26 Mar Whats the Current State of Student Loan Forgiveness?
While campaigning for President, Joe Biden promised $10,000 in student loan forgiveness per borrower, so naturally borrowers want to know what’s the latest news on President Biden’s student loan forgiveness plan. Here’s a roundup of recent developments and what might happen next.
Latest Student Loan Forgiveness Updates
On , Joe Biden announced his third extension of the federal student loan payment pause and interest waiver. Federal student loans will remain interest-free until . There was no reference in the announcement about a loan forgiveness or cancellation program that the Biden administration might be pursuing but President Biden asked quick loans in Minnesota borrowers to do their part to prepare for repayment.
This extension came as a bit of a surprise after the Administration expressed that its August announcement would be the final extension of the student loan interest waiver that was instituted in as part of the CARES Act. When asked by reporters about the potential for President Biden to extend the payment pause again or enact further student loan forgiveness just the day prior, White House Press Secretary Jen Psaki said that the President had not made a decision yet.
As the Biden Administration continues to pursue its agenda with narrow majorities in Congress, it has taken a piecemeal approach to student debt relief while it explores its legal authority to pursue wider loan forgiveness programs without congressional support.
Most recently, an overhaul of the Public Service Loan Forgiveness program was announced to restore the promise of PSLF, according to the Education Department factsheet. A key aspect of the development is a one-time waiver that will allow payments from all federal student loan programs, including those not previously eligible, to be counted toward progress for Public Service Loan Forgiveness.
The Department of Education announced on August 19 that over 300,000 borrowers who have a total or permanent disability will receive $5.8 billion in forgiveness. The Department of Education would begin identifying borrowers eligible for the automatic discharge by matching data from the Social Security Administration.
Other Recent Student Loan Forgiveness Developments
The U.S. Department of Education and the Justice Department are reviewing whether the President has the legal authority to cancel up to $50,000 in federal student loan debt through executive action. There is no timetable on when these reports will be issued. There may be delays because Congress has not yet confirmed key policy advisors in both departments.
The White House’s Domestic Policy Council will consider how student loan forgiveness should be targeted, regardless of whether it is implemented through executive action or legislation.
Borrowers should beware of student loan scams that promise debt forgiveness, in exchange for a fee. When student loan forgiveness is implemented, it will most likely be automatic and free. The U.S. Department of Education will publish an update on the web site.
The U.S. Department of Education has recently taken a few steps toward providing student debt relief for which they have clear legal authority:
Restoration of Total and Permanent Disability Discharges
Some disabled borrowers who qualified for a Total and Permanent Disability Discharge had their repayment obligation reinstated because they failed to submit the annual earnings paperwork during the pandemic. The U.S. Department of Education will reverse the reinstatements and provide other student loan debt relief for 230,000 borrowers with Total and Permanent Disability Discharges.
Borrowers with a federally-held federal education loan are eligible for administrative forbearance and an interest waiver through . Unfortunately, borrowers with defaulted loans in the Federal Family Education Loan Program (FFELP) were not eligible because those loans were held by guarantee agencies on behalf of the U.S. Department of Education. The U.S. Department of Education has decided to make these borrowers eligible for the federal student loan payment pause and interest waiver, affecting more than one million FFELP borrowers. FFELP borrowers who defaulted during the pandemic will also have their loans returned to good standing and the defaults removed from their credit histories.