Over the past six months, the Biden administration has announced a series of new student loan relief measures that will benefit millions of student borrowers. These include payment relief, assistance for defaulting borrowers and new student loan forgiveness initiatives. Here is an overview.
Extension of student loan payment suspension
Last week, President Biden announced a further extension to the current pause on student loan repayments and accrued interest.
For 25 months, student loan repayments on most federal student loans have been suspended and interest has also been frozen. This relief, enacted by Congress through the CARES Act in response to the Covid-19 pandemic, was originally intended to be effective for six months. But thanks to half a dozen separate extensions, President Trump and President Biden have made the relief last much longer. Biden’s latest extension to August 31, 2022 added another four months to the hiatus, and there are indications it could be extended even beyond that.
Unlike other types of federal student loan payment deferral programs, such as hardship forbearances or unemployment deferrals, the payment suspension period during the CARES Act payment pause period continues to count for student loan forgiveness programs, including income-based repayment plans and the utility loan. Forgiveness program (PSLF).
Fresh start for borrowers with federal student loans in default
Biden also announced a new initiative last week whereby the Department of Education will automatically reinstate delinquent federal student loans. “All borrowers with paused loans [will] receive a ‘fresh start’ on reimbursement by eliminating the impact of delinquency and default and allowing them to re-enter reimbursement in good standing,” the department said in a statement.
This is an important initiative that will give approximately eight million borrowers the opportunity to get a second chance on their student loans, while helping to repair their credit and avoid adverse collection activity. Advocacy groups had been pushing the administration to do so for more than a year.
Public Service Loan Waiver Limited Waiver Scheme (PSLF)
Public Service Loan Forgiveness (PSLF) can eliminate federal student loan debt for borrowers who make 120 “qualified” payments — the equivalent of 10 years, if those payments are made consecutively. Under the original program rules, the PSLF limited eligibility for direct federal student loans that were repaid under income-tested repayment plans. But because these requirements were often not well communicated to borrowers, the PSLF program had an abysmal approval rate.
Last October, the Biden administration implemented the Limited PSLF Waiver program. Under this waiver, for a limited time, the Department of Education can count past repayment periods that would have been disallowed under the “old” PSLF rule regime, including payments made on loans non-direct federal loans such as Family Federal Education Loan (FFEL) program loans. and federal Perkins loans. The Department may also account for payments made under any repayment plan and will not limit eligibility for income-tested plans. Borrowers may, however, need to take certain steps to qualify, and they must take action by October 31, 2022. Learn more here.
Student Loan Forgiveness Review and Appeal Process
Borrowers trying to navigate the PSLF process, including the limited PSLF waiver, continue to encounter obstacles. This includes erroneous information provided by loan servicers, as well as erroneous PSLF determinations.
The Biden administration announced that this month it will roll out a new PSLF appeal and review process. “From April 2022, we will provide borrowers with a provisional online submission process to request PSLF reconsideration” via the StudentAid.gov website, the ministry said in a statement. The reconsideration process will allow borrowers “to ask the government to review whether your account has been treated appropriately” under federal law.
However, no clear details about the process have been released at this time. “We will provide more details … in the coming months regarding the PSLF review and when it will be available. Check back … for updates and information,” the Department said on its website.
Further Reading on Student Loans
Will student loan repayments really resume? Probably Not For A While – Here’s Why
Forgiveness of student loans through executive action still on the table, says top Biden official
4 options for Biden to legally enact student loan forgiveness without Congress
Biden plan would eliminate student loan forgiveness ‘tax bomb’