News: Does President Biden's Newest Round of Student Loan Forgiveness Impact You?
The Biden administration has canceled another $1.1 billion in student loan debt. Is yours included?
Contributing Writer at Tally
October 29, 2021
Recently, the Biden administration partially made good on its promise on student loan debt by canceling $5.8 billion in federal loans. This cancellation was for borrowers who couldn’t maintain substantial, gainful employment because of a physical or psychological medical impairment.
Shortly after this, the administration continued its cancellation streak by lopping off another $1.1 billion in student loan debt. Find out below:
Who qualifies for this student loan cancellation
How to get it
Whether or not there are more cancellations on the horizon
Who’s included in the loan cancellation?
The newest round of student loan cancellations covers 115,000 former students of the now-defunct ITT Technical Institute, which closed its doors permanently in 2016.
This follows a round of $500 million in ITT student loan debt the federal government canceled in June 2021 after it determined the school lied to 18,000 students about how a degree from the school would help them land a job.
The 115,000 students attended the school when ITT misrepresented its financial health and directed students toward expensive private student loans. These expensive loans were allegedly portrayed as “grant aid” to the students.
The impacted students left ITT Technical Institute on or after March 31, 2008, and never completed their degree or credential program.The Department of Education estimates 43% of the impacted borrowers are in default.
How do you get your loan canceled?
For the most part, the discharge process is automatic for those who left ITT and didn’t enroll in another school within three years of its closure. If you fall in this category, the Department of Education will automatically cancel your loans.
If you enrolled in another school within three years of ITT’s closure but didn’t complete the degree or certificate program, you may still qualify for a cancelation. In this case, you must complete a discharge application and submit it to your student loan servicer.
$9.5 billion cancelled, but will there be more?
The Biden administration has now canceled $9.5 billion in student loans since January 2021. Still, many Democrats in office are pushing him to cancel more of the $1.7 trillion in student loans Americans owe.
Biden has vowed to cancel $10,000 in student loan debt per borrower, but some Democrats want him to cancel $50,000. While President Biden hasn’t been overly fond of the $50,000 number, he has encouraged Democrats to continue pushing him on the issue.
Will there be more student loan forgiveness, and how likely is it that we’ll see $50,000 in loan cancellations per borrower? Some experts feel we’ll continue seeing more targeted forgiveness in the near term, but it’ll have to come along with education reform.
Most experts agreed that the $50,000 number is unrealistic, but the $10,000 one is attainable by targeting the hardest-hit borrowers.
What can you do about your student loans today?
If your student loans aren’t up for cancellation, you have a few options to help get relief.
First, consider consolidating any private student loans using a debt consolidation loan. Just make sure the interest rate is lower than the rate you’re paying on your student loans and the monthly payment fits your budget.
If you own a home with equity in it — the home is worth more than the mortgage balance — you may be able to get a low-interest home equity loan or home equity line of credit to pay off the student loans. This will allow you to lower your interest rate and stretch out the payments over a longer period to reduce your minimum monthly payments.