The Latest on Student Loan Forgiveness (March 2022)
So as we all know, President Biden touted $10,000 of forgiveness for every federal student loan borrower on the campaign trail. It’s been over a year since he took office, and though we’ve seen student loan forgiveness and initiatives for particular subsets of borrowers, we are yet to see Biden make good on his broader plan.
So what’s the status on this? Is widespread loan forgiveness coming? Why hasn’t Joe Biden forgiven student loans? In this episode, we’re filling you in on the latest and greatest when it comes to student loan forgiveness.
What’s happened so far?
First, let’s talk about what’s happened so far regarding student loan relief. Of course, we all know by now that Biden extended the ongoing payment pause on federal student loan billing and interest to May 1. So that’s great.
In addition to that, the administration made changes to three critical programs.
Public Service Loan Forgiveness (PSLF). In October 2021, they instituted a Limited PSLF Waiver program that relaxed the complicated rules that govern this program. PSLF is for borrowers who have devoted their careers to nonprofit or public organizations. We did a full-fledged video on Public Service Loan forgiveness when this was enacted, and you can check it out by clicking on the card above. Essentially, through October 31, 2022, the Department of Education is expanding the definition of “qualifying payments” to include most types of federal student loans and any repayment plan. This move allowed tens of thousands of borrowers to get immediate loan forgiveness and got many more to get closer to the 120 total payments required to have their loans forgiven.
Total and Permanent Disability (TPD) Discharge: Aside from death, the only other way to get your loans discharged was through becoming totally and permanently disabled. These rules were also complicated. With the Biden administration’s new guidelines, hundreds of thousands of disabled borrowers receiving Social Security disability benefits automatically qualified for loan cancellation. Also, even after getting loans discharged, it used to be that the Department of Education would monitor your earnings for three years. Now, they’ve done away with this post-discharge monitoring. The Education Department is currently working to overhaul the TPD discharge regulations to permanently eliminate income monitoring and make applying for a TPD discharge easier for borrowers in the future.
Borrower Defense To Repayment: The Biden administration is improving the controversial Borrower Defense to Repayment program. This program permits federal student loan borrowers to request debt cancellation if their school engaged in specific kinds of fraud or deception that caused them to enroll or stay enrolled at the school. They’ve reversed a previous policy that allowed authorities to grant little or no relief even for accepted Borrower Defense claims and has attempted to speed up the processing of petitions for borrowers who attended specific for-profit institutions. They still have a ridiculous backlog of unprocessed applications, and the program is still going through some legal battles, but it’s a start.
While the Biden administration is quick to celebrate its recent initiatives and point to the $15 billion in student loan forgiveness so far through these initiatives, the fact is that this only amounts to less than 1% of total outstanding student loan debt.
Biden campaigned on providing $10,000 in federal student loan forgiveness for every borrower. He also proposed forgiving all undergraduate federal student loan debt for borrowers with annual incomes under $125,000 who attended public colleges and universities or historically black colleges and universities (HBCUs) and private minority-serving institutions (MSIs).
So why hasn’t anything happened? Is widespread loan forgiveness coming?
Biden has expressed reservations about acting unilaterally without Congress, as well as reservations about endorsing a higher level of student loan forgiveness and doubts about whether he would have the legal right to do so. I mean, we even saw in a press conference back in January when an attendee explicitly asked a question about his plans for $10,000 of student loan forgiveness that he flat-out ignored.
Last April, Biden directed the Departments of Education and Justice to look into broad student loan forgiveness legality. Still, some White House officials predicted that the Departments would quickly disclose the resulting legal memos. Spoiler alert: they have yet to be released.
Is student loan forgiveness off the table?
One interesting bit of recent news came, surprisingly enough, not from the president but a senator.
In late January, Elizabeth Warren said in an interview that “The White House is making a decision now” on student loan cancellation. Senator Warren has been one of the more vocal individuals in Congress calling on Biden to cancel student debt.
White House chief of staff Ronald Klain did an interview the other day in which he specifically quoted that the president is still looking into the legality of whether or not he can forgive student loans through executive order and whatever decision that is made that decision will be made before student loan payments resume.
So, that means one of two things: either they’re going to decide before May 1st whether or not to forgive the loans, or they’re going to push the deadline back while they investigate further. We guess that they’re just going to extend the deadline back even further. We also believe this because POLITICO reported the other day that the Department of Education instructed the student loan servicers to stop sending out payment notifications reminders in advance of the May 1st deadline. That is another indication that, come May 1st, we are probably not going to go back into repayment.
Does that mean that it goes out of sight out of mind? No, we should always be prepared at any moment. However, it does look like we’ll have a little more time while the administration gets their stuff together and decides whether or not student loan forgiveness will be happening.
What’s our take?
Some people might think that the extended payment pause provides more time for the administration to consider its options, including loan forgiveness.
What’s our opinion? We shared it in a previous video, and it honestly hasn’t changed. If it happens, it happens. Hooray. However, we’re not holding our breath for the knight in shining armor to come and save us. We are devising a plan to pay back our student loans.
How do you feel about our chances of student loan forgiveness at this point? Has Biden wearied the patience of the saints? Are y’all still holding out? Let us know.
We dive deep into tackling debt repayment and so much more in our program, MONEY 180™, so if you’re interested in learning more about that, go on and check it out!
Sources used for this post:
Biden Administration Touts $15 Billion In Student Loan Forgiveness
Biden May Be 'Making A Decision Now' On Student Loan Cancellation, Says Key Senator
Biden Seems Poised To Issue More Student Loan Relief: Key Details