The Biden administration on Wednesday announced several new proposed changes to the federal student loan system, including measures to help repay loans for borrowers with physical and mental disabilities, limit capitalization of interest rates and help borrowers working as public service employees , to earn forgiveness on their loans.
In a statement revealing the proposed expansion of student loan programs, the Department of Education said it expects to finalize a full plan by Nov. 1, with the goal of the changes taking effect no later than July 1.
Education Secretary Miguel Cardona said in the statement that the proposed changes “will protect borrowers and save them time, money and frustration and hold their colleges accountable for wrongdoing.”
“We are committed to fixing a broken system. If a borrower qualifies for student loan relief, it shouldn’t take mountains of paperwork or a law degree to get it,” Cardona said in a statement. “Nor should student loan benefits be so difficult to obtain that borrowers never take advantage of them.”
The Biden administration has so far written off nearly $26 billion for more than 1.3 million borrowers since taking office, much of which involved loans taken out by borrowers who were defrauded by their college or school closed before manage to complete their education.
Changes proposed to the federal student loan system Wednesday would make it easier for borrowers to file and pursue claims of predatory practices by colleges. The proposed rules would also help students who enrolled in school 180 days before a school closure and who did not complete their education more easily repay loans.
In a statement, James Quall, deputy education minister, said “borrowers have had to navigate narrow rules and an unnecessarily complex system” when trying to cancel loans they should be able to easily repay.
“Worse, borrowers whose schools lied to them are unable to litigate because restrictive and unfair arbitration requirements and class action bans are imposed on them by their peers,” Quall said. “Borrowers don’t have to jump through hoops to get the relief they deserve.”
Since October, the Biden administration has approved about $8.1 billion in student loan relief for 145,000 borrowers after implementing changes to Public Service Loan Forgiveness (PSLF), which provide loan forgiveness to those who work full-time on certain positions in the public service.
The PSLF changes include a waiver that bypasses certain program requirements and provides borrowers with loan cancellation credit regardless of the type of federal loan. The exemption expires at the end of October.
Wednesday’s announcement proposes a permanent change to PSLF that will allow more payments to be eligible for the program, including partial, one-time and delayed payments. It would also allow certain types of deferments and forbearances to count toward PSLF and create a formal review process for applicants denied access to the program.
Watch Live: Biden Remarks on Pension Relief Historic US Bailout Black Women Demand Biden, Harris Bring Brittney Griner Home
Other proposals include eliminating interest capitalization rates on loans for certain borrowers, making it easier for borrowers with permanent disabilities to qualify for loan forgiveness, and giving borrowers an easier path to loan forgiveness if they’ve been falsely certified and are not eligible for a loan.
The Biden administration also floated the idea of canceling $10,000 per borrower amid calls from progressives to cancel $50,000 or more per borrower.
In May, Deputy Press Secretary Vedant Patel said “no decisions have been made,” but sources told The Hill in late April that the president had settled on that number and was working on the specifics of providing such debt relief.
Add Comment