How can people get out of student loan debts? And when are student loan forgiveness programs an option? Unfortunately, other statistics aren’t needed to show how deeply enslaved U.S. college grads are in student loan debt.
The statistics may be staggering but finding a solution is what matters. Unfortunately, a lot has happened since the Biden administration announced various changes to the student loan forgiveness programs.
This guide will review the various updates to catch you up on current trends. Then, we’ll explore various ways you can qualify for student loan forgiveness programs.
With that said, let’s begin.
Student Loan Forgiveness Programs: Where It All Began
Student loan forgiveness programs have been in place for 15 years. The Public Service Loan Forgiveness Act was passed by Congress in 2007 and signed by President George W. Bush.
The bill aimed to assist public officials in having their education loans forgiven in exchange for serving in the government.
Despite this, over 99 percent of loan debtors were turned down for the cancellation program.
Education Secretary Miguel Cardona and Joe Biden collaborated to make student loan forgiveness simpler and more accessible for borrowers.
The Most Up-to-Date Information on Student Loan Forgiveness Programs
On April 6, 2022, President Biden stated that the moratorium on federal loan repayments would be extended once more, this time until August 31, 2022. The president advises borrowers to go to studentaid.gov for assistance with repayment planning.
This prolongs the period of uncertainty for federal student loan borrowers who haven’t had to make a payment since March 2020. A further announcement on the large-scale loan forgiveness or payment suspension is unlikely until this summer.
Student loans taken to attend for-profit institutions that were found to be scamming student borrowers, like ITT Technical Institute, have been the focus of the Administration thus far.
On June 1, 2022, the Department of Education issued a $5.8 billion group discharge to eliminate loans related to those schools.
Extension For Federal Payment Suspension
Joe Biden extended the federal loan payment suspension and interest waiver for the third time on December 22, 2021. As a result, until May 1, 2022, federal student loans would be free of interest.
There was no mention of a loan cancellation or forgiveness program in that announcement. But President Biden encouraged borrowers to play their part in preparing for repayment.
After the Administration stated in August that its announcement would be the final extension of the CARES Act’s loan interest waiver, it came as a bit of a surprise.
Jen Psaki, White House Press Secretary, said Biden had not decided when he was asked the day before about the possibility of the president enacting more loan forgiveness or extending the payment freeze.
Borrowers are waiting for information about significant student loan forgiveness, as promised by President Biden during his campaign. And it’s uncertain whether the payment moratorium will be prolonged beyond August 2022.
The Biden Administration has chosen a gradual approach to student loan relief as it investigates its legal power to seek larger loan forgiveness schemes without congressional approval. It continues to pursue its agenda with slim majorities in Congress.
The Public Service Loan Forgiveness Overhaul
According to a factsheet released by the U.S. Department of Education, a revamp of the PSLF program was revealed recently to restore the PSLF promise.
A one-time waiver will allow payments from all federal student loan forgiveness programs, including those not previously eligible, to be included toward advancement toward PSLF.
On August 19, the U.S. Education Department announced that over 300,000 debtors with a total or permanent handicap would be forgiven $5.8 billion in student loans.
By comparing data from the SSA, the Education Department would be able to identify debtors who are eligible for automatic release.
With that said, what student loan forgiveness programs are available? We’ll answer this shortly. But first, let’s find out if student loans will be forgiven.
Over 9 Million Borrowers Qualify For Student Loan Forgiveness Programs
According to a new analysis, almost nine million U.S. citizens may be eligible for federal student loan forgiveness via an existing program.
The Student Borrower Protection Center issued a new analysis that indicated millions of public service workers might be eligible for debt cancellation under the PSLF program. However, the process is yet to begin.
For borrowers with federal student loans, regardless of their type or whether they were enrolled in a payment plan, the U.S. Education Department announced a change in 2021 that temporarily waives specific PSLF criteria.
When it comes time to renew, this waiver will no longer be valid after October 31, 2022.
According to the Federal Student Aid office, only roughly 127,000 borrowers had been eligible for forgiveness under the PSLF limited waiver as of early May 2022.
Among the nine million public servants identified by SBPC as eligible for debt cancellation under PSLF, fewer than 15% had even submitted the paperwork necessary to track their progress.
