On Thursday, the White House announced an additional $9 billion in student debt relief for 125,000 Americans. This debt forgiveness will help 53,000 borrowers under Public Service Loan Forgiveness programs, nearly 51,000 borrowers who made 20 years or more of payments, and nearly 22,000 borrowers with a total or permanent disability.
More individuals could have their student loans canceled, as well, in the not-too-distant future. Here's who could qualify for student loan forgiveness under President Biden's brand new debt relief plan, based on priorities detailed by the Department of Education.
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1. Borrowers who owe more than they originally borrowed
The Department of Education stated in a recent issue paper on student loan debt relief that many borrowers owe more now than the amount that they originally borrowed. This can happen because the accrual of unpaid interest builds up over time. The department listed this category of borrowers as a top priority for the president's new student debt relief plan.
2. Borrowers who are eligible for forgiveness under programs who haven't applied yet
The Biden administration just allocated $5.2 billion in additional debt relief for some borrowers who are already covered under existing Public Service Loan Forgiveness programs. These borrowers are employed by government or not-for-profit organizations.
There are also some borrowers who are eligible for student loan forgiveness under programs such as income-driven repayment but haven't applied for those programs yet. The Department of Education wants to help these borrowers obtain student loan forgiveness that they haven't yet taken advantage of.
3. Borrowers who attended programs that didn't provide enough financial value
Most Americans take out federal student loans thinking that the college programs they attend will help put them in a good position later to pay off those loans. However, some programs simply don't provide enough financial value. The Biden administration wants to help borrowers who attended such programs and later discovered they couldn't afford to pay their student debt.
4. Borrowers who weren't able to take advantage of later benefits
Both the U.S. Congress and the Department of Education have made additional benefits available to student loan borrowers through the years. Many individuals, though, either borrowed or began making repayments on their student loans before those newer benefits were created. The White House wants to try to assist borrowers who weren't able to take advantage of later benefits.
5. Borrowers with hardships that the current student loan system doesn't address
Current federal student loan programs try to help borrowers with hardships in various ways. There are options for reducing payments, delaying payments, and obtaining loan forgiveness.
However, the Biden administration believes that the current student loan system might not fully address some types of hardships that borrowers experience. Because of this, the Department of Education wants to figure out effective ways to address such unique cases of hardship.
What's next?
The Department of Education's Student Loan Debt Relief Committee will convene on Oct. 10, 2023, for a two-day meeting to discuss new student loan forgiveness regulations. The public will be permitted to comment on these proceedings.
The committee will then get back together in November and December to review and publish draft rules for the Biden administration's new student debt relief plan. Those draft rules will also be open to public comments in early 2024. The final rules should be put into place next year barring any legal challenges that delay the process.
