President Joe Biden’s plans to forgive federal student loan debt on a large scale have met with widespread opposition from lawmakers and legal authorities, but that has not deterred him from continuing to pursue debt relief options. Last month, his administration announced that it would forgive approximately $1.2 billion in debt for more than 150,000 borrowers enrolled in the Savings on a Valuable Education Plan.
That and other moves follow the Supreme Court’s rejection of a far more ambitious plan to cancel up to $20,000 in debt per borrower last summer. Since taking office, Biden has canceled approximately $138 billion for 3.9 million borrowers.
You can expect the U.S. Department of Education to continue investigating student loan forgiveness options in 2024, especially since it is an election year and Biden has made student loan forgiveness a top priority.
“From day one of my administration, I vowed to fix student loan programs so higher education can be a ticket to the middle class—nnot a barrier to opportunity,” Biden reportedly said in a February email to SAVE borrowers, announcing the latest round of debt relief.
SAVE is an income-driven repayment program designed to eliminate monthly payments for low-income borrowers, save other borrowers approximately $1,000 per year in payments, and prevent borrowers’ balances from growing due to unpaid interest.
Another initiative to watch for in 2024 is the Income-Driven Repayment Account Adjustment, formerly known as the IDR waiver. It is a temporary adjustment that allows eligible loan borrowers to apply past repayment periods (including deferment and forbearance) to their 20-year and 25-year IDR loan forgiveness terms, as well as their Public Service Loan Forgiveness programs.
Many federal loan borrowers have already had their recount adjusted automatically. If you have a loan not administered by the Education Department, such as a Federal Family Education Loan (FFEL), Perkins Loan, or Health Education Assistance Loan (HEAL), you must consolidate it using a federal direct loan. The deadline for doing this is April 30.
Forbes reported that the Education Department has approved nearly $12 billion in loan forgiveness for medically disabled borrowers through the Total and Permanent Disability Discharge program. The department recently released a new TPD application with relaxed eligibility rules and expanded access, allowing over 500,000 borrowers to qualify for discharge.
Here are some other debt relief developments to watch for in 2024:
- A “Plan B” program, announced shortly after the Supreme Court’s decision last summer, could be released later this year. According to a press release issued by the Education Department on February 15, the proposal outlines a set of factors that could be used to identify hardship that may qualify borrowers for relief. These factors include a borrower’s total student loan balance and required payments in relation to household income, as well as whether the borrower faces high costs for essential expenses such as healthcare or childcare. Forbes reported that the Biden administration plans to release final draft regulations in May. The program could go live later in 2024, but it may not be available to borrowers until next year.
- A new option will allow some borrowers to “buy back” certain deferment and forbearance periods, which will count toward Public Service Loan Forgiveness. Although the PSLF Buyback Program has yet to gain widespread acceptance, the new option aims to provide an alternative method of student loan forgiveness for PSLF borrowers. Last year, the Biden administration enacted new regulations that make it easier for PSLF program applicants to qualify for full student loan discharge — including AmeriCorps forbearances, military-related deferments, hardship deferments, and mandatory administrative forbearances.
- According to Forbes, a pair of temporary federal student loan relief initiatives are expected to benefit borrowers through most of 2024. One is the Fresh Start program, which allows borrowers in default on federal student loans to regain good standing. This may be required to qualify for student loan forgiveness programs like PSLF or the IDR Account Adjustment. The other is a “on-ramp” transition period that protects borrowers from negative credit consequences and default if they fail to make a payment after the payment pause ends. Fresh Start and the on-ramp program will both end in September 2024.