Department of Education Announces Major Changes in Student Loan Forgiveness – Forbes | Vette Leader

The U.S. Department of Education has announced major changes in how it allocates student loans.

Here’s what you need to know – and what it means for your student loans.

student loans

President Joe Biden continues his commitment to student loan assessments and student loan forgiveness. On Wednesday, the Biden administration proposed regulations that would help more student loan borrowers foreclose on student loans. These significant reforms include changes to:

  • forgiveness of public service loans;
  • borrower defense for repayment;
  • student loan interest; and
  • complete and permanent disability.

“We are committed to fixing a broken system,” said US Secretary of Education Miguel Cardona. “If a borrower qualifies for student loan easement, it shouldn’t require mountains of paperwork or a law degree to obtain it… These proposed rules will protect borrowers, saving them time, money and frustration and putting their colleges to account.” draw for misconduct.”

Student Loan Forgiveness: Defending the Borrower Until Repaid

Total student loan cancellations: $8 billion

  • Defending the borrower against repayment helps student loan borrowers get a full cancellation of the student loan if their college or university misled them.
  • Biden recently canceled $6 billion in student loans for 200,000 student loan borrowers;
  • the Biden administration is proposing several changes to borrower defenses on repayment that may help more borrowers get student loan relief;
  • Student loan borrowers would have six years to apply for student loan forgiveness;
  • Group requests for student loan forgiveness (rather than individual borrower requests) would now be allowed;
  • the time limits for a borrower to file a claim in the borrower’s defense against student loan repayment would be relaxed; and
  • Student loan borrowers would receive a student loan forgiveness decision more quickly.

Government loan forgiveness

Total student loan cancellations: $8 billion

  • Biden wants more student loan borrowers to qualify for government loan forgiveness;
  • Partial, lump sum and late student loan payments would fall under the new proposals;
  • certain types of student loan forbearance and student loan forbearance (e.g. military service) would count towards forgiveness of public service loans; and
  • Help student loan borrowers who are denied student loan forgiveness more easily be re-examined for student loan cancellations.

Student Loan Waiver: Total and Permanent Disability

Total student loan cancellations: $9 billion

  • The Biden administration wants to help more student loan borrowers who have a complete and permanent disability to obtain student loan termination.
  • The proposed rules would allow a wider range of disability statuses to qualify for student loan forgiveness;
  • the three-year income monitoring period would be eliminated; and
  • documentation requirements would be relaxed.

Student Loan Rates: Proposed Changes

  • Biden wants to protect student loan borrowers from the capitalization of student loan interest or the process of adding accrued interest to the principal balance of your student loans;
  • Under the new rules, the capitalization of student loan interest would be eliminated if a student loan borrower enters student loan repayment, ends student loan forbearance, defaults on a student loan, or exits most income-based repayment plans.

Student loans: next steps

The Department of Education has proposed these huge changes to student loans as part of its rulemaking process. The public has 30 days to comment on these proposals and provide feedback. After the public comment period, the Department of Education will finalize the rules by November 1, 2022, and implement the final rules by July 1, 2023. While these changes may be exciting for student loan borrowers, it’s important to remember that federal student loan payments will resume on September 1, 2022. Are you prepared for student loan repayments? Here are some great options to consider to save you money and get out of debt faster:

Student Loans: Related Reading

9 million borrowers now qualify for student loan forgiveness

Senators propose major changes to student loan forgiveness

How to qualify for $6 billion in student loan forgiveness

The Department of Education announces a major overhaul of student loan administration

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