September 6, 2021

Will Student Loans Ever Be Forgiven?

How did the talks about student loan forgiveness begin & where the current talks are today. Here's everything you need to know about the possibility of your student loans being forgiven.

12 min read

Qoins Staff

@qoinsapp

A vast majority of Americans are affected by student loan debt and according to a 2019 report, each American who has student loan debt carries, on average, $33,000 debt. Due to this, student loan forgiveness became a relief point for many of them.

 

But will student loans ever be forgiven? Read this article ahead to learn everything you should know!

 

Student Loan Forgiveness: How Did It Begin?

Student loan forgiveness term means releasing the borrower from having to repay the full amount of the loan. The institution might forgive a part of the federal student loan or the full amount.

 

Typically, borrowers under student loan forgiveness programs are the ones who use the funds to pay for post-secondary education. Student loan forgiveness is available for various types of loans such as Perkins & direct loans. Additionally, there are different loan forgiveness programs such as teacher & public service loans.

 

Borrowers with federal student loans who want forgiveness of their loans must apply for it and may require continuing repayments until they receive approval on their application.

 

Some takeaways of student loan forgiveness:

  • Student loan forgiveness helps borrowers to get released from the obligation to repay either a part of the full amount of the federal student loan.
  • Not all loans qualify for forgiveness - only federal direct loans do and it’s not available for private loans
  • Borrowers who work in public service for a certain period or by repaying via an income-contingent payment plan for a long period are eligible for student loan forgiveness
  • Under certain conditions, Federal student loans can be waved off either partially or completely. Examples of such circumstances are closing of the school or disability.
  • Students who have taken federal student loans and believe their educational institution has misled them or defrauded can also apply for loan forgiveness. They must apply to the Department of Education under the “borrower defense” category.

 

CARES Act of 2020: A Major Step Towards Student Loan Forgiveness

With the introduction of the CARES Act of 2020, borrowers felt some relief from repaying student loan debts. This act included several temporary changes to the rules & regulations of repayment of student loans.

 

For example, the new rules introduced the suspension of loan repayments, imposed an interest-free repayment on the remaining loan, and even stopped collections on defaulted loans. These new rules of the CARES Act of 2020 will stay in effect until January 31st, 2022.

 

According to the CARES Act of 2020, all the loan repayments suspended during this time will be counted towards the Public Service Loan Forgiveness Program (PSLF). This is true if you meet all the requirements of this program. PSLF is specially created for borrowers who work in the public service sector, this can be either for a non-profit organization or for the government.

No items found.

What’s Stopping Student Loan Forgiveness From Proper Implementation?

No one, in particular, is responsible for stopping the full-fledged implementation of Student Loan Forgiveness. The terms of such programs are always subject to change with the political party in power.

 

Let’s take an example of Trump’s & Biden’s administrations.

 

When Trump’s administration was in play, the then-Secretary of Education - Betsy DeVos tried to stop the student loan forgiveness program. She attempted that by delaying all the claim processes, increasing the burden on borrowers for proof, denying claims, offering only partial waive-off, using complex calculations that left applicants with $0.

 

However, after Biden’s administration came into power, in March 2021, the DoE announced it will revoke the complex calculation formula for partial waive-off of student loans. Instead of that, it will forgive student loans completely in borrower defense applications.

 

Can We Expect Student Loan Forgiveness Under Biden’s Reign?

On April 28, President Biden addressed Congress for the first time. During this address, he put forward a proposal of an additional $1.8 trillion budget in federal spending. This includes investment in education, however, he didn’t mention anything about student loan forgiveness.

 

Additionally, on the first day as President, he offered suspensions of interests and principal payments of all federal student loans till 1st October. This was extended for the purpose of temporary relief of student loan repayments during the COVID-19 pandemic. Also, in March, he waived off a $1 billion loan amount for students who were defrauded by for-profit institutions.

 

Even though Biden has not made anything clear about his stand on student loan forgiveness, according to the above information, we can at least expect something positive. But again, these promises have been made before, Biden currently has the power to approve such an action, but it hasn’t happened yet. Regardless if he does or doesn’t forgive student loans we have to remember that if he waives our student loans there will be tax implications, so start saving. Additionally, the amount to be waived has been decreasing with each passing month, the current forgiveness amount is $10,000, therefore if you have student loans that exceed that amount it’s better not to wait. Lastly, payments are set to resume on the last day of the month of January 2022, therefore you must begin planning and budgeting for that mandatory payment again. 

 

Final thoughts, it’s impossible to know if student loans will be forgiven, but one thing you can control is forgiving those student loans yourself rather than waiting decades for someone to do it for you. Take control of your student debt, and pay it off 8x faster with the help of Qoins. We have tools like roundups and when I get paid to help you make monthly contributions, automatically, without ever thinking about it! Make 2022 the year your finances get on the fast track! 

See what you can do with Qoins
UP NEXT
© 2021 Qoins Technologies, Inc. All Rights Reserved

Qoins Visa® Debit card is issued by Evolve Bank & Trust, Member FDIC. Pursuant to a license from Visa U.S.A. Inc. Card is a prepaid debit card. Card can be used everywhere Visa debit cards are accepted.

*Funds are FDIC insured, subject to applicable limitations and restrictions, when we receive the funds deposited to your account.