Other Recent Developments In Student Loan Forgiveness Programs
The U.S. Education Department has lately taken a few measures toward giving clear legislative authorization for student loan forgiveness:
Borrower Defense to Repayment Claims Get Full Forgiveness for Approved Borrowers
The Trump administration formulated a plan in which duped borrowers were only awarded partial loan forgiveness. However, the mechanism for partial alleviation was incorrect.
The United States Department of Education has announced that all borrowers who have had their borrower defense claims recognized will have their loans discharged completely. Seventy-two thousand borrowers who were victims of predatory student lending will be affected.
Total and Permanent Disability Discharges Are Being Restored
Because they neglected to file the annual wage paperwork during the pandemic, several disabled borrowers who qualified for a Total and Permanent Disability Discharge had their payback obligations revived.
For 230,000 borrowers with Total and Permanent Disability Discharges, the U.S. Education Department will reverse the reinstatements and provide other student loan debt relief.
Student Loan Forgiveness Is Now Tax-Free
Congress acted on the tax treatment of student loan debt forgiveness. As a result, debt cancellation and loan forgiveness are tax-free until December 31, 2025, thanks to the American Rescue Plan Act of 2021.
Because most other types of loan forgiveness already have tax-free status, this only affects forgiveness after 20 or 25 years in an income-driven repayment plan. However, whether through new legislation or executive action, it lays the groundwork for future loan forgiveness.
In the Consolidated Appropriations Act of 2021, Congress gave tax-free status to employer-paid LRAPs, until December 31, 2025.
The Congress and Biden administration has yet to take action on loan discharge in bankruptcy.
Student Loan Forgiveness Programs: Will There Be A Loan Forgiveness In 2022?
Is there ever going to be an end to student loan debt? Possibly. A bipartisan coalition of progressive legislators continues to urge the Biden administration to erase student loan debt.
However, there’s no sign of a mass cancellation. As an alternative, Vice President Biden’s Education Secretary Miguel Cardona has been working to improve existing assistance programs.
Almost $12 billion in federal loans have been forgiven by the U.S. Education Department in the past year, including:
- Late payments, non-qualifying FFELP loans, and payments that were less than the full amount totaled $4.5 billion for public employees and military personnel.
- 1.5 billion dollars will be given to debtors who went to schools where they were misled or misbehaved, such as Corinthian Colleges.
- Total and permanent disability applicants will receive $5.8 billion.
So do you still qualify for student loan forgiveness? You probably do, but it probably won’t happen right away. Furthermore, any student loan forgiveness legislation implemented by the Biden administration is unlikely to encompass private student loans.
Only federal student debts are eligible for loan forgiveness, according to Biden and members of Congress.
Here are some student loan forgiveness programs you can take advantage of now.
What Student Loan Forgiveness Programs Are Available
Forgiveness Through Income-Driven Repayment Plans
You can get student loan forgiveness via IDR plans, but it’ll take longer than PSLF after making payments for 20 to 25 years. Each of the income-driven repayment programs pledges to forgive your outstanding loan balance.
Who Is Eligible To Apply?
What Types Of Loans Qualify?
FFELP Loans and all Direct Loans. However, federal Perkins Loans and Parent PLUS Loans qualify if consolidated.
When Are The Loans Going To Be Forgiven?
After making 240 monthly payments, most borrowers with solely undergraduate debt will be eligible for loan forgiveness.
If you have graduate school debt or are on the income-contingent repayment plan, you must make 300 monthly payments before being eligible for loan forgiveness. That’s over 25 years.
How To Fill Out The Application
You’ll be automatically enrolled when you apply for income-driven repayment through your loan servicer. Then, once you’ve qualified for forgiveness, your servicer will track your payments and tell you.
Teacher Loan Forgiveness Program
Teachers who work full-time in educational service organizations or low-income schools can get up to $17,500 in student loan debt canceled. Science, mathematics, and special education teachers are eligible for the total sum.
Depending on your student loan balance, you may be eligible for greater forgiveness under the PSLF Program. However, for Teacher Loan Forgiveness and PSLF, you can’t earn credit for the same qualifying payments or service time.
Who Is Eligible?
Highly qualified teachers have worked in low-income educational institutions for at least two years and work full time.
