Biden Student Loan Forgiveness - June 2024 [Updated]

Update: On June 24, 2024, federal courts in Missouri and Kansas struck down parts of the SAVE Plan and blocked the Education Department from lowering payments and providing more forgiveness under that plan. Read SAVE Plan Blocked for more details.

• The Supreme Court struck down Biden’s initial, broad student loan forgiveness plan, but his administration continues to provide targeted relief that may help you join the 4.3 million others who’ve gotten their loans forgiven.

• The plan you want to qualify for before June 30, 2024, is the IDR Account Adjustment. This program offers a one-time opportunity for borrowers to get credit toward 20 to 25-year forgiveness for their time in repayment, forbearance, and deferment.

• If you work in public service, you can use the IDR Account Adjustment to get even more PSLF credit — even if you’ve never applied for Public Service Loan Forgiveness before.

• If you borrowed less than $12,000 total to pay for school, you may be eligible for forgiveness as early as 10 years after you entered repayment by enrolling in the SAVE Plan.

• Your eligibility for student loan forgiveness under Biden’s plans depends on factors such as your loan type, length of repayment, income, and public service employment.

“One out of every 10 federal student loan borrowers approved for debt relief means one out of every 10 borrowers now has financial breathing room and a burden lifted,” said U.S. Secretary of Education Miguel Cardona.

Despite suffering an early defeat with his first debt cancellation plan, President Joe Biden’s moves to forgive student loan debt since then have all worked out, delivering over $68 billion in loan forgiveness to 4.3 million Americans.

This relief has mostly come not by creating new forgiveness plans but instead by using COVID-related powers to temporarily change long-standing programs. Those changes have helped borrowers long saddled with student loan debt unclog financial and mental blockers that have prevented them from retiring, buying a home, getting married, or simply enjoying no longer having to talk with their loan servicer about how they can get an affordable monthly payment.

The need for student loan relief has never been more pressing, with $1.6 trillion in total student debt and one in six borrowers behind on payments. Biden’s plans aim to address this crisis head-on. As a student loan lawyer, I’ve seen firsthand the transformative impact of loan forgiveness on my clients’ lives.

In this article, I’ll take a deep dive into Biden’s plans, explaining the key features and benefits of each program, as well as important deadlines and eligibility criteria. By the end of this article, you’ll clearly understand:

1. The current student debt landscape and the impact of Biden’s plans

2. The key features and benefits of each plan

3. Important deadlines and dates to keep in mind

4. The potential long-term effects of these plans and the importance of responsible borrowing

Related Articles:

• How to Apply for Student Loan Forgiveness

• Am I Eligible for Student Loan Forgiveness at Age 65?

• Can Private Student Loans Be Forgiven?

What it is: The IDR Account Adjustment is a one-time opportunity for borrowers to get credit toward forgiveness for their time in repayment, forbearance, and deferment. This credit, based on the number of months spent in these statuses, can be applied to Income-Driven Repayment forgiveness, Public Service Loan Forgiveness, and the SAVE Plan.

When it started: April 2023.

When it ends: June 30, 2024.

Who’s eligible: Borrowers with Direct Loans, FFEL loans, or Perkins Loans held by the Education Department. If you have any privately-held federal student loans (i.e., non-Direct Loans serviced by Navient, AES, or other guaranty agencies), you must consolidate those loans into a Direct Consolidation Loan to qualify for the adjustment.

How it works: Borrowers receive credit for past periods of repayment, forbearance, and deferment, which can help them reach the required number of payments for forgiveness faster. This adjustment applies to borrowers on any of the four IDR plans, those pursuing PSLF, and those who borrowed $12,000 or less and enroll in the SAVE Plan.

How to apply: Contact your loan servicer or visit the Federal Student Aid website for more information. To benefit from the adjustment, submit any necessary paperwork, such as an IDR plan application or Direct Consolidation Loan application, before the June 30, 2024 deadline.

Legal challenges: Although the IDR Account Adjustment faced legal challenges, federal courts have dismissed the lawsuits and upheld the program. As a result, you can take advantage of this opportunity to receive credit toward loan forgiveness without worrying about the program being interrupted or discontinued.

What it is: The PSLF Program forgives the remaining balance on your Direct Loans after you make 120 qualifying monthly payments while working full-time for a government organization or non-profit.

When it started: October 2007.

