Future Prospects for Student Loan Forgiveness in 2024
President Joe Biden’s efforts to forgive federal student loan debt have faced significant opposition from lawmakers and legal authorities. Despite this, he continues to explore debt relief options. Recently, his administration announced the elimination of approximately $1.2 billion in debt for over 150,000 borrowers enrolled in the Saving on a Valuable Education (SAVE) Plan.
This move follows a more ambitious plan to cancel up to $20,000 in debt per borrower, which was struck down by the Supreme Court last summer. To date, Biden has canceled about $138 billion in debt for 3.9 million borrowers since taking office.
The U.S. Department of Education is expected to continue exploring student loan forgiveness options in 2024, especially since it’s an election year and Biden has prioritized student loan forgiveness. In a February email to SAVE borrowers, Biden emphasized his commitment to fixing student loan programs to make higher education a pathway to the middle class rather than a barrier.
The SAVE program is an income-driven repayment plan designed to eliminate monthly payments for low-income borrowers, save other borrowers around $1,000 annually, and prevent balances from growing due to unpaid interest.
Another initiative to watch in 2024 is the Income-Driven Repayment (IDR) Account Adjustment, previously known as the IDR waiver. This temporary adjustment allows eligible loan borrowers to count past repayment periods (and some deferment and forbearance periods) toward their 20-year and 25-year IDR loan forgiveness terms and Public Service Loan Forgiveness (PSLF) programs. Many federal loan borrowers have already had their accounts automatically adjusted. However, those with loans not administered by the Education Department, such as Federal Family Education Loans (FFEL), Perkins Loans, or Health Education Assistance Loans (HEAL), need to consolidate their loans via a federal direct loan by April 30.
The Education Department has also approved nearly $12 billion in loan forgiveness for medically disabled borrowers under the Total and Permanent Disability (TPD) discharge program. A new TPD application with relaxed eligibility rules and expanded access has been launched, allowing over 500,000 borrowers to qualify for discharge.
In 2024, several other debt relief developments are anticipated. A “Plan B” program, announced after the Supreme Court decision, could be released later this year. This program would identify hardship factors, such as total student loan balance relative to household income and high-cost burdens for essential expenses, to determine eligibility for relief. Final draft regulations are expected in May, with the program potentially going live later in 2024.
Additionally, a new option will allow some borrowers to “buy back” certain deferment and forbearance periods to count toward PSLF. The PSLF Buyback Program aims to provide an alternative method of student loan forgiveness for PSLF borrowers. New rules implemented last year make it easier for PSLF program applicants to qualify for full student loan balance discharge, including for AmeriCorps forbearances, military-related deferments, hardship deferments, and mandatory administrative forbearances.
Two temporary federal student loan relief initiatives are expected to benefit borrowers through most of 2024. The Fresh Start program helps borrowers in default on their federal student loans restore good standing, which is necessary to qualify for forgiveness programs like PSLF or the IDR Account Adjustment. The “on-ramp” transition period protects borrowers from adverse credit consequences and default if they miss a payment after the payment pause ends. Both programs are set to end in September 2024.