President Joe Biden will cancel $6.2 billion in student loans through changes to student loan forgiveness.
Here’s what you need to know.
There’s more good news for student loan borrowers who are seeking student loan forgiveness. The U.S. Department of Education has identified 100,000 student loan borrowers who are now eligible for student loan cancellation due to the changes the Biden administration made to the Public Service Loan Forgiveness program in October. In aggregate, these student loan borrowers will get $6.2 billion in student loan cancellation. The Education Department is notifying these student loan borrowers of their eligibility for student loan forgiveness, as CNN reported. Ultimately, the Education Department says that 550,000 student loan borrowers will get student loan forgiveness sooner due to these changes.
(Biden has cancelled $15 billion of student loans).
Student loan forgiveness: who is eligible
Who is eligible for this student loan cancellation? Based on the major changes to student loan forgiveness, the Biden administration relaxed the requirements regarding which student loan payments count toward student loan forgiveness; which types of student loans count for student loan forgiveness; which employers qualify for student loan forgiveness; and when student loan payments start counting for student loan forgiveness. (6 major changes to student loan forgiveness).
These major changes include:
- Count prior student loan payments toward student loan forgiveness;
- Count prior student loan payments made for FFELP Loans;
- Get credit for student loan forgiveness if you used wrong student loan repayment plan;
- Count prior student loan payments that were late or were partial payments;
- Student loan payments made before student loan consolidation also count; and
- Members of the military can count prior student loan payments while on active duty.
(Here’s Who Won’t Get Student Loan Forgiveness)
How to get this student loan forgiveness
The Public Service Loan Forgiveness cancels federal student loans if you meet several requirements. For example, you must work full-time for an eligible public service or non-profit employer, enroll in an income-driven repayment plan and make at least 120 monthly student loan payments. After meeting eligibility requirements, the remaining balance of your federal student loans will be forgiven. To count prior student loan payments that were deemed ineligible, you can complete a limited waiver for student loan forgiveness, which is available through the U.S. Department of Education. This limited waiver is available through October 31, 2022. This limited waiver will allow you to count previous payments to help you meet the 120 monthly payments requirement. Make sure to submit an Employer Certification to the Education Department annually and each time you change employers.
(Student loan refinancing rates just got ridiculously cheap)
Student loans: next steps
Federal student loan payments are scheduled to restart after May 1, 2022. Since March 2020, student loans borrowers haven’t been required to make any federal student loan payments. Student loan borrowers have been able to “count” any non-payments toward the 120 monthly payment requirement for student loan forgiveness. White House Chief of Staff said that Biden may consider extending temporary student loan relief beyond that date. However, Biden has not reached a decision. Your best plan is t prepare now for the end of the student loan payment pause. This way, you are protected no matter what happens. Start by understanding your best options for student loan repayment and acting accordingly.
Here are some smart ways to pay off student loans faster: