In a recent decision, the Supreme Court blocked President Biden’s loan forgiveness program, leaving many hopeful borrowers disappointed. However, there are still numerous avenues available for individuals seeking relief from their federal student loan debt. While the blocked program could have potentially canceled up to $20,000 of debt for millions of people, existing laws and regulations provide alternative means to alleviate the burden.
Income-Driven Repayment
One of the most accessible methods to manage and potentially eliminate student loan debt is through income-driven repayment plans. These plans offer borrowers the option to pay an amount based on their income, ensuring affordability. If the borrower is unable to fully repay the balance after 20 or 25 years of consistent income-driven payments (depending on the specific plan chosen), the government cancels the remaining debt. The U.S. Department of Education provides comprehensive explanations on the various income-driven repayment options available.
Public Service Loan Forgiveness
For individuals working in government or nonprofit sectors, the Public Service Loan Forgiveness program remains a viable solution. Under this program, borrowers who make ten years of payments while working full-time in a qualifying job and utilizing an income-driven repayment plan can have their remaining loan balance eliminated. Recent adjustments by the Biden administration have improved the program, resulting in debt relief for numerous teachers and social workers.
Closed or Low-Performing Schools
Students who attended schools that engaged in misconduct, misled them, or violated state laws related to loans or services can seek debt cancellation through borrower defense claims. Under the Biden administration, the rules surrounding borrower defense have become more lenient, leading to debt balance cancellations for many students who borrowed to attend for-profit or underperforming schools. The Education Department offers detailed explanations on the borrower defense process.
Bankruptcy Discharge
While challenging, it is possible to discharge student loan debt through personal bankruptcy. To succeed in court, borrowers must meet the legal standard of proving an “undue hardship” that makes repayment impossible. Factors such as the specific judicial circuit and the judge overseeing the case can influence the outcome. Although a complete discharge is not easily obtained, recent changes introduced by the Biden administration have made the process slightly more favorable for borrowers.
Disability Discharge
Individuals facing total and permanent disability have the option to discharge their student loan debt. Qualification for automatic discharge can be achieved by obtaining disability classification from the Social Security Administration or the Department of Veterans Affairs. Mental illness can also serve as a qualifying condition, as explained on the Social Security Administration’s website. Alternatively, a doctor’s certification is required, stating that the borrower is unable to engage in substantial gainful activity due to a physical or mental impairment expected to last for at least five years or result in death. The Education Department has implemented changes to facilitate disability qualification.
Debt Won’t Carry On
Young adults who are concerned about inheriting federal PLUS loans taken out by their relatives can find solace in knowing that the debt does not pass on to them. The federal government does not make claims on the estate of the deceased, relieving heirs of any responsibility to repay the balance.
In conclusion, while the Supreme Court’s decision on President Biden’s loan forgiveness program may have dashed the hopes of many borrowers, alternative pathways to cancel federal student loan debt still exist. Programs such as income-driven repayment, public service loan forgiveness, borrower defense claims, bankruptcy discharge, and disability discharge offer individuals opportunities to alleviate their financial burdens. It is crucial for borrowers to explore and understand all available options to find the most suitable path towards debt relief.
Finding Solutions: How to Cancel Federal Student Loan Debt
In the wake of the Supreme Court’s decision to block President Biden’s loan forgiveness program, millions of individuals seeking relief from their federal student loan debt may feel disheartened. However, despite this setback, there are still numerous avenues available to borrowers that can help alleviate the burden of student loans. Let’s explore some alternative methods and programs that can assist in canceling federal student loan debt.
Income-Driven Repayment: A Path to Manageable Debt
One of the most accessible and widely applicable solutions for borrowers is the Income-Driven Repayment (IDR) program. This comprehensive mechanism allows individuals to repay their debt based on their income level. If borrowers find it challenging to meet the standard payment amount defined by the federal government as affordable, they have the option to pay a reduced amount calculated through a specific formula. Furthermore, after 20 or 25 years of consistent income-driven payments, depending on the chosen repayment plan, the government cancels the remaining debt. To learn more about the various income-driven repayment options, the U.S. Department of Education provides detailed explanations on their website.
Public Service Loan Forgiveness: Supporting Public Servants
The Public Service Loan Forgiveness (PSLF) program offers relief to borrowers who work in government or nonprofit sectors. Under this program, individuals who have made ten years of payments while working full-time in qualifying jobs and utilizing an income-driven repayment plan can have their remaining loan balance eliminated. Recent adjustments made by the Biden administration have significantly improved the PSLF program, enabling hundreds of thousands of teachers and social workers to become debt-free.
Closed or Low-Performing Schools: Seeking Justice for Students
Students who have attended schools that engaged in misconduct, misled them, or violated state laws related to loans or services have an avenue to seek debt cancellation through borrower defense claims. In previous years, the Education Department attempted to tighten the rules and slow down the process. However, under President Biden’s administration, the rules surrounding borrower defense claims have become more lenient. As a result, students who borrowed to attend for-profit or underperforming schools, including institutions like Westwood College, Corinthian Colleges, DeVry University, and ITT Technical Institute, have seen their debt balances wiped out. For a comprehensive understanding of the borrower defense process, the Education Department provides a useful explainer on their website.
Bankruptcy Discharge: A Challenging but Viable Option
Although it is not an easy path, it is indeed possible to discharge student loan debt through personal bankruptcy. To succeed in court, borrowers must meet the legal standard of proving an “undue hardship” that makes repayment impossible. This often requires demonstrating a “certainty of hopelessness” in ever being able to pay down the debt. The outcome can be influenced by the judicial circuit and the judge presiding over the case. While a complete discharge is not easily obtained, recent changes introduced by the Biden administration have made the process slightly more favorable for borrowers. In November, my colleague Tara wrote a comprehensive guide on these changes.
Disability Discharge: Relieving the Burden for the Disabled
Individuals facing total and permanent disability have the option to discharge their student loan debt. Automatic discharge can be obtained by obtaining disability classification from the Social Security Administration or the Department of Veterans Affairs. Mental illness can also qualify as a condition for discharge, as explained on the Social Security Administration’s website. Alternatively, borrowers can seek certification from a doctor stating that their physical or mental impairment prevents them from engaging in substantial gainfulactivity for at least five years or is expected to result in death. The Education Department has implemented changes to streamline the disability qualification process, making it more accessible for borrowers. These changes were detailed in a recent press release.
Debt Won’t Carry On: Inheriting Federal PLUS Loans
Young adults who are concerned about inheriting federal PLUS loans taken out by their relatives can find relief in knowing that the debt does not pass on to them. The federal government does not make claims on the estate of the deceased, ensuring that heirs are not burdened with the responsibility to repay the loan balance.
In conclusion, while the Supreme Court’s decision may have halted President Biden’s loan forgiveness program, there are still alternative pathways available to borrowers seeking to cancel their federal student loan debt. The Income-Driven Repayment program, Public Service Loan Forgiveness, borrower defense claims, bankruptcy discharge, and disability discharge all provide avenues for debt relief. It is crucial for borrowers to explore these options and understand the eligibility criteria and processes associated with each. By staying informed and taking proactive steps, individuals can work towards lightening the burden of their student loans and achieving financial freedom.