Biden Student Loan Forgiveness - September 2024

• The SAVE Plan remains blocked by an appeals court, with the Supreme Court allowing the Eighth Circuit’s pause to remain in place, causing continued uncertainty for millions of borrowers.

• Before being paused, the SAVE Plan had forgiven $5.5 billion for 414,000 borrowers.

• As of September 2024, the Biden administration has approved over $169 billion in loan forgiveness for 4.76 million Americans through various programs and policy changes.

• The Biden administration’s new mass debt relief plan, based on the Higher Education Act, is expected to be finalized in October 2024. It could potentially benefit up to 25 million borrowers.

• The new plan would target relief to those with runaway interest, long-term borrowers, those eligible for existing programs but not enrolled, and those who attended low-financial-value programs.

Mass student loan forgiveness has been a hot topic, with the Biden administration pushing for major changes to help millions of Americans struggling with student loan debt. These efforts aim to address issues like growing loan balances, poor customer service from loan servicers, and challenges faced by borrowers who attended predatory for-profit institutions.

While many support these changes for offering relief, there are concerns about costs and fairness. With the 2024 election and court rulings looming, the future of student loan forgiveness remains uncertain. If you’re wondering, “Did student loan forgiveness pass?” here’s what you need to know about the current landscape and how it may affect you.

Here’s an overview of the current landscape.

Recent polling data shows mixed public sentiment regarding President Biden’s student loan forgiveness plans. While 48% of all voters consider it an important issue for the 2024 elections, only 30% of U.S. adults approve of Biden’s handling of student loans.

But there’s broad support for government action, with about 70% of voters believing the government should take steps to alleviate student debt. Support is higher among Democrats and younger voters, particularly Gen Z.

Interestingly, targeted relief measures garner more bipartisan support. Biden’s revised plans focusing on low-income borrowers, the disabled, and long-time repayers have found favor across party lines.

Related: Kamala Harris’s Student Loan Forgiveness Plans

What it is: The Saving on Valuable Education (SAVE) Plan is President Biden’s newest income-driven repayment option for federal student loans. With over eight million borrowers enrolled, this plan had provided $5.5 billion in debt forgiveness for more than 414,000 borrowers since its inception.

Here’s what you need to know:

What happened:

1. June 2023: After the Supreme Court strikes down Biden’s original broad student debt cancellation plan, he announces the SAVE program under the Higher Education Act.

2. June 2024: Federal judges in Missouri and Kansas block parts of the SAVE plan, including further loan forgiveness and payment reductions for millions of borrowers.

3. July 2024: The 10th Circuit Court of Appeals pauses the Kansas judge’s order, allowing the Education Department to proceed with reducing monthly payments under SAVE. However, the loan forgiveness portion remains on hold due to the Missouri injunction.

4. July 2024: Alaska, South Carolina, and Texas file a lawsuit asking the Supreme Court to reverse the 10th Circuit’s ruling and halt the payment reductions, arguing the SAVE plan is unlawful.

5. July 2024: The 8th Circuit Court of Appeals issues a ruling completely blocking the SAVE program, causing uncertainty for millions of borrowers.

6. August 9, 2024: The 8th Circuit Court of Appeals replaces its temporary stay with a preliminary injunction, blocking the entire SAVE Plan.

7. September 2024: The Supreme Court declines to reinstate the SAVE Plan, allowing the Eighth Circuit’s pause to remain in place.

Recent developments:

• All 8 million enrolled borrowers have been placed on administrative forbearance, during which they are not required to make payments and interest will not accrue.

• While this forbearance period doesn’t count toward forgiveness progress for Public Service Loan Forgiveness (PSLF) or income-driven repayment (IDR), the Education Department has released guidance on other ways borrowers can still get credit.

• This ruling goes beyond what the states were initially asking for, creating potential “mass chaos” according to some student loan experts.

• The ongoing legal battle is causing significant stress and confusion for borrowers, with some worried about potential financial hardships if the plan remains blocked.

• Critics, including Republican lawmakers, argue that the plan overreaches and unfairly burdens taxpayers.

• The Biden-Harris administration vows to “aggressively defend the SAVE Plan” and continue fighting against efforts to raise costs on borrowers’ student loan payments.

What’s now on hold:

The entire SAVE Plan, including:

• The reduction of payments on undergraduate loans from 10% to 5% of income above 225% of the poverty line

• The provision allowing more than four million lower-income borrowers to qualify for $0 monthly payments

• The more generous income threshold for calculating payments

• Interest subsidy benefits

Looking ahead:

• The preliminary injunction likely means enrolled borrowers will be in limbo for longer as the legal process continues.

• The Education Department is considering its options and is expected to provide further guidance to affected borrowers.

• Legal challenges will continue to work their way through the courts, with the possibility of the Supreme Court being asked to weigh in on the case, given its high-profile nature and impact on millions of borrowers.

• The Education Department may explore alternatives to help borrowers, such as extending the administrative forbearance or providing other forms of relief.

