President Joe Biden is helping more student loan borrowers get student loan cancellation.
Here’s what you need to know.
Student loans
Biden has been focused on helping more student loan borrowers get student loan cancellation, even if it’s not wide-scale student loan cancellation. His targeted approach has resulted in $3 billion in student loans cancelled. His latest focus is improving the Public Service Loan Forgiveness (PSLF) program, which helps student loan borrowers such as first responders, teachers, servicemembers in the military, nurses, doctors and other public servants get federal student loan cancellation. As part of the College Cost Reduction and Access Act, Congress created the federal program on a bipartisan basis in 2007 during the President George W. Bush administration. As of April 30, 2021, the U.S. Department of Education has cancelled $452.7 million of student loan debt for 5,467 student loan borrowers through the Public Service Loan Forgiveness program.
However, since inception, the program has faced numerous issues, including that nearly 98% of student loan borrowers didn’t get student loan cancellation at the time of their application. Biden wants to change that to help more student loan borrowers who meet the program’s requirements get student loan forgiveness. Here’s how:
Student loan cancellation: how to improve student loan forgiveness
To help reform the Public Service Loan Forgiveness program, the U.S. Department of Eduation is asking for your feedback (even if you don’t have any student loans). Through September 24, 2021, you can send comments on “technical improvements, borrower experiences, policy considerations, or other factors that should be considered to improve access” to public service loan forgiveness. These comments will be the first step in gaining feedback to change rulemaking regarding public service loan forgiveness. You can either submit your comments electronically at www.regulations.gov, or by mail to: Office of the Under Secretary, U.S. Department of Education, 400 Maryland Avenue SW, Room [7E307], Washington, DC 20202.
Student loan cancellation: 16 questions
Here are some questions regarding student loan forgiveness provided by the U.S. Department of Education that you can answer in your comments:
Public Service & Student Debt
1. What are the direct and indirect effects of student debt on America’s public service workforce?
2. What are the direct and indirect benefits of PSLF for America’s public service workforce, including the effects of PSLF on individual borrowers, on the labor market, on communities, and on the populations served by public service workers?
3. Does PSLF provide a strong incentive for borrowers to engage in public service work? How are public service workers' employment decisions affected by their debt and by PSLF?
Experiences With Public Service Loan Forgiveness
4. What borrower experiences should the Department and Congress consider when making improvements to PSLF?
5. What features of PSLF are most difficult for borrowers to navigate?
6. What role do loan servicers play in making it easier or harder for borrowers to access PSLF?
7. What barriers prevent public service workers with student debt from pursuing PSLF or receiving loan forgiveness under PSLF?
8. For borrowers who have or had loans other than from the Direct Loan program, what have your experiences been when trying to access or participate in PSLF?
9. How can communications about PSLF requirements be improved?
10. What are the common questions that borrowers have about PSLF?
Opportunities To Strengthen PSLF for Borrowers Who Currently Work in Public Service
11. What operational steps can the Department take to strengthen PSLF and better serve public service workers who currently owe student debt, including borrowers who have already applied for and been denied PSLF?
12. What steps can the Department take to improve borrowers’ experiences in applying for PSLF?
13. What steps or improvements can servicers make to improve borrowers’ experiences in applying for PSLF?
14. What can the Department do to better partner with employers to ensure that all borrowers know about the benefits of PSLF?
The Effects of the COVID-19 Pandemic on Student Loan Borrowers Working in Public Service
15. How has the COVID-19 pandemic affected borrowers’ ability to access PSLF?
16. Are there any considerations about PSLF that the Department should bear in mind as it prepares for the end of the COVID-19 administrative forbearance on Direct Loans?
Student loan cancellation during the Covid-19 pandemic
Biden’s student loan forgiveness plan includes improving the Public Service Loan Forgiveness program. As a result of federal student loan relief due to the Covid-19 pandemic, student loan borrowers will receive $90 billion of student loan cancellation through September 30, 2021, according to the U.S. Department of Education. This has been especially beneficial to those borrowers pursuing public service loan forgiveness. Why? In addition to having no required federal student loan payments, Congress also ensured that any non-payments since March 2020 “count” toward the required 120 monthly payments for the program, even if a student loan borrower didn’t make actual payments. This is another form of student loan cancellation.
Student loan cancellation: next steps
This targeted plan for student loan cancellation for student loan borrowers who work for a qualified public service or non-profit employer is separate from wide-scale student loan cancellation. Biden’s focus on public service loan forgiveness is another example not only of targeted student loan cancellation — helping a specific group of student loan borrowers within the broader student loan borrower population — but also of Biden focusing on an area of student loan cancellation that is based on existing law. The same goes for borrower defense to repayment, through which Biden has cancelled $1.5 billion of student loans. This is in addition to the millions of dollars of student loans that colleges and universities have cancelled for borrowers. Even with all this student loan cancellation, it doesn’t mean there will be any wide-scale student loan cancellation anytime soon.
It’s possible that Biden decides to enact wide-scale student loan cancellation. However, as Biden has noted, he doesn’t believe has explicit legal authority to act unilaterally without further authorization in Congress. Biden has asked the U.S. Department of Education to opine on his legal power to cancel student loans, but the Trump administration determined that a president doesn’t have such authority. Speaker of the House Nancy Pelosi (D-CA) said the same this week, noting the president doesn’t have the power to cancel student loans. Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) disagree, noting the president has existing authority to cancel student loans through the Higher Education Act of 1964. The ideological division has resulted in no wide-scale student loan cancellation, and it’s unlikely that Congress will pass any wide-scale student loan cancellation. This is one reason that Biden has focused on targeted student loan cancellation, and there’s no sign that he will stop. In addition to public service loan forgiveness, Biden is also focused on changing student loan repayment and student loan forgiveness to make it simpler and less burdensome for student loan borrowers.
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