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

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

  • Student loan repayments from FFELP loans and Perkins loans will count toward 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 towards 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 a student loan forbearance or temporary deferral—count toward student loan forgiveness.

Student Loan Forgiveness: Borrower Needs More Time to Qualify

The Biden administration announced major changes to student loan forgiveness last October. While student borrowers will have nearly a year to qualify for the limited waiver, Cordray says it takes longer. The US Department of Education announced that Biden had forgiven $8.1 billion in student loans for 145,000 student borrowers who work in government and nonprofit organizations. That said, the Student Borrower Protection Center says 9 million borrowers are now eligible for student loan forgiveness. The bad news is that less than 15% of the 9 million public service workers with student loan debt have filed paperwork to track their progress toward student loan forgiveness. Conclusion: More student borrowers are eligible for student loan forgiveness, but they are not on track to have their student loan forgiven. Cordray said he would 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

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

  • Student loan forgiveness in 5 years: Reduce the number of student loan repayments needed to qualify for public loan forgiveness from 120 repayments over 10 years to 60 installments over 5 years;
  • Count more student loan repayments: Allow any the previous period of student loan repayment counts as an eligible 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: Allow Parent PLUS loan borrowers and couples who have previously jointly consolidated their Federal FFEL student loans to reconsolidate their student loans into one direct loan to become eligible for Public Service Loan Forgiveness.

Student loans: next steps

Biden decides whether or not to enact large-scale student cancellation for millions of student borrowers. This historic student loan relief could include $10,000 in student loan forgiveness, though progressives in Congress are pressing Biden to forgive $50,000 in student loans. Biden has not publicly commented on whether he will extend the limited waiver beyond Oct. 31. Education Secretary Miguel Cardona and Cordray both said the moratorium on federal student loan repayments could be extended. However, they warned student borrowers to prepare for the restart of federal student loan repayments starting September 1, 2022. If you haven’t prepared yet, here are some smart ways to repay your student loans:

Student Loans: Related Reading

Biden canceled $400 billion in student loans, but lawmaker says there’s no more student loan forgiveness

5 huge changes to student loans

How to qualify for $6 billion in student loan forgiveness

Department of Education Announces Major Overhaul of Student Loans Service