Student Loan Forgiveness Tied To Personal Hardships ![]() The draft regulations suggest indicators of hardship under this prong could include “receipt of a Pell Grant and other information from the FAFSA form” demonstrating that the borrower is low-income, as could the “receipt of means-tested public benefits.” Specific benefits are not referenced in the draft, but this could include food stamps, certain kinds of Social Security benefits, Medicaid, or healthcare subsidies under the Affordable Care Act. Since other government agencies may have already determined that a borrower qualifies for certain programs based on financial need, this could allow for automatic loan forgiveness in certain cases. ![]() The proposed regulations, if enacted, would also allow the Education Department to consider borrowers for student loan forgiveness if they have already qualified for other government programs that are based on financial hardships. The draft regulations include a provision for “total consumer debt balances and required payments, relative to household income,” as well as “high-cost burdens for essential expenses, such as healthcare, caretaking, and housing.” Student Loan Forgiveness Based On Demonstrated Need The department could also look at a borrower’s other financial obligations as indicators of hardship. The regulations also provide that the department can evaluate the “type of loans and total debt balance owed for loans,” including for loans “not owed to the Department.” This could encompass private student loan debt, which typically is not factored in for other federal student loan relief programs, such as income-driven repayment other loan forgiveness options. ![]() Under the draft regulations, the Education Department could consider the “current repayment status and other repayment history information,” suggesting that borrowers who have clearly struggled with repayment for years (or perhaps have paid a lot on their loans but haven’t made a dent in the balance) could be eligible.
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