In the past two years, President Biden and the Department of Education have taken steps to overhaul the existing forgiveness programs for federal loans. For example, they took a flamethrower to the thicket of rules for the Public Service Loan Forgiveness Program, clearing the way for 175 thousand public servants to get nearly $10 billion in debt relief.
In a separate move, the department announced it would help people who had been in repayment for years by reviewing their payment history and crediting their accounts towards income-driven repayment plan forgiveness — even if they never enrolled in an IDR plan or made few payments because they were in long forbearances or deferments.
Many of those fixes are temporary. Student loan borrowers must apply for relief before the deadline passes, or they’ll miss out on this opportunity forever.
Biden’s $10-$20k cancellation
At the end of August, Biden announced that he would follow through on his campaign promise of student debt cancellation. The Department of Education announced that borrowers who made under $125 thousand (and couples who made under $250 thousand) would receive $10 thousand in cancellation on their federal student debt. Borrowers who received Pell Grants would receive an additional $10,000 in forgiveness.
For many borrowers, this forgiveness will be applied automatically. But in some cases, borrowers will have to fill out an application for student loan forgiveness. This will usually happen when the Department of Education doesn’t have current information about your income for 2020 or 2021.
The Public Service Loan Forgiveness Program is designed to encourage more Americans to work in public service — under the program, borrowers who make 120 qualifying monthly payments on their student loans while working full-time for a government or non-profit organization can have the remaining balance of their loan forgiven.
Here’s the problem. Many borrowers who thought they were on track to have their loans forgiven have been denied because they had the wrong type of loans, didn’t make their payments through an eligible repayment plan, or because their employer wasn’t considered a qualifying organization. So, some borrowers paid faithfully on their loans for ten years and then submitted their PSLF application, only to have it denied.
In response, federal lawmakers attempted to add a fix by temporarily expanding PSLF to count payments made under the wrong repayment plan. But the Temporary Expanded PSLF Program still excluded individuals with government-backed bank loans known as Federal Family Education Loans. So in October of 2021, the Biden Administration attempted to fix the “wrong loan” issue by expanding PSLF to count payments made toward FFEL loans as well.
Under the PSLF Waiver, any borrower who has made ten years of qualifying payments — regardless of whether they made those payments under an eligible repayment plan or while working for a qualifying employer — will now be eligible for loan forgiveness. This is a big win for public service workers who have been struggling to repay their student loans.
It’s important to note that individuals with FFEL loans need to consolidate their loans into a Direct Consolidation Loan. This can be done by logging in to studentaid.gov.
Learn more: PSLF Waiver: Who Qualifies, Deadlines, and Updates
IDR waiver after 20 years
The income-driven repayment waiver may be your best bet if you don’t qualify for PSLF. You will first need to enroll in one of the income-driven repayment plans available through the Department of Education and then pay on your loans for 20 years (or 25 years if you went to grad school!).
This option can be a huge relief if you’re struggling to make your monthly student loan payments, but it has an additional benefit. Instead of allowing interest to capitalize on your loans forever as your loan balance grows, your loan will be forgiven after 20 years of payments.
Since the payment pause began with the CARES Act of 2020, time spent in the coronavirus forbearance has also counted towards these payments. Additionally, the US Department of Education revised the plan so that borrowers who spent time in forbearance will also have that time counted toward the IDR waiver.
Learn More: Income-Driven Repayment Plan Forgiveness — What to Know
Borrower defense to repayment
You might also be able to qualify for forgiveness if your school lied to you. Borrower defense, or defense to repayment, is a relief program that allows borrowers to have their federal student loan debt forgiven. To do this, they must show that their school engaged in deceptive marketing, used strong-arm recruiting tactics, inflated enrollment numbers, violated state law, or misled them about tuition costs, graduation and job placement rates, and so on.
Learn More: Borrower Defense to Repayment.
Total and Permanent Disability
Any permanent physical or mental impairment that makes you unable to work may qualify for total and permanent disability discharge as an option. This means that your loans will be forgiven, and you will no longer be required to make payments. To qualify, you must provide documentation of your disability to your loan servicer. Once you have been approved, your loans will be forgiven.
If you have private student loans, you may still qualify for forgiveness if you are totally and permanently disabled. But not every lender offers private student loan forgiveness options. If yours doesn’t, you may decide to work with your loan servicer to negotiate a settlement. If you are able to reach a settlement, your loans will be forgiven, and you will no longer be required to make payments.
Learn More: What Disabilities Qualify for Total and Permanent Disability Forgiveness?