The Supreme Court’s decision on President Joe Biden’s student loan forgiveness program might take weeks or months.
Over 16 million people have already been accepted for up to $20,000 in federal student loan forgiveness, and some have been contacted through email, but no debts are permitted to be canceled at this time due to pending litigation. But, many of the 43 million federal student loan borrowers may be eligible for debt relief through alternative means.
Public Service Loan Forgiveness
After 10 years of eligible payments, the Public Service Loan Forgiveness program allows selected government and nonprofit employees to apply for federal student loan forgiveness.
The complete remaining balance of a qualified borrower is canceled, regardless of the amount. Teachers, social workers, nurses, and doctors, as well as government attorneys, are examples of potential borrowers.
There are numerous eligibility requirements. First, a borrower must have worked full-time for a qualified government or nonprofit organization for at least ten years. Second, the borrower must have federal Direct Loans and have made 120 monthly loan payments on an income-driven repayment plan, which bases payment amounts on the borrower’s income and family size.
Beginning in July, borrowers who consolidate existing loans into federal Direct Loans in order to qualify for the program will earn partial credit for past payments. Prior to consolidation, borrowers lost all progress toward forgiveness. Following July, they will get a weighted average of their existing PSLF-eligible payments.
In addition, the new rules will simplify the requirements for meeting the requirement that a borrower is a full-time public sector employee. The new benchmark for full-time employment will be 30 hours per week. Specifically, the modification will make it easier for adjunct instructors at public colleges to qualify for the program.
Teacher Loan Forgiveness Program
The Teacher Loan Forgiveness Program forgives up to $17,500 in federal student loan debt for eligible full-time teachers who have taught for at least five years in a low-income elementary or secondary school.
Highly qualified secondary school math and science teachers, as well as an elementary and secondary school special education instructors, are eligible for the full $17,500 in federal loan forgiveness. Individuals who are regarded as highly competent and who teach other subject areas are eligible for loan forgiveness of up to $5,000.
Federal Direct Loans and Federal Family Education Loans are both eligible for forgiveness under this program.
File For Bankruptcy
Historically, it has been quite difficult to discharge student loan debt in bankruptcy. But, the Biden administration issued new instructions last year that tries to facilitate debt relief for individuals in financial trouble.
Unlike a credit card, medical, and other consumer loans, student loan borrowers must demonstrate undue hardship in repaying their debt.
The new guidelines are intended to ease the arduous process of proving undue hardship and make it simpler for government attorneys to recommend debt discharge to a bankruptcy court.
Total And Permanent Disability Discharge
The federal government forgives the federal student loan debt of borrowers who are totally and permanently incapacitated, including Direct Loans, Federal Family Education Loans, and Perkins Loans. Borrowers must produce proof of eligibility from a physician, the Social Security Administration, or the Department of Veterans Affairs.
In 2021, the Biden administration modified the rule so that the Department of Education can automatically release disabled borrowers determined by administrative data matching with the Social Security Administration without the borrowers submitting documentation.
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Borrower Defense To Repayment
The borrower defense to repayment program provides debt relief to those whose college committed fraud.
Under the federal program, students who attended large, for-profit colleges such as Corinthian Colleges and ITT Tech that have been determined to have misled students with inflated job-placement rates are generally eligible for loan forgiveness.
The Department of Education has already established that certain categories of students are automatically qualified for borrower defense against repayment, including those who attended Corinthian Colleges between 1995 and April 2015.
Some students, however, may be required to seek for debt relief and provide evidence that their schools misled them or engaged in other misconduct.
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