There were several significant new developments for student loan borrowers this week as the Biden administration began rolling out several new student loan forgiveness initiatives. Here’s what you need to know.

Biden Administration Updates Guidelines for Applying for Student Loan Forgiveness Under Temporary Waiver

The Department of Education recently updated the official guidelines for the PSLF Limited Forgiveness Initiative, a temporary program that relaxes the rules governing the Public Service Loan Forgiveness Program. The Forgiveness Initiative can allow borrowers in public service jobs to obtain substantial credit retroactively toward loan forgiveness for periods that may not count toward the required ten years of service.

The PSLF limited waiver program ends on October 31, 2022, and advocates are growing concerned about a looming deadline. Many borrowers will have to submit applications or paperwork to qualify for the exemption. For example, borrowers with FFEL loans must combine these loans into a direct consolidation loan to qualifyโ€”a process that can take 30 to 60 days. Borrowers who have not certified their employment by submitting completed PSLF Certificate of Employment forms will need to do so before the deadline as well.

The Ministry of Education has since made it clear, however, that it surrender of these application materials by the deadline that is critical – not is being processed of those materials by Federal Student Aid officials.

โ€œIf you have FFEL, Perkins, or other types of loans that are not direct loans, then the consolidation application should be Apply online through StudentAid.gov by 11:59 p.m. ET on October 31, 2022, until you receive your PSLF limited exemption benefits,โ€ the Department of Education says in updated guidelines.

The guidelines also state that borrowers โ€œuse [online] PSLF Utility by October 31, 2022, to create a PSLF Form that was finally approved โ€œto obtain credit to meet the deadline.โ€[We] It will keep a record if you complete all the steps of a file [online] PSLF Utility is on or before October 31, 2022, but you must still print, sign and sign for your employer(s) and submit the PSLF form to MOHELA, the PSLF provider. Borrowers must submit all required documents by the deadline.

Congress passes legislation to split joint marital consolidation loans

Yesterday the House passed the Consolidation Loan Separation Joint Consolidation Act of 2021, which will allow borrowers who have consolidation loans to a married couple to separate.

Joint marital consolidation loans were introduced until 2006. They allowed married borrowers with federal student loans to pool their loans into a single consolidation loan. Then the spouses became fully legally liable for the entire balance.

However, marital consolidation loans turned out to be a huge problem. Married borrowers who eventually separated were liable for each other's federal student loan debt, because a joint loan could not be divided under federal law. Spousal consolidation loans issued through the FFEL program could not be reincorporated into a direct consolidation loan, which prevented access to major student loan relief programs including Public Service Loan Forgiveness (PSLF).

The bill, which the Senate already passed last summer, would allow borrowers with these types of loans to separate, paving the way for direct loan reconsolidation and access to federal student loan forgiveness programs that were previously unavailable. The bill now heads to President Biden's office for his signature.

The next step is implementation by the Department of Education, which should establish a procedure for borrowers to apply for splitting these spousal loans. Time is short, as borrowers looking to apply for the limited PSLF exemption must do so before October 31, 2022.

Republicans Look to Sue Biden Administration Over Student Loan Forgiveness

The Biden administration is frantically rolling out a new one-time student loan forgiveness initiative that will cancel up to $20,000 in federal student loan debt. The Department of Education estimates that 40 million borrowers in all 50 states will receive student loan forgiveness under the initiative, with up to 20 million debt forgiven completely.

But Republican lawmakers, right-leaning think tanks and attorneys general in red states are actively taking steps to sue the administration to try to stop the loan-forgiveness initiative before it even begins.

Earlier this month, a group of Republican conservatives wrote to President Biden, urging him to reverse course on enacting broad student loan forgiveness. "While inflation soars to the skies...your plan will encourage more student borrowing, stimulate higher education rates, and increase inflation even further, negatively affecting every American," they wrote, arguing that Biden "lacks power." To cancel student debt on a large scale.

But finding a plaintiff with the capacity to bring such a lawsuit โ€” meaning that an individual or entity would suffer significant injury as a result of Biden's new student loan forgiveness plan โ€” can be difficult. Borrower advocacy groups maintain that Biden's plan has a firm legal foundation.

The Biden administration criticized the developments. "Let's be clear about what they're going to try to do here," a White House official told Axios. โ€œThe same people who voted for a $2 trillion tax grant for the wealthy and hundreds of thousands of dollars in their small business loan debt were forgiven will try to keep millions of middle-class Americans in the mountains of debt.โ€

However, the lawsuit -- which could be filed within weeks if Republicans get a viable plaintiff -- could derail Biden's plans. If a federal court issues a national injunction temporarily halting implementation of the initiative while legal proceedings are in progress, it could leave millions of borrowers in limbo.

Further reading Student loan

Millions of student loan borrowers will receive refunds on payments under the Biden Loan Forgiveness Initiative

When can borrowers expect student loan forgiveness under Biden's new plan?

Student loan borrowers must write these critical dates for loan forgiveness and repayment

Biden student loan forgiveness may be taxable in some states