Biden administration extends $1B of additional student loan debt forgiveness
The Department of Education is canceling an additional $1.1 billion of federal student loan debt for borrowers who attended the now-defunct ITT Technical Institute, according to an Aug. 26 press release. Beginning in September, the Department will automatically discharge the student loan debt for 115,000 eligible borrowers.
This isn't the first time the Biden administration has targeted ITT Tech. In June, the Department canceled approximately $500 million worth of debt for 18,000 borrowers who applied for forgiveness under the borrower defense to prepayment program.
BIDEN ADMIN CANCELS ANOTHER $5.8B IN STUDENT DEBT FOR SELECT BORROWERS WITH DISABILITIES
Since President Joe Biden took office in January, his administration has canceled $9.5 billion in federal student loan debt for more than 563,000 borrowers, according to the Department of Education. When Biden was a presidential candidate, he initially campaigned on forgiving up to $10,000 worth of federal student loans per borrower.
Keep reading to learn more about who is eligible for this newest student loan forgiveness measure, as well as alternative options like federal deferment programs and private student loan refinancing.
If you decide to refinance your loans, visit Credible to shop around for the lowest rate possible without impacting your credit score.
BIDEN LAUNCHES INQUIRY TO FIX PSLF PROGRAM FOR FEDERAL STUDENT LOAN BORROWERS
Who qualifies for this round of student loan forgiveness?
The Biden administration will automatically provide student debt relief for 115,000 borrowers who attended the now-shuttered institution between Nov. 1, 2013, and July 1, 2020, according to the Department of Education. Students who attended ITT Tech within 120 days of its closure in 2016 already received automatic discharges in 2019.
The Education Department will begin processing this new round of discharges in September. To qualify, borrowers must not have enrolled in another institution within 3 years of their school's closure. Those who enrolled elsewhere but didn't complete their education may be eligible for student loan forgiveness, but they'll have to apply on the Federal Student Aid (FSA) website.
However, even if they meet the eligibility requirements, borrowers may still not have their student loans forgiven. The Higher Education Act allows the Department to forgive federal debt under the Direct Loan Program, the Federal Family Education Loan (FFEL) Program and the Perkins Loan Program. So, borrowers with private student loans may not have their debt forgiven under the closed school discharge program.
Borrowers with private student loans can consider alternative options like refinancing. View student loan refinance rates from real private lenders in the table below.
TWO STUDENT LOAN SERVICERS END FEDERAL CONTRACTS, DESERTING 10M BORROWERS
3 options to consider if you're not eligible for a closed school discharge
Outstanding student loan payments can constrict your budget and keep you from achieving financial milestones like buying a home or starting a family.
The Biden administration has extended the pause on federal student loan payments, but this COVID-19 emergency relief won't last forever — and it doesn't help borrowers with private student loans. If you're struggling to repay your college debt and you don't qualify for the latest round of federal forgiveness, consider the following options:
- Research alternative student loan forgiveness programs. For example, you can apply for the borrower defense program if you believe your school misled you or engaged in misconduct. You may be eligible to have some or all of your federal student loan debt forgiven.
- See if you qualify for federal student loan protections. The FSA offers income-driven repayment plans (IDR) that cap your monthly payments at a certain percentage of your disposable income. You may also qualify for up to 36 months of additional forbearance through economic hardship deferment or unemployment deferment.
- Refinance your student loans. Depending on the type of loans you have, refinancing may help you lower your monthly payment or pay off your debt faster. Student loan refinance rates are still near historic lows, granting borrowers the opportunity to save money on interest over time.
BIDEN ADMINISTRATION ISSUES 'FINAL EXTENSION' OF STUDENT LOAN PAYMENT PAUSE
Student loan refinancing isn't right for everyone. You may not want to refinance federal student loans, for instance, since doing so would make you ineligible for government protections like IDR plans and zero-interest forbearance. But if you have private student loans and you can secure a lower rate than what you're currently paying, refinancing may be a smart financial move.
If you need help deciding if refinancing is right for you, get in touch with a loan expert at Credible to discuss your student loan repayment options.
98% OF PUBLIC SERVICE LOAN FORGIVENESS PROGRAM APPLICATIONS REJECTED
Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at email@example.com and your question might be answered by Credible in our Money Expert column.