NewsLet Joe Know


Could recent announcements mean student loan forgiveness is on the way?

student loan savings
Posted at 5:00 AM, Mar 31, 2021
and last updated 2021-03-31 17:41:20-04

The Biden-Harris Administration has been pressured to act on promises to forgive student loan debt. Talks of $50,000 in forgiveness for everyone have been shot down with President Biden saying he wants lawmakers to act.

However, in recent weeks, it seems his administration is taking action, starting with two specific groups: Americans who have become disabled and students who were lied to about their college.

"Perhaps the school told them that job placement rates were higher than they actually are. Upon graduation, the school might have told them that graduates make more money than they actually do, or that the college's rankings were higher than they actually were," said Brianna McGurran, a loan analyst with Forbes Advisor.

McGurran says these students could see help from the Borrowers Defense Program. Major changes were just implemented to this program no longer requiring applicants to show they suffered monetary harm or that they are making less than other people in their intended field.

More importantly, if someone qualifies, all of their federal student loans will be wiped out, not just a percentage like before.

It could mean about 72,000 borrowers would be free of their student loans.

The second group seeing some reprieve: Americans who have student loans and have become permanently disabled.

This week the Department of Education, citing the COVID pandemic, removed their income verification requirements.

In the past, applicants who applied had to show their income did not surpass a certain level for three years after filing or the loans would be reinstated.

It could apply to more than 230,000 borrowers.

As for the 41,000 who already had their loans reinstated during the pandemic, the Department of Education says they will have them removed once again and any payments refunded.

"Unfortunately, this announcement doesn't necessarily give us more information about widespread loan forgiveness," said McGurran.

She says despite this, lawmakers have taken action to make sure any student loan forgiveness doesn't come at a cost.

"People don't have to deal with one more bureaucratic hiccup in terms of paying tax on that amount," said McGurran.

On Tuesday, the Department of Education made yet another loan announcement.

They say payments for Federal Family Education Loans (FFEL) will be paused because of the pandemic.

If you can pay, however, now is a good time as the payment will go towards the principal of the loan.