5 Important Updates on Student Loan Forgiveness as Demands Rise
Demands are rising for two of President Biden’s signature student loan forgiveness initiatives.
Yesterday, the Biden administration officially launched the application for its unique student loan forgiveness plan that will provide millions of borrowers with $10,000 or more in student loan forgiveness on their government-held federal student loans. Borrowers can apply until December 31, 2023, but many are rushing to complete the new online application after the education department successfully completed beta testing over the weekend.
Meanwhile, the window to apply for relief under the PSLF’s Limited Waiver Program, which provides temporary retroactive flexibilities to borrowers applying for student loan forgiveness through the Civil Service Loan Forgiveness Program ( PSLF), closes quickly. The initiative ends on October 31, but the Ministry of Education is still updating the guidelines on the initiative in response to new legislation.
Here is the latest.
12 million borrowers have already applied for student loan forgiveness under the Biden plan
According to President Biden on Tuesday, another four millions borrowers have been applying for a one-time student loan forgiveness since it was announced yesterday. This is in addition to the eight million borrowers who applied during last weekend’s beta launch.
The online application is easy to complete and straightforward, and most borrowers should be able to submit it in minutes. Only basic contact information and personal details are required, and borrowers do not need to log in or submit any supporting documents. They simply have to certify that they meet the income criteria associated with the program.
The Department for Education estimates that up to 40 million borrowers could ultimately be eligible for student loan forgiveness.
Automatic student loan forgiveness is coming
When the administration first announced the one-time student loan forgiveness initiative in August, Education Department officials said borrowers who already had income information on file (e.g. , if the borrower has recently applied for an income-based repayment plan) may receive their student loan forgiveness automatically, without having to submit an application.
The Ministry of Education has started to implement the automatic student loan cancellation process now. Borrowers eligible for automatic loan forgiveness will receive a notification if they are eligible. They will also have the option to opt out of the relief, if they wish.
Borrowers who live abroad experience problems with applying for student loan forgiveness
Some borrowers who live abroad report problems applying for student loan relief through the online application. Foreign IP addresses would be blocked, which would prevent these borrowers from accessing the application.
The Department of Education is reportedly working on a solution. A paper application may also become available in the coming weeks, which these borrowers can use as a workaround if needed.
FFELP Spouse Consolidation Borrowers Have A Path To Student Loan Forgiveness Through PSLF Waiver
Borrowers with FFELP spousal consolidation loans — a former type of federal student loan that allowed married borrowers to combine their individual federal student loans — were excluded from PSLF relief because federal law had prohibited such borrowers from reconsolidate their loans into a direct loan consolidation. Direct loan consolidation is a necessary step for FFELP borrowers to qualify for loan forgiveness under the PSLF, including under the limited PSLF exemption.
However, Congress recently passed legislation allowing FFELP and Direct Consolidation Loans to be split and potentially reconsolidated into a Direct Loan to qualify for PSLF relief under the waiver. This week, the Education Department has updated its online guidelines on the limited PSLF waiver to provide these borrowers with a path to loan forgiveness.
“If you have a joint consolidation loan, a specific process has been put in place for borrowers with these types of loans to be screened due to the new law,” the Department of Education explains. “This process requires you to submit a request for reconsideration and attach your signed PSLF form,” rather than sending the PSLF form to MOHELA – the Department of Education’s designated PSLF service.
Borrowers with Joint Spouse Consolidation Loans Seeking PSLF Relief Should Carefully Review Updated Department of Education Guidance here.
No indication that there will be an extension of the limited PSLF waiver
Advocacy groups for student loan borrowers have urged the Biden administration to extend the limited PSLF waiver beyond the Oct. 31 deadline, given widespread concerns that many borrowers could lose the relief. But so far the Ministry of Education has given no indication that an extension is in the works.
With just 13 days left before the PSLF reverts to its original eligibility rules, senior officials are urging borrowers to take all necessary steps to apply for and receive the relief before the end of the possibility of derogation. Borrowers should review the eligibility rules and application procedures for the limited PSLF waiver. here.
Further Reading on Student Loan Forgiveness
Biden launches student loan forgiveness app, says 8 million have already applied
Only two weeks left to apply for student loan forgiveness under expiring waiver program
In Reversal, Biden Administration Announces New Student Loan Forgiveness Eligibility Limits
5 key takeaways from the sudden change in student loan forgiveness eligibility