As student loan forgiveness nears $160 billion, here’s what to know about the relief programs

In attempts to fix the country’s $1.6 trillion student loan system, the Biden administration has routinely announced forgiveness of large shares of that debt.

In total, the U.S. Department of Education has canceled almost $160 billion in federal student loan debt for nearly 4.6 million borrowers since President Joe Biden entered office.

Here’s what to know about the aid programs that have led to that relief.

Income-driven repayment plans, which date back to 1994, allow student loan borrowers to pay just a share of their discretionary income toward their debt each month and to get any remaining debt forgiven after a set period. There are four different plans.

Many borrowers paid into the system for years without getting that promised cancellation, explained higher education expert Mark Kantrowitz.

“The loan servicers weren’t keeping track of the number of qualifying payments,” Kantrowitz said in an earlier interview with CNBC.

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The Biden administration has been evaluating millions of borrowers’ loan accounts to see if they should have had their debt forgiven.

It has also been granting borrowers who consolidate loans a one-time payment count adjustment. That gives them credit toward all their loans based on the one they have been making payments on for the longest, as well as for certain periods that previously didn’t count, including certain months spent in deferments or forbearances.

So far, nearly 1 million people have benefited from the improvements to income-driven plans, receiving almost $50 billion in debt cancelation.

Most people with federal student loans qualify for income-driven repayment plans. Options for these plans and applications are available at studentaid.gov. In some cases, borrowers will want to request a loan consolidation by June 30 to qualify for the Biden administration’s account adjustments.

Navigating the Public Service Loan Forgiveness program has been famously difficult. 

The program, which former President George W. Bush signed into law in 2007, allows employees of the government and certain not-for-profit entities to have their federal student loans discharged after 10 years of on-time payments.

The Consumer Financial Protection Bureau in 2013 estimated that 25% of American workers may be eligible.

However, after some borrowers got the wrong information from their servicers about the program’s requirements, many of them hit walls. Those borrowers frequently found that some or all of their qualifying payments didn’t count because they had a loan or were enrolled in a payment plan not covered under the initiative.

The Biden administration has tried to reverse the trend of borrowers being excluded from the relief on technicalities. It has broadened eligibility and allowed people to reapply for the relief, as long as they were working in the public sector and paying down their debt.

Some 876,000 public servants have gotten their debt erased as a result, amounting to more than $62 billion in relief.

With the PSLF help tool, borrowers can also search for a list of qualifying employers under the program and access the employer certification form. They can head to studentaid.gov to learn about all the program’s requirements.

Another 1.6 million borrowers have been able to eliminate their debt over the past few years because of the Borrower Defense Loan Discharge. These people received more than $28 billion in relief.

You may be eligible for a full discharge of your Direct Loans, Federal Family Education Loan (FFEL) Program Loans or Federal Perkins Loans if your school closed while you were enrolled or if you were misled by your school or didn’t receive a quality education.

In processing these applications, the Biden administration has begun considering cases in a group rather than requiring each attendee of a school to prove that they were misled.

Those who think they might qualify can apply with the Education Department.

The Biden administration has forgiven the student debt of more than 548,000 disabled borrowers. The $14.1 billion in aid was delivered under the Total and Permanent Disability, or TPD, Discharge.

The Department of Education has gotten better at identifying borrowers who are disabled and in need of this relief by accessing information from the Social Security Administration, Kantrowitz said.

Borrowers may qualify for a TPD discharge if they suffer from a mental or physical disability that is severe and permanent and prevents them from working. Proof of the disability can come from a doctor, the Social Security Administration or the Department of Veterans Affairs.