November 22, 2021
By: Freedom to Prosper Team
The U.S. Department of Education recently announced that it is canceling $2 billion of student loans through the Public Service Loan Forgiveness program. This change would mark $11.5 billion in student loans canceled since the start of the Biden Presidency.
The Public Service Loan Forgiveness (PSLF) program is notorious for being difficult to navigate and helping very few eligible Americans: since its creation in 2007, it has rejected 90% of applicants. The Biden Administration is tackling this issue head-on. This change in student loan forgiveness aims to relieve upwards of 30,000 Americans in public service from their loans. The Department of Education will send out emails this week with more information to those impacted by the new policy — make sure your email is updated on the Federal Student Aid if you think you qualify!
The Biden Administration continues to grapple with the legalities of canceling all student loan debt. However, in the meantime, the administration has adopted a targeted approach, focusing on forgiving student loan debt for certain groups of Americans.
So, what’s next in Biden’s incremental plan? The Limited Public Service Loan Forgiveness Waiver, announced in October, allows borrowers to earn credit on past payments that would have otherwise not been eligible, opening up eligibility for more borrowers. One beneficiary of this policy is borrowers with FFEL loans or Perkins Loans who are working in qualifying public service jobs may be eligible for the Limited PSLF Waiver. Borrowers with direct loans can also verify their employment to become eligible for the Limited PSLF Waiver. Lastly, borrowers with errors or irregularities in their loan records may benefit from an automatic adjustment to their PSLF payment count or a manual review of their account. While the Department of Education does not have an exact estimate of how much additional loan debt will be forgiven, they approximate that $2.82 billion more dollars in loan forgiveness could be coming after the initial $2 billion recently announced.
We commend President Biden on canceling $11.5 billion in student debt within the first year of his presidency. We are hopeful that this trend will continue in the coming years of his presidency, freeing more and more Americans currently trapped by student loan debt.
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