Home youth program budget The Biden administration approved $26 billion in student loan forgiveness, but borrowers face growing uncertainty

The Biden administration approved $26 billion in student loan forgiveness, but borrowers face growing uncertainty

0

The Biden administration is boasting his approval of billions of dollars in student loan forgiveness for more than a million borrowers. At the same time, however, many other borrowers are grappling with growing uncertainty about the future of their student loans, as several key federal student loan relief programs come to an end.

Meanwhile, the Biden administration continues to send mixed signals about what borrowers should expect in the months ahead.

Here is a breakdown.

Biden administration touts billions in ‘targeted’ student loan forgiveness

The Department of Education says it has approved $26 billion in federal student loan forgiveness for 1.3 million borrowers. These initiatives were achieved through a so-called “targeted” approach to student loan forgiveness, under which officials temporarily expanded relief or eased eligibility rules under existing student loan programs.

The billions of dollars in relief include the following:

Not included in the $26 billion figure are additional billions of dollars in student loan and interest payments that have not been collected since March 2020 under the current CARES Act student loan pause. .

While the student loan forgiveness approved under these initiatives is substantial, it barely scratches the surface of the total outstanding $1.8 trillion in student debt. And advocates have argued that the initiatives do not go far enough to bring lasting relief to more than 40 million student borrowers.

Meanwhile, many of these key initiatives are temporary and should end in a few weeks or months. Biden administration officials have been ambiguous about what might come next.

Student loan break set to end in five weeks

The nationwide student loan suspension — which temporarily halted payments and interest on all federal student loans held by the government — has been in effect for well over two years. After a series of short-term extensions by President Trump and President Biden, the most recent extension is set to end on August 31, just over five weeks away.

Senior Biden officials have long suggested another extension could happen, particularly if economic and pandemic conditions warrant it. But with weeks to go before billing for student loans resumes, the administration has made no public decision. At the same time, the Department of Education and its contracted loan managers have made no effort to warn borrowers of a return to repayment this fall. The uncertainty is leaving millions of borrowers unsure about whether or not they should start preparing to make student loan repayments again in the weeks ahead.

Expansion of student loan relief for public service borrowers ends in three months

As part of the limited PSLF waiver, which the Biden administration implemented last fall, the Department of Education temporarily relaxed the strict rules governing the Public Service Loan Forgiveness Program (PSLF). PSLF offers borrowers federal student loan forgiveness after 10 years of qualifying employment with nonprofit or public organizations.

The dramatic expansion of relief under the waiver has allowed the department to approve more than $8 billion in student loan forgiveness. Others may be on the way.

But the initiative is scheduled to end on October 31, 2022. Although that still leaves a little over three months, some borrowers must take certain steps to qualify (such as consolidating their loans or having PSLF forms signed by their employers) by the deadline. And because these processes can sometimes take weeks or even months, in practice some borrowers have very little time to qualify for student loan forgiveness under the waiver initiative.

Student borrower advocacy groups are urging the Biden administration to extend the limited PSLF waiver. But senior Education Ministry officials have not indicated they will, instead urging borrowers to apply by October 31.

Defaulting student loan borrowers in limbo

The Biden administration has signaled that it intends to automatically remedy federal student loan defaults and automatically restore those loans to good standing. Although all collection efforts against federal borrowers in default on student loans have been suspended as part of the national student loan suspension, these borrowers have remained in default and in limbo since 2020.

Under “Operation Fresh Start, federal borrowers in student loan default are supposed to have their defaults corrected and their federal loans restored to good standing before the student loan pause ends and payments resume. But the Department of Education has released minimal details on how this process will work or when it will be completed. It is unclear whether the Ministry would be able to implement this initiative by August 31, when the student loan payment pause ends.

Is the broader student loan exemption still under consideration?

Earlier this year, President Biden seemed closer than ever to enacting some form of large-scale student loan forgiveness — well beyond the $26 billion in “targeted” student loan forgiveness signed into law so far. Reports said Biden and senior officials were focusing on $10,000 in block student loan forgiveness for borrowers, with eligibility caps based on income.

Biden himself has suggested a decision on student loan forgiveness is imminent, possibly within weeks. But that was in April, and no public announcement followed. Last month, Biden reconfirmed that a decision on student loan forgiveness would be made soon. But again, no official announcement followed.

Administration officials have previously suggested that a decision on student loan forgiveness will be made before the end of the student loan payment break. But with that August 31 expiry date fast approaching and it’s unclear whether the Department of Education will extend the payment pause or adopt full-scale student loan forgiveness, borrowers remain in the lurch. ‘ignoring.

Further Reading on Student Loans

Education Department urges borrowers to apply for student loan forgiveness before October deadline

3 Key Student Loan Forgiveness Opportunities Could End Soon – Here’s How to Apply

If You’ve Been To These Schools, You May Qualify For Student Loan Forgiveness: Here’s What To Do

Biden Reportedly Close to Making a Decision on Widespread Student Loan Forgiveness – Here’s Where It Stands