Understanding the landscape of student loan forgiveness is crucial for borrowers looking to navigate their repayment strategies effectively. With recent changes and proposals under the Biden administration taking place in 2024, here are four essential items to be aware of if you are seeking student loan relief.
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Federal vs. Private Loans and Public vs. Private Employment
The first step in any repayment or forgiveness pursuit is understanding the type of student loans you have. Federal loans offer federal repayment and forgiveness options, such as Public Service Loan Forgiveness (PSLF) and Income-Driven Repayment plans. In contrast, private loans typically do not offer these forgiveness paths. Your employment sector, too, plays a critical role in qualifying for either program. PSLF is available to borrowers who work full-time in public service jobs, including positions within government agencies or non-profit organizations. If you’re employed in the private sector, you are not eligible for PSLF but you can pursue Income-Driven Repayment (IDR) plans for your federal student loans. One of the Biden-Harris administration’s 2024 pursuits is expanding the eligibility criteria for PSLF and IDR, so it’s important to understand whether or not you may qualify under the new parameters.
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New Groups of Borrowers Targeted for Relief
Recent proposals under President Biden’s administration aim to expand relief to new groups of borrowers. This includes measures to alleviate the burden of interest for long-term borrowers and those who have been disproportionately impacted by student debt. All told, it could help an estimated 30 million people. These new groups include:
- Borrowers who have been adversely impacted by unpaid interest
- Borrowers who are eligible for PSLF or IDR but haven’t successfully applied
- Borrowers who have been paying for over 20 or 25 years (depending on the type of loan)
- Borrowers facing hardship, and
- Borrowers who attended colleges of “low financial value,” such as institutions that lost eligibility for federal funding due to financially cheating their students.
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Servicer Changes
The landscape of student loan servicers—the companies managing your loan payments—has seen significant shifts, with some servicers bowing out of federal contracts for a large portion of borrowers. It’s important to stay informed about any changes to your servicer, as this can affect how payments are processed and how information is communicated, potentially impacting eligibility for forgiveness programs. For example, in April 2024, the Department of Education (ED) announced that the servicer of the PSLF program, MOHELA, will shift all processing of PSLF forms to Federal Student Aid. During the transition, processing of PSLF applications will be suspended for 3 months. This includes form processing, payment counts, and even reaching forgiveness, with all necessary corrections and tabulations being made when the pause ends after July 2024.
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Additional Benefits Under the SAVE Plan
Income-Driven Repayment plans are crucial for many borrowers, as they adjust your monthly payments according to your income and family size. In 2024, additional benefits will go into effect for those enrolled in the Saving on A Valuable Education (SAVE) plan, including cutting monthly payments in half (from 10% to 5% for most undergraduate loans).
Stay Informed on Student Loan Programs
Ensuring that you stay up to date on the ever-shifting student loan landscape can be a challenging part of the forgiveness journey—but these policy changes can significantly impact your repayment strategy and financial well-being.
Interesting Related Article: “Benefits of Private Student Loan Refinance“
