student loan debt

Biden’s New Plan for Student Loan Forgiveness

President Biden has a ‘Plan B’ lined up for student loan forgiveness, which looks significantly different from the first plan.

His original plan, which was recently blocked by the U.S. Supreme Court, would have cancelled up to $20,000 in student loan debt for tens of millions of borrowers. Following the ruling, the President created a Student Loan Debt Relief Committee to create an alternate plan.

The President’s original plan impacted nearly 40 million American borrowers, but the new plan will be narrower in reach. The original, which covered more than 90 percent of federal student borrowers, will now cover just 10 percent.

student loan debt, Student Loans

Where You Can Get Student Loan Debt Forgiveness if Biden’s Debt Plan Fails

If President Biden’s student loan debt cancellation plan is struck down by the U.S. Supreme Court, borrowers still have options available to them through individual state forgiveness plans.

In fact, 47 states and Washington, D.C., have their own programs, while many of them offer more than one loan forgiveness program. Every program is different with its own unique set of requirements, many of which are tailored to one profession or one specific industry. Additionally, like the Public Student Loan Forgiveness Program, many of them require the borrower to work in a specific industry for a set period of time.  However, if the Supreme Court does end up striking down Biden’s proposed program, these state programs may be the only option available to borrowers.

student loan debt

Federal Government Seeks Alternatives after Biden Student Loan Forgiveness Program Blocked

With President Biden’s student loan forgiveness at an indefinite pause, the federal government is looking for other ways to help student loan borrowers receive relief from their debt. However, many of these changes hinge on the decision of the executive branch.

One reason student loan debt is so difficult to pay down has to do with the interest charged on the balance every month. According to the Education Department, $22 billion in interest was charged in the fiscal year 2019 alone. Keep in mind that no interest has been charged on federal student loans since the pause was issued on interest on these types of loans after the start of the COVID-19 pandemic.

student loan debt, Student Loans

$32 Billion in Student Loan Forgiveness Granted by Biden Administration: How to Apply

The Biden administration approved a total of $32 billion in student loan forgiveness over the course of the last year. Here’s a quick overview of Biden’s recent student loan forgiveness plan announced this week:

    • $10,000 for federal student loan borrowers who didn’t receive Pell Grants (only applies to those earning less than $125,000 a year or couples earning less than $250,000 a year)
    • $20,000 for federal student loan borrowers who received Pell Grants.
student loan debt, Student Loans

4 Student Loan Relief Measures that should be Implemented if Payment Pause Is Not Extended

It remains unclear whether the student loan repayment pause will be extended by President Biden. Two primary economic concerns urge the delay of payments past Feb. 1: Rising Omicron cases could jeopardize workers’ return to work, and given the pandemic-exacerbated racial disparities, borrowers of color will face ‘undue hardship’ if payments are restarted too soon.

If that’s the case, the organizations recommend four additional protections for student loan borrowers:

  1. Continue to waive interest for all borrowers;
  2. Return all borrowers in default on their debt to good standing to avoid financial penalties;
  3. Ensure all borrowers are aware of the process to apply for an income-driven repayment plan;
  4. Announce and implement provisions, like offering a grace period to prevent borrowers from immediately becoming delinquent on their debt.
student loan debt, Student Loans

First Wave of Public Servants Awarded Student Loan Forgiveness Through Temporary Program

The Biden administration recently announced the introduction of a temporary expansion of the Public Service Loan Forgiveness program. The program cancels outstanding student debt for public servants.

In order to be eligible, debt holders must have made 120 payments toward their federal student debt on-time for at least 10 years. The loans must have been made through the federal government and payments must have been made through repayment plans, most of which are based upon income. They must also work for the government or one of the non-profit organizations specified by the program. Many teachers, public defenders, Peace Corps workers, and law enforcement officers may qualify for forgiveness.

student loan debt, Student Loans

Heavily Redacted White House Memo Released Regarding Student Loan Forgiveness

The White House recently released a memo about canceling debt for federal student loan borrowers, but the text was heavily redacted. This seven-page memo, dated April 5, 2021, was addressed to the U.S. Secretary of Education in consideration of potential student loan forgiveness by the Biden Administration. This memorandum, although heavily redacted, gives some insight into whether the administration has the authority to issue widespread student loan forgiveness.

student loan debt, Student Loans

Biden Administration Cancels Almost $10 Billion in Student Loan Debt. Who Got Relief?

In total, the Department of Education has approved discharging $8.7 billion in student loan debt for more than 450,000 borrowers.

Click here to see if you are eligible.

That amount has included:

  • $7.1 billion for borrowers who were eligible for relief because of “total and permanent disability.”
  • $55.6 million in loan discharges for students who attended three trade schools that officials said misrepresented themselves to students.
  • Another $1 billion for other students defrauded by their schools.

The Biden Administration has cancelled nearly $10 billion in student loan debt since January 2021, according to the U.S. Department of Education. The Department reported they have approved $9.5 billion in student loan discharges since January 2021, affecting approximately 563,000 borrowers.  This has given borrowers the ability to tackle other debts, invest and increase savings.

student loan debt, Student Loans

Student Loan Payment Pause Extended to 2022

The Biden administration has announced that the moratorium on federal student loan payments would be extended through January 31, 2022. This announcement came just over a month before the pause was set to expire at the end of September. According to the Department of Education, this extension is the final one that will be issued.

The moratorium was first put in place in March 2020 after Congress passed the CARES Act. The moratorium paused payments through the end of September 2020, keeping all federal student loan interest rates at zero percent, affecting approximately 42 million federal borrowers. President Trump then issued an executive order to extend the student loan payment pause through January 2021. As soon as President Biden took office, he issued another executive order extending the pause through September 30, 2021.

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