Comprehensive Guide to Student Loan Forgiveness Under the Biden Administration

“By a vote of 6-3, the Supreme Court justices ruled that the Biden administration overstepped its authority in 2022 when it announced that it would cancel up to $400 billion in student loans.

In a statement issued by the White House, President Joe Biden called the court’s decision “wrong” and promised that “this fight is not over.”

He wasn’t kidding.

Student loan debt has been a significant burden for millions of Americans. Consequently, President Joe Biden and his administration have taken measures into their own hands. Many new reforms and initiatives are in place to address the student loan debt problem

This guide will walk you through everything you need to know about these changes, including specific examples, key dates, and the impact on borrowers.

1. Public Service Loan Forgiveness (PSLF) Overhaul

The Public Service Loan Forgiveness program was designed to forgive the student loans for those working in public service for ten years.

Now, there’s many challenges with qualifying for this program. In fact, according to the Education Data Initiative only 2.3% of applicants have qualified for the program up until the 2021 changes .

This is what we do.
US Student Loan Center has had a 100% approval rate for their qualifying submissions

Because of that, President Biden has made significant changes.

Here they are:

Temporary Expanded PSLF (TEPSLF): This initiative allows borrowers to receive credit for past payments that were previously ineligible. For instance, payments made under non-qualifying repayment plans can now count towards forgiveness.
Before Reform: Sarah, a teacher, made payments for seven years under the wrong repayment plan. None of these payments counted toward PSLF.
After Reform: Sarah’s seven years of payments now count towards PSLF, bringing her closer to loan forgiveness.
Key Dates: These changes were announced in October 2021 and are part of a limited-time waiver that ends on October 31, 2022.

2. Targeted Loan Forgiveness

The Biden administration has provided targeted relief to specific borrowers.

Here are the key categories:

Total and Permanent Disability (TPD) Discharge:
- Details: Borrowers with a total and permanent disability can have their federal student loans forgiven.
- Before Reform: John, a veteran with a total disability, had to navigate a complex application process to get his $50,000 loan discharged.
- After Reform: John’s loans were automatically discharged in August 2021 through a data match with the Social Security Administration.
Borrower Defense to Repayment:
- Details: This rule allows borrowers defrauded by their schools, especially for-profit institutions, to have their loans discharged.
- Before Reform: Emily, who attended a for-profit college that misrepresented job placement rates, struggled to get her $20,000 loan forgiven due to a lengthy and unclear process.
- After Reform: Emily’s loans were forgiven under streamlined procedures, acknowledging the school’s fraud.
Closed School Discharge:
- Details: Borrowers whose schools closed before they could complete their degrees can have their loans forgiven.
- Before Reform: Mark attended a college that shut down unexpectedly. He had to individually apply for loan discharge, a process that took months.
- After Reform: Mark’s $15,000 in loans were automatically discharged in July 2021, reducing the burden of application.

3. Income-Driven Repayment (IDR) Plan Improvements

Income-Driven Repayment plans have been revised to offer more generous terms:

Lower Monthly Payments: The administration proposed reducing monthly payments for IDR plans.
- Before Reform: Lisa, who earns $40,000 annually, paid $200 per month under her IDR plan.
- After Reform: Lisa’s payments dropped to $100 per month, easing her financial burden.
Shorter Forgiveness Timeline: The time to forgiveness under these plans may be shortened.
- Before Reform: Lisa would have to make payments for 25 years before her loans were forgiven.
- After Reform: Lisa’s loans will now be forgiven after 20 years of payments.

4. Payment Pause and Interest Waiver

One of the most immediate relief measures has been the extension of the payment pause and interest waiver:

Details: Federal student loan payments have been paused, and interest has not accrued during this period.
- Before Reform: Maria, who owes $30,000, was required to make monthly payments, and interest was accumulating on her loans.
- After Reform: Maria hasn’t had to make a payment since March 2020 and has saved thousands in interest, providing significant financial relief.
Key Dates: This pause began in March 2020 and has been extended several times, most recently until September 2023.

Note: This payment pause and interest waiver has expired. All students are now required to make payments as scheduled. Many students don’t know this and are therefore in default. Schedule a call now to ensure your student loans are being handled properly

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5. Proposed Broad Student Loan Forgiveness

While not yet enacted, President Biden has proposed broader student loan forgiveness:

Details: The proposal includes forgiving $10,000 per borrower.
- Challenges: Legal and political hurdles have complicated this effort, preventing it from being implemented so far.
- Potential Impact: If passed, this could relieve a significant portion of debt for many borrowers.
- Example: Jessica, who has $15,000 in student loans, would see her debt reduced to $5,000, significantly lightening her financial load.

Conclusion

The Biden administration’s reforms aim to ease the burden of student debt through targeted forgiveness, improved repayment plans, and immediate relief measures.

After the Supreme Court ruling, in an effort to ease student loan burden and gain votes, President Biden has forgiven hundreds of billions of dollars in student loan debt.

While some proposals are still pending, the changes already implemented have provided much-needed relief to many borrowers.

Of course, this is a heated debate.

Remember your Econ 101?
“There’s no such thing as a free lunch”

Someone will pay for these forgiveness programs. But we can worry about that later right? 🙂

Summary of Key Points

PSLF Overhaul: Expanded eligibility and retroactive payment credit.
Targeted Forgiveness: Relief for disabled borrowers, defrauded students, and those affected by school closures.
IDR Plan Improvements: Lower payments and shorter forgiveness periods.
Payment Pause: Extended relief from payments and interest accrual.
Broad Forgiveness Proposal: Potential for $10,000 forgiveness per borrower, pending implementation.

Stay Updated

If you have any questions about the latest developments in student loan forgiveness and repayment plans take action. Reach out to a team member here at US Student Loan Center.

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