President Biden announced a plan to cancel $10,000 thousand in federal student loan debt for borrowers earning less than $125,000 thousand per year or less than $250,000 thousand for married couples. Those who received Pell Grants, a type of financial aid for low-income students, can have $20 thousand knocked off their loan balance.
The president’s debt relief plan has faced several legal challenges, each alleging the Biden administration overstepped its executive powers in going forward with the program.
In response to those lawsuits, the Education Department unilaterally changed how the plan would work to try and preserve forgiveness for millions of Americans. One tweak was to allow borrowers to opt out of forgiveness for any reason, including to avoid paying state taxes on the canceled amount. The second fix limited the debt cancellation to borrowers whose loans were owned by the department and FFEL Loan borrowers who applied to consolidate before Sep. 29, 2022.
That date came out of the blue with no notice or apology.
If you didn’t apply to consolidate your Navient loans into a Direct Consolidation Loan before Sep. 29, you’re out of luck. You’re not eligible for Biden’s plan.
Is it possible that you will be eligible in the future? No, I don’t believe so. There are legitimate concerns about whether any borrowers will have their loans forgiven. A federal judge in Texas recently rejected the president’s plan, effectively halting the administration’s efforts to forgive up to $20 thousand in federal student loans for tens of millions of borrowers.
Related: FFELP Loan Forgiveness
What if my loans were with Navient but were moved to Aidvantage? During the pandemic, Navient ended its contract with the U.S. Department of Education and transferred department-held loans to Aidvantage. Those loans qualify for cancellation without the need for consolidation. Read more about the move from Navient to Aidvantage.
Learn More: When Will Student Loan Forgiveness Be Reflected?