When it ends: PSLF is an ongoing program with no set end date. However, a limited PSLF waiver was available until October 31, 2022, which provided more flexibility for borrowers to qualify for loan forgiveness. Although this waiver has ended, you can still take advantage of the IDR Account Adjustment to receive credit toward PSLF for past periods of repayment, forbearance, and deferment

Who’s eligible: To qualify for PSLF, you must:

• Work full-time for a government organization or a non-profit.

• Have Direct Loans (or consolidate other federal student loans into a Direct Consolidation Loan).

• Make 120 PSLF qualifying payments on an income-driven repayment plan or the 10-year Standard Repayment Plan.

How it works: After making 120 qualifying payments while working for an eligible employer, the remaining balance on your Direct Loans will be forgiven. The IDR Account Adjustment can help you get closer to this goal by providing credit for past periods of repayment, forbearance, and deferment.

How to apply: Use the PSLF Help Tool on StudentAid.gov. You can submit the PSLF Form and Employment Certification Form annually or when you change employers to certify your employment and payments. Once you meet the requirements, you can apply for loan forgiveness.

Legal challenges: While Republican lawmakers have introduced bills proposing to end PSLF, these efforts have been unsuccessful. During his presidency, Donald Trump also suggested eliminating the program, but no action was taken. Despite these challenges, PSLF remains in place and continues to provide loan forgiveness to eligible borrowers working in public service.

What it is: The SAVE Plan is the newest income-driven repayment plan calculates your monthly payment based on your income and family size, with unique benefits that will lower payments for many borrowers. The SAVE Plan replaced the Revised Pay As You Earn (REPAYE) Plan.

When it started: Summer 2023, with more benefits going into effect in February and July 2024.

When it ends: The SAVE Plan is an ongoing program with no set end date.

Who’s eligible: Borrowers with eligible federal student loans, including Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans made to graduate or professional students, and Direct Consolidation Loans that did not repay any PLUS loans made to parents. Some FFEL Program Loans and Federal Perkins Loans may become eligible if consolidated into a Direct Consolidation Loan.

How it works:

• Your monthly payment is based on a smaller part of your adjusted gross income (AGI) compared to other IDR plans, resulting in lower payments for most borrowers.

• If you make your full monthly payment, but it’s not enough to cover the accrued monthly interest, the government covers the rest of the interest that accrued that month, preventing your balance from growing.

• Beginning in February 2024, borrowers who originally borrowed $12,000 or less can receive forgiveness after as few as 10 years.

• In July 2024, payments on undergraduate loans will be cut in half (reduced from 10% to 5% of income above 225% of the poverty line).

Related: Does the SAVE Plan Eliminate Interest?

How to apply: Use the IDR application to apply for the SAVE Plan. You can apply on the Federal Student Aid Website. If you were on the REPAYE Plan, you’ve been automatically enrolled in the SAVE Plan.

Legal challenges: In April 2024, a group of states led by Missouri sought to block the implementation of the SAVE Plan, arguing that it lacks congressional permission. A federal court heard arguments on the case in June 2024, and a decision is expected within a few weeks.

A second lawsuit was filed by Kansas on behalf of 10 other states. On June 7, the judge in that case recently dismissed 8 states from the lawsuit, ruling they didn’t have standing. The case remains open with South Carolina, Texas and Alaska having “just barely” alleged enough facts to find they had legal standing to challenge the plan.

While the outcome of the SAVE Plan lawsuit remains uncertain, the SAVE Plan is still set to begin in July 2024. If you’re eligible for the plan, proceed with the application process as planned. Stay informed about the latest developments, but don’t let the ongoing legal challenge prevent you from exploring your options for student loan repayment and forgiveness under the SAVE Plan.

What it is: A set of proposed plans to cancel student debt under the Higher Education Act through waivers targeting specific borrower groups.

When it started: The plans were announced in 2023, with draft regulations expected to be released for public comment in the coming months.

When it ends: The timeline for implementation will depend on the negotiated rulemaking process and the publication of final regulations.

Who’s eligible: If implemented as proposed, the plans would allow waivers to:

1. Cancel up to $20,000 in interest for all borrowers who have accrued or capitalized interest on their loans since entering repayment.

2. Automatically cancel debt for borrowers who would otherwise be eligible for loan forgiveness under income-driven repayment (IDR) plans or Public Service Loan Forgiveness but are not enrolled in those programs.

