President Biden believes that despite ongoing legal challenges, borrowers will begin to receive student loan forgiveness under his signature one-time cancellation initiative within two weeks.
Here’s what borrowers need to know.
Federal Court Temporarily Blocked Student Loan Forgiveness
Under Biden’s one-time student loan forgiveness plan, up to 40 million borrowers with government-held federal student loans will be eligible for up to $20,000 in student loan cancellation. Qualifying single and married-filing-separately borrowers must have earned under $125,000 in either 2020 or 2021, or $250,000 if married-filing-jointly. Borrowers who never received a Pell Grant can receive $10,000 in student loan forgiveness.
But a series of legal challenges has threatened the initiative. Several lawsuits brought by Republican state leaders and conservative legal organizations were dismissed in recent weeks. But a coalition of Republican-led states appealed a dismissal to the 8th Circuit Court of Appeals, which temporarily halted the student loan forgiveness program last Friday while it considers legal arguments. The court could issue a ruling any day on whether to allow the administration to proceed with the initiative.
“We’re gonna win that case,” predicted Biden in public remarks on Thursday. “I think in the next two weeks you’re gonna see those checks going out.” Notably, borrowers won’t actually receive student loan forgiveness checks, as any loan forgiveness would be applied directly to their loan balances.
Student Loan Forgiveness Application Remains Open
While the Biden administration has been unable to implement any student loan forgiveness while the 8th Circuit’s temporary stay remains in effect, the Education Department is still able to accept applications.
“We encourage you to apply if you are eligible,” says the Education Department in a message on the application website. “We will quickly process discharges when we are able to do so.” Over 20 million borrowers have already submitted student loan forgiveness applications, according to Education Department officials.
The 8th Circuit’s administrative stay is “temporary” and “does not stop the Biden Administration’s efforts to provide borrowers the opportunity to apply for debt relief,” said Education Secretary Miguel Cardona in a tweet last week. “We are moving full speed ahead to be ready to deliver relief to borrowers who need the help.”
Other Student Loan Forgiveness Programs Remain Available
While Biden projected optimism that federal courts would allow the one-time cancellation program to proceed, other important federal student loan forgiveness initiatives are not impacted by the ongoing litigation.
The Limited PSLF Waiver, which provides sweeping flexibilities for borrowers seeking relief through the Public Service Loan Forgiveness program, expires on October 31. But borrowers can still take steps to apply by the deadline.
Meanwhile, the Education Department recently announced that it would be launching the IDR Account Adjustment, another broad initiative that may bring millions of federal student loan borrowers — including those seeking PSLF — closer to loan forgiveness by this summer.