It remains to be seen whether President Biden’s plan to forgive up to $20,000 in student loan debt for Pell Grant recipients and $10,000 for millions of others will withstand a legal challenge currently before the Supreme Court. But FFELP borrowers still have opportunities to eliminate their federal student loan balance through two other initiatives.
Public service workers: PSLF Waiver
Public service workers, previously denied forgiveness due to the wrong loan types, consolidated their FFELP loans into the Federal Direct Loan Program before last Halloween. This let them qualify for Public Service Loan Forgiveness (PSLF).
The PSLF Waiver has already wiped out nearly $40 billion in loans, and more relief is coming. MOHELA, the student loan servicer in charge of the PSLF Program, is still processing hundreds of thousands of applications.
Debt cancellation for non-government and nonprofit workers
You can also find debt cancellation if you’re an FFELP borrower not working full-time in government or nonprofit organizations. President Biden announced a one-time account adjustment when he extended the payment pause in April. The U.S. Department of Education will clear the remaining loan balances for borrowers in repayment for at least two decades.
The IDR Waiver offers retroactive credit toward income-driven repayment plan forgiveness for time spent in repayment, regardless of the repayment plan or payment status, and some deferment and long forbearance periods.
Automatic forgiveness for certain borrowers
All borrowers with loans held by ED, who have built up time in repayment for at least 20 or 25 years, will see automatic forgiveness of their loans. This includes those with FFEL Consolidation Loans, Parent PLUS Loans, Federal Perkins Loans, and Health Education Assistance Loans (HEAL) Loans.
Those with private student loans are permanently locked out. But there’s a loophole to qualify for private student loan forgiveness if you paid off or refinanced your loans during the pandemic.
IDR Waiver application timeline
The Department of Education first aimed to complete the IDR Waiver application by the end of 2023. Unfortunately, the deadline has been pushed back several times. The probable cause for these delays is the inadequate amount of staff and resources. The federal government hasn’t boosted its budget to accommodate all these initiatives simultaneously.
Forgiveness process begins soon
In a recent update on the Federal Student Aid website, the Education Department revealed plans to start erasing the balances of borrowers it determined to have enough qualifying credit for forgiveness this spring.