Are you eligible for an $ 8.7 billion student loan forgiveness?
Here’s what you need to know.
If you’ve been following the latest student loan headlines, you may be aware that President Joe Biden has canceled $ 8.7 billion in student loans since taking office in January. That includes a major announcement this week to write off $ 5.8 billion in student loans in Biden’s biggest student loan cancellation act. This begs the question: Are you eligible for this student loan cancellation? Let’s get it straight.
Student loan cancellation: who is eligible
Biden adopted a targeted student loan cancellation aimed at specific groups of student loan borrowers. Targeted student loan cancellation is different from large-scale student loan cancellation, as the latter can help most or all student loan borrowers. Senator Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) want Biden to enact a large-scale student loan cancellation of up to $ 50,000 in student loans. To date, however, there was no large-scale student loan cancellation. Instead, Biden focused on canceling student loans for two main existing groups of student loan borrowers. This student loan cancellation comes on top of the $ 60 billion in student loan cancellations that student loan borrowers will have received through the student loan relief made possible under the Cares Act, the 2 , $ 2 trillion, including the four extensions by Biden and President Donald Trump.
Total and permanent disability
The first constituency is made up of student loan borrowers with total and permanent disabilities. Biden canceled $ 5.8 billion in student loans for more than 300,000 student loan borrowers this week. To be eligible for this federal student loan forgiveness, you must have a total and permanent disability, which prevents you from earning income and paying off student loans. This student loan discharge is automatic. To qualify, your name will appear on any data correspondence between the US Department of Education and the US Social Security Administration or between the US Department of Education and the US Department of Veterans Affairs.
Defense of the borrower on repayment
The Biden administration has now written off $ 1.5 billion in student loan debt under the borrower’s defense against repayment rule. The borrower’s defense against repayment is a federal regulation that began under the Obama administration that allows you to have a student loan canceled if you have been misled or defrauded by your college or university. . The borrower’s defense against repayment may result in the total or partial cancellation of the student loan. It is important to note that student loan cancellation as part of the borrower’s defense against repayment only applies to direct loans. Therefore, the borrower’s defense to repayment does not apply directly to Federal Family Education Loans (FFELP) or Perkins loans. This is no surprise because student loan cancellation does not apply to everyone. That said, you can consolidate these student loans into a direct consolidation loan, which would then qualify for student loan cancellation as part of the borrower’s defense against repayment.
Student loan cancellation: how to apply
To request these specific types of student loan cancellations, there is traditionally a request and other requirements. The Biden administration is working to streamline the process so that more eligible student loan borrowers can get their student loan canceled automatically. For example, student loan borrowers eligible for total and permanent disability were required to complete an application, submit income information, and undergo a three-year monitoring period. The Education Department plans to eliminate the enforcement and oversight period during the negotiated rule-making process that begins in October.
How do I apply for a student loan termination?
If you don’t qualify for total and permanent disability (which most student loan borrowers don’t), you may wonder if you will ever be eligible for a student loan cancellation. For example, you might be wondering: Has the student loan cancellation been reversed? It might sound like this if you’re hoping for a full-scale student loan cancellation, but it didn’t. Although the Department of Education has already canceled student loans for student loan borrowers who qualify under the Borrower’s Defense for Repayment, you can still request cancellation of your student loan by completing the form. Defense request from the borrower on repayment of the loan. The application is available through both the US Department of Education and your student loans manager. The application takes approximately 30 minutes to complete. You will need your Federal Student Aid (FSA) ID, the name of your school and program of study, your enrollment dates, and any documents to support your application.
What are the conditions for canceling a student loan?
To obtain the cancellation of a student loan through the borrower’s repayment defense rule, you must prove:
- you borrowed federal student loans to attend college or university;
- you believe that your college or university has intentionally misled you or committed other wrongdoing;
- you have suffered specific financial loss as a result; and
- you can prove that your college or university violated a state law relating to your student loans or the educational services that were provided.
Here are some valid reasons why you may be eligible for a student loan cancellation under the borrower’s repayment defense: false promises from your college or university regarding the cost of your studies, school accreditation, employment prospects, the ability to transfer credits, or the closure of your school while you were enrolled. With that said, you can’t make a valid borrower defense claim because you didn’t get the job of your dreams, or you aren’t earning as much income as you hoped.
Biden student loan cancellation: what if you don’t qualify
Chances are, you haven’t been included in the student loan cancellation Biden has adopted to date. In total, approximately 500,000 student loan borrowers have received federal student loan forgiveness. In comparison, the latest statistics on student loan debt show that there are approximately 45 million student loan borrowers. How to get a student loan cancellation? It’s possible Biden will enact a full-scale student loan cancellation, but it’s likely he will continue to focus on targeted student loan cancellation instead. Student loan cancellation may help more student loan borrowers, but that doesn’t mean Biden will cancel everyone’s student loans. The cancellation of Biden’s student loan to date was based on applicable law. It is not known whether Biden has the legal authority to unilaterally cancel student loans without further authorization from Congress. The two best ways to get a student loan canceled are through an income-based repayment plan and the public service loan forgiveness program. Both only apply to federal student loans, involve requirements, and can take 10 years (public service loan cancellation) or 20-25 years (income-based repayment plans). More importantly, student loan relief has been extended until January 31, 2022. However, be sure to focus on your student loan repayment strategy now. Don’t wait until January to pay off your student loans. Here are some popular options for paying off student loans and saving more money:
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