Student loan borrowers should note these critical dates for loan cancellation and repayment

The Biden administration has released a slew of new student loan initiatives over the past year, including new student loan forgiveness plans, expansions to critical programs, and extensions of past repayment relief. The multiple, overlapping initiatives can create confusion for borrowers who find it difficult to keep track of impending deadlines and the expiration of temporary initiatives, especially when action may be needed.

Here is a comprehensive overview of key dates in the coming months that student borrowers need to know.

October 1, 2022: Biden Initiative student loan forgiveness application expected to be released shortly thereafter

The Biden administration last month announced a sweeping new plan to enact broad student loan forgiveness for millions of borrowers through executive action. The initiative will provide one-time student loan forgiveness relief of up to $20,000 for eligible borrowers who earn less than $125,000 per year, or $250,000 if married.

The Department of Education is currently developing a formal application that most borrowers will need to submit to apply for loan forgiveness under the initiative. Senior administration officials said the application is expected to be posted in early October on StudentAid.gov. Borrowers will have one year to apply for student loan forgiveness.

October 31, 2022: Expiry of limited PSLF waiver

Last year, the Biden administration announced the PSLF Limited Waiver, an initiative that temporarily relaxes the rules governing the forgiveness of public service loans (PSLFs). PSLF is a student loan forgiveness program for borrowers who dedicate their careers to nonprofit or government work. Borrowers can become eligible for federal student loan forgiveness after making 120 “qualifying payments,” which equals 10 years if payments are made consecutively (although they don’t have to be).

The original rules governing the PSLF program were strict, confusing and poorly administered by the government and its contracted loan managers. Under the limited PSLF waiver, the rules governing “eligible payments” have been significantly relaxed, allowing many prior loan periods (including certain deferment and forbearance periods) to count towards cancellation of the loan. ready.

But the initiative is due to end on October 31. Many borrowers will need to take action by then, such as consolidating FFEL program loans into a direct loan or submitting PSLF employment certification forms.

Senior Education Ministry officials have urged borrowers to apply for the PSLF before the waiver expires in October, despite calls from many student loan borrower advocacy groups to extend the deadline.

“For a limited time, all past student loan repayments count toward #PSLFsaid Education Secretary Miguel Cardona in a Tweeter Wednesday. “It doesn’t matter if they were on time, for the full amount, or on an eligible repayment plan. They all matter. The waiver runs until October 31, 2022. Go to StudentAid.Gov/PSLF to register today.

November 3, 2022: Hearing on Final Approval of Borrower’s Defense to Repayment Settlement

The Biden administration and a class of student borrowers are finalizing a settlement to resolve a lawsuit, Sweet vs. Cardona, regarding blocked requests for defense of the borrower against repayment. Borrower Defense Until Repayment provides federal student loan forgiveness for borrowers who have been misled or defrauded by their schools.

Borrowers who have attended a list of covered schools have a short window of time to seek relief through Borrower Advocacy to obtain at least some benefits from the Sweet regulation. Borrowers who submit their claim before November 3, 2022, which is the final court hearing on the “fairness” of the proposed settlement, would be considered “post-class plaintiffs.”

“Under the proposed settlement, post-class applicants will receive decisions on their applications within 36 months of the date of final approval of the settlement. If the Department does not issue a decision within this period, you will benefit from the same relief as if you were a member of the decision group who did not receive a timely decision (loan release, repayment [of any payments made]and credit repair),” according to the Predatory Student Loans Project, the legal group representing the student borrower category.

November 15, 2022: Suggested Biden Plan Student Loan Forgiveness Application Submission

While borrowers will have up to a year to apply for Biden’s student loan forgiveness initiative of up to $20,000, Department of Education officials are encouraging borrowers to submit their application by Nov. 15, 2022 Indeed, the expected processing time is four to six weeks, which would mean that a borrower who submits a timely application should receive loan forgiveness by the end of the year – that’s i.e. when the student loan payment break is now due to end (more details below).

It’s not necessary to get student loan forgiveness applied to your balance until January, but it can help reduce student loan payments for some borrowers after the payment break ends. For borrowers who have a balance remaining after student loan forgiveness is applied and who are repaying their loans under a standard, extended, or graduated repayment plan, the Department of Education will “recalculate your monthly payment based on your new balance, potentially reducing your monthly payment.”

December 31, 2022: end of the student loan break

As part of the announcement of Biden’s new student loan forgiveness plan last month, the president also extended the pause on outstanding student loan payments and the interest freeze until the end of the year. . The White House and the Department of Education called it a “final” extension of the payment break. Borrowers should anticipate a return to repayment in January.

January 1, 2023: Planned completion of IDR account adjustment

Last spring, the Biden administration announced another student loan relief and forgiveness initiative called the IDR Account Adjustment. This initiative will provide a unique retroactive “solution” through Income Driven Repayment (IDR) programs, which allow loan forgiveness after 20 or 25 years of repayment under an IDR plan.

As part of the IDR account adjustment, the Department of Education will be able to provide retroactive credit over a borrower’s IDR repayment term, including most repayment periods as well as some adjournment and abstention. According to the administration, “More than 3.6 million borrowers will receive at least three years of additional credit for forgiveness” as part of the adjustment. And, “Any borrower with loans that have accumulated repayment time of at least 20 or 25 years will see automatic discounting, even if you are not currently on an IDR plan.”

For borrowers who already have federal student loans held by the government, no action is needed, as the Department of Education will automatically roll out the initiative starting this fall. But for borrowers with corporate-held FFEL student loans, direct loan consolidation may be required to qualify for this one-time relief.

“If you have FFEL loans held for commercial purposes, you can only benefit from the IDR account adjustment if you consolidate before the end of the implementation of these changes, which is estimated at the earliest on January 1, 2023 “, said the Ministry of Education in a published statement. tips. There are indications that this deadline could be pushed back, but so far the administration has not provided any official update.

July 1, 2023: New IDR plan and new PSLF regulations

In addition to these temporary, one-time initiatives, the Biden administration is also drafting new regulations governing major federal student loan programs to bring about more lasting change. This includes updated PSLF regulations that will codify some (but not all) elements of the limited PLSF waiver, as well as a potentially more affordable IDR plan.

“The ministry is proposing a rule to create a new income-based repayment plan that will significantly reduce future monthly payments for low- and middle-income borrowers. The proposed rule would protect more income from loan repayments. It would halve … the amount borrowers have to pay each month on their undergraduate loans,” the Department of Education said in a statement last month. The new plan would also reduce accrued interest.

The regulations have not been finalized and the process still has to clear several procedural hurdles before coming into effect. The earliest the new regulations would be active would be July 1, 2023.

Further Reading on Student Loans

6 things borrowers can do now to prepare for student loan forgiveness

Biden’s student loan forgiveness could be taxable in some states

Biden announces historic student loan forgiveness of up to $20,000 and extended student loan pause: key details

If You’ve Been To These Schools, You May Qualify For Student Loan Forgiveness: Here’s What To Do

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