Five things to know as Biden cancels $6.2 billion in student debt

According to the Department of Education, the Biden administration has identified 100,000 student borrowers eligible for student debt forgiveness due to October changes to the Civil Service Loan Forgiveness Program. These 100,000 borrowers have cancellable debt that totals $6.2 billion in federal student debt relief.

According to CNN, not all eligible borrowers have yet been notified of their debt relief. Borrowers will be identified on an ongoing basis.

Here’s what else you need to know about this student debt forgiveness.

1. What have been the changes?

Ultimately, the Department of Education said 550,000 student borrowers would get student loan forgiveness sooner due to changes made in October.

Building on six major changes to student loan forgiveness, the Biden administration relaxed requirements for student loan payments to be considered for student loan forgiveness; what types of student loans count towards student loan forgiveness; which employers qualify for student loan forgiveness; and when student loan repayments begin to count toward student loan forgiveness, depending on Forbes.

The main changes include:

  • Previous student loan repayments count towards student loan forgiveness;
  • Previous student loan payments made for FFELP loans count toward student loan forgiveness;
  • Credit is given for student loan forgiveness if the wrong student loan repayment schedule was used;
  • Previous student loan payments that were late or partial payments count toward student loan forgiveness;
  • Student loan payments made before student loan consolidation also count and
  • Military members can now count past student loan repayments while on active duty

2. Who is eligible?

Public service loan forgiveness waives federal student loans for those who meet several conditions, including working full-time for a public service or qualifying nonprofit employer, enrolling in an income-based repayment plan and make at least 120 monthly student loan payments.

After meeting these eligibility criteria, the remaining balance of federal student loans will be forgiven. To count past student loan repayments that were previously deemed ineligible, a limited waiver must be completed for student loan cancellation, available through the US Department of Education.

The limited waiver is available until October 31, 2022 and will allow individuals to count their previous payments to help meet the 120 monthly payment requirement. Employer certification must be submitted to the Education Department annually and after each change of employer.

3. When do federal student loan payments resume?

The moratorium on federal student loan repayments has been extended until May 1. As of March 2020, student borrowers are no longer required to make federal student loan repayments. The temporary student loan relief could be extended beyond the May 1 deadline, according to Forbes, but Biden has not made a decision.

4. Who is considered an eligible employer?

According to Federal Student Aid, which is part of the U.S. Department of Education, eligible employment does not relate to an individual’s specific job, but rather to the employer they work for. Organizations with which employment counts toward the Public Student Loan Forgiveness program include government organizations at all levels, including the U.S. military and nonprofit organizations that are tax-exempt under Section 501 (c)(3) of the Internal Revenue Code. Serving as a full-time AmeriCorps or Peace Corps volunteer also counts as qualifying employment for the PSLF.

Employers who are not eligible for the PSLF include unions, partisan political organizations, and for-profit organizations, including for-profit government contractors.

5. Which loans are eligible?

Any loan received under the federal William D. Ford Direct Lending Program is eligible for the PSLF.

Loans from the Federal Family Education Loan Program and the Federal Perkins Loan Program are not eligible for PSLF, although they may become eligible if consolidated into a direct consolidation loan.

Student loans from private lenders are not eligible for PSLF.

Due to major changes made in October, any payments made on loans before they were consolidated into a direct loan before October 31, 2022 may be able to receive qualifying credit for payments made on those loans through the limited PSLF waiver. . Normally, only eligible payments made on new direct consolidation loans can count towards the 120 payments required for the PSLF and payments made on loans before they are consolidated do not count.

For more information on consolidating your student loans, the Department of Education offers the PSLF Helper Tool.

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