6 Student Loan Forgiveness Updates For 2024

The Education Department has approved $167 billion in student loan forgiveness since 2021, according to data officials released in May. At least 4.75 million borrowers have benefited.

President Biden’s initial mass student debt relief plan, which would have wiped out up to $20,000 in federal student loans for eligible borrowers, was struck down by the United States Supreme Court last year. But the administration has still managed to enact billions in debt cancellation through a series of improvements, regulatory changes, and waivers associated with existing loan forgiveness plans.

Here’s an overview of the relief approved so far, and what borrowers should know as some initiatives are ongoing.

$68 Billion in Student Loan Forgiveness Through PSLF Changes

The Biden administration has approved close to $70 billion in student loan forgiveness for more than 900,000 borrowers through a series of improvements to Public Service Loan Forgiveness (PSLF). PSLF can wipe out a borrower’s federal student loans in as little as 10 years if the borrower meets the program’s requirements and works in qualifying nonprofit or public employment. The Education Department has adopted several PSLF-related initiatives, including:

• The Limited PSLF Waiver, which relaxed PSLF program rules so that borrowers could receive retroactive PSLF credit for past loan periods that may not have counted. The waiver ended in the fall of 2022.
• The IDR Account Adjustment, which extended many of the benefits of the Limited PSLF Waiver. Key deadlines for the account adjustment have passed, but the Education Department is still implementing relief under the initiatve.
• New PSLF regulations went into effect last July that allow more periods to potentially count toward loan forgiveness, and provide borrowers with a “buyback” option for certain past periods that wouldn’t normally count.

Separately, the 3.5-year Covid forbearance can count toward PSLF if the borrower was working in qualifying employment and was meeting other program criteria.

In addition, the Education Department recently transitioned PSLF tracking from MOHELA, one of the department’s contracted loan servicers, to StudentAid.gov. After a three-month processing pause, PSLF tracking and servicing is back up and running as of July 1.

1 Million Borrowers Get Student Loan Forgiveness Through IDR Account Adjustment

Another million borrowers have been approved for student loan forgiveness through the IDR Account Adjustment. Similarly to the earlier PSLF Waiver, this initiative is designed to rectify past problems with income-driven repayment plans by providing borrowers with retroactive “credit” toward student loan forgiveness under IDR plans. Only federal student loans can qualify; private student loans do not.

“In the past, there were a variety of reasons why some months may not have been credited toward loan forgiveness—for example, months when you were in a payment plan that wasn’t eligible,” says Education Department guidance. “With this payment count adjustment, we will change whether certain payments or months are credited toward your loan forgiveness.” Certain past periods of repayment, deferment, forbearance, and recent default periods can all potentially count toward 20- or 25-year IDR loan forgiveness, depending on a borrower’s specific student loans and circumstances.

Key deadlines for the IDR Account Adjustment have already passed, but implementation is ongoing.

“The U.S. Department of Education (ED) currently expects that the payment count adjustment will be completed by Sept. 1, 2024,” says official guidance. However, many borrower advocates expect this completion date to be pushed out later into the year. “When we implement the adjustment, it will automatically be applied to all Direct Loans and FFEL Program loans that are managed by ED at that time.”

54,000 Borrowers Get Early Student Loan Forgiveness Under SAVE

The Biden administration’s new SAVE plan — which just debuted last fall — already has eight million enrollees. Officials have touted SAVE as the most affordable IDR plan ever created; the plan features a high income exemption, a reasonable repayment formula, and a generous interest subsidy.

One unique benefit of the SAVE plan is accelerated student loan forgiveness for borrowers who took out small amounts of debt. Borrowers who took out $12,000 or less could be eligible for student loan forgiveness in as little as 10 years, compared to 20 or 25 years for other IDR plans. The loan forgiveness term increases by one year for every additional $1,000 borrowed. Around 54,300 borrowers have received more than $600 million in student loan forgiveness through this feature, according to the Education Department.

However, SAVE is currently facing two major legal challenges brought by a coalition of Republican-led states. After a flurry of court activity, most elements of the SAVE plan remain in effect, although student loan forgiveness under the program has been halted. SAVE could ultimately get struck down if these legal challenges are successful.

Student Loan Forgiveness For Disabled Borrowers And Those Harmed By School Misconduct

The Biden administration enacted new rules for the Total and Permanent Disability (TPD) discharge program, which can allow federal student loan borrowers to qualify for loan forgiveness if they have a medical condition that significantly interferes with their ability to maintain substantial, gainful employment. These new regulations make it easier for certain borrowers to qualify (such as those receiving Social Security disability benefits, as well as borrowers whose medical provider must certify that they are disabled), and removes administrative barriers that had previously made it difficult for some borrowers to keep their loans in a discharged status. More than half a million people have been approved for TPD discharges following these changes.

In addition, the Education Department has approved “$28.7 billion for more than 1.6 million borrowers who were cheated by their schools, saw their institutions precipitously close, or are covered by related court settlements,” according to a recent press release. This includes relief under Borrower Defense to Repayment, the Closed School Discharge program, and the Sweet v. Cardona settlement.

New Student Loan Forgiveness Plan Debuts This Fall – Maybe

Meanwhile, the Biden administration is planning on debuting a new student loan forgiveness plan by this October. The new initiative will target relief to four groups of borrowers, including those who have experienced significant interest accrual or capitalization, or have been in repayment for 20 or 25 years or longer. The administration may later unveil a related initiative to provide student loan forgiveness based on a person’s hardships.

However, most observers expect the new plan to get challenged in court as soon as it is formally released. So whether any borrowers actually receive loan forgiveness under the program remains to be seen.