Student Loans: How the Payment Pause Will Impact Borrowers’ Eligibility for Forgiveness

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With millions of student loan borrowers left in the dark following the temporary blocking of President Biden’s student loan relief program by a federal appeals court, the White House has extended the federal student loan payment moratorium until June 30, 2023, or earlier if the appeal litigation is resolved by the Supreme Court.

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However, student loan lawyer Adam S. Minsky argues in a Forbes article that even though Biden’s student loan relief plan has hit several legal roadblocks, many student loan borrowers have already benefited by receiving loan forgiveness throughout the payment pause.

For borrowers participating in an income-driven repayment plan (IDR) or the Public Service Loan Forgiveness (PSLF) Program, the three years of paused monthly payments count toward their eventual federal student loan forgiveness, per the U.S. Department of Education (ED).

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Furthermore, those who enroll in an IDR plan during the payment pause will have their payments paused and they will count toward IDR forgiveness. The same goes for PSLF program candidates, who can apply for and get forgiveness during the payment pause if they reach their 120 qualifying payments, according to the ED site.

As Minsky states, through the Biden-initiated, ED-implemented IDR Account Adjustment (due in July 2023) and the extended student loan payment moratorium, “millions of borrowers will get close to, or surpass, the threshold for student loan forgiveness.”

Per Forbes, income-driven repayment plans were brought into practice with the passing of the Student Loan Reform Act of 1993. ICR calculates borrowers’ monthly payments on their incomes and family size rather than through a standard repayment plan.

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Created under the College Cost Reduction and Access Act (CCRAA) of 2007, the Public Service Loan Forgiveness (PSLF) program provides debt relief to support teachers, nurses, firefighters and other community workers. Borrowers enrolled in this program can have the remainder of their student loan balance forgiven after making 120 qualifying monthly payments, over ten years of full-time public service.

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The Biden Administration’s student loan forgiveness plan was intended to provide relief to 43 million borrowers and potentially help 20 million of those debtors get rid of their loans completely, according to an Aug. 24 White House fact sheet

The plan would cancel up to $20,000 in student debt for Pell Grant recipients and up to $10,000 for individual borrowers who make under $125,000 per year. The moratorium does not apply to borrowers with privately held loans.

However, a Nov. 10 ruling by U.S. District Judge Mark Pittman, who deemed Biden’s program illegal after numerous lawsuits were filed on the basis of federal procedural violations, has put Biden’s student debt relief plan is on hold and borrowers in limbo, pending appeals by the White House.

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About the Author

David Nadelle is a freelance editor and writer based in Ottawa, Canada. After working in the energy industry for 18 years, he decided to change careers in 2016 and concentrate full-time on all aspects of writing. He recently completed a technical communication diploma and holds previous university degrees in journalism, sociology and criminology. David has covered a wide variety of financial and lifestyle topics for numerous publications and has experience copywriting for the retail industry.
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