#1 Student Loan Lawyer
Updated on December 31, 2022
Student loan forgiveness chatter is everywhere. Since President Biden moved into the White House, nearly 1.8 million federal student loan borrowers have received almost $38 billion in relief through existing forgiveness programs. Beneficiaries include:
Former students of schools that enticed them to enroll by using illegal recruiting tactics, inflating job prospects, and making false promises about future earnings.
Teachers, nurses, military service members, and other public servants who’ve spent a decade or more working full-time for the government or a nonprofit organization.
People who could no longer work due to a permanent mental or physical disability.
The U.S. Department of Education will add to that total once it finishes its one-time review of borrowers’ accounts to give them credit toward income-driven repayment plan forgiveness. Read more about the IDR Waiver.
This dizzying amount of debt forgiveness doesn’t include the relief promised under President Biden’s student loan forgiveness plan, which is on hold until the courts decide whether to set aside several legal challenges. About 26 million Americans applied for relief before litigation forced the department to halt the application process.
As the Biden administration tries to fend off lawsuits over the debt relief program, the White House announced it would extend the pandemic-related payment pause until possibly Sep. 1.
Related: Student Loan Pause Extension 2023
Borrowers will resume payments 60 days after the court cases are resolved, according to the department. If the courts haven’t resolved the issue by June 30, payments will start 60 days later.
Who is eligible for student loan forgiveness?
You qualify for President Biden’s student debt relief plan if you have federal student loans and your adjusted gross income on your 2020 or 2021 tax return was $125 thousand or less. If you’re married and file your taxes jointly or are a head of household, you qualify if your income is under $250 thousand.
Related: Income Requirements for Student Loan Forgiveness
Many borrowers will get up $10 thousand of forgiveness. Pell grant recipients will get up to $20 thousand. The term “up to” can be confusing. It simply means that if you owe $6 thousand in federal student loans and qualify for $10 thousand in forgiveness, you’ll get all $6 thousand erased. The remaining money won’t go into your bank account. It will stay with the federal government.
Current students with new loans are eligible if they or their parents meet the income requirements. Similarly, before the Education Department halted the application process, parents who borrowed loans for their child’s education could also submit a Student Loan Debt Relief Application to get relief.
Related: Can Parent PLUS Loans Be Forgiven?
Does everyone qualify for student loan forgiveness?
No. Everyone doesn’t qualify for Biden’s student loan forgiveness program. For example, private student loans aren’t eligible. Neither are privately-held federal loans made through the Federal Family Education Loan and Perkins Loan Programs.
At first, FFEL borrowers were eligible for relief. But the Education Department abruptly reversed course to protect the overall debt cancellation from legal changes made by Republican special interests and elected officials. After the policy change, borrowers who applied to consolidate their FFEL Loans into a Federal Direct Loan before September 29 qualified for forgiveness. Those who hadn’t yet applied were no longer eligible.
Although the legal battle over Biden’s cancellation program has left millions of borrowers in limbo, there are several other opportunities you can take advantage of to get your federal student loan debt forgiven.
Eligibility requirements for loan forgiveness
Biden’s loan cancellation – You must have loans owned by the Education Department, i.e., Ed-held federal student loans, and meet the income requirements.
Public Service Loan Forgiveness Program – You must work full-time for the government or nonprofit organization and make 120 qualifying monthly payments. The payments need not be consecutive, but they must have been made after the PSLF Program started. The department and its loan servicers are still processing applications under the PSLF Waiver opportunity that ended on Halloween. It also updated its regulations to make it easier for public servants to get the relief they were promised. Read more about the PSLF changes.
Income-Driven Repayment Plan Forgiveness – You must make 20 to 25 years of monthly payments under one of the Income-Based Repayment, Income-Contingent Repayment, Pay As You Earn, or Revised Pay As You Earn Plan. The Education Department is reviewing borrowers’ accounts to give them retroactive credit toward forgiveness for past periods of repayment under any student loan repayment plan and certain time spent in deferment and forbearance. These credits will bring millions of people closer to debt forgiveness and wipe out the remaining balances for thousands more. Some borrowers will need to consolidate their FFEL loans into a Direct Consolidation Loan to be eligible.
Borrower Defense to Repayment – You must submit a Borrower Defense to Repayment application on the Federal Student Aid website, StudentAid.gov. In your application, you’ll need to provide evidence or statements detailing how your school misled you about its admission criteria, career services, credit transferability, and so on.
Student loan bankruptcy discharge – The Biden administration revised its policies to make it easier for some borrowers to discharge their federal student debt. The new student loan bankruptcy guidelines set standards that can help the federal government determine whether the borrower has met the undue hardship discharge standard without forcing them to go through a long and costly trial.
In addition to those programs, the Education Department is working on a new IDR plan that will offer lower monthly payments and wipe some borrowers’ loan balances in 10 years without having to work in public service.
Related: Income-Based Repayment Disadvantages
Even if courts reject President Biden’s debt relief plan, there are several other student loan forgiveness programs you may qualify for depending on where you work, went to school, or how long you’ve been in repayment, etc.
Want help figuring out how to get rid of your loans? Get in touch for a student loan consult. I’ve helped thousands of people from all walks of life, many of whom owed hundreds of thousands of dollars in student loans, find the most efficient way to get their debt forgiven.