Biden cancels $300 million in student debt as loan forgiveness under that program reaches record highs

The Education Department announced that President Joe Biden has canceled a further $300 million in debt through a student loan forgiveness program that has achieved record approval rankings.

The details released by the department last week were a part of a broader wave of loan forgiveness approved by the Biden administration under a series of separate programs, and are available as officials are pushing ahead with one other mass debt relief program, from which they hope it’ll rise up to judicial scrutiny.

“Today we are helping 277,000 borrowers who have been making payments on their student loans for at least a decade,” Assistant Secretary of Education James Kvaal said in a press release Friday, referring to this larger group of student loan forgiveness approvals. “They paid what they could afford and they received loan forgiveness for the balance of their loan.”

Here are the main points.

PSLF Student Loan Forgiveness Reaches Record Highs

$300 million in student loan forgiveness was approved under the Public Service Loan Forgiveness program. PSLF can eliminate federal student debt for borrowers who dedicate their careers to public service work, which incorporates employment at certain nonprofit and government agencies. Borrowers can qualify for loan forgiveness after making 120 qualifying monthly payments, which is such as 10 years.

But since its founding in 2007, PSLF has struggled with quite a few problems, leading to borrower confusion and low approval rates. The Biden administration has implemented several initiatives — some temporary, some more everlasting — to extend access to this system and make it easier for borrowers to acquire PSLF loans. These changes include:

• The Limited PSLF Waiver, a short lived program that resulted in 2022 and relaxed key PSLF requirements to deal with prior loan processing and administration issues.
• The IDR Account Adjustment, one other temporary initiative that’s ongoing and expands several features of the limited PSLF waiver.
• Regulatory reforms that chill out a few of the strict rules defining qualified payments and qualified employment, including a brand new “buyback” option that serves as a protected harbor for loan terms which may otherwise not count toward forgiveness.
• A brand new, streamlined online platform for filing and processing PSLF employment certifications.

As a results of these changes, the PSLF program has undergone notable changes. When Biden first took office, this system had a 1 percent approval rating and only a number of thousand borrowers had received student loan forgiveness.

“The government has approved $62.8 billion in forgiveness for nearly 876,000 borrowers through PSLF since 2021,” in response to Department of Education data released last Friday.

Additional student loan forgiveness approved under other programs

The PSLF approvals announced last week were part of a bigger series of student loan forgiveness announced by the Biden administration as a part of other programs.

The Department of Education has approved a minimum of $3 billion in debt relief under the brand new SAVE plan, which might speed up debt relief. SAVE — a brand new income-driven repayment plan unveiled by the Biden administration last fall — can shorten borrowers’ IDR forgiveness periods from 20 or 25 years to simply 10 years in the event that they took out small loan amounts. More than 200,000 borrowers had their student debt forgiven under this provision this month.

The department approved debt relief for a further 65,700 borrowers under the IDR account adjustment. This temporary initiative relaxes the principles for 20- or 25-year student loan forgiveness under income-driven repayment plans and allows for the potential crediting of many past repayment, deferment and forbearance periods. These periods will also be counted toward PSLF if the borrower was working in a certified public service on the time. IDR account matching is scheduled to finish this summer and certain borrowers might have to take motion before the top of April to qualify.

The latest Biden student loan forgiveness plan might be coming soon

The announcement of the newest wave of student loan forgiveness last Friday followed one other blockbuster announcement earlier this week that President Biden would soon unveil a brand new mass debt relief plan.

The latest loan forgiveness program is meant to switch Biden’s first mass debt relief plan, which the Supreme Court rejected last 12 months. The latest initiative targets relief for five groups of borrowers, including those experiencing hardship. The program must undergo several additional administrative steps before it officially launches, but borrowers could start applying as early as the autumn — assuming it’s not rejected in court, which could well occur.