The US Department of Education approved $6.8 billion in student debt relief for more than 113,000 borrowers after President Joe Biden made some revisions to its Public Service Loan Forgiveness Program.
President Biden modified the program in October, allowing nonprofit and government employees to have their federal student loan debt wiped after ten years of payments, or 120 installments, according to a Bloomberg report.
While the debt forgiveness will be welcomed by individuals who qualify, it only accounts for 0.26 % of the 43.4 million Americans overwhelmed by the US student loan debt.
As the deadline for the student loan payment moratorium comes at the end of August, Biden was under pressure to fulfill his campaign promise to cancel $10,000 in student loans per borrower. Biden stated that he would either extend the moratorium, which has been in effect since the outbreak of COVID-19, or forgive some debt before then.
Additionally, we should forgive a minimum of $10,000/person of federal student loans, as proposed by Senator Warren and colleagues. Young people and other student debt holders bore the brunt of the last crisis. It shouldn't happen again.
— Joe Biden (@JoeBiden) March 22, 2020
The White House is reviewing Biden's legal authority to waive student loan debt through executive action. According to White House Press Secretary Jen Psaki, the president is considering restricting his student loan forgiveness scheme to people with income below $125,000 per year. A $10,000 per borrower forgiveness would clear loans for 15 million people.
Tips for Those Who Want To Avail Student Loan Forgiveness
Higher education expert Mark Kantrowitz advised people wanting to take advantage of the program to act immediately because the Biden administration's new guidelines for public service loan forgiveness are set to expire on October 31.
Suppose you have a Federal Family Education Debt (FFEL) or a Federal Perkins Loan, which don't ordinarily qualify for public service loan forgiveness but do now. In that case, you'll need to consolidate them with your servicer into direct loans. According to Kantrowitz, consolidation takes 30 to 45 days.
He said that borrowers should accomplish this process "even if they don't expect to have 120 payments by the deadline, as the previously ineligible payments will count only if they do this."
It is also required for borrowers to establish that their effort was considered public service for any period that they want to be considered toward forgiveness, as per a CNBC report. To do so, submit an employer certification form to your servicer for each employment you've had throughout your timeframe.
Kantrowitz added that borrowers who are now unemployed or not employed in the public sector may still be eligible for amnesty if they have made 120 qualifying payments in the past.
Is Amnesty for All Student Loans in the US Possible?
Within weeks, Biden will decide on whether or not to forgive all student loans. If Biden eradicates student loans, he'll have to deal with various issues as well. Per Forbes, since the legislative option is not viable, expect Biden to pursue either executive action or a regulatory change if he decides to cancel student loans.
Moreover, anticipate eligibility limits if Biden cancels $10,000 in student loans for debtors. This might include, for example, limiting student loan relief to only federal and college student loans. There may be income restrictions, which might rule out student loan debtors with higher earnings.
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