Biden Student Loan Forgiveness: Since President Joe Biden took office in January 2021, hundreds of thousands of Americans have seen their student debt disappear — some of these borrowers have even had their balances reduced to zero.
While a significant portion of the population has benefited from federal student loan waivers, approximately 43 million federal borrowers still have $1.6 trillion in college debt, according to the Education Data Initiative. That’s an average balance of $37,014 per federal student loan borrower.
Read on to find out who qualifies for Biden Student Loan Forgiveness and 5 things you should know about Biden student loan forgiveness. If you are one of the many borrowers who still have student debt, consider your repayment options such as student loan refinancing.
Who Qualified for Biden Student Loan Forgiveness?
The Department of Education has provided $25 billion in student loans to 1.3 million borrowers under the Biden administration through the following student loan forgiveness programs:
- Full and permanent disability exemption
- Public Service Loan Forgiveness Program
- Borrower Defense Against Repayment or Closed School Dismissal
Read more about each Biden Student Loan Forgiveness program in the following sections.
Full and permanent disability exemption
- Eligible Borrowers: 400,000+
- Total Debt Relief: Over $8.5 Billion
The Total and Permanent Disability (TPD) Release Program provides debt relief for borrowers who are completely and permanently disabled.
Eligible borrowers no longer have to pay back their federal student debt, including loans from the Direct Loan Program, Federal Family Education Loan (FFEL) Program, and Federal Perkins Loans. They also don’t have to meet a TEACH scholarship service obligation to get their loans waived.
Previously, borrowers had to apply for TPD relief, but the Department of Education announced in August 2021 that an existing data reconciliation with the Social Security Administration (SSA) would automatically qualify these borrowers for an exemption. This resulted in approximately $5.8 billion in automatic student loan repayments at the time.
The Biden administration also reinstated $1.3 billion in TPD relief in March 2021 for 41,000 borrowers who had not reported income information under that program.
If you have a complete and permanent disability but do not qualify for a TPD discharge, you may be able to apply for the program on the Federal Student Aid (FSA) website by providing your doctor’s file. And if you still don’t qualify for a TPD layoff, check out Credible to compare alternative student loan repayment programs, such as refinancing.
Public Service Loan Forgiveness Program
- Qualified Borrowers: 127,000+
- Total Debt Relief: $7.3 Billion
The Public Service Loan Forgiveness Program (PSLF) provides federal student loan relief as an incentive for borrowers who work in government or nonprofit occupations. Eligible borrowers can have the remainder of their federal loan debt paid off after making 120 consecutive qualifying payments.
However the PSLF program has come under fire for its pitifully low approval rating – 98% of PSLF applications have been rejected since the program began. The Biden administration launched a public inquiry into PSLF, with borrowers calling the program “broken” and “confusing”.
Following an evaluation of the PSLF, the Ministry of Education announced a major overhaul of the program in October 2021. This limited exemption makes it easier for public employees, such as nurses and special education teachers, to qualify for the program, as long as they defer their federal loans into a direct consolidation loan by October 31, 2022.
The policy resulted in 22,000 borrowers being immediately eligible for $1.74 billion in loan forgiveness. An additional 27,000 borrowers must verify their employment to qualify for student loan discounts of up to $2.82 billion. So far, the Biden administration estimates that more than 127,000 borrowers have been eligible for $7.3 billion in aid.
The department estimates that these measures will bring more than 550,000 borrowers an average of two years closer to PSLF credit relief. In addition, borrowers who have previously been denied PSLF are eligible for a review of their cases.
To meet the eligibility requirements for PSLF, borrowers must work for an eligible employer, nonprofit, federal, state, local, or tribal government. You can use the PSLF help tool to see if you qualify. If you don’t qualify for PSLF, you may be able to refinance your student loan on better terms.
Keep in mind that refinancing your federal loans into a private student loan would no longer qualify you for PSLF in the future.
Borrower Defense Against Repayment or Closed School Dismissal
- Qualified borrowers: 690,000
- Total Debt Relief: $7.9 Billion
The Borrower Defense Program is available to students who have been misled during enrollment by a school involved in misconduct. Regardless, students who attended a school that was closed during enrollment or shortly after graduation may be eligible for a waiver of their federal student loans under the Closed Schools Release Program.
Borrowers who qualify for these two programs can sometimes overlap. In certain circumstances, borrowers who received a closed school discharge were also eligible for student loan forgiveness as part of the borrower’s defense against a repayment program.
Examples of forgiveness from the Borrower Defense Program include the Department of Education’s announcement in June 2021 that $500 million in student loans would be repaid to 18,000 borrowers who attended the now-defunct ITT Technical Institute.
The Biden administration approved an additional 1,800 borrower defense claims for students at Westwood College, the Marinello Schools of Beauty, and the Court Reporting Institute in July 2021. In February, an additional 16,000 borrowers were admitted to the program.
The department is currently reviewing future regulations related to borrower defenses and will hold public hearings in June 2021 to gather feedback. You can apply for the Borrower’s Defense on the FSA website.
The most recent example of school dismissal was in June when the Department granted $5.8 billion in student loan debt relief to 560,000 borrowers who attended Corinthian Colleges between its founding in 1995 and its closure in 2015.
Earlier in April, the department repaid $238 million in state loans for 28,000 Marinello Schools of Beauty alumni, including many who had not filed a defense.
In August 2021, the department also provided an additional $1.26 billion in aid to 115,000 borrowers who left ITT on or after March 31, 2008, without graduating.
The Biden administration made these changes after an assessment of the issues leading to the shutdown of ITT. The department found that the school had misrepresented the “true state of its financial health” by allegedly enticing students to take out private student loans offered as scholarships.
“For years, ITT has concealed its true financial condition from borrowers, tricking many of them into taking out personal loans with deceptive and unaffordable terms that may have left borrowers out of school,” Education Minister Miguel Cardona said in a statement.
Private student loans are not grants, but they are a viable credit option for select student borrowers who have reached federal loan limits.
How to Get Approval for Student Loan Forgiveness
One factor many applicants have fallen for is incomplete documentation, where errors or missing documentation can cost applicants a lot of money.
For the best chance of approval, an authorized signatory from your employer must sign your employment certification form.
It’s also worth asking a friend or relative to check your records for typographical errors or missing files or data.
Another common story is that students fail to realize that their loans are ineligible for the program.
Only direct loans are eligible, meaning personal loans, Perkin loans, and FFELP loans are not eligible, although the latter can be consolidated into a direct consolidation loan.
Likewise, your loan must have an income-based amortization schedule, which can be an income-tested repayment (IBR) or a Revised Pay As You Earn (REPAYE).
Finally, another important factor to remember is that it is your employer and not the role that will help you qualify for the government loan waiver.
Your employer must be a qualified public sector employer and a private company that a state government considers a customer is not eligible.
5 Things Borrowers Need To Know About $25 Billion Biden Student Loan Forgiveness
Here’s what you need to know.
Biden Student Loan Forgiveness comes from targeted initiatives
The Biden administration’s initiatives to cancel student loans have so far been achieved through so-called “targeted” relief. This means that the administration focuses on existing student loan forgiveness programs and uses executive measures to ease restrictions, expand access, or streamline the application or approval process. These are the programs that the administration has mainly focused on so far:
- $7.9 billion in student loan cancellations for borrowers who have been defrauded or harmed by their school. These include the Borrower Defense to Repayment, where a school misrepresented the truth of important aspects of an educational program, and the Closed School Discharge program, where the closure of a school prevented borrowers from graduating. The Department of Education estimates that some 690,000 student loan borrowers have been approved for dismissal as part of these initiatives.
- $7.3 billion through the Limited Public Service Loan Forgiveness (PSLF) Waiver Program, which temporarily relaxes PSLF rules to dramatically expand access for borrowers who have dedicated their careers to public service. According to the Ministry of Education, at least 127,000 borrowers have been approved so far. The Limited PSLF Waiver Program is expected to end on October 31, 2022.
- At least $8.5 billion in permanent disability (TPD) relief for disabled borrowers. The department simplified access to this program by automating the application process for borrowers receiving Social Security benefits. More than 400,000 borrowers have benefited so far, the administration says.
Biden Student Loan Forgiveness is automatic
To provide simplified relief, the Biden administration has attempted to grant automatic student loan waivers whenever possible. For example, the government recently approved nearly $6 billion in student loan forgiveness for 560,000 borrowers under Loan Defense to repay those who previously attended Corinthian Colleges, a for-profit college chain that collapsed in 2015; Eligible borrowers don’t even need to apply. In addition, much of the TPD outreach is also done automatically through a data-sharing initiative between the Ministry of Education and the Social Security Administration.
With other programs, it is a bit more complicated. For direct borrowers who have already certified their government jobs, many have already received automatic student loan waivers under the PSLF limited waiver as the ministry automatically provides some relief where possible. However, other borrowers may need to take action to qualify.
Some borrowers may need to apply for student loan forgiveness or take other steps to qualify
It can be confusing for borrowers to know if action needs to be taken to receive some of the new student loan waivers and associated relief:
- For the limited PSLF waiver (and for the more recent IDR adjustment initiative), borrowers with FFEL program loans would have to consolidate those loans through the Federal Direct Consolidation Program for those loans to qualify. Every borrower (whether direct or FFEL loans) would have to certify their government employment on formal PSLF forms from the Ministry of Education to receive a loan during the limited PSLF exemption period. The closing date for registrations is October 31, 2022.
- For disabled borrowers, even if you don’t qualify for an automatic waiver based on Social Security benefits for disability, you can still submit a formal application for discharge, although you may be required to attach a medical certificate form – part of the application completed and signed by your doctor – confirms that you meet the eligibility criteria.
- For borrowers who have not attended Corinthian colleges but have been scammed by their school by making false promises or providing false information, you can still file a formal application for credit protection with the Department of Education.
Federal student loan forgiveness is not taxable for the time being
Under the American Rescue Plan Act, passed by Congress last year and signed into law by President Biden, federal student loan forgiveness under a program is not considered taxable income under federal law (normally can be considered at canceling a debt or being settled). as taxable “income” to the borrower, unless there is a specific definition in federal law). However, this relief is temporary and is expected to end in late 2025 unless Congress extends it or makes it permanent.
Notably, there is an existing spin-off of Public Service Loan Forgiveness (PSLF) that must remain tax-free after 2025 under federal law.
More forgiveness can come from student loans
The Biden administration has hinted that the $25 billion in student loan waivers approved so far could be just the beginning. This number excludes student loan waivers under the recently announced changes to income-based repayment (IDR) programs, which could lead to billions of additional student loan waivers. These changes are expected to be implemented in the autumn of this year at the earliest.
Meanwhile, the Biden administration is also considering executive steps to push through a large-scale cancellation of student loans. No final decisions have been made, but recent reports suggest the president could make a final decision in August.
Conclusion – Biden Student Loan Forgiveness
If you’re waiting for Biden Student Loan Forgiveness, we hope this post has enlightened you on what you need to know about Biden Student Loan Forgiveness. This post has discussed how to know who qualified for the Biden Student Loan Forgiveness and the other 5 things you should know about this student loan forgiveness.
