On Wednesday, the Biden administration released a series of proposed new regulations aimed at expanding programs that offer student loan forgiveness to Americans who have borrowed from the federal government.
If passed, the new rules would allow or expand debt forgiveness for borrowers whose schools have been closed or lied to, or who have a permanent disability and to borrowers who work for the government.
We pledge to reform the defective system. , Miguel Cardona, dans un PRESS RELEASE “The benefits of student loans should not be so difficult that borrowers do not actually benefit.”
The changes would make it easier for borrowers who attended schools that lied or took advantage of their loan repayments and created a “clear expectation” that the Education Department would hold these schools accountable for the cost of cancellation.
It also prevents schools from requiring borrowers to sign agreements that require disputes to be resolved through arbitration rather than class action lawsuits.
The Department of Education is also seeking to make it easier for borrowers working in the public service to qualify for accelerated loan forgiveness after 10 years of payments, rather than the 20 or 25 years granted to borrowers working in other sectors.
The rule changes will allow more payments to qualify for the exemption, including partial, lump sum and delayed payments, while allowing certain types of deferral programs, such as those for Peace Corps, Army or National Guard borrowers, to count for 10 years.
The Biden administration is also seeking to keep aggregate loan balances from growing by capitalizing interest for borrowers who are unable to make monthly payments. Interest capitalization occurs when unpaid interest is added to the total loan balance, so that future interest payments are calculated on a higher loan balance.
The new regulations will eliminate the practice of interest doubling where it is not required by law, including when a borrower goes into repayment, is out of patience, defaults on a student loan, or is present in most income-based repayment plans.
The reforms will also help borrowers who are unable to work because of a disability, by expanding the types of disabilities recognized by the Social Security Administration to be eligible for discharge and expanding the type of proof needed to document a disability.
The proposals come amid the Biden administration’s review of the executive’s use of one-time student loan debt relief for all federally backed student loan borrowers.
President Biden has repeatedly extended a pause in student loan collections that began under President Trump in order to combat the economic impact of the COVID-19 pandemic.
While some Democrats in Congress have called for Biden to use the executive branch to cancel $50,000 of student debt per borrower, the president said in April that he had decided to cancel any debt that would be less than that number.
“I am not considering a $50,000 debt reduction, but I am thinking carefully about whether or not there will be additional debt relief, and I will respond to that in the coming weeks,” Biden told reporters at the White House at the time. Although there are no other ads.
The current hold on student loan collections will expire on August 31, and Biden is expected to announce a decision on the general exemption before that date.