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Student loan forgiveness: Biden’s program remains stalled, but here are more ways to get debt relief

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Washington
CNN

of President Joe Biden student loan forgiveness program is at the mercy of the courts, and student borrowers could wait weeks or even months to find out if the program is allowed to go into effect.

About 16 million people have already been approved for up to $20,000 in federal student loan forgiveness – and some have been notified by email but no debt is currently allowed to be canceled as the litigation unfolds. The Biden administration has asked the Supreme Court to intervene.

But there are several other ways that many of the 43 million federal student loan borrowers may qualify for student debt relief.

The Civil Service Loan Cancellation Program allows certain government and nonprofit employees to apply for federal student loan forgiveness after making 10 years of qualifying payments.

An eligible borrower’s entire remaining balance is canceled regardless of the amount.

Teachers, social workers, some nurses and doctors, and government lawyers are some of the types of borrowers who may be eligible.

There are several eligibility restrictions. First, a borrower must work full-time for a government or qualifying non-profit organization for at least 10 years. Second, a borrower must have federal direct loans and have made 120 monthly loan payments under an income-based repayment plan, which sets payments based on income and family size.

If all of these requirements are met and a borrower has submitted the PSLF form to the Ministry of Education, the government will cancel its remaining federal student loan debt.

A one-year waiver that expands eligibility for the PSLF program expired on October 31, but some of these temporary changes will become permanent starting in July 2023.

Under the new rules, borrowers will be able to receive credit to PSLF on payments made late, in installments or in a lump sum. Previous rules only counted a payment as eligible if it was made in full within 15 days of its due date.

In addition, time spent in certain adjournment or abstention periods will count towards the PSLF. These periods include deferments for cancer treatment, military service, economic hardship, and time in the AmeriCorps and National Guard.

Starting in July, borrowers will receive some credit for past payments when they consolidate older loans into federal direct loans to qualify for the program. Borrowers previously lost any progress toward forgiveness when consolidating. After July, they will receive a weighted average of existing eligible payments to PSLF.

The new rules will also simplify the criteria for meeting the requirement that a borrower be a full-time public sector employee. The new standard will consider full-time employment at 30 hours per week. In particular, the change will help adjunct professors at public colleges qualify for the program.

The Teacher Loan Forgiveness Program forgives up to $17,500 in federal student loan debt for certain full-time teachers who have worked at a qualifying low-income elementary or secondary school for at least five consecutive years.

Mathematics and science teachers considered as highly qualified at the secondary level, as well as special education teachers at the elementary and secondary levels, are eligible for the full $17,500 in federal student loan forgiveness. Those considered highly qualified and teaching other subjects can receive up to $5,000 in loan forgiveness.

Federal Direct Loans and Federal Home Education Loans are eligible for this rebate program.

The defense of the borrower against the repayment program offers student debt relief to people who have been defrauded by their college.

Generally, students who attended large, for-profit colleges like Corinthian Colleges and ITT Tech that misled students with inflated placement numbers will be eligible for the indulgence under the federal program.

The Department of Education has already determined that certain groups of students are automatically eligible for Borrower Defense Until Repayment, such as those who attended Corinthian colleges from its creation in 1995 to its closure in April 2015.

But other students may have to seek debt relief, showing how schools misled them or engaged in other misconduct.

Borrowers enrolled in one of the four types of income-based repayment plansknown as IDRs, are eligible for loan forgiveness after 20 or 25 years of payments, depending on the specific plan.

These repayment plans can help struggling borrowers avoid defaults by lowering their monthly payments based on their income and family size.

Generally, borrowers are eligible for an income-driven plan as long as their federal student loan debt is greater than their annual Discretionary Income and, therefore, will pay less each month than they would under a standard 10-year payment plan.

But the Department of Education and its student loan managers have struggled to keep up with borrower payments. To address these issues, the Biden administration is conducting a recount, expecting to bring many borrowers closer to forgiveness. The recount began this month.

The Biden administration has also proposed a new income-driven payment plan that aims to make repayment more manageable for borrowers, though it’s unclear when it might take effect.

The new rule is expected to cap payments at 5% of a borrower’s discretionary income, down from the 10% offered in most current plans, as well as reduce the amount of income considered discretionary. It would also forgive remaining balances after 10 years of repayment, instead of 20 or 25 years, as well as cover the borrower’s unpaid monthly interest.

The federal government is canceling federal student loan debt — including direct loans, federal family education loans and Perkins loans — for borrowers who are totally and permanently invalid. Borrowers must provide documentation from a doctor, the Social Security Administration, or the US Department of Veterans Affairs to show they qualify.

Last year, the Biden administration changed the rule so that the Department of Education could grant automatic discharges to borrowers with disabilities who are identified through matching administrative data with the Social Security Administration — without the borrowers do not submit documents.

It has always been very difficult to get student loan debt forgiven in bankruptcy. But the Biden administration released new guidelines earlier this month, which aims to facilitate the provision of debt relief to borrowers in financial difficulty.

Unlike credit card, medical, and other consumer debt, student borrowers must demonstrate that paying off the debt would cause them “undue hardship.”

But the new guidelines aim to simplify the tedious process of demonstrating undue hardship and make it easier for government lawyers to recommend to a bankruptcy court that the debt be discharged.