Federal education officials unveiled a plan Wednesday to remove student loan debt for some borrowers.
The regulations propose to alleviate debt burdens for borrowers whose schools closed, borrowers who are totally and permanently disabled, and for public service workers who have met their commitments under the Public Service Loan Forgiveness (PSLF) program. It would eliminate what U.S. Department of Education officials say are overly strict limits on when borrowers can file a claim, and expand the type of misconduct that can lead to an approved claim to include aggressive and deceptive recruitment practices.
The regulations would also stop many instances of interest capitalization, which officials say occurs when unpaid interest is added to a borrower’s principal balance, increasing the total amount they owe. The plan proposes allowing more payments to qualify for PSLF, including partial, lump sum, and late payments. It would also allow some kinds of deferments and forbearances to count toward PSLF, such as those for Peace Corps and AmeriCorps service, National Guard duty, and military service.
“We are committed to fixing a broken system. If a borrower qualifies for student loan relief, it shouldn’t take mountains of paperwork or a law degree to obtain it,” U.S. Secretary of Education Miguel Cardona said in a statement. “Student loan benefits also should not be so hard to get that borrowers never actually benefit from them. ... These proposed regulations will protect borrowers and save them time, money, and frustration, and will hold their colleges responsible for wrongdoing.”
The proposed regulations will be published in the coming days, with a 30-day public comment period. The department aims to finalize these rules by Nov. 1, and they would take effect no later than July 1, 2023.
Career Education Colleges and Universities, an organization that represents for-profit colleges and universities, criticized the proposed changes, saying they are “not grounded in any existing statute.”
“(T)oday’s proposed rule sends a clear and troubling message that the Department intends to use the rulemaking process to discharge federal student loans en masse while hurting unfavored institutions and their students in the process,” Jason Altmire, the organization’s president and CEO, said in a statement. “This is an unprecedented expansion of the Department’s authority that was never contemplated by Congress and that will have substantial negative economic consequences on institutions and taxpayers.”
Federal officials did not outline how many borrowers could be helped by the regulations. More than 1.6 million Georgians have student loan debt, according to federal statistics.
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