Federal Student Loan Debt: Deadlines and New Developments

The vast majority of prospective students considering or pursuing an undergraduate or advanced degree rely on loans to afford the cost of tuition, which has been rapidly rising faster than the rate of inflation: 45 million Americans have accumulated over $1.5 trillion of student loan debt, and it is now common for a law school graduate to owe well over $100,000. These high levels of debt increasingly place borrowers in such precarious financial situations that they do not even have the means to afford starting a family (See the ABA’s Young Lawyer Division (YLD) report, Student Debt: The Holistic Impact on Today’s Young Lawyer, to learn more about the practical impacts caused by the student loan debt crisis).

Comprehensive federal legislation will be required to fundamentally reform the financing of higher education and finally rein in the cost of college and professional school, yet the continued partisan acrimony within Congress makes that an unlikely prospect in the near future. Fortunately, President Joe Biden has taken several administrative steps that may assist many current borrowers.

Most notably, the White House took the historic step to eliminate up to $20,000 of student loan debt for many Pell Grant recipients who have loans held by the Department of Education (Department), and up to $10,000 of relief for many other non-Pell Grant recipients. While a federal court temporarily blocked the Department’s ability to process debt discharges under this proposal, it is still accepting applications for relief here.

The Department also took the opportunity to further extend the student loan payment pause until December 31, 2022. Payment forbearance was originally put in place by Congress in March 2020 during the onset of the pandemic. This relief including suspended federal student loan payments and permitting borrowers to repay their loans at a zero percent interest rate.

Furthermore, the Department announced a temporary waiver of certain Public Service Loan Forgiveness (PSLF) rules for a limited period of time that ensure any prior period of repayment will count as a qualifying payment, regardless of loan program, repayment plan, or whether the payment was made in full or on time: The temporary waiver period expires on October 31, 2022.

On October 25, 2022, the Department again urged eligible borrowers to apply for PSLF under the temporary waiver provisions by the October 31 deadline and announced additional program changes that would be in effect starting in November 2022. A complete list of the new PSLF improvements can be found in this fact sheet. The Department expects to publish final regulations soon that will make permanent changes to the PSLF program effective July 1, 2023.

The ABA vigorously advocated for student loan debt forgiveness, the temporary PSLF waiver, and the extension of payment forbearance during its Student Debt Week of Action in the Fall of 2021. We also made this issue a priority during the past two ABA Days. Most recently the ABA sent a letter to the Department of Education requesting an extension of both the temporary PSLF waiver deadline, as well as the student loan payment pause.

Follow us @ABAGrassroots to get student debt relief updates as they develop.