Over 30,000 federal student loan borrowers will receive an estimated $2 billion in forgiveness as part of the Public Service Loan Forgiveness program (PSLF), according to an Education Department spokesperson. Of them, over 10,000 have already seen $715 million worth of debt canceled, and many of the remaining 20,000 borrowers will receive forgiveness in the coming weeks.
Still, about 43 million borrowers still owe an average balance of $39,351 each, according to the Education Data Initiative. And while President Biden campaigned on canceling $10,000 worth of federal student loan debt per borrower, his administration has yet to enact widespread student loan forgiveness.
Keep reading to learn more about this most recent wave of student debt forgiveness, and learn more about your alternative debt repayment options like student loan refinancing. Visit Credible to compare student loan rates from multiple private lenders without impacting your credit score.
Student loan forgiveness update: Borrowers benefit from limited PSLF waiver
This most recent round of student loan debt forgiveness is due to a limited waiver enacted by the Biden administration that makes it easier for student borrowers with certain federal loans to qualify for a discharge under the PSLF program.
PSLF allows public servants like nurses and teachers who work for a qualifying employer to have the remainder of their federal student loan debt discharged after making 120 consecutive loan payments.
The temporary waiver brings 550,000 student loan borrowers two years closer on average to meeting the PSLF requirements, as long as they consolidate into the Direct Loan Program by Oct. 31, 2022. Prior to the overhaul, just 2% of PSLF applications were approved.
About 30,000 previously ineligible borrowers now qualify for the PSLF program, resulting in $2 billion worth of loan cancellation. An additional 27,000 borrowers can potentially qualify for another $2.82 billion worth of student loan forgiveness if they certify employment, according to the Education Department.
You can learn about student loans and your alternative debt repayment options, such as student loan refinancing, on Credible.
Will Biden forgive student loans?
The Department of Education has canceled $11.5 billion worth of student loan debt for 580,000 borrowers since Biden took office in January 2021. A significant portion of that debt forgiveness was granted to borrowers who qualified for PSLF, but other programs include borrower defense to repayment, closed school discharges and total and permanent disability discharges (TPD).
It's unknown whether Biden will enact widespread student loan forgiveness legislation that impacts all borrowers.
While progressive lawmakers like Sen. Elizabeth Warren (D-Mass.) and Senate Majority Leader Chuck Schumer (D-N.Y.) have said that the president has the power to cancel student loan debt "with the flick of a pen," not all Democrats agree. For example, House Speaker Nancy Pelosi (D-Calif.) has said that Biden doesn't have the authority to cancel debt, but that student loan forgiveness "has to be an act of Congress."
With no clear answer on whether the Biden administration will cancel debt for all federal borrowers, it's time for those with student loans to start preparing for payments to resume in February 2022. If you're one of the many borrowers who aren't ready for the payment pause to end, consider your alternative debt repayment options:
- Enroll in an income-driven repayment plan (IDR). Federal student loan borrowers may be able to limit their student loan payments to 10-20% of their disposable income by enrolling in an IDR plan on the Federal Student Aid (FSA) website.
- Apply for additional federal forbearance. You may be eligible for up to 36 months of additional forbearance on your federal student loans by filling out an economic hardship or unemployment deferment request.
- Lower your loan payments by refinancing. Student loan refinancing may help you reduce your monthly payments, pay off debt faster and save money over the life of the loan with a lower interest rate. Note that refinancing your federal loans into a private student loan will make you ineligible for certain federal benefits like IDR plans, COVID-19 administrative forbearance and student loan forgiveness programs.
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