President Joe Biden will cancel $3.9 billion of student loans.
Here’s what you need to know — and what it means for your student loans.
The Biden administration announced today that it will discharge all remaining federal student loans for 208,000 student loan borrowers who attended ITT Technical Institute (ITT), a for-profit college, from January 2005 through its closure in September 2016. These student loan borrowers will receive a discharge through borrower defense to repayment and don’t need to apply to get their student loans canceled. Biden’s major announcement comes at a critical juncture as he considers whether to enact wide-scale student loan cancellation and extend the student loan payment pause for millions of student loan borrowers.
“It is time for student borrowers to stop shouldering the burden from ITT’s years of lies and false promises,” U.S. Secretary of Education Miguel Cardona said. “The evidence shows that for years, ITT’s leaders intentionally misled students about the quality of their programs in order to profit off federal student loan programs, with no regard for the hardship this would cause. The Biden-Harris Administration will continue to stand up for borrowers who’ve been cheated by their colleges, while working to strengthen oversight and enforcement to protect today’s students from similar deception and abuse.”
In June, the Biden administration canceled $6 billion of student loans for 200,000 student loan borrowers under borrower defense to repayment.
Student loan forgiveness: $32 billion of student loans canceled
Since becoming president, Biden has canceled nearly $32 billion in student loans, including:
- Borrower Defense To Repayment: $13 billion of student loans for 1 million student loans borrowers who received a student loan discharge through borrower defense to student loan repayment and school closures;
- Public Service Loan Forgiveness: $9.6 billion of student loans for 175,000 student loans borrowers; and
- Total and permanent disability: $9 billion of student loans for more than 425,000 student loan borrowers due to a total and permanent disability.
Student loan cancellation: how to apply for borrower defense to repayment
Borrower defense to repayment is an Obama-era rule that helps student loan borrowers get student loan cancellation if their college or university closed or misled them. While today’s announcement on student loan cancellation will be automatic, every student loan borrower won’t qualify. That said, you can apply for borrower defense to student loan repayment online. To qualify, you must demonstrate that:
- your college or university closed while you were enrolled or shortly after you withdrew, or
- your college or university misled you.
Under borrower defense to repayment, you can get partial student loan forgiveness or total student loan forgiveness.
Student loan cancellation: will Biden cancel more student loans?
Is Biden potentially days away from canceling student loans for more than 40 million student loan borrowers? Student loan borrowers are waiting for Biden’s announcement on wide-scale student loan forgiveness and the student loan payment pause. Biden’s decision on broad student loan forgiveness is separate from today’s announcement regarding targeted student loan cancellation for student loan borrowers through borrower defense to repayment. The student loan payment pause ends on August 31, 2022, and Biden has remained silent on whether he will extend student loan relief. While Biden has promised an announcement on wide-scale student loan forgiveness before August 31, 2022, there’s no guarantee that Biden will cancel $10,000 of student loans (or any other amount) for more than 40 million student loan borrowers. Republicans announced a blockbuster plan for student loan forgiveness, while also calling for the end of the student loan payment pause. Regardless of Biden’s decisions on potential student loan forgiveness and the student loan payment pause, make sure you have a clear, long-term plan for student loan repayment. Here are some of the best ways to pay off student loans faster and save money:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)
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