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President Joe Biden presides over a federal student loan program that has vastly expanded its capacity to forgive student debt — though legal challenges could unravel his most ambitious plan.
His administration has waived payment-counting rules to make it easier for borrowers to qualify for loan forgiveness; helped defrauded borrowers to get refunds from closed colleges; and granted disabled borrowers relief. And a new income-driven repayment plan may reduce monthly payments for millions of borrowers by changing the way discretionary income is measured.
But broad student debt cancellation is Biden's most high-profile effort yet. Close to 26 million borrowers applied for $10,000-$20,000 of federal student debt cancellation in the weeks after the Department of Education released the application in mid-October — roughly half of those eligible for the relief.
Debt cancellation was slated to begin as early as Oct. 23, but intensifying legal challenges have put it on ice for now. On Nov. 10, a Texas district court judge declared Biden's plan unconstitutional just weeks after the 8th Circuit Court of Appeals approved a temporary stay on the relief program. Federal judges are still reviewing a handful of other lawsuits, while the White House fights back.
Even if debt cancellation survives the courts, it may not be enough to help future student borrowers. His critics say he has failed to address a core problem that prompted public pressure for forgiveness in the first place: sky high college costs and record inflation that has spurred interest rates student loans to rise after years of lows.
Here’s where we stand.
What Biden has done for borrowers so far
Forbearance: The White House has extended the broad, zero-interest pause on loan payments begun under President Donald Trump. Federal student loan forbearance now is scheduled to end as late as summer 2023, after legal challenges are resolved.
Other targeted loan forgiveness: The Department of Education also has revised existing loan forgiveness programs and estimates that $38 billion in loans has been canceled for roughly 1.75 million borrowers since the beginning of Biden's term. The newest, a one-time review of all past federal student loan payments, broadens the number that can count toward income-driven repayment if borrowers choose to enroll.
A new income-driven repayment plan: The new IDR plan will change how payments are calculated and how much income is counted. For most borrowers who enroll, monthly payments should be cut by half or more.
Relief on defaulted loans: The White House on Aug. 18 announced a program to wipe the slate clean for more than 7 million borrowers who have defaulted on their student loans, which brings severe consequences including possible seizure of tax refunds and Social Security checks and long-lasting impacts on credit. The Fresh Start program addresses most of the consequences of default by removing the penalties and making the rehabilitation process cheap and easy for borrowers who choose to rehabilitate their loans and move forward with a payment plan.
Other plans we’re watching: financial aid, student debt
Policy proposals in the works
What else is on the way
Keep track of these dates
July: Loans serviced by FedLoan Servicing began transferring to MOHELA.
July 1: New interest rates are in effect on federal student loans for the 2022-23 school year.
Sept. 1: Delinquent and defaulted student loan borrowers will be brought back to good standing.
October 17: Applications for cancellation open at the Department of Education.
Oct. 1: Opening date for 2023-24 FAFSA.
Oct. 31: Expiration date for the Public Service Loan Forgiveness waiver.
Feb. 28, 2023: Last day to self-certify income for income-driven repayment. To self-report, complete the IDR application, but in Step 2 (income information) select, “I’ll report my own income information.”
March 1, 2023:
Unpaid interest will not capitalize during the payment pause and through March 1, 2023. If your grace period ends between March 13, 2020 and March 1, 2023, your interest will not be added to your balance immediately.
Earliest month borrowers would need to recertify for income-driven repayment. If your account still shows your recertification date set before March 2023, it will be pushed out by one year.
May 1, 2023: Borrowers who want to take advantage of additional months counted toward income-driven repayment must act.
Borrowers with commercially-held FFELP loans must consolidate by May 1, 2023, to benefit.
Borrowers considering PSLF must submit an application for PSLF by May 1, 2023, to ensure the recount will be applied to the PSLF count of 120 months.
Borrowers weighing IDR forgiveness must consider whether or not to enroll in IDR by July 2023, so future payments are counted.
June 30, 2023: Deadline for the 2022-23 FAFSA. Also the end of student loan forbearance, if lawsuits have not been resolved before then. Payments would start in 60 days.
Aug. 28, 2023: Student loan payments resume, if lawsuits remain unresolved.
October 2023: Window for debt cancellation applications closes one year after it begins.