Your Student Loan Forgiveness Is Getting Delayed, And It May Get Worse

Borrowers are contending with delayed student loan forgiveness on a number of fronts as the Biden administration works to simultaneously implement multiple student loan debt relief initiatives. The problems, largely related to inadequate federal funding, may only get worse in the coming months.

Here’s what borrowers should know.

Biden Has Launched Multiple Student Loan Forgiveness Initiatives

The Biden administration has launched a number of temporary or one-time student loan forgiveness initiatives designed to provide billions of dollars in debt relief to millions of federal student loan borrowers. These initiatives include the following:

• Limited PSLF Waiver — A one-time fix to Public Service Loan Forgiveness (PSLF), a federal student loan forgiveness program for borrowers who work in qualifying nonprofit or government jobs for at least 10 years. The waiver, which technically ended last October, allows for certain past loan periods that otherwise would have been rejected to potentially count towards loan forgiveness.
• IDR Account Adjustment — Another one-time fix to federal Income-Driven Repayment (IDR) plans, similar to the PSLF Waiver in that it will allow for certain past loan periods that otherwise would have been rejected to potentially count towards loan forgiveness under IDR plans. Some borrowers will see their progress towards student loan forgiveness advance, while others will see their balances completely discharged.
• New IDR Plan — The Biden administration just announced details for overhauling the Revised Pay As You Earn (REPAYE) plan, an IDR plan. Under the proposed changes, many borrowers will see lower monthly payments and faster student loan forgiveness.
• Borrower Defense to Repayment — Last year, the administration announced group discharges for hundreds of thousands of borrowers through Borrower Defense to Repayment, a federal student loan discharge program that can result in loan forgiveness for borrowers who were defrauded by their schools. The Education Department has approved Borrower Defense relief for former students of Corinthian Colleges and ITT Technical Institutes.
• One-Time Student Loan Forgiveness — President Biden’s sweeping one-time student debt relief initiative would have cancelled up to $20,000 in federal student loans for most borrowers. However, the program has been blocked by federal courts. The Supreme Court has taken up the case.

Student Loan Forgiveness Delays Across the Board

Between all of the separate student loan forgiveness initiatives, millions of borrowers are entitled to relief. But there are widespread delays across the board.

The Limited PSLF Waiver ended on October 31. However, the Education Department and MOHELA, its contracted PSLF student loan servicer, are contending with a backlog of 2 million PSLF applications. As a result, it is taking three months or longer (sometimes, much longer) for borrowers to receive student loan forgiveness under the waiver, particularly for borrowers who submitted PSLF applications during last summer or fall.

Meanwhile, the IDR Account Adjustment is just getting started (and notably, the adjustment may also benefit borrowers on track for PSLF who missed the Limited PSLF Waiver deadline). But the Education Department has already delayed implementation of the account adjustment several times. The program was initially supposed to start resulting in student loan forgiveness by last fall, with implementation completed as early as January 2023. Now, however, the Education Department does not anticipate borrowers receiving student loan forgiveness until the spring of 2023, with implementation not completed until the summer.

Many borrowers who received notifications last year that they were approved for Borrower Defense relief have yet to receive any student loan forgiveness, and the Education Department has hinted that it might take much of 2023 to implement the group discharges. Meanwhile, the Education Department has provided no concrete timeline on the availability of the benefits of the new REPAYE plan.

Biden’s one-time cancellation program has been blocked by federal courts since last fall, so one has received student loan forgiveness under that program. The Supreme Court will review the initiative. Oral arguments before the court are set for next month, and a decision is expected by June.

Federal Funding is Big Reason for Student Loan Forgiveness Delays — And Things May Get Worse

The federal omnibus bill that Congress passed during the lame duck session resulted in the Office of Federal Student Aid (FSA) receiving no additional funding to cover its operations. This flat-funding outcome is a significant reason for the delays in implementing the Biden administration’s student loan forgiveness initiatives. Officials and employees have been tasked with establishing and running an increasingly diverse array of student debt relief programs that collectively will impact tens of millions of borrowers, but with no additional resources or support. As a result, everything is taking longer, and officials are reportedly warning that the problems may only worsen.

Furthermore, political brinkmanship in Congress could also pose a real problem. Republican lawmakers in the House of Representatives are reportedly going to use a battle over the debt ceiling to extract spending cuts. Breaching the debt ceiling, failing to fund the government, or cutting funding to the U.S. Department of Education may only constrain FSA’s resources further. This may lead to compounding implementation delays across the board.

Biden’s one-time student loan cancellation initiative cannot be implemented yet due to a federal court order while the case is reviewed by the Supreme Court. But if the court ultimately sides with the administration and upholds the program, the Education Department will then need to implement hundreds of billions of dollars in student loan forgiveness for 40 million borrowers — on top of continuing to operate all of the other student debt relief programs.

In short, student loan borrowers should buckle up and prepare for ongoing delays and mounting frustrations in the coming months.

Further Student Loan Forgiveness Reading

Big Student Loan Forgiveness Update As Education Department Clarifies Eligibility For One-Time Adjustment

Biden Announces New Student Loan Plan: 8 Big Details On Forgiveness And Payments

Here’s What You’ll Pay, And When You’ll Get Student Loan Forgiveness, Under Biden’s New Plan

The Student Loan Pause Is Actually Leading To Loan Forgiveness — Are Further Extensions Coming?