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Already Applied For Student Loan Forgiveness? 6 Key Updates

Millions of borrowers have applied for President Joe Biden’s signature student loan forgiveness initiative since the application went live.

Under his plan, up to 40 million borrowers can receive $10,000 or more in student loan forgiveness if their income was within required limits in either 2020 or 2021. Only federally administered loans (such as Direct loans and federally held FFELP loans) are currently eligible.

But no one has received any student loan forgiveness yet under the program, and the situation remains fluid for borrowers. Here are key updates.

26 Million Borrowers Have Submitted Applications For Student Loan Forgiveness

According to President Biden, 26 million borrowers have already submitted the simple, online student loan forgiveness application available through StudentAid.gov. And as of last week, the Education Department has already preliminarily approved 16 million borrowers for student loan forgiveness.

Student Loan Forgiveness Implementation Still Blocked By Federal Appeals Court

While the Education Department is receiving and processing student loan forgiveness applications, the implementation of loan forgiveness has been blocked by a federal appeals court since October in response to a legal challenge.

In that case, a coalition of Republican-led states sued the Biden administration, arguing that Biden’s loan forgiveness plan was unlawful and would financially harm the states due to reduced revenue associated with borrowers consolidating commercially-held FFELP loans into a government-issued Direct loan. The coalition’s legal arguments were initially rejected by a federal district court judge, as FFELP loans currently do not qualify for Biden’s student loan forgiveness initiative (even if consolidated, unless the consolidation application was submitted prior to September 29, 2022). The coalition then appealed to the 8th Circuit Court of Appeals, which implemented a temporary administrative stay of the program while it considers whether to impose a preliminary injunction. That temporary stay remains in effect, and a ruling is anticipated after the midterm elections.

8th Circuit’s Ruling May Not End The Legal Battle Over Student Loan Forgiveness

The Justice Department recently forwarded a letter written by MOHELA, a FFELP loan holder and Education Department contractor, suggesting that the agency had nothing to do with the Republican-led states’ decision to sue the administration over loan forgiveness. If true, this could undercut their legal arguments, as the states cited MOHELA and other similar agencies as potentially losing revenue as a result of Biden’s plan.

Regardless of how the 8th Circuit ultimately rules, however, the legal battle over Biden’s student loan forgiveness initiative may continue. The losing party will likely appeal the 8th Circuit’s decision to the U.S. Supreme Court. While the Supreme Court has recently rejected other legal challenges to the initiative, every case is different, and another appeal could potentially further delay implementation of student loan forgiveness.

Borrowers Can Still Apply For One-Time Student Loan Forgiveness

While the legal challenges continue, the Biden administration is still accepting applications for the one-time student loan forgiveness initiative.

“As a result of a court order, we are temporarily blocked from processing debt discharges,” reads a message on the application website. “We encourage you to apply if you are eligible… We will quickly process discharges when we are able to do so and you will not need to reapply.”

The Education Department is also in the process of releasing a paper application for borrowers who have inadequate internet access. And officials are also working on a fix that will allow borrowers living abroad — whose foreign IP addresses have been blocked as a safety precaution — to apply online.

Education Department Still Working On Loan Forgiveness Eligibility For FFELP Borrowers

Borrowers with privately-held FFELP loans were excluded from Biden’s one-time student loan forgiveness initiative following a last-minute policy reversal by the administration in response to legal challenges, including the case that ended up at the 8th Circuit.

“[The Education Department] is assessing whether there are alternative pathways to provide relief to borrowers with federal student loans not [federally-held]… including FFEL Program loans and Perkins Loans, and is discussing this with private lenders,” according to the Department of Education website on the cancellation initiative. Top administration officials, including Education Secretary Miguel Cardona, have indicated they are looking into potential solutions. But so far, none have been announced.

Other Student Loan Forgiveness Programs Remain Available For Direct And FFELP Loans

While Biden’s one-time student loan forgiveness plan remains held up in court, other significant initiatives are not impacted by these legal challenges.

The Education Department and MOHELA are still implementing the Limited PSLF Waiver, which operated as temporary expansion of the Public Service Loan Forgiveness program. Although it officially ended on October 31, officials will continue to process applications over the course of the coming months.

In addition, the Biden administration is just beginning to implement the IDR Account Adjustment, a sweeping initiative that will advance borrowers’ progress towards loan forgiveness through income-driven repayment plans (even for borrowers who are not on such a plan at this time). The IDR Account Adjustment will also operate as an extension of many of the benefits of the Limited PSLF Waiver for borrowers working in public service careers.

Further Student Loan Forgiveness Reading

Supreme Court Rejects Attempt To Block Biden’s Student Loan Forgiveness Plan — For Now

Court’s Block On Student Loan Forgiveness Continues, But There’s A Big Update

When Will You Receive Student Loan Forgiveness? Key Details On Timing

A New, Bigger Student Loan Forgiveness Initiative Is Set To Launch — And It’s Not The One That You Think