Recently, student loan borrowers were dealt a harsh blow when the Supreme Court ruled against President Biden's student loan forgiveness plan. Under Biden's proposal, borrowers had the potential to shed up to $20,000 in federal student loans.
But even though that specific student loan forgiveness plan was shot down by the Supreme Court, student loan forgiveness has always been an option for qualifying borrowers -- and it still is for those who meet the right criteria. And now, the Biden administration is taking steps to help ensure that those who are entitled to student loan forgiveness don't end up slipping through the cracks.
Image source: Getty Images.
There's more relief on the way
The Biden administration just announced that more than 800,000 federal student loan borrowers will have their debt wiped out due to fixes that will more accurately account for monthly payments under existing income-based repayment plans. All told, a good $39 billion worth of debt is expected to be forgiven.
To be clear, student loan forgiveness has always been an eventual option under income-based repayment plans. In fact, these plans are set up to wipe out remaining loan balances after borrowers meet certain requirements and make payments for a certain period of time -- commonly 20 to 25 years.
In the past, however, administrative errors have made it so that borrowers who were eligible to have their remaining loan balances wiped out were instead told to keep making payments. Now, the Biden administration is taking steps to fix that so those who are eligible for loan forgiveness can stop living with the burden of monthly payments.
Do you qualify for student loan forgiveness?
There are certain professions that allow student loan borrowers to have a portion of their debt forgiven, so if you're a teacher, non-profit worker, or government employee, it pays to explore your options in this regard. Similarly, some medical professionals may qualify for student loan forgiveness.
Meanwhile, if you've been paying off your student loans as part of an income-driven repayment plan, you should know that you're generally eligible to have your debt forgiven eventually. These plans include the:
- REPAYE Plan
- PAYE Plan
- IBR Plan
- ICR Plan
All of these plans come with either a 20- or 25-year repayment window. If, at that end of that period, you still have a remaining balance, it will generally be wiped out automatically. If you're at that point and haven't been told that your remaining debt is forgiven, it pays to contact your loan servicer to review your account, especially in light of Biden's plan to correct errors that may have resulted in certain payments not counting toward forgiveness.
It's clear that the Biden administration is very invested in helping student loan borrowers shed the burden of educational debt. In addition to the measure above, Biden has introduced a new SAVE plan, which could help slash existing student loan payments and allow for remaining debt to be cancelled after 10 years of payments. Both current and future student loan borrowers will be eligible to participate in this new program.
