Borrowers may have to wait for student loan relief
BOSTON - This week's announcement on federal student loan debt relief left many people asking one question: When will the money be on the way?
President Joe Biden announced Wednesday that those making under $125,000 a year will receive $10,000 in student loan forgiveness. Borrowers who received Pell Grants will receive $20,000 in forgiveness.
The Department of Education admits it is still working to figure out exactly how it will implement the aid.
Adam Minsky is an attorney in Boston specializing in student loans.
"I think that we have never seen anything like this before," said Minsky. "I think it is going to change a lot of lives."
Minsky said student debt forgiveness had been a long time coming, but there is a chance borrowers will have to wait a little longer. There is a chance this policy could head to court.
"There is always the possibility of there being some sort of injunction being put in place while a legal dispute plays out," said Minsky.
In the meantime, the Department of Education provided insight into their process to receive relief thus far.
Out of the more than 40 million Americans with student loan debt, about 8 million of them are expected to receive the forgiveness directly to their accounts. That's because the Department of Education said they have enough information for those borrows to approve their eligibility.
For the rest of the borrowers, the DOE said they plan to launch an application through a website in the coming weeks.
Borrowers interested in receiving updates directly from the Department of Education can subscribe at ed.gov/subscriptions.
"We are all playing a bit of a waiting game from now until the end of the year," said RBC financial advisor Nora Yousif.
Yousif pointed out the White House extended the loan moratorium, or payment pause, for a seventh time until December 31.
Yousif suggested borrowers save over these next few months and pay off a large chunk of their loan after the new year.
"If it's a 5% interest rate that is a 5% hole that is burning through your pockets," said Yousif. "So, the faster you can get rid of that debt the better."
