3 Federal Student Loan Deadlines That Borrowers Should Know About

While legal battles over President Joe Biden’s efforts to cancel federal student loan debt continue, some student loan-related initiatives have been moving forward.
Since the U.S. Supreme Court shot down an initial plan for a blanket cancellation of up to $400 billion in student loans last summer, the administration has implemented targeted programs through regulatory changes and executive actions.
So far, this has erased nearly $169 billion in debt for 4.8 million borrowers.
The plan primarily benefits those who owe more than they originally borrowed due to accrued interest. It would erase up to $20,000 beyond the principal balance, regardless of the borrower’s income. Some 23 million may even see their entire interest balances eliminated.
The Education Department could also forgive the debt of those who have been repaying for at least 20 or 25 years, those who qualify for loan forgiveness under other programs but haven’t applied, and those who attended schools that lost access to federal aid, suddenly closed, or left graduates financially worse off.
A fifth category of borrowers may get their debt forgiven based on “hardships” that persist after other benefits are exhausted.
The Education Department has defined hardship “indicators” as including age, disabilities, and financial burdens such as medical debt and expensive child care. The specifics are expected to be finalized next year.
During the on-ramp, payments are due and interest accrues once again, but missed payments won’t be considered delinquent, placed in default, or reported as such to creditors or debt collectors. The theory is that financially struggling borrowers who have long been out of the habit of making payments are at a higher risk of defaulting shortly after repayments resume.
This option will remain available to all eligible borrowers—typically those who don’t make a payment for at least 270 days—through Sept. 30. However, they must sign up before that date to access the full suite of Fresh Start benefits.
As of this January, the Department of Education held $1.5 trillion in federal student loans for nearly 43 million borrowers.