Here’s who won’t qualify for $6.2 billion of student loan cancellation.
Here’s what you need to know — and what it means for your student loans.
There’s good news for student loan borrowers: President Joe Biden will cancel $6.2 billion of student loans. However, you may be wondering if you will qualify for this student loan forgiveness. While 100,000 student loan borrowers are expected to qualify for this student loan cancellation, it’s important to understand who won’t qualify for $6.2 billion of student forgiveness.
(New proposal would extend student loan payment pause and cancel student loans)
Here are 3 types of student loan borrowers who won’t get student loan forgiveness:
1. You’re not pursuing student loan forgiveness
The $6.2 billion of student loan forgiveness is not automatic. You’ll need to pursue student loan forgiveness. Specifically, this student loan cancellation only applies to the Public Service Loan Forgiveness program. (Biden could deliver student loan cancellation and student loan payment pause). This program is available to student loan borrowers who work full-time for a qualified public service or non-profit employer. You’ll need to meet several requirements, including enrolling in an income-driven repayment plan and making at least 120 monthly student loan payments. If you’re not already enrolled, it’s not too late to start. While you won’t qualify for this $6.2 billion of student loan forgiveness, you can still qualify for total student loan forgiveness for your federal student loans. Contact your student loan servicer for details. Make sure to send an Employer Certification form to the U.S. Department of Education every year and whenever you change jobs.
(Biden could extend the student loan payment pause forever)
2. You don’t complete a limited waiver for student loan forgiveness
If you’re currently pursuing student loan forgiveness, the easiest way to not qualify for student loan forgiveness is to forget to do this one thing. You must complete a limited waiver for student loan forgiveness. In October, Biden announced major changes to student loan forgiveness that will enable more student loan borrowers to get student loan cancellation. If any of your previous federal student loan payments weren’t counted, this is your opportunity to get retroactive credit. For example, if you made a late student loan payment or partial student loan payment, this is your opportunity to get credit toward your 120 required monthly student loan payments. Similarly, if you made student loan payments while enrolled in the wrong student loan repayment plan, you can now count these student loan payments. However, you only have until October 31, 2022 to complete the limited waiver.
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3. You have private student loans
You won’t qualify for any student loan forgiveness with private student loans. Unfortunately, private student loans are excluded from this $6.2 billion of student loan forgiveness. Similarly, this is true with most student loan forgiveness programs, which focus on federal student loans. If you have both private and federal student loans, however, your federal student loans still can qualify for student loan forgiveness.
(Bombshell report claims this student loan servicer misled student loan borrowers)
Student loans: next steps
It’s important to understand who will and won’t benefit from this student loan cancellation. The good news: Biden has cancelled more than $15 billion of student loans, which is more student loan cancellation than any president in history. Your next step is to plan for the restart of federal student loan payments, which will begin after May 1, 2022. This means you should evaluate all your options for student loan repayment based on your unique financial situation.
Here are some popular strategies to save money on your student loans: