What’s happening
President Biden still hasn’t announced his decision on widespread student loan forgiveness, but millions of borrowers have already had $25 billion in debt canceled during his term.
Why it matters
With one in five Americans owing student debt, loan forgiveness can help ease the pain of soaring inflation and economic uncertainty.
While the prospect of student loan debt forgiveness for all borrowers still hangs in the balance with President Joe Biden’s decision, millions of Americans have already had their loans cancelled. More than $25 billion in student loan debt has been forgiven since Biden took office in January 2021.
Biden campaigned in 2020 on canceling a “minimum of $10,000” in student loan debt for everyone, and on April 28 promised a decision “in the next couple of weeks,” but months have passed with no action on widespread student loan relief. About 1 in 5 Americans owe money on student loans for a total of $1.6 trillion, or an average of $37,013 per borrower.
Student loan payments have been paused for over two years, but that moratorium is set to expire on Aug. 31, 2022. Without another extension, payments and interest on loans will start again in September.
Learn who has qualified for student loan forgiveness so far, and how you can check to see if you’re one of the borrowers eligible for debt cancellation. For more, here’s what we know about how debt forgiveness could affect your credit score and why you might continue to make student loan payments even though you aren’t required.
$7.3 billion in student loans discharged for public servants
In October last year, the Department of Education announced “transformative” changes to the Public Service Loan Forgiveness program, immediately making 22,000 borrowers immediately eligible for debt cancellation. The department expects its policy changes to enable more than 550,000 borrowers who had consolidated their loans to eventually become eligible for debt forgiveness.
The PSLF program cancels the remaining balance on a student loan after the borrower makes 120 qualifying monthly payments. Anyone who works for a federal, state or local government agency can apply for the program, including teachers, firefighters, military members, nurses and other employees in the public sector. The PSLF program has canceled $7.3 billion in student loan debt for 127,000 borrowers so far during Biden’s term.
The biggest changes to PSLF let borrowers count all previous payments made on Federal Family Education Loans and Perkins Loans and waive requirements of full-amount and on-time payments. However, to receive this relief, borrowers need to submit a PSLF application by Oct. 31, 2022. Note: if you need to consolidate your debt to qualify for PSLF relief, that process can take 45 days, so build time into meeting that end of October deadline.
For more information about PSLF policy changes and to see if you are eligible for the program and the waiver for previous payments, visit the PSLF Help Tool on the Federal Student Aid website.
$5.8 billion in student loans discharged for borrowers with disabilities
In August last year, the Department of Education implemented a regulation change that allowed 323 million student loan borrowers with “total and permanent” disabilities to have more than $5.8 million of their federal loans canceled. Borrowers with these disabilities no longer have to apply for relief — they’ll be determined by data matches in the Social Security Administration, which began identifying these borrowers on a quarterly basis in September last year.
Before the policy change, only about half of borrowers with total and permanent disabilities who were identified as eligible via Social Security matches had received loan forgiveness.
If you believe that you might qualify for student loan relief from a total disability, complete the online disability application on the Social Security website.
$7.55 billion in student loans discharged for defense claims against specific schools
Student loan borrowers who have been misled or defrauded by educational institutions have a right to file “borrower defense claims” with the Department of Education. If these schools are found to have violated state laws, borrowers may be eligible for partial or complete student loan cancellation.
Throughout 2021 and 2022, the Department of Education has announced specific relief measures for student loan borrowers who attended colleges and universities that made fraudulent claims about their schools or misled students when they were applying for loans.
These student loan discharges include:
- ITT Technical Institute: 115,000 borrowers were given $1.1 billion in loan cancellations in August 2021.
- DeVry University: In February, 16,000 borrowers received $415 million in student loan discharges, along with additional forgiveness for students at Westwood College, the nursing program at ITT, and criminal justice programs at Minnesota School of Business and Globe University.
- Marinello Schools of Beauty: Due to “pervasive and widespread misconduct” at Marinello schools, 28,000 borrowers had $238 million in loans discharged in April.
- Corinthian Colleges: In the largest defense claim discharge of the year so far, the DoE announced $5.8 billion in forgiveness for 560,000 borrowers on June 1.
If you attended one of these schools and owes money on a student loan, you’ll need to file an official borrower defense claim on the Federal Student Aid website to receive relief. After you complete your application, which should take about 30 minutes, the DoE says that they will contact you by email with information about your loan discharge.
264,000 more borrowers set to receive student loan relief from defense claims
On June 22, the Department of Education announced a proposed settlement in the class action lawsuit Sweet v. Cardona. About 264,000 borrowers sued the agency, saying it illegally delayed action on longstanding defense claims.
If approved by a judge, the proposed settlement will provide student loan debt relief to students from more than 50 mostly for-profit colleges and significantly reduce the backlog of defense claims that began during the President Donald Trump administration and grew during the Biden administration.
The debt relief proposed in the settlement will only apply to borrowers who have already filed defense claims with the Education Department. The Project on Predatory Student Lending says that all borrowers with pending defense claims as of June 22, 2022, or those who received denials after December 2019 are eligible to be plaintiffs in the class action lawsuit.
It’s not yet known if the Department of Education will expand relief to borrowers who attended the offending schools but have not filed defense claims.
For more on student loans, learn why you might want to keep making payments even though student loans are paused. And find out whether or not you should refinance your student loans as rates are rising.