President Joe Biden’s broad student debt cancellation is one of the most high-profile efforts yet. He leads the federal student loan program, which has expanded to forgive student debts.
Almost 26 million borrowers applied for federal student debt cancellation in mid-October. His administration has also waived payment-counting rules, helped defrauded borrowers, and granted disabled borrowers relief.
Federal Student Loan Payments
This program started under former President Donald Trump, and the White House has extended it. It is a zero-interest pause on loan payments which will resume in late 2023 or after resolving legal challenges around debt cancellation
Also Read: Student Loan Repayment Pause: Extended?
Relief on Defaulted Loans
The White House announced the Fresh Start Program on August 18, which helps more than 7 million borrowers who have defaulted on their student loans. Defaulting on a loan results in long-lasting impacts on credit and possible seizure of tax refunds and Social Security checks. The program aims to slate clean the borrower’s consequences of default by removing penalties and making the rehabilitation process cheaper and easier.
Student loan borrowers stage a rally to celebrate President Biden canceling student debt on August 25 . (Photo: NPR)
Emergency Relief Fund
According to nerdwallet, the Higher Education Emergency Relief Fund has given direct financial aid to more than 18 million college students since the start of 2021. This program offers cash grants to current university students amid the pandemic. The program has already distributed $19.5 billion in emergency grants in 2021.
Other Targeted Loan Forgiveness
The Department of Education has altered the existing loan forgiveness, which has benefited nearly 1.75 million borrowers after cancelling loans worth about $38 billion. The Department has also announced to fix long-standing failures through its one-time review of all past federal student loan payments. The Federal Student Aid (FSA) expects the program will result in immediate debt cancellation for at least 40,000 borrowers. The Department also plans to revise the income-driven plan to change how the payments and income are calculated.
Read More: When must I start making my Student Loan Payment again?
