For President Biden, student loan forgiveness was a top priority during his presidency. He’s proposing to forgive $10,000 per borrower, but he doesn’t have the legal authority to forego student loans on his own (which has been blocked by the Supreme Court as a result).
But he Over $66.9 billion in student loans already forgivenusing the Student Loan Forgiveness Program previously approved by Congress. As an executive, he was able to streamline and modify existing programs to ensure eligible borrowers received student loan forgiveness.
Learn how President Biden has forgiven the most student loans ever and how to qualify for these student loan forgiveness options.
Borrower defense against repayment
The Trump Administration Delayed Processing Borrower Defenses to Forgiveness Malicious attempts to retroactively modify applications over years, attempts to implement partial forgiveness, reject applications without review, and generally deny borrowers defenses to qualified forgiveness. I took some action.
Borrowers have filed a class action lawsuit with the U.S. Department of Education seeking a stay of further delays and proper processing of waiver requests. (Sweet v. Cardona, Case No. 19-cv-03674-WHA, United States District Court for the Northern District of California)
The Biden administration has decided that Resolution this lawsuit.of settlement would result in about billions of dollars in emissions 200,000 borrowers attending 153 colleges. (A complete list of for-profit colleges can be found in Exhibit C of his PDF document, which includes settlements, beginning on page 60.) Also, relevant defamatory information will be removed from the borrower’s credit history. Borrower defenses to repayment applications not yet processed will be processed in a timely manner according to the schedule specified in the Settlement Agreement.
Defenses to Borrower Repayment (20 USC 1087e(h) and 34 CFR 685.206(c) and 34 CFR 685.222) are available if the University violates federal or state law, or if the university violates federal or state law, or It provides for cancellation of a borrower’s federal student loans in the event of material misrepresentation of repayment. Borrower’s student loans or educational services paid for the use of student loans. If the borrower qualifies for the borrower’s defense to forgiveness, the borrower’s federal student loan will be canceled and all previous payments will be refunded to the borrower.
The lawsuit involves borrowers who previously filed a Borrower Defense Application for Forgiveness, but eligible borrowers may continue to file applications. studentaid.gov/borrower-defense/.
Important Timing Notes: If the settlement is approved, it will apply not only to borrowers who filed claims before June 22, but also to borrowers who filed claims after June 22 before the court approved the settlement. Become. A public hearing is scheduled for July 28. Among other things, the proposed settlement provides that these borrowers will have three years to process their applications, or the loan will be automatically forgiven in full.
Biden also approved other categories of borrower defenses against forgiveness claims, including $500 million against the 18,000 borrowers who participated. ITT Institute of Technology (ITT) Increase $1 billion borrowers to 72,000 by undoing Trump administration policies. partial relief.participating borrowers DeVry University, Marinello Beauty School and Corinth University He is also qualified to defend borrowers against repayments.
Fully allowed: Provided $14.5 billion in student loans to 1.1 million borrowers.
Public service loan exemption
On October 6, 2021, the Biden administration will announced be Limited PSLF exemption The Limited PSLF Forgiveness counts all payments made by the borrower for public service loan forgiveness, including late and partial payments, and payments made under the Repayment Plan.
To qualify, borrowers of loans in the FFEL program must consolidate their loans into one. Federal Direct Consolidated Loans before the deadline.
Additionally, all borrowers are required to submit the PSLF form using the following methods: PSLF help tool before the deadline. (The FFELP loan borrower must first consolidate the loan and then submit her PSLF form, by both deadlines.)
Approximately 22,000 borrowers will receive immediate loan forgiveness as a result of this change, and approximately 550,000 borrowers will eventually be eligible for loan forgiveness as a result of this change.
As of early June 2022, approximately 145,000 borrowers are eligible for $8 billion in student loan forgiveness under the Limited PSLF Forgiveness.
Additionally, as of the end of May 2022, more than 19,000 borrowers are eligible for the $1.5 billion PSLF and TEPSLF waivers without requiring a limited PSLF waiver.
The U.S. Department of Education also conducted automated data matching with U.S. Department of Defense records to identify PSLF-eligible borrowers for military service.
The Biden administration is also reviewing previously denied applications to the PSLF to identify processing errors that wrongfully denied loan forgiveness to which borrowers are entitled.