• The outcome of the 2024 presidential election, with the recent change in Democratic nominees, could significantly impact the future of student loan forgiveness programs.

Related: Why Is My Account in Administrative Forbearance MOHELA?

What it is: A set of proposed plans to cancel student debt under the Higher Education Act through waivers targeting specific borrower groups. This new mass debt relief plan is being developed in response to legal challenges to previous forgiveness efforts.

When it started: The plans were announced in 2023, with draft regulations released for public comment in spring 2024.

Timeline:

1. Final rules are expected to be published in October 2024.

2. The administration could potentially implement relief as soon as the rules are published, possibly as early as October 2024.

3. Without early implementation, the program would typically start on July 1, 2025.

Who’s eligible: If implemented as proposed, the plan could impact at least 25 million borrowers. The Department of Education has outlined four categories of eligibility:

1. Borrowers who owe more than they did at the start of repayment.

2. Those who entered repayment on their undergraduate loans on or before July 1, 2005, or, if they have graduate loans, on or before July 1, 2000.

3. People who are already eligible for student loan forgiveness under one of the government’s existing programs but just haven’t yet applied.

4. Students from “low-financial value” programs.

How it works:

1. The U.S. Department of Education would use available data to identify eligible borrowers.

2. Many borrowers may receive automatic forgiveness without needing to apply.

3. Some borrowers, particularly for hardship-based relief, may need to submit an application.

Recent developments:

• In August 2024, the administration began sending emails to tens of millions of borrowers about the new plans.

• Borrowers were given the opportunity to opt out of the relief by August 30, 2024, with their loan servicer.

• The Education Department declined to comment on the pending litigation but stated it will continue to fight for borrowers struggling to repay their federal student loans.

• The lawsuit filed by Republican-led states on September 3, 2024, adds new uncertainty to the timeline and implementation of the forgiveness plan.

Legal challenges:

1. On September 3, 2024, seven Republican-led states (Missouri, Georgia, Alabama, Arkansas, Florida, North Carolina, and Ohio) filed a lawsuit to block the implementation of Biden’s new student loan forgiveness plan.

2. The lawsuit, led by Missouri Attorney General Andrew Bailey, claims the Education Department is illegally preparing to start debt cancellation before the rule is finalized.

3. The GOP-led states allege they have obtained documents showing the Education Department instructing loan servicers to start clearing debt as early as September 3 or September 7, 2024, before the rule’s finalization.

4. The lawsuit argues this action could result in $73 billion in student loan debt being forgiven prematurely and without legal authority.

5. This legal challenge follows previous successful efforts by conservative states to block earlier versions of Biden’s student loan forgiveness plans.

6. The recent Supreme Court ruling overturning the Chevron Doctrine could make it harder for the plan to survive legal challenges.

7. Despite these challenges, the administration believes this plan is on firmer legal footing as it’s grounded in the Higher Education Act.

8. Legal experts anticipate further challenges as the final rules are published.

Looking ahead:

1. The plan is estimated to cost $84 billion.

2. It could potentially benefit up to 25 million borrowers.

3. The 2024 election outcome could significantly impact the plan’s implementation.

4. The separate hardship-based forgiveness pathway is planned but likely won’t be available by October 2024.

The Education Department said it expected to finish applying the one-time payment count adjustment to borrowers’ loans by September 1, 2024. But as of September 3, there’s no evidence borrowers can point to showing this has happened. Still, this program is not directly impacted by the SAVE Plan litigation. So the department should still be moving forward with delivering on its promise to borrowers.

The June 30, 2024, consolidation deadline for the IDR Account Adjustment has passed, marking a significant milestone in this one-time opportunity for borrowers. Here’s what long-term borrowers need to know:

Key Points:

1. The IDR Account Adjustment is separate from the SAVE Plan and is not affected by recent SAVE Plan legal challenges.

2. Outcomes will vary: Some may see immediate forgiveness, others may be closer to forgiveness, and some may receive refunds for overpayments.

3. This adjustment ensures your progress towards loan forgiveness more accurately reflects your repayment history.

For those who consolidated before the June 30, 2024, deadline or had eligible Direct Loans, continue to monitor your Federal Student Aid account and communications from your loan servicer for updates on your adjustment status.

If you’re unsure about your eligibility or the potential impact on your loans, consider consulting with a student loan expert to understand your options, given your specific situation.

What it is: The PSLF Program forgives the remaining balance on your Direct Loans after you make 120 qualifying monthly payments while working full-time for a government organization or non-profit.

When it started: October 2007.

When it ends: PSLF is an ongoing program with no set end date. But a limited PSLF waiver was available until October 31, 2022, which provided more flexibility for borrowers to qualify for loan forgiveness. Although this waiver has ended, you can still take advantage of the IDR Account Adjustment to receive credit toward PSLF for past periods of repayment, forbearance, and deferment.

