FILE - New graduates line up before the start of a community college commencement in East Rutherford, N.J., May 17, 2018. A federal judge in St. Louis on Thursday, Oct. 20, 2022, dismissed an effort by six Republican-led states to block the Biden administration's plan to forgive student loan debt for tens of millions of Americans. is on hold for now, leaving millions of Americans who are eligible for relief in limbo.
In that case, Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina, argue that Biden’s plan threatens a loss in tax revenue for each state. They also argue that the Biden administration’s Department of Education is overstepping its authority to provide one-time debt relief. Meanwhile, the Biden administration has repeatedly said that borrowers are continuing to recover from the pandemic, and providing debt relief under the Heroes Act is lawful. It’s the same authority both Biden and former President Donald Trump have used to pause student loan payments during the pandemic since March 2020. Biden recently extended the pause for a sixth time through the end of June 2023.
A good rule of thumb is if your loans haven't been a part of the payment pause during the COVID pandemic, then they probably won't be a part of cancellation. However, the defaulted ED-held loans do qualify. But in terms of federal loans, it includes parent plus loans, graduate loans, undergraduate loans —anyone with a direct loan is completely fine. So that’s $10,000 across the board and then an additional $10,000, so total $20,000 if the borrower had a Pell Grant.
What if a borrower submitted their application prior to the pause on the program and has not received a letter yet?If you've submitted an application and you have not received a communication, I would definitely encourage folks to continue to monitor the messages they're receiving. Some of this is just the fact that the Department of Education and the student loan servicing companies somewhat have a monumental task — they have to communicate updates with tens of millions of people.