Fully allowed: Since October 2021, the Biden administration has forgiven 615,000 borrowers of $42 billion in student loans.
read more: Understanding the Biden PSLF Waiver vs. PSLF vs. TEPSLF
Closed school expulsion
A student may be eligible for a scholarship if the university closes while the student is in school, or if the university closes within 180 days of the student’s withdrawal. Closed school discharge If you are unable to complete your education through teachout or transfer of credits to another school, your federal student loan will be waived.
The Biden administration provided $1.126 billion in relief for closed schools to 107,000 borrowers who were in school. ITT Technical Research Institute. This applies to borrowers who attend this college and qualify for Debt Defense Against Forgiveness.
Fully allowed: $1.26 billion to 107,000 borrowers.
Total and Permanent Disability Discharge
If the borrower is completely and permanently disabled, they may be eligible for federal student loan forgiveness.
There are three ways to qualify for the Total Permanent Disability (TPD) Waiver by proving that you are incapable of engaging in activities that bring you material benefits.
- Service-related failure determination by the Department of Veterans Affairs (VA) to be 100% failure.
- Determination of disability status by the Social Security Administration (SSA). The next disability review is scheduled no less than five years after the most recent disability status determination. This applies to either Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI).
- Physician certification of severe disability that has or is expected to continue for at least 5 years or is expected to result in death.
If a TPD discharge is based on an SSA decision or physician certification, there is a three-year monitoring period after discharge, during which the borrower cannot earn more than the poverty line for a family of two. Otherwise, the repayment obligation will revert.
The U.S. Department of Education performs data reconciliations with VA and SSA records and automatically implements TPD waivers for eligible borrowers. This provided $5.8 billion in repayments to 323,000 borrowers. automatically.
The Biden administration also I regained my eligibility Compensate $1.3 billion in TPD waivers for 41,000 borrowers whose loans have been reinstated due to non-filing of documents during the pandemic.
Fully allowed: $9.1 billion to 425,000 borrowers.
Suspension of payments and waiver of interest
Editor’s Note: Dates have been updated to reflect the latest updates regarding payment suspension and interest forgiveness.
Suspension of payments under student loan suspension is 120 payments requirement for Public Service Loan Forgiveness (PSLF) and 240 payments for 20 or 25 years post-payment forgiveness based on income repayment or will count towards the 300 payment requirement. (IDR).
By the time the payment suspension and interest forgiveness expires in mid-2023, borrowers on eligible loans will benefit from a payment suspension of at least 36 months. This is more than a third of the PSLF’s requirement and equates to 10% or 12.5% ​​of the IDR exemption requirement.
This equates to approximately $30 billion for over 1 million PSLF borrowers and approximately $60 billion for over 8 million IDR borrowers. This waiver is not included in the $25 billion total as most eligible borrowers have not yet received it.
Only federal education loans held by or on behalf of the U.S. Department of Education are eligible for this exemption. This includes all direct loan program loans and certain his FFELP loans where ownership has been transferred to the U.S. Department of Education or a surety agency. His FFELP loans that are commercially held, most federal Perkin loans, and private student loans are not covered.
Borrowers of commercially held FFELP loans and Federal Perkins loans can be eligible by incorporating them into Federal Direct Consolidation Loans. This is a bit late considering the student loan moratorium is due to end in mid-2023, but perhaps the suspension of payments and interest forgiveness will be extended for the ninth time.
Student Loan Forgiveness Tax Status
of 2021 US Relief Plan (PL 117-2) made all student loan forgiveness and forgiveness tax exempt until December 31, 2025.
Without this change, the IRS would have treated the forgiven amount as the borrower’s taxable income. It’s as if someone gave money to a borrower to pay off student loans. The forgiven amount is reported to the borrower on IRS Form 1099-C. The federal government gives with one hand and takes back with the other.
But with this change, borrowers no longer have to worry about the federal tax burden associated with loan forgiveness. However, some states may still impose state taxes on student loan forgiveness.
President Biden is calling for this tax-exempt status to be made permanent.
Thanks to these administrative process improvements and changes, President Biden has forgiven the most student loans of any president in history, and will likely forgive many more as the rest of his term continues.