Who’s eligible: To qualify for PSLF, you must:

1. Work full-time for a government organization or a non-profit.

2. Have Direct Loans (or consolidate other federal student loans into a Direct Consolidation Loan).

3. Make 120 PSLF qualifying payments on an income-driven repayment plan or the 10-year Standard Repayment Plan.

How it works: After making 120 qualifying payments while working for an eligible employer, the remaining balance on your Direct Loans will be forgiven. The IDR Account Adjustment can help you get closer to this goal by providing credit for past periods of repayment, forbearance, and deferment.

How to apply: Use the PSLF Help Tool on StudentAid.gov. You can submit the PSLF Form and Employment Certification Form annually or when you change employers to certify your employment and payments. Once you meet the requirements, you can apply for loan forgiveness.

Recent developments: The Biden-Harris administration has significantly expanded the PSLF program. As of September 2024, the administration has forgiven $69.2 billion for 946,000 borrowers under this program, which works out to an average of about $73,000 per borrower. This expansion has made PSLF more accessible to eligible public servants and non-profit workers.

Legal challenges: While Republican lawmakers have introduced bills proposing to end PSLF, these efforts have been unsuccessful. During his presidency, Donald Trump also suggested eliminating the program, but no action was taken. Despite these challenges, PSLF remains in place and continues to provide loan forgiveness to eligible borrowers working in public service.

What it is: A program that lets federal student loan borrowers seek loan forgiveness if their school engaged in certain misconduct, such as fraud or severe misrepresentation.

When it started: The BDR program has been in place for many years, but it gained more attention and underwent significant changes during the Obama and Biden administrations.

When it ends: BDR is an ongoing program with no set end date.

Who’s eligible: Borrowers who went to schools that engaged in misconduct, such as misrepresenting job placement rates, the transferability of credits, or the quality of education provided. The misconduct must have violated state or federal law.

How it works: If a BDR claim is approved, the borrower’s federal student loans related to the school’s misconduct will be forgiven. The U.S. Department of Education can then seek to recoup the forgiven amount from the school responsible for the misconduct.

How to apply: Borrowers can submit a BDR application online through the Federal Student Aid website or by mail. They must provide evidence to support their claim of the school’s misconduct.

Recent developments: The Biden-Harris administration has significantly expanded the use of borrower defense to repayment. As of September 2024, the administration has approved $22.5 billion in debt relief through borrower defense to repayment, closed school discharges, and related court settlements. This is a substantial increase from previous administrations, which had approved less than $600 million.

Some notable actions include:

1. $5.8 billion of debt for Corinthian College students was forgiven, even for students who didn’t submit a borrower defense claim.

2. The administration has introduced new regulations to make it easier to conclude that a college engaged in misconduct.

3. In many cases, the administration has chosen to forgo clawbacks from the institutions, potentially to avoid giving affected colleges standing to oppose the changes in court.

Legal challenges: Implementing new BDR regulations proposed by the Biden administration, which would make it easier for borrowers to have their loans forgiven, is on hold due to an injunction from the Fifth Circuit Court of Appeals.

The injunction also applies to the closed school discharge plan. While the injunction is in effect, the Department of Education will continue to process BDR applications under the existing regulations.

We understand that recent legal challenges to some of Biden’s student loan forgiveness plans, particularly the SAVE Plan, may be causing concern and confusion. It’s natural to feel uncertain during these times.

But there’s still reason for hope. Despite setbacks, the Biden-Harris administration has made significant progress in student loan forgiveness:

1. As of September 2024, the administration has approved over $169 billion in loan forgiveness for 4.76 million Americans through various programs and policy changes.

2. The Public Service Loan Forgiveness (PSLF) program has forgiven $69.2 billion for 946,000 borrowers, averaging about $73,000 per borrower.

3. $22.5 billion has been approved in debt relief through borrower defense to repayment, closed school discharges, and related court settlements.

4. The Total and Permanent Disability Discharge program has forgiven $14.1 billion for 548,000 borrowers.

5. New regulations that took effect in July 2023 have ceased capitalizing interest in many situations where it’s not required by statute, potentially saving borrowers significant amounts over time.

The news is filled with stories about different student loan debt relief opportunities. There’s so much happening all at once, and anxiety is so high for people desperate for help. Shady businesses are taking advantage of this situation by bombarding people with emails, hoping to scam them out of their hard-earned money.

Some companies might call or email you claiming they can help you get rid of your student loans for a fee. But you need not pay for help with your federal student loans. And the government or your loan servicer won’t call you to tell you that your loans have been forgiven. Instead, you’ll get a letter or email confirming your balance has been forgiven and no student loan payments are due.

Emails from the department will come from:

• noreply@studentaid.gov

• noreply@debtrelief.studentaid.gov

• ed.gov@public.govdelivery.com

If someone tries to scam you, tell the Federal Trade Commission by calling 1-877-382-4357 or going to reportfraud.ftc.gov.

Save this page to your bookmarks for continuous updates. Although this specific method of student loan forgiveness is on hold, you can still apply for forgiveness through other programs, as listed above.