Biden Student Loan Forgiveness - July 2024 [Updated]

• The SAVE Plan has been temporarily blocked by an appeals court, halting its implementation and causing uncertainty for millions of borrowers.

• Despite ongoing legal battles, 4.5 million borrowers were previously qualifying for $0 monthly payments under the SAVE Plan.

• 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.

• Both the SAVE Plan and the new debt relief plan face ongoing legal challenges that could impact their implementation. Your eligibility for current and future student loan forgiveness under Biden’s plans depends on your loan type, repayment length, income, and public service employment.

Despite ongoing legal challenges, President Joe Biden and the Education Department continue to pursue student debt relief through various channels. While the landscape has evolved since the president took office, many borrowers are still qualifying for partial or total debt cancellation, and new plans are in development.

U.S. Secretary of Education Miguel Cardona recently reaffirmed, “Despite challenges, we’re committed to providing relief to as many eligible borrowers as possible. Every borrower who receives debt relief is one more American with improved financial stability.”

Since taking office, the Biden-Harris administration has approved over $68 billion in loan forgiveness for 4.3 million Americans through various programs and policy changes. This relief has come primarily through:

1. Revamping existing forgiveness programs

2. Implementing new repayment plans like SAVE

3. Targeting relief to specific groups of borrowers

While legal challenges continue to impact these efforts, there have been recent developments:

• An appeals court temporarily blocked the SAVE Plan, halting its implementation and causing uncertainty for millions of borrowers.

• The administration is developing a new mass debt relief plan based on the Higher Education Act, expected to be finalized in October 2024.

• Both current and planned relief efforts face ongoing legal scrutiny, with the administration working to ensure their plans are on firm legal footing.

Related Articles:

• How to Apply for Student Loan Forgiveness

• Am I Eligible for Student Loan Forgiveness at Age 65?

• Can Private Student Loans Be Forgiven?

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 Plan is President Biden’s newest income-driven repayment option for federal student loans. With over eight million borrowers enrolled, this plan has already provided $5.5 billion in debt forgiveness for more than 414,000 borrowers since August.

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 filed 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.

Recent developments:

• The 8th Circuit Court of Appeals has temporarily blocked the entire SAVE Plan, including provisions that were previously allowed to continue.

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

• The Education Department is assessing the impact of the ruling and will communicate directly with affected borrowers.

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

• The Biden 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 legal challenges will continue to work their way through the courts.

• The Education Department is considering its options, including potentially pausing student loan payments while the case is sorted out in the courts.

• The Supreme Court may be asked to weigh in on the case, given its high-profile nature and impact on millions of borrowers.

• The outcome of the 2024 presidential election could significantly impact the future of student loan forgiveness programs.

Borrowers are advised to stay informed about policy changes and legal developments, regularly review their repayment strategies, and understand how different forgiveness programs could work for their unique situations.

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:

Current Status:

• The consolidation deadline for certain loan types to benefit from the IDR Account Adjustment has passed.

• The Department of Education is proceeding with the adjustment process for eligible loans.

• All reviews are expected to be completed by September 1, 2024.

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 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. However, 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:

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

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

• 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.

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 set of proposed plans to cancel student debt under the Higher Education Act through waivers targeting specific borrower groups.

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

Timeline:

• Final rules are expected to be published in October 2024

• The administration could use early implementation authority to start delivering relief sooner than July 1, 2025

Who’s eligible: If implemented as proposed, the plans would allow waivers to:

1. Cancel up to $20,000 in interest for borrowers who have accrued or capitalized interest since entering repayment (potentially affecting up to 25 million borrowers)

2. Automatically cancel debt for borrowers eligible for loan forgiveness under income-driven repayment (IDR) plans or Public Service Loan Forgiveness but not enrolled

3. Cancel debt for undergraduate borrowers who entered repayment at least 20 years ago and graduate borrowers who entered repayment at least 25 years ago

4. Cancel debt for borrowers who previously enrolled in low-financial-value programs

5. Cancel debt for borrowers experiencing hardship that prevents them from paying back their loans (on a separate timeline)

How it works:

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

• Many borrowers may receive automatic forgiveness without needing to apply

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

How to apply: The full application process will be determined during the negotiated rulemaking process and announced once final regulations are published.

Legal challenges:

• Republican-led states that challenged Biden’s first student loan forgiveness plan may also challenge this new program

• The administration believes this plan is on firmer legal footing as it’s grounded in the Higher Education Act

• Legal experts anticipate challenges as soon as the final rules are published

Looking ahead:

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

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

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. ED 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.

Legal challenges: The implementation of 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, ED 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.

Other initiatives like the IDR Account Adjustment and the PSLF program continue to offer paths to relief for many borrowers.

In these changing times, here are some steps you can take to stay on top of your loan situation:

1. Keep yourself informed about policy changes and legal developments. Knowledge is power, and staying updated can help you make the best decisions for your situation.

2. Regularly review your repayment strategy. As the landscape shifts, so might your best options.

3. Understand how different forgiveness programs could work for you. Each borrower’s situation is unique, and what works best for you might change 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.