Types Of Loans Eligible
Both FFELP and Direct loans are included.
How To Apply
After you’ve taught for a minimum of five years in a row and completed the Teacher Loan Forgiveness Application, you can seek to have your student loans forgiven.
For How Long Will The Loans Be Forgiven?
After five consecutive years of teaching, you aren’t eligible for Teacher Loan Forgiveness. The servicer typically processes the application within a few months of receiving it.
Nurse Loan Forgiveness
Nurses, like everyone else, have several federal and state student loan forgiveness programs available. In addition, nurses throughout the country can participate in the loan forgiveness explained below.
NURSE Corps Repayment Program
Working in underserved communities is one of the best ways to qualify for this repayment program. Of course, this doesn’t guarantee that you’ll be admitted into this program. But it significantly improves your chances.
If you meet the two-year work requirement, you may be eligible to have up to 60 of your student debts forgiven. In addition, you may be eligible for a further 25 percent decrease in student loans if you work an extra year.
As a practitioner or nurse, it’s not that bad to think about having 75 percent of your overall student loan debt forgiven.
How To Qualify
You must meet one of the following requirements to be eligible for the Nurse Student Loan Forgiveness Program:
- Nurses must be licensed.
- Must work in a critical shortage area
- You must be a licensed practitioner.
- Applicants must have graduated from a nursing school recognized by the state.
- Have to serve a population with high needs.
How To Apply
You must first review the program criteria and standards before applying to this program. In addition, applications are only accepted once a year for this program, and the eligibility requirements may alter from year to year.
You must submit your application by the deadline to be considered for this program.
Public Service Loan Forgiveness (PSLF)
All full-time non-profit and government employees are eligible for PSLF, which eliminates their student loan debt. After completing 120 qualified loan payments, PSLF cancels the remaining federal student loan debt tax-free. It hasn’t worked in the past, but a PSLF Waiver is now in place through October 31, 2022.
Loan payments made on the wrong type, late, or any repayment plan will be retrospectively credited to students who qualify for this temporary relief.
What You Should Know About PSLF Qualification
PSLF, as mentioned above, is designed to provide loan forgiveness to public sector personnel once a certain number of payments have been paid.
Below are the requirements to be eligible for PSLF:
- You must be employed by a U.S. government agency or non-profit. (That also includes the U.S. military service.)
- You must become a full-time employee of a non-profit agency or federal organization.
- 120 qualified payments must be made
- Direct Loans are required. But you can also consolidate other federal loans into a Direct Loan.
The current PSLF waiver allows qualified borrowers to obtain credit for payments made on other loan types, under any loan repayment plan, before consolidation or after the given deadline, regardless of when the payments were initially scheduled.
People who received Teacher Loan Forgiveness can use the time they served as a teacher to qualify for the PSLF.
LRAPs Sponsored By Universities And States
When it comes to student loan forgiveness programs, you can find programs for just about every possible professional path. Lawyers and their loan forgiveness possibilities are the topics of this section.
These defenders may be eligible for state or government-funded programs to assist them in repaying some of their school loans. See what your state government has to offer by contacting them directly.
Your university is an excellent resource for learning more about these programs. The University of Virginia Law School, for example, provides students earning less than $55,000 a year with a program to forgive their debts.
To some, the $55,000-per-year salary of a lawyer may seem small in the legal profession. But the school hopes to encourage its students to begin or at least begin their careers in the public service sector.
You’ve seen just a few of the many options available to help you pay off your student loan debt as a lawyer, and there are numerous more.
Consider All The Options For Tackling Your Loan Debt
Federal student loans can be forgiven partially or entirely through various means. If you’re not qualified, you may be able to get some or all of your student loans canceled. If you aren’t eligible, you may want to check into other possibilities for repayment.
Final Thoughts on Student Loan Forgiveness Programs
Keep in mind that qualifying for student loan forgiveness programs may take years. If you don’t qualify for loan forgiveness, your loan total could double, putting you in a worse financial situation.
Also, forgiveness programs are challenging to navigate, and the fine print might lead to disqualification. However, the forgiving process will be more straightforward if consumer advocacy groups and senators like Dick Durbin and Elizabeth Warren apply enough pressure.
Check this guide to know what student loan forgiveness programs are available.