3. Cancel student debt for borrowers with undergraduate loans who entered repayment at least 20 years ago and debt for graduate school borrowers who entered repayment at least 25 years ago.

4. Cancel student debt for borrowers who previously enrolled in low-financial-value programs.

5. Cancel student debt for borrowers experiencing hardship that prevents them from paying back their loans.

How it works: The proposed plans would let waivers cancel student debt for specific borrower groups based on their loan types, time in repayment, enrollment in low-financial-value programs, or experience of hardship. The U.S. Department of Education would use available data to identify eligible borrowers and provide automatic relief in some cases, while other borrowers may need to apply.

How to apply: The application process will be determined during the negotiated rulemaking process and will be announced once final regulations are published.

Legal challenges: Republican leaders in the 18 states that successfully challenged Biden’s first student loan forgiveness plan before the Supreme Court have suggested they may also challenge this new program. These states previously argued that the executive branch lacks the authority to enact such widespread debt relief without congressional approval.

However, the Biden administration is ensuring that the new plans are grounded in the Higher Education Act to reduce the risk of legal obstacles. The outcome of any potential legal challenges remains to be seen, but borrowers should stay informed about the latest developments and continue to explore their options for student loan repayment and forgiveness.

What it is: A program that lets federal student loan borrowers seek loan forgiveness if their school engaged in certain misconduct, such as fraud or severe misrepresentation.

When it started: The BDR program has been in place for many years, but it gained more attention and underwent significant changes during the Obama and Biden administrations.

When it ends: BDR is an ongoing program with no set end date.

Who’s eligible: Borrowers who went to schools that engaged in misconduct, such as misrepresenting job placement rates, the transferability of credits, or the quality of education provided. The misconduct must have violated state or federal law.

How it works: If a BDR claim is approved, the borrower’s federal student loans related to the school’s misconduct will be forgiven. ED can then seek to recoup the forgiven amount from the school responsible for the misconduct.

How to apply: Borrowers can submit a BDR application online through the Federal Student Aid website or by mail. They must provide evidence to support their claim of the school’s misconduct.

Legal challenges: The implementation of new BDR regulations proposed by the Biden administration, which would make it easier for borrowers to have their loans forgiven, is on hold due to an injunction from the Fifth Circuit Court of Appeals.

The injunction also applies to the closed school discharge plan. While the injunction is in effect, ED will continue to process BDR applications under the existing regulations.

As a student loan lawyer, I’ve seen how Biden’s forgiveness plans can provide much-needed relief for borrowers struggling with long-term debt. The IDR Account Adjustment and PSLF changes can help those who have been paying for decades finally get rid of their student loans and improve their financial situation.

However, current and future students must understand these loan forgiveness programs should not be seen as a free pass to take on excessive debt.

While the SAVE Plan and other initiatives can make monthly payments more manageable, borrowing large amounts without considering the long-term consequences can still lead to financial hardship.

If you’re considering taking out student loans, it’s crucial to:

1. Borrow only what you need to cover your education expenses

2. Research your expected income and job prospects in your chosen field

3. Understand the terms of your loans and the repayment options available

4. Explore scholarships, grants, and other forms of financial aid that don’t require repayment

By being proactive and making informed decisions about your student debt, you can benefit from Biden’s forgiveness plans while also setting yourself up for long-term financial success.

Ultimately, the goal should be to make higher education more affordable and accessible for all students. As the government works to provide short-term relief through forgiveness plans, it’s important to also advocate for long-term solutions that address the rising costs of college and promote responsible borrowing practices.

The news is filled with stories about different student loan debt relief opportunities. There’s so much happening all at once, and anxiety is so high for people desperate for help. Shady businesses are taking advantage of this situation by bombarding people with emails, hoping to scam them out of their hard-earned money.

Some companies might call or email you claiming they can help you get rid of your student loans for a fee. But you need not pay for help with your federal student loans. And the government or your loan servicer won’t call you to tell you that your loans have been forgiven. Instead, you’ll get a letter or email confirming your balance has been forgiven and no student loan payments are due.

Emails from the department will come from:

• noreply@studentaid.gov

• noreply@debtrelief.studentaid.gov

• ed.gov@public.govdelivery.com

If someone tries to scam you, tell the Federal Trade Commission by calling 1-877-382-4357 or going to reportfraud.ftc.gov.

Save this page to your bookmarks for continuous updates. Although this specific method of student loan forgiveness is on hold, you can still apply for forgiveness through other programs, as listed above.