US President Joe Biden talks about his plan to fight inflation and cut labor costs … [+]
AFP via Getty Images
Over the past year, the Biden administration has passed a series of student loan forgiveness initiatives. By targeting existing student loan relief programs for expansion and improvement, the Department of Education estimates that nearly $17 billion in student debt will be forgiven for at least 725,000 borrowers, many of them automatically.
The debate over broader student loan forgiveness continues, and there are indications that Biden is considering other student loan forgiveness initiatives. But as of today, here’s where things stand.
Student Loan Forgiveness for Public Service Borrowers
One of the Biden administration’s most significant initiatives has been to expand relief under the troubled Public Service Loan Forgiveness (PSLF) program. PSLF can eliminate federal student loan debt for borrowers who commit to working 10 or more years for government or nonprofit organizations. But the program has been difficult for borrowers to navigate, and the Department of Education has consistently done a poor job of managing the program and overseeing its contracted loan officers who administer it.
By relaxing key eligibility criteria, the Department of Education will now be able to count past loan periods that would otherwise have been rejected under the PSLF – including payments made under “non-eligible” repayment plans. and other payments rejected due to technicalities. The new initiative is called the Limited PSLF Waiver program, and one million borrowers could eventually benefit from the program.
According to the Department of Education, borrowers who already have direct program federal student loans and who have submitted PSLF employment certification forms will have their PSLF payment account automatically adjusted, resulting in automatic student loan forgiveness. for borrowers who reach 120 or more “eligible payments” after the changes.
However, other borrowers may need to take certain steps to qualify, and the deadline is October 31, 2022. Borrowers with FFEL loans or Perkins loans should consolidate their loans through the Federal Direct Consolidation Loans Program . And borrowers who have not certified their employment in the public service by submitting PSLF employment certificates should do so.
Borrowers can learn more about the PSLF Limited Waiver Program here.
Student Loan Forgiveness Through Income-Oriented Repayment
An even more recent — and potentially more sweeping — move by the Biden administration is a landmark solution to income-contingent reimbursement (IDR) plans. IDR programs allow borrowers to repay their loans based on their income, and staying in the program can ultimately result in student loan forgiveness after 20 or 25 years, depending on the plan.
But as with the PSLF, the IDR program has been plagued by poor administration and oversight. Advocacy groups and government regulators have accused managers of forcing borrowers to forbear, rather than IDR plans. And recent investigative work revealed that the government is not adequately tracking the progress of borrowers toward student loan forgiveness.
To address the shortcomings of the IDR program, the Biden administration announced sweeping fixes that will allow many past repayment, forbearance, and deferment periods to count toward a borrower’s IDR repayment term. The Department of Education will automatically adjust the number of eligible payments a borrower has for loan forgiveness, and officials said borrowers who have been repaying for 20 or 25 years may see automatic student loan forgiveness. The Department also estimates that 40,000 borrowers on track for the PSLF will receive automatic student loan forgiveness as a result of the IDR adjustments.
As with the limited PSLF waiver, the Department of Education indicated that borrowers with FFEL loans would need to consolidate through the Federal Direct Consolidation Program to qualify for the IDR adjustment.
Borrowers can learn more about the IDR Adjustment Initiative here.
Student Loan Forgiveness for Disabled Borrowers
The Biden administration has also initiated changes for borrowers seeking student loan forgiveness due to disability.
The Total and Permanent Disability Release (TPD) program can eliminate federal student loan debt for borrowers who are unable to maintain substantial gainful employment due to a medical condition, whether physical or psychological. Previously, TPD discharge rules required borrowers to submit a formal TPD discharge application certifying that they met the legal standard for discharge through proof of a military service-related disability, a signed application form completed by the borrower’s doctor or proof of receipt from Social Security. disability benefits with a benefit review period of at least five to seven years.
Last year, the Biden administration announced it would eliminate red tape for hundreds of thousands of disabled borrowers and provide automatic relief. Thanks to a data-sharing initiative between the Social Security Administration and the Department of Education, the Biden administration was able to automatically forgive $7 billion in federal student loan debt for 350,000 borrowers with disabilities, without requiring them to submit a demand. The administration also canceled loan reinstatement for thousands of additional disabled borrowers whose previous TPD discharges had been canceled due to their alleged failure to submit required annual documents during a post-discharge monitoring period.
Borrowers can learn more about the TPD waiver program here.
Student loan forgiveness for borrowers defrauded by their school
The Biden administration has also taken steps to automatically forgive student loan debt for borrowers who have been harmed by misleading and deceptive school practices. The Department announced $1.2 billion in automatic student loan forgiveness under the Closed Schools Release Program for borrowers who attended ITT technical institutes before the for-profit school chain collapsed, leaving tens of thousands of borrowers with worthless degrees.
The administration also announced a total of $2 billion in student loan forgiveness under the Borrower Repayment Defense Program, which allows borrowers to seek loan forgiveness if a school has made serious misrepresentations about the key elements of a degree program. In particular, the administration reversed a Trump-era policy that allowed the Department to award partial relief for approved borrower defense claims.
Borrowers can learn more about school-related student loan release programs here. Although much of the relief granted thus far has been automatic, most borrowers seeking a closed school discharge or a borrower’s defense against repayment should submit a formal request.
Further Reading on Student Loans
40,000 student borrowers will automatically get ‘immediate debt cancellation’ – but questions remain
Thousands of Jobs Qualify for Expanded Student Loan Forgiveness Program
Who qualifies for student loan relief under Biden’s huge new income-based repayment expansion
Student Loan Forgiveness: Department of Education Launches Appeals Process for Civil Service Borrowers