The U.S. Department of Education on Wednesday officially unveiled its proposed expansion of the Higher Education Act, which would allow additional relief for student loan borrowers who have faced a wall of red tape or are part of qualifying groups that should be granted financial assistance.
Calling the federal student loan system “broken,” Secretary of Education Miguel Cardona and the agency promised a more streamlined and forgiving process of trying to dispute or remove debts for a range of borrowers, including those with disabilities, those lied to by the institutions they attended and those who work in the public sector.
“If a borrower qualifies for student loan relief, it shouldn’t take mountains of paperwork or a law degree to obtain it,” Cardona said. “Student loan benefits also should not be so hard to get that borrowers never actually benefit from them. The Biden-Harris Administration is determined to build a more accessible, affordable and accountable student loan system. These proposed regulations will protect borrowers and save them time, money and frustration, and will hold their colleges responsible for wrongdoing.”
So far, the Biden Administration has helped more than one million borrowers reduce or eliminate $26 billion in debt because they were victims of fraud, they faced unending delays in getting the relief they deserved or there were obstacles preventing them from getting it at all.
“Whether it is for closed school discharges, borrower defense claims, PSLF or relief after a total and permanent disability, borrowers have had to navigate narrow rules and a needlessly complicated system,” said James Kvaal, Under Secretary of Education. “What’s worse, borrowers whose schools lied to them can’t pursue litigation because restrictive and unfair arbitration requirements and class-action bans were foisted on them by their colleges. Borrowers should not have to jump through hoops to get the relief they deserve. The regulations we’ve proposed today would remove many of those barriers and help create a federal student loan system that works better for borrowers.”
Here are six areas that the Education Department are seeking to address, with hopes that they can be finalized by Nov. 1 for a launch date in July 2023:
Borrower defense: Those who took on loans but were then victimized by institutions should have a clear path to getting them discharged. The Department also wants to mitigate predatory practices in the future.
Public service loan forgiveness: Those working in public service jobs should be afforded the opportunity to make partial payments and given better forbearance and deferment options to satisfy their loans. Included in that would be some relief for non-tenured instructors.
Interest capitalization: The Department wants to avoid excessive interest accrual on loan balances and proposes that capitalization not occur for those who have entered programs where they’ve gotten behind on their payments.
Total and permanent disability discharges: The Department wants to see an expansion of benefits and a broader range of recipients quality for debt relief. “The Department is particularly concerned that the income monitoring requirements have caused far too many borrowers to lose their discharges even though they still have low incomes,” it said in a statement.
Closed school discharges: Any borrowers whose institution was closed six months after they enrolled should be afforded full relief from loans.
False certification: If college “falsely certifies a borrower’s eligibility for student loans when, in fact, the student was ineligible,” they should be granted loan relief.