The Department of Education on Tuesday announced solutions to various student loan programs, offering thousands of borrowers immediate relief from student loan debt and bringing millions more years closer to the forgiveness of their student loans. It comes as the Biden administration continues to consider canceling student loan debt for millions of Americans.
Changes are being made to utility loan forgiveness programs and revenue amortization plans. According to the Department of Education, the corrections will immediately forgive 40,000 borrowers and bring at least 3.6 million borrowers closer to relief in at least three years through income-based repayments.
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“Student loans should never have been a life sentence, but it has certainly felt that way for borrowers blocked by debt relief to whom they are eligible,” Education Secretary Miguel Cardona said in a statement. press release. He said the measure is beginning to “remedy years of administrative failure” and that the actions demonstrate the administration’s commitment to providing “significant debt relief and ensuring that federal student loan programs are administered fairly and effectively.” “.
A review by the Federal Office of Student Aid found that some administrators had been putting borrowers facing financial difficulties in indulgence in violation of regulations requiring borrowers to provide clear and accurate information about their options for stay out of arrears. This happened even when monthly payments under income-based repayment plans could have made their payments as low as $ zero, the Department of Education said.
To address the issue, the Department of Education will make a single account adjustment to account for certain long-term compensation for revenue and public service forgiveness. The changes will be automatically applied to the borrowers’ accounts later this year. Borrowers who have been subject to short-term compensation may also apply for account revisions. At the same time, the administration will increase oversight of administrators’ ability to indulge borrowers in indulgence, including working with the Office of Consumer Financial Protection to conduct periodic audits of the use of tolerance.
Meanwhile, in its review of the revenue-based repayment program, the Department of Education found “significant flaws” suggesting that borrowers were not making progress toward forgiveness. The federal student aid office will conduct a one-time review of income-based payments, so that any month a borrower makes payments will count toward forgiveness, regardless of the repayment plan they are in. This includes payments made before loan consolidation. For those who have made the required number of payments (usually 120), the loans will be canceled automatically.
In an effort to address the issue on an ongoing basis, the Department of Education will issue new guidelines for administrators. Starting next year, borrowers will be able to sign in to their accounts through the federal student aid office to see their own progress toward online income-based payment forgiveness. In addition, the Department of Education plans to take steps to further simplify the counting of payments by allowing more loan statements to be counted for income-based forgiveness.
Efforts announced on Tuesday come as the Biden administration has already canceled more than $ 17 billion in debt for some 725,000 borrowers since President Biden took office.
Earlier this month, the White House also announced an extension of the federal student loan repayment break until Aug. 31. White House Press Secretary Jen Psaki recently said that the administration would make a decision from now on then by canceling the student loan debt, or the break would be extended even further.
- In:
- Student loan
- United States Department of Education
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