Who will get student loan forgiveness? Qualifying factors explored

US President Joe Biden is expected to make an announcement about the government's plans for $1.6 trillion in student loan forgiveness on Wednesday, August 24, 2022.

According to News Nation, the Biden administration plans to forgive $10,000 in student loan debt for borrowers earning less than $125,000 per year. Biden advocated for the student debt exemption during his campaign. However, certain qualifying factors exist, such as the loan being funded by the federal government.

According to News Nation, Biden refused to forgive $50,000 per borrower in May, despite Democratic pressure.

Elaborating on the "efforts" of the Biden-Harris administration on student loan forgiveness, the US Department of Education stated:

"Today’s announcement is part of the Biden-Harris Administration’s broader efforts to get students and borrowers the benefits to which they are entitled. These efforts include enacting lasting policies to make college more affordable and preventing a future debt crisis by holding schools accountable for leaving students with mountains of debt and without the skills and preparation to find good jobs."

According to The Hill, Biden is expected to announce the largest forgiveness of federal student loan debt to date.

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Understanding the qualifying factors at play for student loan forgiveness

To qualify for student loan forgiveness, borrowers need to meet certain employment and payment criteria. The majority of loan forgiveness programmes are funded by the federal government. There are no strict requirements for people with federal loans in terms of occupation, military status, or specific student loan plans.

There are options for borrowers with private student loans that may forgive some of the student loans. However, it is expected that the new announcement will not cover private loans because they do not fall under the federal loan system.

According to internal documents obtained from the Education Department in July, the Biden administration may include in the student loan forgiveness announcement Parent PLUS Loans, which are loans taken out by parents on behalf of their children, and FFEL loans, which are loans taken out by private entities. Federal loans that cover graduate schools have reportedly also been included in the potential student loan forgiveness scheme.

It has also been reported that the recent student loan forgiveness could also target the recipients of the Pell Grant, which is mostly offered to students with “exceptional financial need.” However, it is unclear whether the government has finally included the same in their plans.

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A summary of various student loan forgiveness programmes

According to the Federal Student Aid (FSA), there are several student loan forgiveness programs in place that borrowers should know about.

PSLF (Public Service Loan Forgiveness) is available to full-time employees of government agencies or non-profit organisations who have made 120 or more timely payments. Borrowers can adjust their payment schedule instead of receiving full forgiveness through the Income-Driven Repayment (IDR) Plan, which is only available after a certain number of payments.

Teachers in low-income areas can opt for Teacher Loan Forgiveness, which is available if the borrower is in the occupation for at least five consecutive years.

Military Forgiveness or the U.S. Department of Defense (DOD) student loan repayment option is available for members of certain branches of the U.S. military.

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Many state programs in the United States also help with student loan debt. Borrowers who serve low-income communities can benefit from these programs.