Biden Student Loan Forgiveness Means 3 Things For Your Student Loans (2024)

FAQs

What does the student loan forgiveness mean for me? ›

That means you won't have to pay back some or all of your loan(s). The terms “forgiveness,” “cancellation,” and “discharge” mean essentially the same thing.

Long-time borrowers: The plan would provide relief for people who have been paying their student loans for more than 20 years by waiving undergraduate school debt for those borrowers. The plan would also forgive graduate school debt for people who have held that debt for 25 years or more.

If you have loans that have been in repayment for more than 20 or 25 years, those loans may immediately qualify for forgiveness. Borrowers who have reached 20 or 25 years (240 or 300 months) worth of eligible payments for IDR forgiveness will see their loans forgiven as they reach these milestones.

For current students, the Education Department will have income data for any borrowers who completed the FAFSA in 2021-2022, Walter says. For borrowers who were a dependent during the 2021-2022 school year, the Department of Education will use parental income information to calculate loan cancellation eligibility.

Loan forgiveness, cancellation, and discharge are the removal of a borrower's obligation to repay all or a portion of a loan. If you're no longer required to make payments on your loan(s) due to service in a certain type of job (in the nonprofit/public sector), this is generally called forgiveness or cancellation.

Why did my college send me a check? A refund check is money that is directly deposited to you by your college. It is the excess money left over from your financial aid award after your tuition and additional fees have been paid. Your college may send you a check or the money may be deposited into your checking account.

Borrowers who have made 10 years of payments and borrowed $12,000 or less will see the aid. For each additional $1,000 a borrower took out in loans, they will need to wait another 12 months to see that amount forgiven.

The court's decision ends a long legal saga in the Biden administration's quest for loan forgiveness. The plan was originally blocked last fall, when several states argued that it would hurt student loan companies.

Pay less over the life of the loan: Because your student loan, like most other debt, accrues interest when you carry a balance, it's cheaper if you pay off the loan earlier. It gives the debt less time to accumulate interest, meaning you'll pay less in the long run.

Borrowers with undergraduate debt would qualify for forgiveness if they entered repayment 20 years ago or more, and borrowers with graduate school debt would qualify for forgiveness if they entered repayment 25 years ago or more. Cancel student debt for borrowers previously enrolled in low-financial-value programs.

What student loans are not eligible for forgiveness? ›

You're not eligible for federal student loan forgiveness programs if you have private loans, but there are other strategies for managing private loan debt. NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.

If you've been repaying parent PLUS loans for at least 25 years (or 10 years if you, the parent, are eligible for PSLF), you should automatically get forgiveness of your remaining debt under the IDR account adjustment. You don't need to consolidate.

Will Biden forgive private student loans? No. The Biden administration's student loan forgiveness plan only included federal student loans, but it was later struck down by the Supreme Court and never enacted. Private education loans don't qualify for federal loan forgiveness programs.

Today's announcement brings the total loan forgiveness approved by the Biden-Harris Administration to $167 billion for 4.75 million Americans. Thanks to this Administration's efforts more than one out of every 10 federal student loan borrowers has now been approved for some debt relief.

If you're a longtime borrower who has been in repayment for at least 20 or 25 years, you could get automatic loan forgiveness by September 2024. This is the result of a one-time program called the IDR account adjustment.

Cancel student debt for borrowers who entered repayment a long time ago. Borrowers with undergraduate debt would qualify for forgiveness if they entered repayment 20 years ago or more, and borrowers with graduate school debt would qualify for forgiveness if they entered repayment 25 years ago or more.

You could get a refund. Depending on the type of discharge you receive, you could receive a refund of some or all payments you made on the loan.

[2] As of February 2024, borrowers who borrowed $12,000 or less will receive forgiveness after making the equivalent of 10 years of payments (a 10-year repayment term). For borrowers who borrowed more than $12,000, the repayment term is one year longer for every $1,000 above $12,000 borrowed.

All borrowers on SAVE receive forgiveness after 20 or 25 years, depending on whether they have loans for graduate school. The benefit is based upon the original principal balance of all Federal loans borrowed to attend school, not what a borrower currently owes or the amount of an individual loan.