3 Key Student Loan Forgiveness Opportunities Could End Soon – Here’s How to Apply

In recent months, the Biden administration has approved billions of dollars in student loan forgiveness for hundreds of thousands of borrowers. And others may be on the way.

But many of these initiatives are temporary, and borrowers only have a limited window of time to apply for or receive relief before it ends. In many cases, borrowers may have to take action by a specific deadline to qualify for student loan forgiveness.

Here’s what you need to know and how to apply.

Forgiveness of student loan thanks to the renunciation of the PSLF

In October, the Biden administration signed into law a new fix for the Public Service Loan Forgiveness Program (PSLF). PSLF is a student loan forgiveness program that can erase federal student loan debt for borrowers who work 10 years or more in eligible nonprofit or government careers. To remedy years of poor oversight and mismanagement, the administration implemented the PSLF Limited Waiver Program.

Under the limited PSLF waiver, prior repayment periods that would otherwise have been ineligible (including payments made under ineligible repayment plans or on older FFEL loans) may be counted in the PSLF, except provided that the borrower was in eligible employment at the time. . But the program is set to end on Oct. 31, 2022 (advocates are urging the Biden administration to extend the relief, but there’s no indication officials will).

Here’s how to pursue the Limited PSLF Waiver initiative:

  • Review the Ministry of Education’s detailed guidance on the PSLF Limited Exemption Program.
  • For borrowers who already have direct federal student loans and who have already certified their employment in the public service, no action is necessary, as the Department of Education has indicated that it will automatically update the payment tally. PSLF of borrowers.
  • For borrowers who need to certify or re-certify their PSLF employment, or to check if your employer is eligible for PSLF, you can initiate the process through the Ministry of Education’s PSLF Help Tool.
  • The Department of Education says borrowers with FFEL loans or Perkins loans should consolidate those loans through the Federal Direct Consolidation Program by October 31, 2022 to be eligible for the limited PSLF waiver. “Pre-consolidation loan repayment periods matter” under the Limited PSLF Waiver initiative, the Department says. Borrowers can consolidate online through the ministry’s website. Consider the pros and cons of consolidation before proceeding. Note that the consolidation process can take a month or two, so don’t wait until the last minute if you need to consolidate.
  • Borrowers receiving loans from the FFEL program must first verify that their job is eligible for PSLF via the PSLF help tool above, before consolidating. If their employment qualifies, FFEL borrowers will need to consolidate these loans through the Federal Direct Consolidation Program, and then submit their PSLF employment certificate once their FFEL loans have been consolidated into a direct loan.

Student loan forgiveness as part of an income-based repayment adjustment

The Biden administration announced an initiative in April to expand relief under Income-Based Reimbursement (IDR) plans, which includes plans such as Income-Based Reimbursement (IBR) and Pay-to-Pay. as you go (PAYE). Under IDR plans, borrowers can get any remaining loan balance forgiven after 20 or 25 years (depending on the plan). But according to the rules of origin, only the time spent on reimbursement under an IDR plan would count.

Under the new initiative, which the Biden administration calls the “IDR adjustment,” prior loan periods can be factored into a borrower’s IDR repayment term, including any repayment period and certain adjournment and abstention periods. Under the initiative, “any borrower whose loans have accrued repayment time of at least 20 or 25 years will receive automatic discounting, even if you are not currently on an IDR plan,” says the Ministry of Education.

Here’s how to continue this program:

  • See Ministry of Education guidelines on adjusting IDR. Note that the IDR adjustment will also benefit PSLF borrowers. The Department’s guidance on the PSLF limited waiver program also reflects the IDR adjustment.
  • For borrowers who already have direct federal student loans, no action may be required as the Department of Education has indicated that it will automatically implement the IDR adjustment and begin posting tracking information. IDR this fall.
  • Similar to the PSLF Limited Waiver Program, borrowers with FFEL loans would need to consolidate those loans through the Federal Direct Consolidation Program to qualify for the IDR adjustment. The Department for Education says borrowers should do so “before we complete the implementation of these changes, which should be no earlier than January 1, 2023”. Borrowers can consolidate online through the ministry’s website. Consider the pros and cons of consolidation before proceeding. Note that the consolidation process can take a month or two, so don’t wait until the last minute if you need to consolidate. As with the limited PSLF waiver, the Department indicates that “any pre-consolidation repayment period of the consolidated loans” may be taken into account as part of the IDR adjustment.
  • Note that the tax implications of student loan forgiveness under IDR plans can be complicated, depending on exactly when the student loan forgiveness occurs. Consult a qualified tax advisor if necessary.

Student loan forgiveness for borrowers misled by their school

The Biden administration is working to implement two key initiatives as part of the defend-to-pay borrower program. Borrower Defense Until Repayment is a federal student loan forgiveness program designed to address certain types of school misconduct. Borrowers can seek Borrower Defense Relief if a school has made false promises or misrepresentations about critical aspects of their curriculum like admissions, career prospects, or credit transferability.

For the first initiative, the Biden administration announced earlier this month that it would forgive federal student loan debt incurred by borrowers who attended Corinthian Colleges, a nationwide chain of for-profit colleges that has closed. in 2015 following accusations of widespread misconduct. Everest College, Heald College, and Wyotech were part of the Corinthian College umbrella.

The Department of Education also announced last week a proposed settlement agreement with a class of student borrowers to resolve Sweet vs. DeVos, a multi-year lawsuit regarding blocked borrower defense claims. Under the terms of the proposed agreement — which has yet to be finalized and approved by the court — borrowers who have already submitted borrower defense claims and attended a covered school will have their applicable federal student loans forgiven. However, other borrowers may still qualify for borrower defense relief.

Here’s what you need to know:

  • For borrowers who attended Corinthian schools (including Everest College, Heald College, and Wyotech), no action is necessary. The Biden administration has indicated that these borrowers will have their applicable federal student loans canceled whether or not they have actually submitted a Borrower Defense Claim.
  • For the Sweet vs. DeVos proposed settlement, borrowers who attended one of the more than 150 schools listed in the joint agreement who submitted a borrower defense request before June 22, 2022 would have their applicable federal student loans forgiven, once the settlement proposed approved by the court.
  • Borrowers who attended one of the schools covered by the Sweet vs. DeVosbut have not yet submitted a borrower defense request, may still submit one before final approval of the settlement proposal, which attorneys in the case do not expect until this fall. These borrowers would not be entitled to automatique student loan cancellation, but under the proposed settlement, the Department of Education would have to make a decision on such applications within 36 months or the borrower would be entitled to an automatic discharge. To learn more about the Sweet vs. DeVos case and proposed settlement, and to view the list of schools covered, go here.
  • Importantly, borrowers who made not attend one of the schools covered by Sweet vs. DeVos can still submit a Borrower Defense Claim until repayment, as the program itself does not expire. You can start the process on the Ministry of Education’s Borrower Advocacy website.

Further Reading on Student Loans

If You’ve Been To These Schools, You May Qualify For Student Loan Forgiveness: Here’s What To Do

264,000 borrowers to get $6 billion in student loan forgiveness in ‘historic’ settlement deal with Biden administration

Biden Reportedly Close to Making a Decision on Widespread Student Loan Forgiveness – Here’s Where It Stands

Want student loan forgiveness? To qualify, borrowers may need to do this first

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