August 7, 2024
It looks like President Biden’s new federal student loan forgiveness program is coming this fall. So, this video is going to tell you if you qualify and what you need to do. And yes – there is an August 30th deadline you need to be aware of.
And before you ask – yes, President Biden can do this even though the Supreme Court struck down his last student loan forgiveness program. The justices said that program was not legal – but they never said he can’t try again with a different program and different qualifications. And – since then that’s exactly what he’s been doing. This new proposed program has been moving through the rule making process for at least a year and according to the department of education if it’s finalized, it would bring debt relief to tens of millions of borrowers this fall. And yes – this too will obviously be challenged in the courts and we’ll see if it survives – but if it does — who qualifies? As I reported in these videos and talked about with the Department of Education in this video — there are four categories of borrowers who will get access to relief.
CATEGORY ONE – may include an estimated 23 million borrowers who owe more now on their federal student loan than they did when they started repaying it. These borrowers would be eligible if they have a current balance on an unconsolidated federal direct loan, a Dept of Education held FFEL loan or Perkins loan that has grown out of control because of runaway interest. This also includes consolidated loans that have a larger balance now than when the *original loan entered repayment. If you qualify, all borrowers may receive –at minimum — up to $20,000 in forgiveness. But for borrowers enrolled in an income driven repayment program who earn less than $120,000 a year individually or less than $180,000 a year as head of household or less than $240,000 a year as a married couple – your entire principal and interest above the original principal and interest balance at the beginning of your repayment will be forgiven.
CATEGORY TWO – federal loan borrowers who have been in repayment for decades. Some or all of your debt may be fully forgiven if a borrower with only undergraduate loans has been in repayment for more than 20 years -so you entered repayment on or before July 1, 2005 – you would qualify. And if you have at least one federal graduate loan and have been in repayment for more than 25 years – so you entered repayment on or before July 1, 2000—you would also qualify. What makes this different than the current debt relief law is that this new program will also include consolidated loans.
CATEGORY THREE – includes federal loan borrowers who are otherwise eligible for forgiveness from some other existing program and just haven’t applied.
And CATEGORY FOUR – federal loan borrowers who enrolled in low-financial value programs that failed to achieve one of the Department of Education’s accountability standards. That includes non-degree programs that have closed.
As I mentioned at the beginning of this video –there is a deadline. If you believe you qualify for forgiveness and for some reason want to opt out of forgiveness– you have until august 30th to contact your loan servicer and inform them. Once you opt out – the dept of education says you cannot opt back in.
If you think you qualify and you want to receive the forgiveness you don’t have to do anything.
Last week the department of education sent potentially eligible borrowers an email about all of this. Now – if you didn’t get an email and you think you qualify – don’t panic. The email does not guarantee forgiveness eligibility and more info will come once the program is finalized.
Read more about the program here.
Read more from the Dept. of Education here.
