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Steps to Take Right Now to Maximize Biden Loan Forgiveness

Borrowers may qualify for up to $20,000 in student loan forgiveness, but some immediate action may be required.

Written By: Michael P. Lux, Esq.

Last Updated:

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The recently announced loan cancellation from the Biden Administration means millions of borrowers will have up to $20,000 forgiven. Millions more may qualify for up to $10,000 of loan forgiveness.

The Department of Education also announced an extension of the payment and interest freeze and a new repayment plan.

We are still awaiting details on eligibility and implementation. However, based on what we already know, there are several steps that borrowers can take to ensure they maximize any potential loan forgiveness.

Ask for a Refund on Prior Payments

The Covid-19 payment and interest freeze has been in effect since March 2020. Though not required, many borrowers have chosen to make extra payments to reduce their federal loan balance.

If you have made extra payments, you can request a refund on those payments. You don’t have to show a financial hardship or any specific circumstances; you just have to ask for a refund.

Call your federal loan servicer to submit a refund request.

This step is crucial for borrowers with balances under $20,000.

Check Out the Limited Waiver on PSLF

During his press conference announcing the forgiveness program and new repayment plan, President Biden highlighted his fix to the Public Service Loan Forgiveness program, the PSLF Limited Waiver.

This program allows many borrowers who were previously denied PSLF to get their loans forgiven. It fixes many of the biggest issues facing PSLF borrowers.

Unfortunately, the Limited Waiver expires on October 31, 2022. Notably, this means the Limited Waiver ends before repayment restarts.

If there is even a slight chance that you have worked in a public service job, start investigating the PSLF Limited Waiver before it ends.

Set a Reminder for One Month from Now

We don’t have all the details, but we know that some borrowers will have to provide income verification to show that they qualify for the $10,000 or $20,000 of loan forgiveness. To be eligible, single borrowers must earn below $125,000, and married borrowers must earn below $250,000.

We also know that the Department of Education will have a portal to submit the necessary documents. However, that portal does not exist yet.

If the Department of Education moves quickly, you can submit income information to document your eligibility next month.

For some borrowers, such as those on IDR plans, income verification will happen automatically.

However, we still don’t know exactly who falls in the automatic category and who will require manual action. Set a reminder, mark your calendar, and do whatever it takes to revisit this issue once more information becomes available.

Don’t Try Borrowing New Loans

Current students can still benefit from today’s forgiveness announcement, but they must have older loans to qualify.

Specifically, any loan taken out before July 1 is eligible.

Any new loans borrowed for the upcoming fall semester will not qualify for cancellation.

How do I find out if I received a Pell Grant?

Knowing whether or not you received a Pell grant is massive detail for the Biden forgiveness plan.

If you received a Pell Grant, you can have up to $20,000 forgiven. If you never qualified for a Pell Grant, your maximum forgiveness is $10,000.

To check your federal loan and grant history, log into the federal student loan database. The dashboard shows all student loans and grants. If a Pell grant isn’t displayed, you probably never had one.

Dealing with FFEL Loans

This article initially suggested that borrowers with privately-held FFEL loans should consider consolidating their loans into a federal direct loan.

Sadly, as of September 29, consolidation is no longer an option to address this eligibility issue.

The Department of Education has shifted policy, and borrowers with privately-held FFEL loans may not qualify for forgiveness.

Options for Private Student Loans

If your student debt is with a private lender, options to convert the debt into federal loans are extremely limited.

At this point, the best thing you can do for any private student loan is to make sure you have a fixed-rate loan instead of a variable-rate loan. Inflation is a major concern for student loan borrowers. Locking in a fixed-rate loan is the best way to ensure that inflation doesn’t mean a bigger monthly payment.

Hurry Up and Wait

Today’s news is huge for student loan borrowers.

It is natural to want to know how the forgiveness will apply to your debt and when to expect it to happen.

Unfortunately, we don’t know yet. For now, the best you can do is to make sure you understand your loan situation and that you are prepared to act when the time is right.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

21 thoughts on “Steps to Take Right Now to Maximize Biden Loan Forgiveness”

  1. so if you consolidate your FFel loan from private to direct student loan does your loan and time payoff increases from what is is now . If so what is the real deal in doing it

    • It will impact your repayment plan eligibility, so you can qualify for repayment plans with lower monthly bills… but this does mean that it takes longer to payoff the debt.

      However, as with all federal loans, you can always pay extra if you want to eliminate the debt faster.

  2. I have two direct loans and FFEL loan. To qualify for the PSLF, I would need to consolidate my loans. My hesitation with consolidating my loans is being required to stick to the length of the term. Can I payoff my loans ahead of the loan term without penalty?

    • Hi Mike,

      With all federal loans, you are allowed to pay off the debt without any penalty (this holds true for private student loans as well). The monthly student loan bill that you will receive is the minimum due. You can always pay more to eliminate the debt faster. In fact, this is a great way to reduce spending on interest over the life of the loan.

      However, if you are pursuing PSLF, it makes sense to find the plan with the lowest monthly payment and pay the minimum until the loan is forgiven.

      Obviously, the two approaches I’ve just described are opposites. I’d encourage you to run the numbers with both strategies to see what might work best for your debt.

  3. Hi Mike,
    I have a parent plus loan taken out for 2 sons. I am a public school teacher for over 30 years. From a recent reply I read from you, I think you stated that loan forgiveness is for the borrower in public service not my sons that the loans were for. Is that correct? Can I get the loan forgiveness for my years of public service?

  4. Will there be any cancellation for those with FFEL spousal consolidation loans, which were excluded from PSLF? To my knowledge, the separation act passed the Senate but has not progressed to the House.

