Biden administration ready to implement mass student loan forgiveness as decision could come any day

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The Department of Education would be ready to quickly implement the massive cancellation of student loans – if President Biden decides to approve such a move. But so far, Biden has remained undecided. Here is where things stand.

Ministry of Education ready to implement student loan forgiveness initiative

As first reported by POLITICO, the Department of Education has created systems and procedures to quickly move forward with implementing a broad student loan forgiveness initiative, if and when Biden gives the word. That includes a contingency if Biden imposes income restrictions on eligibility for student loan forgiveness, which officials say could be part of such a move. Here are some key elements:

  • Some borrowers whose income information is already on file with the Department of Education may be able to get student loan forgiveness automatically, potentially within months of any announcement.
  • Borrowers who do not have income information on file with the Department may be able to quickly self-certify their income on a simple application form, with the Department performing a small number of audits to verify the information borrowers.
  • The Department of Education is prepared to implement federal student loan relief for nearly all types of federal loans, including Graduate PLUS loans, business-held FFEL loans, and Parent PLUS loans, if Biden endorses such broad relief. It is unclear whether direct loan consolidation would be required to qualify.
  • For borrowers who have loan balances remaining as a result of applying for student loan forgiveness, the Department may be able to re-amortize the loan based on the remaining reduced balance, which will result in lower monthly payments for certain borrowers in standard, extended or progressive repayment. plans.

Biden hasn’t decided on student loan forgiveness, but will very soon

Of course, none of these details are final — they’re plans that hinge on President Biden’s decision to use executive branch action to enact a broad student loan forgiveness. And the White House has repeatedly said that it has not yet made a final decision.

Biden pledged to support $10,000 in student loan forgiveness for each borrower during his 2020 presidential campaign, but he avoided using executive action (rather than congressional legislation) for the enforce. Biden has apparently warmed to the idea in recent months, but he has held off on a final decision. He recently told reporters he would decide before the end of August.

Supporters had pushed Biden to forgive more student debt, and many progressive Democrats had hoped Biden would forgive $50,000 or more for each borrower, with universal eligibility and no income cap. Supporters have warned that imposing eligibility rules could lead to bureaucratic delays, errors and complications.

But Biden has bristled at universal student loan forgiveness. Recent reports suggest he would be more comfortable with $10,000 in student loan forgiveness, limited to borrowers earning $125,000 a year or less.

Biden must soon decide on student loan suspension and other relief as well

The massive student loan cancellation isn’t the only major student loan decision on Biden’s plate. The ongoing student loan pause — which suspended payments and interest on most federal student loans for more than two years — is set to end in four weeks. Speculation is growing that he will extend the payment break, but no decision has yet been announced.

Biden will also have to decide whether to extend other expiring student loan relief initiatives, including the popular but underutilized limited PSLF waiver and a broad IDR account adjustment that could significantly speed up student loan forgiveness. for millions of borrowers.

Further Reading on Student Loans

Did the Biden administration just drop a big hint on student loan forgiveness?

Are you eligible for student loan forgiveness? Education Department launches new tool to help borrowers find out

Biden could extend student loan pause through next year, considering further relief, including loan forgiveness

If You’ve Been To These Schools, You May Qualify For Student Loan Forgiveness: Here’s What To Do

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