(NEXSTAR) — Several thousand borrowers will have their student debt canceled as part of recently announced actions by the Department of Education to “fix longstanding flaws in student loan programs.” Another 3.6 million borrowers will receive loan forgiveness credit.
The Department for Education announced the move on Tuesday, saying the steps being taken are aimed at bringing borrowers closer to the public service loan and income-based reimbursement forgiveness.
Federal Student Aid (FSA) estimates expect at least 40,000 borrowers to see “immediate debt discharge” as they now qualify for the Public Service Loan Forgiveness (PSLF) program under the new changes. Borrowers who work as public servants are eligible for forgiveness under PSLF once they have made 10 years of qualifying payments.
Thousands of other borrowers with older loans will also receive forgiveness through the income-based payment, according to the Department of Education. Another 3.6 million will receive at least three years of additional credit for IDR forgiveness.
“Student loans were never meant to be a life sentence, but it certainly feels that way for borrowers excluded from the debt relief they are eligible for,” said US Education Secretary Miguel Cardona. , it’s a statement. release. “Today, the Department of Education will begin to remedy years of administrative failures that effectively denied the promise of loan forgiveness to certain borrowers enrolled in IDR plans. These actions once again demonstrate the Biden-Harris administration’s commitment to providing meaningful debt relief and ensuring that federal student loan programs are administered fairly and effectively.”
The Education Department said it will also address the “leniency direction”. In some cases, FSA found that borrowers were placed in forbearance, meaning they either didn’t have to make a payment, or could temporarily make a smaller payment but couldn’t get any closer to forgiveness or loan repayment, when a IDR could have been more beneficial.
Now, the department will count forbearances of more than 12 consecutive months and more than 36 months total for loan forgiveness under either IDR or PSLF. This is a one-time action and borrowers who were placed in forbearance can file a complaint with the FSA here. In the future, student loan servicers will have a restricted ability to put borrowers into forbearance, the Department of Education added.
After flaws were found that were believed to be causing borrowers to lose progress toward IDR forgiveness, FSA will also review payment tracking procedures. According to Tuesday’s release, Cardona directed FSA to provide one-time payment reviews to address past inaccuracies and modify the payment count for IDR payment plans.
While the department intends for these changes to take effect immediately, the adjustments are contingent on an update to the National Student Loan Data System, NPR reports. Because of this, loan cancellations will not begin until the fall.
WHAT ABOUT WIDESPREAD STUDENT LOAN FORGIVENESS?
Earlier this month, President Biden not only delay in student loan payments for a few more monthsbut gave some borrowers a little “forgiveness.” Millions of borrowers will have their delinquent or default status lifted, allowing them to “re-enter payment in good standing,” the Department of Education explained in a release.
However, before Biden announced the fourth student loan freeze, 96 lawmakers (21 senators and 75 members of the House) called him to “pay off student debt now,” saying it would “provide long-term benefits for individuals and the economy, helping families buy their first homes, start a small business, or invest in their retirement. More broadly, paying off student debt would add tens of billions of dollars to GDP growth.”
During his campaign, Biden supported the forgiveness of at least $10,000 in federal student loans per person, but did not mention any cancellation in his statement about the latest pause.
However, there is confusion regarding Biden’s power to pay off student loans. House Speaker Nancy Pelosi has said it lacks legal authority, and instead comments, “That would be an act of Congress.” Senate Majority Leader Chuck Schumer, on the other hand, has argued that Biden could do so under the same legal provision that Trump used to delay payments and accrue interest at the start of the pandemic. the hill reports.
Earlier this month, White House press secretary Jen Psaki said Biden’s cancellation of some federal student loan debt remains on the table. She could even decide in the coming months, depending on The hill.
Reference-www.woodtv.com