Biden is not done canceling student loans
President Joe Biden is not done canceling student loans.
Here’s what you need to know — and how you can cancel your student loans.
Biden has now forgiven $17 billion in student loans, and he’s not done. As student borrowers anxiously wait for Biden to announce his decision on large-scale student loan forgiveness, good news is on the horizon. Biden has a clear playbook for canceling student loans. If you learn his strategy, you can get student loan forgiveness even if he doesn’t forgive everyone’s debt.
Here are 3 ways to get student loan forgiveness:
1. Biden focuses on administrative fixes to existing student loan forgiveness
Biden is focused on fixing existing options for student loan forgiveness. This is major news for student borrowers who have been frustrated with a broken student loan repayment system. By cutting red tape, easing requirements and holding student loan managers accountable, Biden is easing the path to student loan forgiveness so more borrowers are eligible. For example, Biden this week announced major changes to student loan forgiveness that will help 3.6 million student borrowers get student loan relief. The Biden administration also eliminated income requirements for student loan forgiveness for borrowers with total and permanent disabilities, while increasing the use of data matching with other federal agencies. The US Department of Education is streamlining student loan forgiveness for student borrowers through civil service loan forgiveness, income-contingent repayment, and repayment defense as well. The U.S. Department of Education also announced major changes to income-contingent repayment, which allows student borrowers to count past student loan repayments that were previously ineligible for student loan forgiveness. Now, student borrowers can get “credit” for those student loan payments, meaning they could qualify for student loan forgiveness sooner.
2. Cancellation of student loans through income-contingent repayment will become the norm
Biden wants more student borrowers to get student loan forgiveness through income-based repayment. If you’re struggling financially, an income-driven repayment plan should be your preferred student loan repayment option for your federal student loans. Income-based repayment plans such as IBR, PAYE, REPAYE, and ICR set your monthly student loan payment at $0 based on your discretionary income and family size. Income-driven repayment plans are preferable to forbearance, as the latter can cause student loan interest to be added to your student loan balance. This not only allows your student loans to have a higher balance, but also increases your risk of non-payment and non-payment of student loans. (Student Loan Relief: How to Qualify for a “Fresh Start” on Your Student Loans). Income-driven repayment plans also provide student loan forgiveness for your federal student loans after 20 years (undergraduate student loans) or 25 years (graduate student loans). This ensures that student borrowers are not stuck paying student loans forever. You can enroll in an income-based repayment plan through your student loan officer.
3. Biden prefers student borrowers sign up for civil service loan forgiveness
There is major pressure within the Biden administration to encourage more student borrowers to sign up for the civil service loan forgiveness. This program helps student borrowers obtain full forgiveness of their federal student loan. To qualify, you’ll need to work for a qualified utility or nonprofit employer, make at least 120 monthly student loan payments while enrolled in an income-based repayment plan, and meet other requirements. Even if you don’t work for a public service or nonprofit employer, now might be the time to consider a career change. With Public Service Loan Forgiveness, you can get student loan forgiveness in about half the time (10 years) compared to an income-driven repayment plan (20 years). Be sure to complete an Employer Certification Form with the U.S. Department of Education when changing jobs and at least once a year to ensure your employer qualifies. You may like your current job or have never considered a career in public service. However, if your focus is on repaying student loans and paying student loans faster, then you should seriously consider civil service loan forgiveness.
When considering the best ways to repay student loans based on your financial goals and unique financial situation, be sure to consider all of your options. This is especially important because temporary student loan relief will end on August 31, 2022. Here are some smart strategies for student loan repayment: