It’s never been a better time to get rid of your student debt.
Although President Joe Biden’s plans to cancel up to $400 billion in student debt for tens of millions of Americans were foiled over the summer at the Supreme Court, his administration has explored all of its existing authority to leave people with less education debt.
As a result, more than 3.7 million Americans have received loan cancellation during Biden’s time in office, totaling $136.6 billion in aid.
In a recent exclusive interview with CNBC, Rep. James Clyburn, D-S.C., who has been a vocal advocate for student loan borrowers, said he’s heard from the U.S. Department of Education that every two months over the next four years, another 75,000 people will be eligible to have their debt forgiven due to changes in income-driven repayment plans and Public Service Loan Forgiveness.
Here’s what borrowers should know about those programs and other aid options.
Income-driven repayment plans
Income-driven repayment plans, which date back to 1994, allow student loan borrowers to pay a share of their discretionary income toward their debt each month, and to get any remaining debt forgiven after a set period. There are four different plans.
Yet many borrowers paid into the system for years without getting that promised cancellation, said higher education expert Mark Kantrowitz.
“The loan servicers weren’t keeping track of the number of qualifying payments,” Kantrowitz said in a former CNBC interview.
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The Biden administration has been evaluating millions of borrowers’ loan accounts to see if they should have had their debt forgiven. So far, more than 930,000 people have benefited, receiving more than $45 billion in debt cancelation.
Most people with federal student loans qualify for income-driven repayment plans, and can review the options and apply at Studentaid.gov.
Recently, the Education Department also announced that it would soon cancel the debts of those who’ve been in repayment for a decade or more and originally took out $12,000 or less. To qualify, borrowers need to be enrolled in the administration’s new Saving on a Valuable Education, or SAVE, plan.
Public Service Loan Forgiveness
Navigating the Public Service Loan Forgiveness program has been famously difficult.
The program, signed into law by former President George W. Bush in 2007, allows certain not-for-profit and government employees to have their federal student loans discharged after 10 years of on-time payments.
The Consumer Financial Protection Bureau in 2013 estimated that one-quarter of American workers may be eligible.
However, after getting wrong information from their servicers about the program’s requirements, millions of borrowers hit walls. People frequently found that some or all of their qualifying payments didn’t count because they had a loan or were enrolled in a payment plan not covered under the initiative.
The Biden administration has tried to reverse the trend of borrowers being excluded from the relief on technicalities. It has broadened eligibility and allowed people to reapply for the relief, as long as they were working in the public sector and paying down their debt.
Some 790,000 public servants have gotten their debt erased as a result, amounting to more than $56 billion in relief.
With the PSLF help tool, borrowers can also search for a list of qualifying employers under the program and access the employer certification form. They can also learn about all the program’s requirements at Studentaid.gov.
Total and Permanent Disability discharge
The Biden administration has also forgiven the student debt of more than 510,000 disabled borrowers. The $11.7 billion in aid was delivered under the Total and Permanent Disability discharge.
The Department of Education has gotten better at identifying borrowers who are disabled and in need of this relief by accessing information from the Social Security Administration, Kantrowitz said.
Borrowers may qualify for a TPD discharge if they suffer from a mental or physical disability that is severe, permanent and prevents them from working. Proof of the disability can come from a doctor, the Social Security Administration or The Department of Veterans Affairs.
Borrower defense
Another 1.3 million borrowers have walked away from their debt over the past few years thanks to the Borrower Defense Loan Discharge. These people received $22.5 billion in relief.
Borrowers can be eligible for the discharge if their schools suddenly closed or they were cheated by their colleges.
The Biden administration has more swiftly processed these applications and has started considering cases in a group rather than requiring each attendee of a school to prove they were misled.
“Borrowers who were affected by similar circumstances should have their loans discharged as a group,” Kantrowitz said.
Those who think they might qualify can apply with the Education Department.
‘Plan B’ for forgiveness still possible
The Biden administration is also working to revise its broad forgiveness plan to make it legally viable.
To do so, it has sought to narrow the aid by focusing on certain groups, including those with balances greater than what they originally borrowed and students from schools of questionable quality. Borrowers experiencing “financial hardship” may also get loan cancelation, although it’s unclear how this category will be defined.
The president may try to deliver that relief before November.
“The election is still a long ways away, and there are signs that the Biden administration has been ramping up its debt relief program,” said Noah Rosenblum, an assistant professor of law at New York University.
That alternative plan, which has become known as Biden’s ‘Plan B,’ could forgive the student debt for as many as 10 million people, according to one estimate.