Student Loan Forgiveness: Biden Could Extend Limited Waiver

President Joe Biden could extend the limited waiver for student loan forgiveness.

Here’s what you need to know — and what it means for your student loans.

Student Loans

Biden’s top student loan official, Richard Cordray, is lobbying the Biden administration to extend the limited waiver for public service loan forgiveness that expires on October 31, 2022. As reported by Business Insider, Cordray expressed concern this week at a student loan conference that the limited waiver will expire before student loan borrowers can take advantage of its many benefits. The limited waiver allows student loan borrowers to “count” previously ineligible student loan payments toward student loan forgiveness. For example, this includes:

  • FFELP Loans and Perkins Loans student loan payments will count for student loan forgiveness;
  • student loan payments before student loan consolidation count toward student loan forgiveness;
  • student loan payments made under the wrong student loan repayment plan count toward student loan forgiveness;
  • late or incorrect student loan payments count toward student loan forgiveness; and
  • student loan payments made during active military service — even if the borrower was enrolled in temporary student loan forbearance or deferment — count toward student loan forgiveness.

Student loan forgiveness: borrower need to more time to qualify

The Biden administration announced major changes to student loan forgiveness last October. While student loan borrowers will have nearly a year to benefit from the limited waiver, Cordray says more time is needed. The U.S. Department of Education announced that Biden has canceled $8.1 billion of student loans for 145,000 student loan borrowers who work in public service and non-profit organizations. That said, the Student Borrower Protection Center says that 9 million borrowers now qualify for student loan forgiveness. The bad news is that less than 15% of 9 million public service workers with student loan debt have filed paperwork to track their progress toward student loan forgiveness. Bottom line: more student loan borrowers are eligible for student loan forgiveness, but they aren’t getting on track to get their student loans canceled. Cordray said he will continue to push for a potential extension of the limited waiver, but Biden could be limited by executive authority.

Senators propose major changes to student loan forgiveness

While the Education Department explores a potential extension of the limited waiver, two U.S. senators proposed major changes to student loan forgiveness. U.S. Senators Sheldon Whitehouse (D-RI) and Jeff Merkley (D-OR) introduced the Simplifying and Strengthening PSLF Act to “streamline and improve” public service loan forgiveness. Their proposed legislation would, among other things:

  • Student loan forgiveness in 5 years: Reduce the number of student loan payments needed to qualify for public loan forgiveness from 120 payments over 10 years to 60 payments over 5 years;
  • Count more student loan payments: Allow any prior period of student loan repayment to count as a qualifying student loan payment, regardless of federal loan type, student loan repayment plan, or whether student loan payments were made in full or on time.
  • Consolidate student loans again: Permit Parent PLUS Loan borrowers and couples who previously joint-consolidated their FFEL federal student loans to re-consolidate their student loans into one Direct Loan to become eligible for public service loan forgiveness.

Student loans: next steps

Biden is deciding whether to enact wide-scale student cancellation for millions of student loan borrowers. This historic student loan relief could include $10,000 of student loan forgiveness, although progressives in Congress are lobbying Biden to cancel $50,000 of student loans. Biden hasn’t commented publicly on whether he will extend the limited waiver beyond October 31. Education Secretary Miguel Cardona and Cordray both said the moratorium on federal student loan payments could be extended. However, they have cautioned student loan borrowers to prepare for federal student loan payments to restart beginning September 1, 2022. If you haven’t yet prepared, here are some smart ways to pay off your student loans:

Student Loans: Related Reading

Biden has canceled $400 billion of student loans, but lawmaker says no more student loan forgiveness

5 huge changes to student loans

How to qualify for $6 billion of student loan forgiveness

Education Department announces major overhaul of student loan servicing

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