Allow Selection of Which Loans are Cancelled

After reading the news yesterday about the lawsuit challenging the $20k/$10k student debt cancellation plan from the Biden Administration, it got me thinking about my situation with my loans and how the administration plans to cancel them under this plan.

I have 6 undergraduate Direct loans that are certified to about 5 years in to the PSLF program (57 months). I then have 2 Direct graduate loans that are only 7 months certified in the PSLF program (graduated with that in 2020 and only worked for non-profit for 7 months since then).

After reading through the FAQ page on how the administration will apply the loan cancellation, the administration will apply the $10k to my undergraduate loans only, due to 2 of those loans having a higher interest rate than my graduate loans (6.8% for undergraduate vs 6.08% for graduate). The relevant part of the FAQ Page states:

If you have multiple loans in a program type (e.g., multiple Direct Loan Program loans), we’ll apply the relief in the following order:

  • Apply relief to loans with highest statutory interest rate.
  • If interest rates are the same, apply to unsubsidized loans prior to subsidized loans.
  • If interest rate and subsidy status are the same, apply to the most recent loan.
  • If interest rate, subsidy status, and disbursement date are the same, apply to the loan with the lowest combined principal and interest balance.

The problem is, I would prefer the cancellation to be applied first to my graduate loans since those have significantly less PSLF certified time applied to them. Additionally, since the administration is planning to introduce a new payment plan that will cap payments at 5% of “discretionary income” for undergraduate loans ONLY, it would be more beneficial for me to have the graduate loans cancelled first so my family pays less over time (and then gets more cancelled through PSLF later).

I’m seeking help from anyone on if there is anything we can do to force the administration to allow an option on the application (and for those qualified to receive automatic cancellation, a way) to request where they want the cancellation applied rather than it just being automatically applied by a specific formula? I know the time is running down before an application becomes live and if this could be sorted out before it begins to roll out, it’d definitely be better for everyone than later.

At the end of the day, I’m happy with the $10k, no matter where it is applied, but if the administration would allow us debtors to choose where it is applied, that would make the $10k go further over time at least in my situation (and I imagine for some others too). Does anyone have any ideas of who to contact or how to go about pressing the administration for this?

I reached out to some others and they showed me a workaround for this if you are in a similar situation. Consolidate the loans (if all your loans are already Direct loans). Until the PSLF waiver expires at the end of this month, the new consolidated loan will receive credit for any qualified employment months. As long as the pre-consolidated loans are all Direct loans, the new consolidated loan should also be eligible for the $20k/$10k cancellation as long as the other requirements are met (income, etc).

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