Your Student Loan Debt Relief Forgiveness Is Getting Delayed, And It May Get Worse
As the Biden administration works to simultaneously implement multiple student loan debt relief initiatives, borrowers are dealing with the delayed forgiveness of student loans on a number of fronts. In the coming months, it is possible that the problems, which are primarily caused by insufficient funding from the federal government, will only become more severe.
Here is some information that should be known by borrowers.
Multiple Forgiveness Programs for Student Loans Have Been Started Under Biden’s Administration
A number of one-time or temporary student loan forgiveness programs have been initiated by the administration of Vice President Joe Biden. These programs are intended to reduce the amount of debt owed by millions of people who have taken out federal student loans. The following actions are included in these initiatives:
A one-time fix to the Public Service Loan Forgiveness (PSLF) program, which is a federal student loan forgiveness program for borrowers who work in qualifying nonprofit or government jobs for at least ten years. Borrowers who take advantage of the Limited PSLF Waiver will have their student loans forgiven. The waiver, which officially came to an end in October of last year, made it possible for certain loan periods from the past that would have been disqualified for loan forgiveness to possibly be included toward debt forgiveness.
IDR Account Adjustment is another one-time fix to federal Income-Driven Repayment (IDR) plans. It is very similar to the PSLF Waiver in the sense that it will allow for certain past loan periods that otherwise would have been rejected to potentially count towards loan forgiveness under IDR plans. This is similar to the PSLF Waiver in that it will allow for certain past loan periods that otherwise would have been rejected. Some borrowers will experience an advancement in their progress toward student debt forgiveness, while others may have their sums totally wiped as a result of the program.
The Brand-New IDR Plan —
The Revised Pay As You Earn (REPAYE) plan, which is an IDR plan, is about to undergo significant changes as a result of recent announcements made by the administration of Vice President Joe Biden. Many borrowers would see cheaper monthly payments and a speedier pace of student debt forgiveness as a result of the modifications that are proposed.
Borrower Defense to Repayment —
The previous year, the administration made an announcement that group discharges would be granted to hundreds of thousands of borrowers through the Borrower Defense to Repayment program. This is a federal student loan discharge program that has the potential to result in loan forgiveness for borrowers who were defrauded by their schools. Former students of Corinthian Colleges and ITT Technical Institutes are eligible for relief under the Borrower Defense program, which has been approved by the Department of Education.
One-Time Forgiveness of Student Loans The comprehensive one-time student debt relief initiative proposed by former Vice President Joe Biden would have forgiven up to $20,000 in federal student loans for the majority of borrowers. However, the program is not being implemented because it has been halted by federal courts. The United States Supreme Court has agreed to hear the case.
Delays in Forgiveness of Student Loans Are Common Across the Board
There are a number of different programs that forgive student loans, and as a result, there are millions of borrowers who are eligible for relief. However, there are widespread delays throughout the entire process.
The Limited PSLF Waiver was valid until the 31st of October. On the other hand, the Education Department and MOHELA, the agency that it has contracted to handle PSLF student loan servicing, are dealing with a backlog of two million PSLF applications. As a direct consequence of this, it is taking borrowers three months or longer (sometimes much longer) to receive student loan forgiveness in accordance with the waiver. This is especially the case for borrowers who submitted PSLF applications during the summer or fall of the previous year.
During this time, the IDR Account Adjustment process is just getting underway (and notably, the adjustment may also benefit borrowers on track for PSLF who missed the Limited PSLF Waiver deadline). However, the implementation of the account adjustment has already been repeatedly postponed by the Department of Education. The program was initially supposed to begin resulting in the forgiveness of student loans by the fall of last year, with the implementation being finished as early as January 2023. However, as of right now, the Department of Education does not anticipate that borrowers will receive student loan forgiveness until the spring of 2023, with implementation not being finished until the summer of that same year.
The Education Department has hinted that it may take much of 2023 to implement the group discharges, which means that many borrowers who received notifications last year that they were approved for Borrower Defense relief have not yet received any student loan forgiveness. In the meantime, the Education Department has not provided a specific timeline for when the benefits of the new REPAYE plan will be available.
Since the fall of last year, the one-time cancellation program proposed by Biden has been halted by the federal courts; consequently, no one has been eligible for student loan forgiveness under this program. The initiative will be subject to review by the Supreme Court. The oral arguments are scheduled to take place in front of the court the following month, and a decision is anticipated to be rendered by June.
Delays in the Student Loan Forgiveness Program are Largely Caused by the Lack of Federal Funding, and Things May Get Even Worse
Because of the omnibus spending bill that was passed by Congress during the lame duck session, the Office of Federal Student Aid (also known as the FSA) did not receive any additional funding to cover its operations. This result, which leaves funding unchanged, is a significant reason for the delays that have occurred in the implementation of the student loan forgiveness initiatives proposed by the Biden administration.
Officials and employees have been given the task of establishing and managing an increasingly diverse array of student debt relief programs, despite the fact that neither additional resources nor support will be provided to them. This will have an effect on tens of millions of borrowers collectively. As a direct consequence of this, everything is taking significantly more time, and officials are reportedly warning that the difficulties may become even more severe.
In addition to this, political gamesmanship in Congress could also end up being a significant obstacle. According to reports, Republican members of the House of Representatives intend to use a fight over the debt ceiling as a bargaining chip in order to obtain spending reductions.
In the event that the debt ceiling is breached, the government is not adequately funded, or funding is cut to the United States Department of Education, it is possible that FSA’s resources will be constrained even further. It’s possible that this will lead to further delays in the implementation of everything.
Due to an order from a federal court, the one-time student loan cancellation initiative proposed by Biden cannot yet be implemented. This is because the Supreme Court is currently reviewing the case. However, in the event that the court ultimately rules in favor of the administration and upholds the program, the Department of Education will be required to forgive student loans totaling hundreds of billions of dollars for a total of forty million borrowers, in addition to continuing to run all of the other programs that provide relief from student debt.
In a nutshell, people who have taken out student loans should brace themselves and get ready for ongoing delays and mounting frustrations over the next few months.