The Supreme Court of the US will decide on Student Loan Forgiveness Programme soon. This plan is a landmark in President’s Biden administration. Even though the highest court strikes down the student debt relief plan, borrowers can benefit from various loan forgiveness programmes. These plans will collectively reduce the student loan debt burden of nearly thousands of beneficiaries.
Some of the forgiveness plans include IDR Account Adjustment Plan and Public Service Loan Forgiveness (PSLF) Waiver. Both these plans will automatically reduce the education loan of borrowers.
Additionally, borrowers who were students of Shuttered Schools will also get automatic student loan forgiveness. Furthermore, loan forgiveness will also be extended to borrowers who were a part of the Sweet v. Cardona Settlement.
Moreover, the US Education Department will also forgive student loans of disabled borrowers.
5 Types of Automatic Student Loan Forgiveness Programmes
If the US Supreme Court rules against the Biden Student Loan Forgiveness Plan, federal loan borrowers can avail of benefits under the following initiatives:
One-Time IDR Account Adjustment Plan
Under this programme, the US federal government will offer a one-time “adjustment” to credit towards a borrower’s student loan forgiveness term. This term varies between 20 and 25 years. The tenure depends on the specific income-driven repayment plan and the type of federal student loans the borrower holds. Furthermore, the US Department of Education can consider previous repayment periods. Additionally, it will also consider specific periods of deferment, forbearance, and even default, as part of the borrower’s loan forgiveness term.
Public Service Loan Forgiveness (PSLF) Waiver
It is a federal program in the US. It offers loan forgiveness to borrowers who work full-time for qualifying employers in the public service sector. Eligible borrowers must make 120 qualifying monthly payments while working for qualifying employers. Additionally, their remaining Direct Loans may be cancelled. The program aims to incentivise individuals to pursue careers in public service by offering a pathway to reduce or eliminate their student loan debt. It is important to follow the program requirements and guidelines to qualify for loan forgiveness.
Automatic Education Debt Relief for Borrowers Who Attended Shuttered Schools
Furthermore, borrowers who attended select collapsed for-profit schools will also receive automatic student loan forgiveness. It was announced by the Biden Administration in 2022. This relief is a part of the US government’s largest automatic mass student loan forgiveness. Under this plan, the Department of Education will discharge USD 6 billion to over 0.5 million ex-students of Corinthian Colleges.
Automatic Student Debt Cancellation Under the Sweet v/s Cardona Lawsuit
Moreover, student loan borrowers who produced Borrower Defense to Repayment Applications by June 2022 will benefit from USD 6 billion in student debt loan discharges. It was declared by the SC in April 2023 under the Sweet v. Cardona settlement. At present, the Department of Education is processing loan forgiveness under this settlement. It was a class action lawsuit filed years ago. Now, eligible borrowers can expect to receive discharges on a rolling basis.
Automatic student Loan Discharges for Borrowers with Disabilities
Additionally, the US Department of Education will also identify disabled borrowers. It will then, sort out the names of student loan borrowers who qualify for the TDP (Total and Permanent Disability) Discharge Programme. Under this plan, the department offers loans to students suffering from psychological or physical disabilities that hinder their ability to sustain employment. With simplified guidelines in July, more impaired borrowers will automatically receive loan forgiveness under TDP Discharge Programme.
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