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  • Writer's pictureAlex Kreis

April 2022: Student Loan Forgiveness Update

Biden has now canceled $17 billion of student loans.

Administrative fixes to existing student loan forgiveness

The government is focused on fixing existing options for student loan forgiveness. Reducing paperwork, easing requirements and holding student loan servicers accountable, makes student loan forgiveness easier for more borrowers to qualify.

In April, major changes to the student loan forgiveness program helps 3.6 million student loan borrowers get student loan relief. Some income requirements were eliminated to get student loan forgiveness for borrowers with total and permanent disability, while increasing the use of data matching with other federal agencies.

The U.S. Department of Education is streamlining student loan forgiveness for student loan borrowers through public service loan forgiveness, income-driven repayment and borrower defense to repayment as well.

The U.S. DOE also made major changes to income-driven repayment, which allows student loan borrowers to count past payments that previously were ineligible for forgiveness. Now, student loan borrowers can get “credit” for these payments, which means they could qualify for student loan forgiveness sooner.

Student loan forgiveness through income-driven repayment to become the norm

Student loan borrowers can get student loan forgiveness through income-driven repayment. If struggling financially, an income-driven repayment plan should be the preferred student loan repayment option for federal student loans.

Income-driven repayment plans such as IBR, PAYE, REPAYE and ICR set monthly student loan payment as low as $0 based on discretionary income and family size.

Income-driven repayment plans are preferable to forbearance since the latter can result in student loan interest being added to the student loan balance. This makes student loans have a higher balance and also increases the risk of student loan delinquency and default.

Income-driven repayment plans also provide student loan forgiveness for federal student loans after 20 years (undergraduate) or 25 years (graduate student loans). This ensures that student loan borrowers aren’t stuck paying student loans forever.

Public Service Loan Forgiveness

This program helps student loan borrowers get total student loan cancellation for their federal student loans.

To qualify:

1. Need to work for a qualified public service or non-profit employer.

2. Make at least 120 monthly student loan payments while enrolled in an income-driven repayment plan.

3. Employer Certification Form filled out annually, or when job changes.

With public service loan forgiveness, student loan forgiveness can be earned in about half the time (10 years) compared to an income-driven repayment plan (20 years).

Temporary student loan relief will end August 31, 2022.

Here are some smart strategies for student loan repayment:

· Student loan refinance (lower interest rate + lower payment)

· Income-driven repayment (lower payment)

· Student loan forgiveness (federal student loans)



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