Student Loan Forgiveness Updates in the Biden Administration

During the last month of the Biden administration, there have been discussions about two new student loan plans and additional options for loan forgiveness.

The Public Service Loan Forgiveness (PSLF) program is a federal initiative that provides forgiveness of the remaining student loan debt to public servants. By allowing borrowers to have their direct loans forgiven, the remaining payment of their contract is rescinded, and they do not have to pay the remaining costs. To qualify for PSLF, borrowers must meet specific criteria that can be found on the Federal Student Aid website (studentaid.gov) for further information.

The two student loan repayment plans under discussion are the Pay-As-You-Earn (PAYE) and Income-Contingent Repayment (ICR) plans. Though both plans have been discontinued, they will now be available for pursuing loan forgiveness.

The Saving on a Valuable Education (SAVE) plan, a similar loan-forgiving payment plan that reduces monthly payments for borrowers and provides loan forgiveness after 10-25 years, has been halted by a court injunction. This litigation has stopped millions of Americans who have been working towards loan forgiveness, disrupting their efforts. The reopening of PAYE and ICR plans has, in turn, left an alternative path for borrowers on their journey to loan forgiveness.

The future of the PAYE and ICR plans is dependent on the 8th Circuit Court's rulings, which could effectively impact the trajectory of student loan repayment in the next 20-25 years.

Stay tuned for more updates on this evolving situation.