What to know if you applied for Biden's student loan forgiveness program

President Biden's student loan debt relief plan is on hold for now, leaving millions of Americans who are eligible for relief in limbo.

“Forty-five million [Americans] owe a collective $1.7 trillion of federal loan debt,” Natalia Abrams, president and CEO of the Student Debt Crisis Center, told Yahoo News. Now 26 million Americans who applied for the program are left with uncertainty; 16 million of them have had their applications approved.

Since the relief plan was announced in August, opponents have filed multiple lawsuits challenging the program. On Nov. 14 ,a federal appeals court put a nationwide injunction in place temporarily barring the plan from taking effect in response to a lawsuit brought on by a group of six Republican-led states.

In that case, Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina, argue that Biden’s plan threatens a loss in tax revenue for each state. They also argue that the Biden administration’s Department of Education is overstepping its authority to provide one-time debt relief.

Under the Heroes Act of 2003, the education secretary has the ability to waive or modify student loan balances in the instance of a national emergency, much like the COVID-19 pandemic. But the states’ lawyers said the Biden administration was using the pandemic as "a pretext to mask the president's true goal of fulfilling his campaign promise to erase student loan debt," according to court documents.

The Biden administration petitioned to the U.S. Supreme Court on Nov. 18 that the injunction be lifted while various legal challenges worked their way through the lower courts. Last week the high court didn't completely strike down Biden's student debt forgiveness plan, but rather delayed its decision until February, when it will hear arguments about the program. The debt cancellation rollout remains blocked until then.

Meanwhile, the Biden administration has repeatedly said that borrowers are continuing to recover from the pandemic, and providing debt relief under the Heroes Act is lawful. It’s the same authority both Biden and former President Donald Trump have used to pause student loan payments during the pandemic since March 2020. Biden recently extended the pause for a sixth time through the end of June 2023.

In an effort to unpack what this all means for borrowers going forward, Yahoo News spoke with Abrams and Cody Hounanian, executive director at the Student Debt Crisis Center, to gain some clarity. (Some responses have been edited for length and clarity.)

Yahoo: If the Supreme Court rules that the Biden administration’s student debt relief plan can be implemented, who would qualify and what type of relief would they receive?

Natalia Abrams: Biden's student debt cancellation plan that he proposed in the middle of August was to cancel $10,000 for all federal student loan borrowers that have loans owned by the Department of Education. (Borrowers are eligible for this relief if their individual income is less than $125,000; $250,000 for married couples.) There were some, what we call ED-held loans that were excluded — these were borrowers with older FFEL loans [Federal Family Education Loan] that were not held by the Department of Education.

A good rule of thumb is if your loans haven't been a part of the payment pause during the COVID pandemic, then they probably won't be a part of cancellation. However, the defaulted ED-held loans do qualify. But in terms of federal loans, it includes parent plus loans, graduate loans, undergraduate loans —anyone with a direct loan is completely fine. So that’s $10,000 across the board and then an additional $10,000, so total $20,000 if the borrower had a Pell Grant. Some borrowers never exhausted their Pell Grant, but even if you took a dollar of a Pell Grant, that means that you would get an additional $10,000 equaling $20,000.

When would borrowers have to resume making payments after Biden extended the pause?

Abrams: [Federal student loan payments would resume] 60 days after a [Supreme Court] decision, or June 30, whichever comes first. And to our knowledge, if the decision comes on June 30, it would be 60 days after that.

What should borrowers know if they were among the 9 million people who applied for relief and mistakenly received an email last month saying their application had been approved?

Cody Hounanian: I would give the same advice we give borrowers for a myriad of issues that involve the communications with both the Department of Education and their service center, and that is to continue to monitor the messages that you're receiving from the Department of Education. Those trusted messages from the Department of Education will come from a "dot gov" email address. They'll never come in the mail or over the telephone from a third party. For those that got this erroneous message, they will receive a communication that clarifies this. So keep the channels of communication open between you, your student loan servicer and the Department of Education. The best way to stay up to date is to continue to monitor the communications you're receiving from those trusted sources.

What if a borrower submitted their application prior to the pause on the program and has not received a letter yet?

Hounanian: If you've submitted an application and you have not received a communication, I would definitely encourage folks to continue to monitor the messages they're receiving. Some of this is just the fact that the Department of Education and the student loan servicing companies somewhat have a monumental task — they have to communicate updates with tens of millions of people. So it happens in waves.

I'll also add, while folks are waiting for their approval letters and other communications related to all sorts of programs, we are seeing from our supporters and from borrowers everywhere that they're getting letters in the mail, they're getting phone calls, they're seeing on social media these opportunities to apply for programs and these opportunities are coming from third party companies that are often “get relief” scams.

If Biden’s student debt relief plan is implemented next year after a Supreme Court decision, how soon would borrowers see relief?

Abrams: I would assume it would be very soon after the decision. They've already approved 16 million borrowers and we would expect to see relief instantly.

Hounanian: The entire reason the department has processed these applications is precisely so the Department of Education can immediately begin canceling student debt once this clears these legal hurdles. So it will be quick.

Does the Biden administration have a plan B if the Supreme Court rules against the plan?

Hounanian: I'm not sure if the administration itself has their backup plan. I think they are steadfast in their fight right now to protect the president's plan as is. But as advocates and part of a broad coalition that have been fighting for debt cancellation for several years now, we have identified several means in which the president can use different authorities to cancel student loan debt.

The president for his proposal chose to lean on a piece of legislation that allows them to issue relief because of the emergency aspect of the COVID-19 pandemic. But we also know that the president has the legal authority to cancel student loan debt broadly through settlement compromise, which is a part of the Higher Education Act. So there are other opportunities.

What other options do borrowers have besides Biden’s student debt relief plan?

Hounanian: There are a host of other opportunities and programs available to borrowers that can help them access relief — and for some to have their entire student loan debt erased. We worked really hard this year to enroll borrowers in a public service loan forgiveness program that has been on the books for over a decade now. This year had an expanded set of rules that made it even easier for folks to apply. That is something we will continue to spread awareness around.

There are going to be what are called the account adjustments next year, meaning there's borrowers who will be closer to completing an income-driven repayment plan or public service loan forgiveness, and will be able to access relief either immediately or sooner.

And there's also the continued work on fixing the existing programs for totally and currently disabled borrowers, [and] those who were victimized by for-profit colleges. So there's a host of opportunities.