Here’s Who Qualifies For Automatic Student Loan Forgiveness Under New Biden Programs
Over the course of the last year, the Biden administration has enacted a series of student loan forgiveness initiatives. By targeting existing student loan relief programs for expansion and improvement, the Education Department estimates that nearly $17 billion in student debt will be cancelled for at least 725,000 borrowers — much of it automatically.
The debate over broader student loan forgiveness continues, and there are indications that Biden is considering additional 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 more significant initiatives has been to expand relief under the troubled Public Service Loan Forgiveness (PSLF) program. PSLF can eliminate the federal student loan debt for borrowers who commit to working 10 years or more for government or nonprofit organizations. But the program has been tricky to navigate for borrowers, and the Education Department has historically done a poor job of operating the program and overseeing its contracted loan servicers who administer it.
By relaxing key eligibility criteria, the Education Department will now be able to to count past loan periods that otherwise would have been rejected under PSLF — including payments made under “non-qualifying” repayment plans, and other payments rejected due to technicalities. The new initiative is called the Limited PSLF Waiver program, and a million borrowers may ultimately benefit from the program.
Borrowers who already have Direct-program federal student loans and have submitted PSLF employment certification forms will have their PSLF payment counts automatically adjusted, says the Education Department, resulting in automatic student loan forgiveness for borrowers who reach 120 or more “qualifying payments” following the changes.
Other borrowers, however, may need to take certain steps to qualify, and there’s a deadline of October 31, 2022. Borrowers with FFEL loans or Perkins loans would have to consolidate their loans via the federal Direct consolidation loan program. And borrowers who have not certified their public service employment by submitting PSLF employment certifications would have to do so.
Borrowers can learn more about the Limited PSLF Waiver program here.
Student Loan Forgiveness Through Income Driven Repayment
An even newer — and potentially more sweeping — initiative by the Biden administration is a historic fix to income-driven repayment (IDR) plans. IDR programs allow borrowers to repay their loans based on their income, and remaining in the program can ultimately result in student loan forgiveness after 20 or 25 years, depending on the plan.
But as with PSLF, the IDR program has been plagued by poor administration and oversight. Advocacy groups and government regulatory bodies have accused servicers of steering borrowers into forbearance, rather than IDR plans. And recent investigatory work revealed that the government is not adequately tracking borrowers’ progress towards student loan forgiveness.
To address shortcomings with the IDR program, the Biden administration announced sweeping fixes that will allow many past periods of repayment, forbearance, and deferment to count towards a borrower’s IDR repayment term. The Education Department will be automatically adjusting the number of qualifying payments a borrower has towards loan forgiveness, and officials have indicated that borrowers who have been in repayment for 20 or 25 years may see automatic student loan forgiveness. The Department also estimates that 40,000 borrowers on track for PSLF will get automatic student loan forgiveness as a result of the IDR adjustments.
As with the Limited PSLF Waiver, the Education Department has indicated that borrowers with FFEL loans would need to consolidate via the federal Direct consolidation program to benefit from 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 cancellation on the basis of a disability.
The Total and Permanent Disability (TPD) discharge program can eliminate the federal student loan debt for borrowers who are unable to maintain substantial, gainful employment due to a medical condition, whether physical or psychological. Previously, the 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-connected disability, a signed application form completed by the borrower’s physician, or proof of receiving Social Security disability benefits with a benefits review period of at least five to seven years.
Last year, the Biden administration announced that it would eliminate red tape for hundreds of thousands of disabled borrowers and provide automatic relief. Through a data-sharing initiative between the Social Security Administration and the Department of Education, the Biden administration has been able to automatically cancel $7 billion in federal student loan debt for 350,000 disabled borrowers, without requiring them to submit an application. The administration also reversed the loan reinstatement of thousands of additional disabled borrowers who had their previous TPD discharges reversed due to their alleged failure to submit required annual paperwork during a post-discharge monitoring period.
Borrowers can learn more about the TPD Discharge program here.
Student Loan Forgiveness for Borrowers Defrauded By Their School
The Biden administration has also taken steps to automatically cancel student loan debt for borrowers who were harmed by misleading and deceptive school practices. The Department announced $1.2 billion in automatic student loan cancellation under the Closed School Discharge 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 has also announced a total of $2 billion in student loan forgiveness under the Borrower Defense to Repayment program, which allows borrowers to request loan cancellation if a school made serious misrepresentations about key elements of a degree program. In particular, the administration reversed a Trump-era policy that permitted the Department to award partial relief for approved Borrower Defense claims.
Borrowers can learn more about school-related student loan discharge programs here. While much of the relief awarded so far has been automatic, most borrowers seeking a Closed School Discharge or Borrower Defense to Repayment relief would have to submit a formal application.