Recent Congressional legislation and Executive Action by the Biden Administration through the Department of Education has expanded opportunities for debt relief for many individuals with burdensome student loans. This can be as dramatic as full Discharge through the Administrative Discharge Programs (for Disability, Closed or Unaccredited Schools and a recent Court settlement will incorporate numerous trade or for-profit schools). If your school does not fall into one the categories for full Discharge, you may be eligible for one of the many existing programs such as:
- IBR (Income Based Repayment)
- PAYE (Pay as you Earn Repayment Plan)
- REPAYE (Revised Pay as you Earn Repayment Plan)
- ICR (Income Contingent Repayment Plan)
In addition recent changes under the CARES Act provide eligibility waivers for many people for the PSLF (Public Service Loan Forgiveness) program (the waivers will expire on 10/31/22). Debt Consolidations will also remain available with Federal Loan Servicers.
Most of these programs will significantly reduce the amount of monthly payments and often lead to a forgiveness of the remaining balance down the road. As with all government regulations and programs, there are numerous restrictions, limitations, and deadlines. Professional review is essential, but the first step for any analysis of federal loan indebtedness relief is obtaining a copy of one’s NSLDS report which is obtained at www.studentaid.gov.
These programs are limited to Federal Student Loans (i.e FFEL loans issued prior to 2010; Direct Loans (i.e. Stafford Loans, Parent Plus , and Graduate Plus loans) issued after 1994). Perkins Loans, State Aid loans and Private Student Loans are not federal, not guaranteed by the U.S. Government and therefore are not controlled by the Department of Education. They require direct negotiation with the Lender and/or Servicer. Relief for these loans are sometimes available through a Chapter 13 Bankruptcy plan but current law continues to disfavor Discharge of all student loans in Bankruptcy.
We strongly encourage all individuals with difficult to handle student loan balances to schedule a thorough review of your student loan portfolio to see the extent of relief available to you.