What is happening
Although President Biden has not announced his decision on widespread student loan forgiveness, millions of borrowers have seen $25 billion in debt forgiven during his tenure.
why is it important
With one in five Americans carrying student debt, loan forgiveness can help ease the pain of soaring inflation and economic uncertainty.
As the date of September 1, 2022 for resume student loan repayments draws nearer, student borrowers are eagerly awaiting President Joe Biden’s impending decision on widespread student debt cancellation. However, since Biden took office on January 21, 2021, millions of Americans have already had $25 billion in student loans canceled by the Department of Education.
The billions in student loan debt already written off during Biden’s tenure may seem like a lot of money, but it pales in comparison to the bigger picture. About 20% of Americans owe money on student loans for a total of $1.6 trillion in debt, or an average of $37,013 per borrower.
Biden campaigned in 2020 on canceling a “minimum of $10,000” in student loan debt for everyone, and April 28 promised a decision on the matter “within the next few weeks,” but nearly two months have passed without any action on the general cancellation of the debt.
Find out who has qualified for student loan forgiveness so far and how you can check if you are one of the borrowers eligible for debt forgiveness. For more, here’s what we know about how debt cancellation could affect your credit score.
$7.3 billion in student loans discharged for public servants
In October 2021, the Department of Education announced “transformative” changes to the Civil Service Loan Forgiveness Scheme, immediately making 22,000 borrowers immediately eligible for debt forgiveness. The ministry expects its policy changes to allow more than 550,000 borrowers who have consolidated their loans to eventually become eligible for debt forgiveness.
The PSLF program cancels the remaining balance on a student loan after the borrower has made 120 qualifying monthly payments. Anyone working for a federal, state, or local government agency can apply for the program, including teachers, firefighters, military, nurses, and other public sector employees. PSLF program canceled $7.3 billion in student loans for 127,000 borrowers so far during Biden’s tenure.
The most significant changes to the PSLF allow borrowers to count all previous payments made on federal home education loans and Perkins loans and waive full and timely payment requirements. However, to qualify for this relief, borrowers must submit a PSLF application by October 31, 2022. Note that if you need to consolidate your debt to qualify for PSLF relief, this process can take 45 days, so allow time to meet this end-October deadline.
For more information about the PSLF policy changes and to see if you are eligible for the program and the waiver of previous payments, visit the PSLF Help Tool on the Federal Student Aid website.
$5.8 billion in student loans discharged for borrowers with disabilities
In August 2021, the Department of Education implemented a regulatory change that allowed 323 million student borrowers with “total and permanent” disabilities to see more than $5.8 million in their canceled federal loans. Borrowers with these disabilities no longer have to apply for relief – they will be determined by data matches in the Social Security Administration, which began identifying these borrowers on a quarterly basis in September 2021.
Prior to the policy change, only about half of borrowers with total and permanent disabilities who were identified as eligible through Social Security matches received loan forgiveness.
If you think you might qualify for student loan relief due to total disability, complete the online disability application on the Social Security website.
$7.55 billion in student loans discharged for defense claims against specific schools
Student borrowers who have been misled or defrauded by educational institutions have the right to file “Borrower Defense Claims” with the Department of Education. If these schools are found to have violated state laws, borrowers may be eligible for partial or full student loan forgiveness.
Throughout 2021 and 2022, the Department of Education announced specific relief measures for student borrowers who attended colleges and universities who made fraudulent claims about their schools or misled students when they applied for loans.
These student loan receipts include:
- ITT Technical Institute: 115,000 borrowers received $1.1 billion in loan forgiveness in August 2021.
- DeVry University: In February, 16,000 borrowers received $415 million in student loan repayments, plus additional remission for students at Westwood College, ITT’s nursing program, and criminal justice programs at the Minnesota School of Business and Globe University.
- Marinello Beauty Schools: Due to “widespread and widespread misconduct” at Marinello Schools, 28,000 borrowers were granted $238 million in loans discharged in April.
- Corinthian Colleges: In the largest defense claim release of the year to date, the DoE announced $5.8 billion in forgiveness for 560,000 borrowers on June 1.
If you attended one of these schools and owe money on a student loan, you will need to file a formal Borrower Defense Request on the Federal Student Aid website to qualify for relief. After you complete your application, which should take about 30 minutes, the DoE says it will contact you by email with information about your loan release.
264,000 additional borrowers set to receive student loan relief from defense claims
On June 22, the Department of Education announced a proposed settlement in the Sweet v. Cardona. About 264,000 borrowers have sued the agency, claiming it was unlawfully delaying action on longstanding defense claims.
If approved by a judge, the proposed settlement will provide student debt relief to students at more than 50 mostly for-profit colleges and significantly reduce the backlog of defense claims that began under the administration. of President Donald Trump and increased under the Biden administration.
The debt relief offered in the settlement will only apply to borrowers who have already filed defense claims with the Department of Education. The Predatory Student Loans Project says all borrowers with pending defense claims as of June 22, 2022, or those who received denials after December 2019 are eligible to be plaintiffs in the class action.
It is not yet known whether the Department for Education will extend the relief to borrowers who attended the offending schools but did not file a defense claim.
Learn more about student loans, find out why you may want to continue making payments even if student loans are suspended. And find out whether or not you should refinance your student loans as rates rise.
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