  5. I have 2 Parent Plus Loan totaling approx 29K.
    We have been paying the PPL back since 2013 until covid pause.
    I worked 5 yrs 4 mo as a Federal Employee ( VA) 2105-2020
    I served 4 years in the USMC 1972-1976.

    My daughter, whom the loan was for, has worked in medical field since 2014 graduation from the Techincal training received from SJV JrCollege.

    Will any of these scenarios allow for consolidation to a Direct Consol. loan for potential forgiveness?

    Thank you

    • You can always consolidate your Parent PLUS loan into a federal direct loan.

      As for the scenarios you described, the time in the VA would potentially count towards PSLF, assuming the other requirements are met. However, the military service from the 70’s unfortunately will not count because it predates the PSLF program (which was created in 2007).

      For Parent PLUS loans and PSLF, the important detail is where the borrower works, whether or not your daughter for whom the loan was borrowed works in public service does not impact PSLF eligibility.

  6. Hi Michael
    Hoping you can help me make sense of my situation.
    I have 2 consolidated FFELP loans through Navient that I did way back in 2007. Should I consolidate those into a direct federal loan if I can?
    Will this qualify me for any loan forgiveness?

    • Joseph,

      That is a really tricky question and one I can’t answer for certain until we get more information from the Department of Education.

      It is possible that if you consolidate now, the loans will benefit from forgiveness. However, its possible that by consolidating now, the new loan is created after the July 1 deadline and not eligible (though I’d be very surprised if this was the rule).

      What I can say for certain, is that if you consolidate now, you can take advantage of the last four months of the payment and interest freeze, as well as the PSLF Limited Waiver and the IDR Count Update.

  7. I recently consolidated FFELP loans (loans originated in 2007) into a Direct Consolidation Loan. Applied for the direct consolidation on 6/28. However, the disbursement of the Direct Consolidation Loan didn’t occur until 7/28. A few questions:
    1. Do you know whether the date of the original loans (in 2007) or the date the direct consolidation was disbursed will be the operative date in connection with the July 1st deadline?
    2. I’ve seen outlets reporting on the July 1st deadline, but haven’t seen anything official on that yet and wondering where that information came from? Also, it seems like the outlets reporting on the July 1st deadline connect that to “current students”, so not sure if I should read that to suggest that the original date of the FFELP loans (prior to direct consolidation) would be the operative date?

    May be a situation where we don’t have enough information yet, but thought you might have some insight.

    • Great questions. And you are right that we don’t have the full details, so we can’t say for certain. That said, I’d be very surprised if they excluded you based on your recent consolidation. I can’t say for certain that it won’t happen, but it is possible.

      The flip side is that your FFELP loans might not have been eligible for the 10k of forgiveness, so consolidating might be the only path to qualify.

      Sadly, without more details, we can only speculate at this time. I’ll update this article as more information becomes available.

      Update 9/8/22: Here are the latest details on how they are handling FFEL loans.

      • Advice on a similar fact pattern? I have 2 FFELP $9700 privately owned via Navient. I didn’t know they could be consolidated and Navient didn’t bother alerting me to this no-brainer when I asked for and granted a short forbearance during 2021. Now it’s either wait to see if pvt held FFELP will be forgiven OR consolidate to direct loan in which they may deny forgiveness because of a post June’22 ‘disbursement’ despite these loans being 20 yrs old.
        If both choices in this fact pattern disqualifies my loans from forgiveness, I’d join with others to pursue Navient for unethical practices. Not too dissimilar from behaviors underlying their $1.7B settlement in Jan ‘22

  8. Hi Michael-

    I have some Grad Plus loans, a Unsub FFELP loan, as well as a consolidated sub and consolidated unsub (which I thought were direct but apparently aren’t). So, I plan to consolidate them all to direct loans. Is there a reason to keep them separate rather than consolidating all of them together? Or is that only an issue for Parent Plus loans?

    Additionally, I’m thinking about today’s announcement stating:

    …the Department of Education is proposing a rule to do the following:
    Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with original loan balances of $12,000 or less. The Department of Education estimates that this reform will allow nearly all community college borrowers to be debt-free within 10 years.

    I’m unclear if this is per loan or total. If per loan, I wonder if consolidating loans together might make them ineligible if this comes into existence. Or would the “original loan balances” be preserved even when consolidated. I know you don’t have a crystal ball (and it might only apply to new loans anyway), but do you know how that works with consolidated loans currently? Are the original loan balances preserved to your knowledge?

    I’d appreciate any insight.

    • Hi Jen,

      The consolidation issue is primarily a problem for Parent PLUS loans right now. Under the limited waiver and IDR Count update, consolidation is much less risky than it used to be. That said, it is always a good idea to discuss your plan with your servicer to make sure you don’t make a mistake.

      As for the new repayment plan, it almost certainly means total. That said, it is still in the rulemaking process and the details may change. We probably won’t know the full details for a couple months.

      • Thanks so much. Indeed, I want to take advantage of converting these to direct loans now that I won’t lose all the credit for previous payments. One of my servicers is actually showing a count now, though I think it is only counting since they became the servicer… I’m hoping I’ll get credit for payments before they took over the loans. But I’m happy that at least they are now keeping track.

        Really appreciate your site given the poor dissemination of information by ED. I left a govt job in 2012 because the information ED provided didn’t indicate that the forgiveness for PSFL would be exempt from taxes (and I looked really hard for that information before deciding). We are constantly having to make important financial decisions without all the information. Let’s hope the new initiatives make things better for the next generation!

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