Written By Adam S. Minsky, JD
Student loan forgiveness continues to be a major political and policy issue in America. The Biden administration has taken steps to provide relief to millions of borrowers despite legal setbacks. While many have benefited from these efforts, not everyone has received the forgiveness they expected.
Not everyone qualifies for immediate student loan forgiveness: Are you still waiting?
Last week, President Biden touted his administration’s efforts to provide debt relief to millions.
“When I was told I couldn’t universally just change the way in which we dealt with student loans, I fixed two student loan programs that already existed to reduce the burden of student debt for nearly four million Americans,” said Biden in his State of the Union Address to Congress.
Biden was referring to last summer’s Supreme Court decision striking down his signature student debt relief initiative, which would have wiped out up to $20,000 in federal student loans for most borrowers.
Despite the legal hurdle, the Biden administration has been taking steps to streamline and broaden existing loan forgiveness programs so more borrowers can qualify. These efforts have focused predominantly on two programs:
- Income-Driven Repayment (IDR) is a category of repayment plan tied to a borrower’s income that can result in eventual loan forgiveness (typically after 20 or 25 years).
- Public Service Loan Forgiveness (PSLF) can wipe out a borrower’s federal student loan debt in as little as 10 years if they work full-time for certain nonprofit or government organizations.
The Education Department has, so far, approved over $102 billion in student loan forgiveness for more than 1.7 million borrowers under both programs, according to data released last month.
But not everyone qualifies for immediate student loan forgiveness under IDR and PSLF, even after Biden’s improvements to these programs. At the same time, those who do qualify may need to take certain steps to get relief or risk being blocked from relief due to administrative or technical issues.
If you haven’t received loan forgiveness yet, here are some possible reasons why.
1. You could be short of the student loan forgiveness threshold for IDR or PSLF
Borrowers are generally eligible for student loan forgiveness after 20 or 25 years of repayment under IDR plans. That term can be reduced to as little as 10 years under Biden’s SAVE plan for borrowers who took out relatively small amounts of student debt and for borrowers pursuing loan forgiveness through PSLF.
Under Biden administration programs like the IDR account adjustment (which is ongoing through the spring) and the limited PSLF waiver (which ended in 2022), borrowers can get retroactive “credit” toward loan forgiveness for periods that might not have qualified under the previous regulatory regime.
Under both programs, past periods of repayment on any kind of repayment plan and certain periods of deferment and forbearance can count toward loan forgiveness.
But even after receiving this credit, not all borrowers qualify for immediate relief. The Education Department is expected to publish IDR payment counts later this summer, at which point borrowers should have a clearer picture regarding where they stand on their loan forgiveness term.
Those on track for PSLF can already see their progress using the “PSLF Payment Tracking” information available through their MOHELA servicer account. Borrowers who are short of the threshold for forgiveness must continue to meet the program requirements for IDR (and, if applicable, PSLF), including, in most cases, repaying their loans under an IDR plan.
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2. You may need to consolidate to qualify for student loan forgiveness
Some borrowers need to consolidate their loans through the federal Direct consolidation program to qualify for student loan forgiveness.
Borrowers who have privately-owned FFEL loans, as well as Perkins loans and Health Education Assistance Loan (HEAL) loans, need to apply to consolidate before April 30, 2024, to receive IDR credit under the IDR account adjustment initiative.
Borrowers with any non-Direct federal loans (including FFEL loans that are federally held) must consolidate via the Direct Loan program to qualify for PSLF and receive PSLF credit by the same deadline, as only Direct federal student loans are eligible for PSLF.
3. You may need to certify your employment for PSLF
Borrowers pursuing loan forgiveness through PSLF must take an additional step by certifying their public service employment. That’s the only way that payments can be counted toward the 10 years required to be eligible for relief through that program. If you don’t certify your employment, you don’t get PSLF credit.
Under the IDR account adjustment, borrowers can receive retroactive PSLF credit as far back as October 2007 for most repayment periods (and some periods of deferment and forbearance) as long as they were working in qualifying employment. Qualifying PSLF employment is defined as working 30 hours per week or more as a W-2 employee for certain nonprofit and public or government organizations.
You can use the Department of Education’s Employer Search tool to find out whether an employer may qualify for PSLF. Borrowers can now certify their PSLF employment (and obtain the required signature from current and prior employers) using an entirely online process via the department’s PSLF Help Tool.
4. Problems with loan data could interfere with loan forgiveness evaluations
In implementing the IDR account adjustment, the Education Department uses computer programs to analyze borrowers’ loan status data as reported to StudentAid.gov. You can review your own loan data by logging into your StudentAid.gov account and downloading your “My Student Aid Data” file.
Sometimes, the data reported to the department by schools or loan servicers may not be accurate or complete. This is particularly the case for some older student loans that have been around for 20 years or longer.
In some cases, no loan status data was reported at all for certain periods of time. In such situations, the Education Department may not automatically count periods toward loan forgiveness under IDR or PSLF because its systems are not able to identify whether a particular loan period qualifies.
If there’s an issue with your loan data, you may need to request a review by the Department of Education.
Borrowers pursuing PSLF who believe that their payments have not been properly counted can go through the PSLF Reconsideration process. Borrowers can also submit formal complaints or disputes to the FSA Feedback division or the FSA Ombudsman group.
5. Enroll in SAVE to be eligible for early student loan forgiveness
Borrowers who took out $12,000 or less in student loans could be eligible for “early” loan forgiveness in as little as 10 years through Biden’s new SAVE plan. This is in contrast to other borrowers in IDR, who typically are eligible for relief after 20 or 25 years in repayment.
Under SAVE, borrowers with smaller initial balances can get loan forgiveness much more quickly. The forgiveness term increases by one year for every additional $1,000 borrowed above the initial $12,000 cutoff.
Last month, the Biden administration approved more than 150,000 borrowers for early student loan forgiveness via SAVE. This was the first batch of relief under this accelerated loan forgiveness timeline. For eligible borrowers, cancellations will be implemented on an ongoing, rolling basis.
However, to qualify, borrowers must first enroll in SAVE.
If you’re in any other student loan repayment plan, including another IDR plan, you won’t qualify for this benefit. “If you have made enough payments to be eligible for this early forgiveness but are not enrolled in the SAVE Plan when the forgiveness is implemented, you must first enroll in the SAVE Plan,” says Education Department guidance.
Not sure what to do with your student loans?
Take our 11 question quiz to get a personalized recommendation for 2024 on whether you should pursue PSLF, Biden’s New IDR plan, or refinancing (including the one lender we think could give you the best rate).
