There have been a lot of recent developments since Biden became the President of the United States in regard to student loan debts and initiatives to eliminate them. With so many initiatives, it can be hard for any borrower to keep up. Here’s the latest on everything related to student loan relief.
The big one-time forgiveness for millions is on hold
Several federal courts have worked to block President Biden’s program to offer a substantial write-off for many that ranged between $10,000 and $20,000, depending on each circumstance[1]. There are appeals in the works with the Supreme Court against the 5th and 8th Circuits, but they won’t be looked into until earlier in the new year.
The initial arguments are expected to happen in February of next year in front of the Supreme Court. However, a final decision may not happen until later in the year, into the summer. The current administration maintains a positive stance on the outcome of the Supreme Court decision, and Biden “invites” this review to happen. He is confident of the legality. Yet the odds may not be in his favour as the Supreme Court currently has a 6-3 majority that’s conservative and has already expressed disagreement with how the executive branch is overreaching.
The current status of this initiative is that it’s on pause, and there’s no forgiveness being given out so far. So if you still need to apply, the system is currently not accepting new applicants.
Student Loan Payment Pauses will continue through Mid 2023
To support borrowers now in limbo, Biden and his administration have decided to extend a pause on student loan repayments either until around June 30, 2023, or 60 days after the litigation is completely handled and resolved, whichever outcome happens first[2].
These additional months of payment suspension due to the extension will still count for anyone who is involved in other types of federal programs related to student loans being discharged and forgiven. This is inclusive of the Public Service Loan Forgiveness program and the Income-Driven Repayment programs.
Emails were sent to applicants for the major student loan forgiveness platform incorrectly.
First discovered by Insider, the Department of Education’s contractor sent out 9 million incorrect emails to the applicants who had applied for debt relief[3]. Only the subject line had the error, but it was enough to cause waves. The subject line stated that all applicants got approval for student loan forgiveness, regardless of eligibility or review[4]. The subject line was supposed to state an update to the student loan forgiveness application, that the application was received, and that the relief was stuck in federal court battles.
The contractor in question has already stated that the right emails would go out soon to those who received the email in error.
Existing programs offering forgiveness and relief to student loans are still here.
Even with the focus being Biden and his one-time debt cancellation platform, other initiatives are still fully functional and should be looked into.
- There is going to be an adjustment to the Income-Driven Repayment program that will help by giving credits retroactively in some circumstances[5]. This will also include those who are under the Public Service Loan Forgiveness program.
- For about 200,000+ borrowers, already $6 billion has been awarded towards student loans being discharged for those that were resolving disputes related to the Borrower Defense to Repayment claims[6].
- Those with federal student loans taken out to either ITT Technical Institutes or Corinthian Colleges have had their loans cancelled automatically[7].
More Debt Relief is on the Horizon
The Department of Education is keeping busy by pushing new initiatives to help more borrowers out there. Some of the proposals and initiatives are:
- Updates to the Public Service Loan Forgiveness plan and the Total and Permanent Disability plan, making the process simpler, go into action in Summer 2023[8].
- Those considering bankruptcy should know that it may become easier for some to discharge said loans in a bankruptcy hearing due to changes in some policies[9].
- There is a new initiative known as Fresh Start aimed at defaulted borrowers and giving them a chance to get these loans in good standing and get back on track. This is to launch around January 2023[10].
- Sometime in 2023, there will be an overhaul to the Income-Driven Repayment Plan that makes repayment affordable for several million borrowers.
