Over the past 10 months, the Biden administration has announced billions of dollars in student loan cancellations. The administration has relied on executive authority, some in emergencies, to expand the assistance available under existing federal student loan exemption programs.
According to the Department of Education, these initiatives are expected to provide more than $ 11.5 billion in student loan cancellations to nearly 600,000 borrowers. In many cases, borrowers will not have to take action because the Ministry has indicated that it will automatically grant relief. But for other borrowers, action is required, and there may even be deadlines. Here’s a breakdown.
Student loan waiver for borrowers defrauded by their school
The Biden administration has extended relief under the Borrower’s Defense to Payback, a program that cancels federal student loan debt for borrowers who have been defrauded by their college, university, or trades school.
The $ 1.5 billion cancellation of new student loans announced by the Biden administration will be provided automatically and will only apply to certain borrowers who have already approved borrower defense claims. The administration rolled back a Trump-era policy that allowed the Education Department to grant only partial relief to approved borrower defense claims. With the new changes, the department will write off any federal student loan balances for borrowers whose loans are covered by the new, expanded relief. No action is required and the Ministry has already started to notify affected borrowers.
Student loan borrowers who do not have automatic relief can, of course, present a borrower defense. application and potentially still benefit from the reversal of the previous partial relief policy. But a new request would still be subject to the Ministry’s review and approval.
Student loan waiver for borrowers affected by school closures
The administration also announced $ 1.1 billion in student loan cancellation for former students of ITT technical institutes, which closed in 2016. This relief is provided through the Closed School Discharge program, which clears federal student loan debt for borrowers who were unable to complete their education due to the closure of their school. It is important to note that borrowers are only eligible for this discharge if they have not completed their study program elsewhere, for example by transferring loans to another institution.
Most borrowers who qualify for Extended Relief will have nothing to do. According to the Ministry of Education, “borrowers who are entitled to a closed school discharge and have attended a [ITT] an establishment that closed between November 1, 2013 and July 1, 2020 will receive an automatic discharge as long as it has not enrolled in another establishment within three years of the closure of its school.
Borrowers who enrolled in another educational institution, and other borrowers who did not attend an ITT institution in the first place, might still be eligible for a closed school discharge. But, they would need to fill in and send a Closed school exit request, which would be subject to review and approval.
Student loan waiver for borrowers working in the public service
Earlier this month, Education Secretary Miguel Cardona announced that the Education Department would be making significant changes to the Public Service Loan Forgiveness (PSLF), a federal student loan cancellation program that has long been hampered by complex rules and dismal approval rates.
Through a new ‘PSLF limited waiver’ initiative, which will be available until October 2022, the Biden administration is temporarily relaxing some of the key PSLF program requirements by allowing more types of federal student loans and all types. of repayment plans to “count”. ”Towards the 120 eligible monthly payments required to obtain a student loan discount via PSLF.
Some of the relief will be provided automatically. For borrowers who already have all federal student loans from the Direct program, the ministry said that over the next few months, officials will check borrowers’ accounts and payment history, and update the number of eligible payments for borrowers whose past payments have been rejected as non-qualifying. Officials have already started sending emails to borrowers with preliminary estimates of how many additional PSLF payments can be added to their totals.
But for many borrowers, action will be necessary. Borrowers who have FFEL student loans may need to consolidate these loans through the Federal Direct Consolidation Program. And many borrowers who want relief or credit under the limited PSLF waiver program will need to certify their employment by submitting the appropriate PSLF form.
Borrowers who need to take action should submit their required documents by October 31, 2022. The new PSLF assistance program is complicated in its own way, and more guidance is expected to be released in the coming weeks, so be sure to learn more on the program requirements (and any associated pitfalls) before taking any action.
Student loan waiver for borrowers with disabilities
The Department of Education announced that it will provide $ 5.8 billion in federal student loan forgiveness under the Total and Permanent Disability (TPD) Release Program for borrowers receiving disability benefits social security and have a disability review period of at least five years. The ministry also announced an additional $ 1.3 billion in canceled loan reinstatements for TPD borrowers who had their previous disability releases canceled during the pandemic due to non-compliance with post-release monitoring rules. which have since been lifted. These discharges will be automatic; the ministry will use data sharing tools with the Social Security Administration to determine who is eligible.
Borrowers who do not qualify for TPD automatic discharges can still apply for relief by submitting a form completed by their doctor certifying that they meet the TPD discharge standard.
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