Joe Biden completed his first year in office and has now canceled more than $11 billion in federal student debt through five rounds. This amounts to just 1% of all federal student loans debt, which currently stands at $18 trillion.
In January, Pennsylvania Attorney General Josh Shapiro announced to Navient that it would cancel $1.7 billion in private student loan debt. This is to clear up allegations of misleading servicing practices. The latest announcement brings the total amount in forgiven student loan debt (federal as well as private) to approximately $13 Billion.
Though hundreds of thousands of borrowers received student loan forgiveness in the past, 43 million borrowers are still in debt. It’s because the forgiveness given so far has been limited to specific groups instead of the broad-based debt cancellation desired by many top Democrats.
Andrew Pentis, who is a certified student loan counselor for Student Loan Hero, told: “The Biden government has a real track record now that we can look at and know how they think about awarding student loans relief.” “It’s a track of targeted relief to particular borrowers and not the mass forgiveness propositions that many progressives have urged for.”
We identify the main borrower groups that are currently eligible to receive student loan forgiveness.
Borrowers from now-defunct Schools
Over 188,000 borrowers are eligible to receive $2.6 million in forgiveness. The forgiveness is designed to assist students who have been found guilty of engaging in deceptive, illegal, or criminal practices.
This group includes Corinthian Colleges. ITT Technical Institute. American Career Institute. Court Reporting Institute. Westwood College. Marinello Schools of Beauty. These schools have been found to have misled their students. Education Secretary Miguel Cardona originally announced the cancellations back in March 2021.
Before these loans could not be canceled, borrowers were required to fill out a Loan Discharge Application Form. This form asks questions about the student’s enrollment history. The Federal Student Aid made the final decision on whether to grant total, partial or complete forgiveness to applicants whose schools had deceived. The automatic discharge of loans started in September 2021 for all borrowers.
Borrowers suffering from total and permanent disability
In August 2021 the Educational Department announced $5.8Billion in forgiveness to student loan debts for 323,000 borrowers with total or permanent disabilities that prohibit them from working.
To have any debt automatically forgiven, all borrowers eligible must be listed as having a “total and permanent” disability by the Social Security Administration. Borrowers do not need to file separate applications to be eligible for relief.
The Education Department monitored the income of borrowers for three years before they were granted TPD status. Once that period expired, loans could be reinstated if income exceeded a specified threshold. In August 2021 the department announced it would no more send automatic income information requests. In addition, is proposing to terminate its monitoring period.
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Borrowers who work for the public sector
The Education Department released dramatic changes to the Public Service Borrower Forgiveness Program (PSLF) in October 2021. This program was created to relieve federal student loan debt from public servants like teachers, firefighters, and other government or non-profit employees. This round of forgiveness led to the cancellation or reduction of federal student loan debt by approximately $1.7 Billion.
Public servants seeking total debt cancellation needed to be enrolled on a repayment plan and make 120 monthly student loan payments. However, 98% of PSLF borrowers that had applied for forgiveness from the program’s 2007 inception were denied. The approval process was complicated by a number of obstacles.
Improvements in the application process and approval process helped 22,000 borrowers immediately. An additional 27,000 borrowers are eligible to receive $2.8 million in forgiveness if their “certify additional periods” of employment, according to the Education Department.
The long-term changes to the PSLF program are likely to benefit more than half a million borrowers who consolidate their loans that fall under the Federal Direct Loan Program.
Navient private loans for borrowers
According to Shapiro, nearly 66,000 private student borrowers will receive Navient’s cancellations. This was the result of an investigation by 39 state attorneys for “allegations regarding widespread unfair, misleading and abusive student loan servicing practices, and abuses in originating predatory student loans.”
Navient said that it would cancel the debt of borrowers who took out loans “largely between 2003 and 2010 and then defaulted or charged off.”
The company will notify the borrowers about the cancellation of private debt by July 2022. The company will refund eligible borrowers who have made payments to cancel private loans after June 30, 2020. Borrowers don’t need to do anything else to have their private debt canceled.