Millions of student loan borrowers get more credit for forgiveness
First, all months in which borrowers have made payments will count against the income-based repayment clock, regardless of the payment plan the borrower was in at the time. Second, the ministry will count months spent deferring payments before 2013 (except those for which the borrower was still in school) as eligible payments. It will also count abstentions of more than 12 consecutive months and more than 36 cumulative months towards forgiveness under the income-contingent repayment and civil service loan forgiveness program.
The changes will apply to the vast majority of the 45 million borrowers with federal loans, who collectively owe $1.6 trillion. Those with direct loans who participate in the federally-run Family Education Loan Program are eligible for waivers. Borrowers do not need to be currently enrolled in an income-based payment program to take advantage of the adjustments, officials said — those who enroll later will still be able to use the credits. The changes will be applied automatically to borrowers’ accounts, the ministry said.
“We wanted to act as quickly as possible to resolve these issues, but we expect these numbers to only increase as we continue to analyze and implement these solutions,” James Kvaal said Tuesday, under -secretary for education.
Three trade associations representing loan servicers, in a joint statement, called the waivers “another quick-fix and band-aid approach to complex programmatic issues,” and said they had not received guidance. on how the changes would be implemented.
Student loans: essential things to know
The department will start working on the changes immediately, but borrowers may not see them reflected in their accounts until the end of the year, Kvaal said. Next year, the department will begin posting repayment counts by income on its StudentAid.gov website so borrowers can track their progress.
The waivers are the latest in a series of piecemeal fixes the Biden administration has enacted under pressure from progressive Democrats and consumer advocates to make sweeping changes to the government’s long-battling student loan system. He made temporary changes to the public service program that have so far brought full loan releases to 110,000 people, Mr Kvaal said.
Collectively, recent changes to various relief programs — including those that help borrowers with disabilities and people whose schools closed abruptly before they finished school — eliminated $17 billion in debt for 725,000 borrowers, a indicated the department.