When Biden ran for the presidency, he made several promises and suggested changes to decrease the debt burden of student loan borrowers. Luckily, since the first days of his presidency, he has been working with the Education Department to create new opportunities for the borrowers. To date, Biden has canceled almost $9 billion student loans through different federal loan forgiveness programs. Instead of broad student loan forgiveness (as currently, some Democrats request), he followed a more targeted strategy. Only specific groups of borrowers could enjoy the forgiveness possibility if they could meet the eligibility requirements.
Main Recipients of Biden’s Student Loan Forgiveness Programs
- Totally and permanently disabled student loan borrowers- Total and Permanent Disability Discharge (TPD) is a program that erases the debt obligations of such people. Biden provided $5.8 billion worth of automatic discharge to more than 340,000 borrowers with disabilities. Besides, a few months ago, he canceled $1.3 billion debt for 41,000 borrowers with a total and permanent disability.
- Borrower’s Defense to Repayment Recipients- The applicants of Borrower’s Defense to Repayment program are another group of borrowers who could eliminate student debt after Biden became the president. Around $1.5 billion debt was forgiven for borrowers who received partial forgiveness under this program.
We will discuss each program in detail in subsequent sections. First, however, if you think you might qualify for one of the programs, apply immediately as the approval chance is higher than ever.
What is a Broad Forgiveness Program?
The Broad forgiveness program for American individuals has been a center of discussion since 2020. When Biden first supported $10,000 loan forgiveness per borrower, debtors became hopeful that they will access this opportunity if Biden is elected.
However, such loan forgiveness is still under question. Besides, Democrats are pressuring the administration to provide $50,000 loan forgiveness for borrowers earning less than $125,000 yearly. In Particular, Elizabeth Warren and Chuck Schumer are supporters of this debt elimination strategy.
The Democrats even claimed that Biden has a right to provide such forgiveness through executive action (without getting Congress approval). However, Biden repeatedly said he does not want to pass such a rule without Congress’s approval.
Rather, Biden’s administration focused on targeted forgiveness, as explained above. They delivered forgiveness to some borrowers under the existing laws- federal programs like Total and Permanent Disability Discharge and Borrower’s Defense against Repayment.
Can Targeted Forgiveness Lead to Broad Forgiveness?
To answer this question, let’s discuss how likely it is to have broad forgiveness. $50,000 per low-income borrower is quite a high amount for the budget. On the one hand, advocates of such forgiveness claim that it will help the borrowers in need and stimulate the economy. On the other hand, opponents of the idea believe that taxpayers’ money should not be used for other students’ student debts.
Therefore, discussions are still ongoing, and it is not sure whether such a bill would pass the Congress voting. Additionally, Biden is not likely to deliver such forgiveness through executive action.
Instead, a more likely scenario is that Biden will help debtors only through targeted forgiveness programs. Such programs do not create any conflicts with Congress because forgiveness is granted under the existing laws and regulations. Besides, it delivers the intended benefit- helping borrowers in need. To date, Biden’s decisions made 455,000 borrowers debt-free.
Unless there is a significant change in events, broad forgiveness does not seem possible, at least in the short term.
Do You Qualify for Biden’s Targeted Forgiveness Programs?
With the announcement of the largest forgiveness act in August – $5.8 billion, people started to question if they can become eligible for this opportunity. As mentioned, Biden mainly focuses on two forgiveness programs- Total and Permanent Disability and Borrower’s Defense against Repayment. This section provides short information about each option, but it is advisable to read Student Loans Resolved blogs for further questions.
Total and Permanent Disability Discharge
Discharge programs grant forgiveness depending on uncontrollable factors. For example, closed school discharge can happen when the school closes, or disability discharge is helpful when the borrower is disabled totally and permanently.
If you have Direct, FFEL, or Perkins loans, you can apply for this forgiveness option. The main condition for this program is proving that your disability is a barrier to engage in employment activity.
Usually, Total and Permanent Disability discharge is automatic. The Department of Education is working with Veteran Affairs and Social Security Administration to collect information on eligible borrowers. However, you can also apply yourself by getting a certification from a licensed Physician.
If you get qualified through Physician’s certification or SSA documentation, you will face a three-year monitoring period. If your disability is eliminated during this period and you can perform gainful employment activity, the discharge can be canceled.
You can apply for this program by filling the Total and Permanent Disability Discharge application form. This form is available online, or you can request it by phone/email. The application form should be filled in from sections 1 to 3 and combined with VA or SSA documentation. In the case of Physician’s certification, the Physician should fill section 4.
Next, you need to send the application form and supporting document to the U.S Department of Education.
Borrower’s Defense to Repayment
Besides TPD discharge, Biden spent many funds to forgive student loan debt through Borrower’s Defense to Repayment. Since his presidency, $1.5 billion has been allocated for this purpose.
Borrower’s Defense against Repayment is a program that protects students who faced unfair treatment from the schools. For example, if the school officials lied about the quality of education, true cost of education, or job replacement rates, the student can reject making debt repayments. However, first, the borrower should prove the school’s fraudulent activity.
If you Direct loans, you will qualify for this program. Keep in mind that FFEL, Perkins, or private loans do not qualify for Borrower’s Defense to Repayment.
Borrower’s Defense against Repayment can bring full or partial loan forgiveness to debtors. This program was successful during the Obama administration. However, when Trump became the president, the ED started not to support the program. As a result, many people got rejections or only partial approvals.
Luckily, Biden aims to revive this program. Hence, your chance of success is higher.
If you believe the school misled you, act quickly as the Biden administration supports this program. Application is made through the form, which requires you to provide personal information, school/ loan details, and a clear description of the school’s misconduct.
In addition, you might be required to submit documents, like a transcript, contracts, manuals, promotional materials, etc. Again, try to be clear and give several arguments with proof to maximize your chance.
What Other Programs Biden Supports?
If you do not qualify for Total and Permanent Disability Discharge or Borrower’s Defense against Repayment, you can consider other options. For example, Public Service Loan Forgiveness is one of the federal aid programs that Biden is supporting. Currently, the program grants full forgiveness after debtors make 120 qualifying payments. However, Biden believes such a rule is complex and not accessible to many public servants.
Hence, in his “Education beyond High School” plan, he mentioned that simplifying the PSLF program is necessary. Currently, he already took a step to realize this suggestion. The Biden Administration has created a “request for information regarding the PSLF” to learn about the public’s opinion. Besides, they are working with experts to advance the program while keeping it simple and accessible.
Additionally, Biden suggested that Income-driven repayment plans should grant loan forgiveness without being subject to income taxes. The administration will likely develop a new plan regarding this matter. Moreover, Biden wanted to develop a repayment plan, cheaper than ever, worth only 5% of monthly discretionary income.