“Check your inbox:” $ 2 billion student loan forgiveness, but more is to come. Here’s why.
The Biden administration is in the process of canceling $ 2 billion in student loans for 30,000 borrowers.
âCheck your inboxes! Â»Declared the Secretary of Education Miguel Cardona in a Tweeter last week, noting that $ 715 million in student loan cancellations had already been finalized, with an additional $ 1.2 billion outstanding. “Over the next few weeks, more borrowers – including veterans and the military – will receive emails” regarding the cancellation of the student loan, he said.
Student loan forgiveness extended to borrowers working in the public service
The relief Secretary Cardona was referring to is a further extension of the Public Service Loan Forgiveness Program (PSLF), which cancels federal student loan debt for borrowers after 10 or more years of public service employment. eligible for non-profit and government organizations. Last month, the Biden administration announced that it would temporarily relax some of the core requirements of the PSLF program.
The PSLF program requires 120 âeligible paymentsâ for a borrower to get the loan canceled. Previously, only direct federal student loans and certain types of repayment plans based on a borrower’s income counted towards a borrower’s student loan forgiveness term under the PSLF. Due to a combination of confusing eligibility criteria established by Congress, poor facilitation by loan officers, and a lack of oversight from the Education Department, many borrowers who thought they were on the right track for the PSLF did not actually abide by the rules of the program. Other student loan borrowers were doing everything right, but faced red tape and other administrative issues that resulted in payments being rejected. As a result, the PSLF program has long suffered from low approval rates.
Under new changes announced last month, which the administration calls the “PSLF Limited Waiver” program, the ministry is temporarily relaxing the rules governing the PSLF to allow most types of federal student loans and most types. of repayment plans to qualify. The Department will also count past payments that should have qualified but were rejected due to technical issues or other errors.
These borrowers get their student loans canceled under the extended PSLF program
The 30,000 student loan borrowers that Secretary Cardona referred to in his previous tweet largely fall into several definable categories:
- Federal direct student loan borrowers who have already certified their employment in the public service, but whose prior payments were rejected for PSLF because those prior payments were made on an ineligible federal student loan (such as a FFEL loan or a loan Perkins) prior to the direct loan consolidation.
- Federal direct student loan borrowers who have already certified their employment in the public service, but whose prior payments were rejected for the PSLF because those prior payments were made under an ineligible repayment plan, such as ” an extended or progressive repayment plan.
- Federal direct student loan borrowers who have already certified their employment in the public service, but whose previous payments have been rejected for technical reasons (such as timeliness).
These borrowers are essentially the handy fruit of a larger potential pool of borrowers eligible for the PSLF. Since these borrowers already have Federal Student Loans from the Direct program and have already certified their qualifying employment periods, the Department of Education can simply review the borrowers’ past repayment records and the history of loan status. loans, and administratively determine how many additional payments need to be added to borrowers. total PSLF payments. The Department can then automatically write off the federal student loan debt for borrowers eligible under the waiver.
More borrowers will get their student loans canceled in the coming months
Many more borrowers will become eligible for the limited PSLF waiver program in the coming months, including:
- Borrowers who currently have FFEL loans or Perkins loans and who have held a qualifying PSLF job. To qualify for the PSLF Limited Waiver, these borrowers must consolidate these loans through the Federal Direct Consolidation Loans Program and certify their employment by submitting the PSLF Employment Certification Form by October 31, 2022. Some borrowers are currently in the process of to consolidate. But since the process typically takes 30-60 days, most of these borrowers have yet to have their student loans canceled under the PSLF waiver.
- Borrowers who have direct loans but have not certified their employment. To benefit from the PSLF Limited Waiver, these borrowers must certify their employment by submitting the PSLF Employment Certification Form by October 31, 2022.
- Borrowers who have irregularities or errors in their loan records. These borrowers may need to request a manual review or audit of their accounts if the Ministry does not automatically adjust their PSLF payment statement.
The ministry has not provided an official estimate of how many borrowers will become eligible after the first wave of approvals, or how much student debt will be written off as a result. However, the ministry has suggested in previous statements that an additional $ 2.82 billion student loan forgiveness, on top of the initial $ 2 billion, could be on its way.
“There is more to come!” Secretary Cardona said in a tweet on Sunday, alluding to the additional cancellation of the student loan that will continue to unfold in the months to come.
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