The Biden administration has been touting its student loan relief initiatives that have resulted in around $12 billion in student loan forgiveness during the last year. The initiatives have been expansive, benefiting tens of thousands of borrowers, with a particular focus on disabled borrowers, public service workers, and borrowers who have been defrauded by their schools.
But as the national student loan payment pause nears its expiration, with no signs that the Biden administration intends on extending it further, many student loan borrowers have been — and may continue to be — excluded from key relief programs.
Private Student Loan Borrowers
Private student loans, by their nature, are already excluded from all federal student loan relief programs, including federal student loan forgiveness and income-driven repayment plan programs. But newer student loan relief enacted during the last two years have continued to exclude private student loan borrowers. This includes the national pause on student loan payments and interest effective since March 2020, as well as the new expanded relief under existing student loan forgiveness programs recently announced by the Biden administration.
Private student loans haven’t been covered by the recent student loan initiatives for several reasons. Private loans weren’t included in the student loan relief provisions of the CARES Act — legislation passed by Congress in 2020 in response to the pandemic; further extensions of that relief through executive action by former President Trump and President Biden were restricted due to that original legislative text. And unrelated additional initiatives by President Biden to expand relief under key federal student loan programs have been similarly limited by earlier federal legislation previously passed by Congress.
Congress could pass new legislation to provide private student loan borrowers with some form of novel relief. But even some recent proposed student loan legislation would exclude private student loans. For example, the bipartisan “Fresh Start Through Bankruptcy Act” would reform the bankruptcy code to make it easier for borrowers to discharge their student loans in bankruptcy. But the proposed changes would only cover federal student loans.
Parent PLUS Borrowers
Parent PLUS loans are a type of federal loan issued to the parent of an undergraduate student. The student is the one who benefits from the loan, but the parent is the borrower. Parent PLUS loans typically have higher interest rates than other kinds of federal student loans, and they are already excluded from the most generous income-driven repayment plan programs, leaving parent borrowers with fewer (and more expensive) repayment options.
While Parent PLUS borrowers often struggle with their loans despite comparatively higher earnings than recent graduates, recent student loan relief initiatives suggest that the Department of Education intends to continue excluding these borrowers from relief. The Biden administration’s recent Limited PSLF Waiver program, which dramatically expands student loan forgiveness eligibility through October of 2022 under the troubled Public Service Loan Forgiveness program, specifically excludes Parent PLUS loans. Parent PLUS loans are also left out the Department of Education’s proposed new income-driven repayment plan.
FFEL Student loan Borrowers
Borrowers with FFEL-program federal student loans (an older type of federal student loan that is issued by a commercial lender but guaranteed by the federal government) have historically been excluded from key programs including the most affordable income-driven repayment plans and the Public Service Loan Forgiveness (PSLF) program. FFEL loans were also left out of the national federal student loan payment pause by the CARES Act, legislation Congress passed in 2020.
The Biden administration has addressed some of these issues by using executive action to expand relief to FFEL borrowers in certain areas. For example, the Department expanded the national suspension of collections efforts on defaulted federal student loans to include FFEL loans earlier this year (although it declined to expand the payment pause and interest freeze to cover those loans). And the recently-announced Limited PSLF Waiver will make it possible for FFEL borrowers to get payments credited towards student loan forgiveness in certain cases. But that relief is only temporary.
Graduate School Borrowers
Borrowers who took out federal student loans for graduate school can, for the most part, benefit from most existing federal student loan relief programs, including income-driven repayment and federal loan forgiveness programs. However, graduate school borrowers are subject to a longer repayment term than undergraduate borrowers are under the Revised Pay As You Earn (REPAYE) plan, one of the most affordable income-driven repayment plan options. And the Department of Education, citing higher earnings by graduate school borrowers, has proposed completely excluding graduate school borrowers from its new income-driven repayment plan.