President Joe Biden’s administration announced an additional $4.8 billion of student loan forgiveness related to fixes made by the U.S. Department of Education to income-driven repayment (IDR) forgiveness and Public Service Loan Forgiveness (PSLF).
That brings the total approved student debt cancelation by the Biden administration to $132 billion for more than 3.6 million Americans, according to the White House.
“From Day One of my Administration, I vowed to improve the student loan system so that a higher education provides Americans with opportunity and prosperity — not unmanageable burdens of student loan debt,” Biden said in a statement. “I won’t back down from using every tool at our disposal to get student loan borrowers the relief they need to reach their dreams.”
Roughly $2.2 billion in student loans were forgiven for nearly 46,000 borrowers through fixes to IDR that will provide borrowers with an accurate count of progress toward forgiveness and address longstanding concerns about misuse of forbearance. The Biden Administration has now approved almost $44 billion in IDR relief for nearly 901,000 borrowers.
Another $2.6 billion in debt was forgiven for 34,400 borrowers through PSLF. This includes borrowers who have benefited through the limited PSLF waiver and ongoing regulatory improvements to the programs.
If you’re having trouble making payments on your private student loans, you won’t benefit from federal relief. You could consider refinancing your loans for a lower interest rate to lower your monthly payments. Visit Credible to get your personalized rate in minutes.
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Biden’s Plan B forgiveness plan hits roadblock
The more than $130 billion in student loan relief comes despite the Supreme Court blocking Biden’s mass debt relief program last June, but could still impact millions. Biden has vowed to develop an alternative forgiveness plan that would provide debt relief for millions more saddled with ballooning federal student loans.
“In the wake of the Supreme Court’s decision on our student debt relief plan, we are continuing to pursue an alternative path to deliver student debt relief to as many borrowers as possible as quickly as possible,” Biden said.
However, plan B was largely criticized by a group of negotiators that met last week to discuss the proposed plan for loan forgiveness, according to a USA Today report. Their concern was that the plan needed to be more far-reaching.
The Department of Education released a proposal ahead of the meeting that suggested providing up to $10,000 of relief to all borrowers who have experienced balance growth due to interest. Also benefiting from debt relief would be borrowers whose loans first entered repayment 20 years ago. This provision would provide one-time relief 20 years after entering repayment on undergraduate loans. All other borrowers would receive forgiveness after 25 years of payments.
Last week’s meeting was supposed to be the last. While the Education Department has not committed to another session, it did open the possibility of extending talks into the New Year.
If you’re having trouble making your private student loan payments, you could consider refinancing your private student loans to a lower interest rate. Visit Credible to speak with a student loan expert and get your questions answered.
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Do you qualify for student loan forgiveness?
The Biden Administration has now approved almost $44 billion in IDR relief for nearly 901,000 borrowers due to an automatic IDR account adjustment, previously called the “IDR waiver,” announced by the Biden administration in April 2022.
IDR plans are designed to eliminate any remaining balance after making payments for 20 or 25 years, depending on factors like the type of IDR plan and loan type. However, certain payments that should have put some borrowers on a closer path to forgiveness were not accounted for, according to the administration.
An additional $53.5 billion has been forgiven for almost 750,000 borrowers since October 2021 through fixes to the PSLF plan. The PSLF program was designed to offer debt relief to borrowers who have pursued roles in non-profit or governmental fields, including teachers, firefighters, military personnel and law enforcement officers.
Eligible borrowers who have made 120 qualifying payments — which would span 10 years if made consecutively — could have the rest of their qualified student loan debt forgiven.
However, complex eligibility requirements and unclear rules led many borrowers to miss out on these benefits, the Biden administration noted. New updates to the PSLF program made during 2021, known as the limited PSLF waiver, expanded borrower eligibility.
Although the limited PSLF waiver ended in October 2022, some provisions were made permanent. For instance, borrowers can still have late, partial, or lump-sum payments credited toward their PSLF progress. In addition, borrowers can still receive credit for months spent in forbearance or deferment during times of economic hardship or military service, according to the Education Department’s PSLF fact sheet.
If you are currently in school or starting soon and need more financial aid than you can receive through FAFSA, you could consider taking out a private student loan. Visit Credible to find your personalized rate without affecting your credit score.
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