President Joe Biden has approved billions of dollars in student loan forgiveness for more than 4.5 million borrowers through various reforms and executive actions. The administration recently announced a new plan that could provide even more relief. Navigating these programs can be complex due to different rules and eligibility criteria. Some forms of loan forgiveness may be automatic, while others require specific actions like submitting an application, consolidating loans, changing repayment plans, or even going to court.
One way borrowers may qualify for student loan forgiveness is through time spent in repayment. President Biden’s one-time IDR Account Adjustment program credits borrowers retroactively with time towards their 20-year or 25-year forgiveness term under income-driven repayment plans. Borrowers who entered repayment a long time ago may also have the option of loan forgiveness through a new proposed plan, which could discharge federal student debt for those who entered repayment at least 20 years ago for undergraduate loans and 25 years ago for graduate loans.
Employment can also be a basis for student loan forgiveness, particularly for employees of non-profit or government organizations who may qualify for Public Service Loan Forgiveness after 120 qualifying payments. Additionally, the Teacher Loan Forgiveness program and profession-specific cancellation for Perkins loans are available. The new SAVE plan introduced by Biden could also lead to loan forgiveness in as little as 10 years for borrowers with federal student loans of $12,000 or less.
Biden’s new student loan forgiveness plan aims to address interest accrual by eliminating up to $20,000 in interest for borrowers who have experienced accrual or capitalization since entering repayment. The plan is expected to benefit borrowers enrolled in the SAVE plan or other IDR programs with income thresholds. Additionally, the plan will provide relief based on hardship for borrowers experiencing financial challenges that prevent them from repaying their loans.
Having a significant medical impairment qualifies borrowers for student loan forgiveness under the Total and Permanent Disability discharge program. The Biden administration revised the TPD discharge application to expand eligibility and automate relief in some cases. Attendance at certain schools could also be grounds for loan forgiveness, such as students who attended specific for-profit college chains, or those who submitted Borrower Defense to Repayment applications by a certain deadline.
Borrowers who attended institutions that lost eligibility for federal student aid due to poor student outcomes may also be eligible for automatic discharges under Biden’s new loan forgiveness plan. The plan could provide relief for borrowers facing financial hardship or other challenges that prevent them from paying back their loans. The Education Department is expected to release proposed regulations and application details in the coming months, with implementation targeted for the fall. Borrowers seeking information on federal student loan forgiveness and discharge programs can visit StudentAid.gov for more details.
