MINNEAPOLIS — President Joe Biden first announced the program, which will impact millions of Americans, this summer.
It's expected to provide relief for up to $10,000 in student loan debt for those making less than $125,000 a year or as much as $20,000 for eligible borrowers who were also Pell Grant recipients.
"We have a huge first round victory," Said Melissa Byrnes, with 'We the 45 Million.'
Byrnes, who is also a student loan borrower, says this is a historic first step.
"I'm partly holding my breath, but I'm glad to see the administration moving forward," she said.
Applications won't be processed until the website officially opens, but those who apply during the beta testing phase will not need to reapply.
This comes as the Department of Education is facing several lawsuits challenging the policy, but along with those challenges - many are left wondering if any money forgiven would be considered taxable income by the state.
"In those states, you'll have a tax burden that may be the equivalent of a few months. Some of those states are trying to change the laws to make it tax-free, but it seems unlikely it will happen this year," said Mark Kantrowitz, a student loan expert with Cerebly.com.
He says people living in certain states, like Minnesota, may want to weigh their options first. "You may want to wait until next year, hoping it becomes tax-free at the state level, however, there's also a reason to apply immediately, there are several legal challenges, and if any are successful, they may block the president's plan," he said.
But in the end, some like Byrnes, are grateful some relief is on the way. "Some people have shame about debt and it makes you feel like you're alone, but you're not alone," she said.
Byrnes also warned borrowers to be on alert about potential scams and to only use official sites.
The formal application period runs through the end of 2023.
Federal student loan payments have been paused since 2020, but they're set to resume in January.
For more information and how to apply, visit the link here.
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