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US President Joe Biden Wednesday unveiled new proposed changes to federal student loan system (PSLF) which includes measures that help discharge loans for physically and mentally disabled borrowers, limit interest capitalization rates, and help borrowers working at public service employees to earn forgiveness on their loans, The Hill reports.
The Department
of Education said in a statement unveiling the proposed expansion of student
loan discharge programs that it expected a full plan by November 1, with the aim
to have the changes take effect no later than July 1.
The Hill reported
that Secretary of Education Miguel Cardona said in the statement that proposed
changes “will protect borrowers and save them time, money, and frustration, and
will hold their colleges responsible for wrongdoing.”
“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,”
Cardona said in a statement. “Student loan benefits also should not be so hard
to get that borrowers never actually benefit from them.”
The proposed
changes announced Wednesday would make it easier for borrowers to file and
pursue claims of predatory practices by colleges and help students who enrolled
in schools 180 days prior to a school closure and who didn’t complete their education
to more easily discharge the loans, according to The Hill..
“borrowers
have had to navigate narrow rules and a needlessly complicated system” when
attempting to cancel loans they should be able to easily discharge, James
Kvaal, the undersecretary of Education said in a statement, according to The
Hill.
“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,” Kvaal said. “Borrowers should not have to
jump through hoops to get the relief they deserve.”
The sweeping
changes include a waiver that bypassed certain program requirements and granted
borrowers credit toward load cancellation, regardless of the type of federal
load. The waiver will expire at the end of October.
The measure
also proposes permanent change to PSLF that would allow more payments to
qualify for the programs, including partial, lump-sum and late payments, according
to The Hill. It would allow particular kinds of deferments and forbearances to
count toward PSLF, and would create a formal reconsideration process for
applicants who were denied access to the program.
The
proposals would also eliminate interest capitalization rates on loans for
borrowers in certain instances, making it easier for permanently disabled
borrowers to qualify for loan forgiveness, and giving borrowers an easier path
toward loan forgiveness if they were falsely certified and ineligible for a
loan.