Are Student Loans Being Forgiven? Guide To Student Loan Forgiveness

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A popular topic of conversation in the news lately has revolved around the question, “Are student loans being forgiven?” Well, if you have federal student loans, you might want to listen. 

Under a recent executive order signed by President Joe Biden, the current administration promises to forgive up to $20,000 of debt per person. As such, a lot of loans will be forgiven, and for borrowers, this can offer an immense amount of relief. However, as of October 2022, the legislation has been temporarily blocked by courts over concerns about its legality. Whether it passes remains to be seen.

Student loan forgiveness 2022 explained

Under President Biden’s student forgiveness program, all borrowers below the income cap will receive up to $10,000 worth of student loan forgiveness. Low-income borrowers who received a Federal Pell Grant will see up to $20,000 in student loan forgiveness. 

The Department of Education expects that 43 million borrowers will have at least a small portion of their loans forgiven. In fact, 20 million of those borrowers will be lucky enough to have their entire loan balance taken care of, leaving them without any debt. Borrowers with a remaining balance may also see their repayment plan adjusted so that they owe less per month instead. 

Who qualifies for 2022 student loan forgiveness? 

Any individual who earned under $125,000 in 2020 or 2021, as well as couples who earned less than $250,000 in a fiscal year, are among those who qualify for President Biden’s student loan forgiveness qualifications. Note that loans must have been disbursed prior to June 30, 2022, in order to be eligible. 

Who benefits from public student loan forgiveness?

The Department of Education states that most federal student loans are eligible for relief, including the following:

  • Undergraduate- and graduate-level direct loans 
  • Parent PLUS and graduate PLUS loans
  • Consolidation loans
  • Government-held Federal Family Education Loan (FFEL) program loans
  • Government-held Perkins loans
  • Government-held loans in default, including loans under the above programs

Who doesn’t benefit from public student loan forgiveness?

Private student loans are not eligible for the student forgiveness program. This means borrowers who refinanced their federal loans into private loans will not be eligible for Biden’s loan forgiveness. 

Additionally, due to legal challenges citing potential harm to private institutions, any non-government held FFEL and Perkins loans are no longer eligible, including loans guaranteed by the governments though owned by private banks. This decision could impact as many as four million borrowers.  

How to get student loan forgiveness

The Department of Education intends to make it easy to obtain loan forgiveness for those who meet the student loan forgiveness qualifications. Around eight million federal loan borrowers should experience automatic forgiveness

These are borrowers whose information is on file with the Department of Education. For instance, borrowers who recently submitted a FAFSA or income-driven repayment application are good to go.

Borrowers who don’t have their information on file will have to fill out a quick yet simple application to verify their income. The application is expected to be available on StudentAid.gov as of early October 2022. 

You don’t want to miss this application. To help those needing to apply, the Department of Education advises signing up for email updates. You can also log into your account on StudentAid.gov to update your information and receive text alerts. 

Once the application is available, the Department of Education advises people to apply before November 15, 2022, in order to receive relief before the payment pause expires in December. Borrowers have until December 31, 2023, to apply.  

Other options for student loan forgiveness

If you have additional debt or you aren’t eligible for 2022 student loan forgiveness, you might have other options worth considering. 

Public Service Loan Forgiveness (PSLF) Program

The Public Service Loan Forgiveness Program is a student forgiveness program for borrowers who work full-time for a government or non-profit agency. The PSLF program forgives the remaining balance on direct loans after you make 120 qualifying payments. 

Teacher Loan Forgiveness

The Teacher Loan Forgiveness Program forgives up to $17,500 in Direct and FFEL program loans. Student loan forgiveness qualifications include working full-time for five consecutive years in an eligible low-income school or educational service agency. 

Closed School Discharge

The Closed School Discharge is available to students whose school has closed while they were enrolled or shortly after they withdrew from school. Eligible students can have up to 100% of their federal loans discharged.  

Perkins Loan Cancellation and Discharge

Borrowers who work in public service positions, including teachers, law enforcement and public defenders, may qualify for full or partial federal Perkins loan cancellations. The canceled amount will vary based on the extent of your public service. You can also have your Perkins loans discharged due to bankruptcy, school closures or total as well as permanent disability.

Total and Permanent Disability Discharge

Borrowers who are or become totally and permanently disabled may qualify for a discharge of their federally-owned direct, FFEL program and Perkins loans. 

Discharge Due to Death

Federal student loans and PLUS loans are eligible for a full discharge if the borrower or student who benefits from the loans dies.

Bankruptcy Discharge

In rare cases, federal student loans may be fully or partially discharged following bankruptcy proceedings. However, the discharge isn’t automatic, and restrictions will still apply

Borrower Defense to Repayment

You may be able to claim borrower defense to repayment if your school did, or failed to do, something related to your education or loan, such as misleading students or violating state laws. Specific requirements vary by circumstance as well as when you received your loan. 

False Certification Discharge

Borrowers whose schools falsely certify their eligibility to receive a loan may be eligible for a discharge of their federally-owned direct and FFEL program loans. 

Forgery Discharge

If you’re a victim of forgery wherein a loan held by the Department of Education was illegally taken out in your name, you might be eligible for a full discharge.  

So, are student loans being forgiven?

The student loan forgiveness plan of 2022 is a long time coming for borrowers who have been drowning under the weight of exorbitantly high educational costs for years. While the current student forgiveness program will not fully absolve everyone’s loans, there might be other options out there for those who are not covered by President Biden’s loan forgiveness program. 

FAQ

Is student debt being forgiven?

Yes. Under a recent executive order, the Biden administration has enacted widespread student loan forgiveness. While certain debt will be forgiven, not everyone’s student loan debt is eligible for forgiveness. 

Do I still qualify for student loan forgiveness if I didn’t finish my degree?

Yes. The Department of Education has stated that borrowers do not need to have a degree in order to be eligible for forgiveness.

When will loan forgiveness be processed?

Loan forgiveness processing is expected to begin in early October of 2022. The Department of Education has stated that borrowers have until December 31, 2023, to apply. Applications should take four to six weeks to process.

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