The Biden administration on Wednesday announced several new proposed changes to the federal student loan system, including measures that help repay loans for borrowers with physical and mental disabilities, limit interest capitalization rates, and help borrowers working as public servants to obtain a forgiveness on their loans.
In A declaration Unveiling the proposed expansion of student loan release programs, the Department for Education said it expected to finalize a comprehensive plan by November 1, with the aim of the changes taking effect no later than November 1. July.
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 undertake to repair a faulty system. If a borrower qualifies for student loan relief, they shouldn’t take mountains of paperwork or a law degree to get it,” Cardona said in a statement. “Nor should the benefits of student loans be so difficult to obtain that borrowers never actually benefit from them.”
The Biden administration has so far canceled nearly $26 billion for more than 1.3 million borrowers since taking office, much of which included loans obtained by borrowers who were defrauded by their college or saw their school close before they could complete their studies.
The proposed changes 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 registered in schools 180 days before a school closed and who have not completed their studies to more easily discharge loans.
In a statement, James Kvaal, the education undersecretary, said ‘borrowers have had to navigate narrow rules and an unnecessarily complicated system’ when trying to cancel loans they should be able to pay off. easily.
“What’s worse, borrowers whose schools have lied to them cannot sue because restrictive and unfair arbitration requirements and class action prohibitions have been imposed on them by their colleges,” Kvaal said. “Borrowers shouldn’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 the Public Service Loan Forgiveness (PSLF), which provides forgiving loans to those who hold certain positions in the public service full-time.
Changes to the PSLF include a waiver that bypassed certain program requirements and gave borrowers credit for loan forgiveness, regardless of federal loan type. The exemption will expire at the end of October.
Wednesday’s announcement proposes a permanent change to PSLF which would allow more payments to qualify for the program, including partial, lump sum and late payments. It would also allow particular types of deferments and abstentions to count for the PSLF, and it would create a formal reconsideration process for applicants who were denied access to the program.
Other proposals include eliminating interest capitalization rates on loans for borrowers in certain cases, making it easier for lifelong disabled borrowers to qualify for loan forgiveness, and giving borrowers an easier path to loan forgiveness. loan if they were falsely certified and ineligible for a loan.
The Biden administration has 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 decision has been made”, but sources told The Hill in late April that the president had set that number and was working out the details of the granting of such debt relief.