The Department of Education is reportedly poised to quickly implement massive student loan forgiveness — if President Biden decides to approve such a move. But so far, Biden has not made a decision. That’s the way it is.
Department of Education prepares to implement student loan forgiveness program
As first reported by POLITICO, the Department of Education has created systems and procedures to move quickly to implement a broad student loan forgiveness program should Biden make promises. That includes the contingency if Biden imposes income limits on eligibility for student loan forgiveness, which officials have suggested could be part of any such move. Here are some key elements:
Some borrowers whose income information is already on file with the Department of Education may be able to automatically receive student loan forgiveness within a few months of any announcement. Borrowers without income information can quickly self-certify their income through a simple application form, while the department conducts a small audit to verify borrower information. If Biden approves such broad forgiveness, the Department of Education is poised to implement federal student loan forgiveness on nearly any type of federal loan, including graduate PLUS loans, FFEL loans held in business, and parent PLUS loans. It is unclear whether direct loan consolidation is necessary to qualify. For borrowers with remaining loan balances after applying for student loan forgiveness, the department may be able to re-amortize the loan based on the remaining reduced balance, resulting in some standard, deferral, or tiered repayment borrowers with reduced monthly repayment plans.
Biden has yet to decide on student loan forgiveness, but will soon
Of course, none of these details are final — their plans depend on President Biden’s decision to use executive action to implement broad student loan relief. The White House has repeatedly said he has not made a final decision.
Biden has promised $10,000 in student loan forgiveness per borrower during his 2020 presidential campaign, but he has avoided using executive action (rather than congressional legislation) to implement it. Biden has seemed intrigued by the idea in recent months, but he has delayed a final decision. He recently told reporters that he would make a decision by the end of August.
Advocates have been urging Biden to cancel more student debt, and many progressive Democrats had wanted Biden to cancel $50,000 or more per borrower, with universal eligibility and no income cap. Advocates warn that implementing eligibility rules could lead to bureaucratic delays, mistakes and complications.
But Biden is outraged by the cancellation of universal student loans. Recent reports suggest he prefers to accept $10,000 in student loan forgiveness, limited to borrowers earning $125,000 or less a year.
Biden must also decide soon to suspend student loans and other relief measures
Massive student loan forgiveness isn’t Biden’s only major student loan decision. The ongoing student loan moratorium — which has suspended payments and interest on most federal student loans for more than two years — will end in four weeks. Speculation has grown that he will extend the payment moratorium, but no decision has been announced.
Biden will also need to decide whether to extend other expiring student loan forgiveness programs, 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 student loan reading
Has the Biden administration just made a big hint about student loan forgiveness?
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Biden may extend student loan moratorium into next year and is considering other relief measures, including loan forgiveness
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