The Biden Administration last week announced that it will soon start the process to review and revise more than a dozen higher education regulations — including federal student debt programs. After months of back-and-forth regarding student loan cancellation and the recent news that President Biden’s next annual budget won’t include wide-scale forgiveness, this overhaul is a silver lining for the 43.2 million Americans carrying a combined $1.56 trillion in student debt.
But borrowers shouldn’t expect changes to go into effect any time soon — or before monthly payments resume in October. The review is still in its nascent stages, with the first phase — public hearings organized by the Department of Education (ED) — scheduled to begin in late June. Findings from the hearings will then be presented to a negotiated rulemaking committee in late summer. From there, experts project it could take more than a year for regulations to be implemented.
And while this initiative won’t result in universal student debt cancellation or partial forgiveness, it could still lead to meaningful support for specific groups. The hearing agenda proposed by the ED is wide-ranging, but individual borrowers should stay in the know on a few key topics.
What this could mean for your student loan debt
Income-based repayment plans: This announcement breaks ground on Biden’s proposed restructuring of income-driven repayment programs for federal student loans. If Biden’s campaign vision is realized, borrowers earning less than $25,000 per year won’t owe any payment on undergraduate loans, and all others will owe a standard five percent of their discretionary income each month.
Public Service Loan Forgiveness (PSLF): The initiative is Biden’s first move to make good on campaign promises to reform PSLF, which forgives outstanding student loan debt for government and nonprofit workers after ten years of qualified payments. Currently, just two percent of all borrowers’ PSLF applications have been approved — the result of controversial review practices enacted during Betsy DeVos’s tenure as Education Secretary that new policies could rectify.
Forgiveness for borrowers with disabilities: Borrowers who can’t hold gainful employment due to a medical condition are already eligible for federal student loan cancellation. But during the pandemic, many failed to submit the income verification required to remain eligible — resulting in the reinstatement of $1.3 billion in student loans for 41,000 borrowers. Biden enacted a temporary order in March that waives the paperwork for the duration of the pandemic, and new regulations could make the change permanent.
Forgiveness for borrowers who were defrauded: If a school engages in misleading practices or misconduct, borrowers can apply for borrower defense, which offers up to full federal loan cancellation — but practices from the DeVos era that experts argue are unethical have resulted in hundreds of thousands of rejected applications. The Biden Administration aims to correct how the ED reviews borrower defense claims and make it easier to receive forgiveness.
Forgiveness for borrowers whose schools close: Currently, students who are enrolled at or who have recently withdrawn from a school that closes are eligible for federal loan cancellation. The pandemic has already forced at least ten small colleges to close their doors for good — and with an estimated ten percent of private liberal arts colleges expected to become defunct by 2025, thousands more students could be impacted. If advocates’ recommendations are adopted, eligibility windows could be extended and qualified borrowers could be granted discharge automatically.
What comes next
It’s too soon to know exactly what the outcome of this undertaking will be, but proponents of student debt reform agree it’s a promising step in the right direction — even if it won’t result in widespread forgiveness.
If you’re uncertain about your ability to restart payments when student loan debt forbearance ends on October 1, check out our Reassess tool to see which income-driven repayment plans and loan forgiveness programs you’re qualified for in minutes, and follow us on Instagram, Twitter, and Facebook for updates as Biden’s review of student loan debt policy continues.