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Department of Education takes steps to help millions of borrowers

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May 3, 2022

Recently, the Department of Education announced steps that will bring borrowers closer to public service loan and income-driven repayment (IDR) forgiveness by addressing what they called historical failures in the administration of the federal student loan programs.

According to the press release, Federal Student Aid (FSA) estimates that these changes will result in "immediate debt cancellation for at least 40,000 borrowers under the Public Service Loan Forgiveness (PSLF) Program." Also, according to the press release, several thousand borrowers with older loans will also receive forgiveness through IDR and more than 3.6 million borrowers will also receive at least three years of additional credit toward IDR forgiveness.

"Student loans were never meant to be a life sentence, but it's certainly felt that way for borrowers locked out of debt relief they're eligible for," said U.S. Secretary of Education Miguel Cardona. "Today, the Department of Education will begin to remedy years of administrative failures that effectively denied the promise of loan forgiveness to certain borrowers enrolled in IDR plans. These actions once again demonstrate the Biden-Harris administration's commitment to delivering meaningful debt relief and ensuring federal student loan programs are administered fairly and effectively."

Among the actions being taken by the Department:

  • Ending "Forbearance Steering." FSA reviews suggest that loan servicers placed borrowers into forbearance in violation of Department rules, even when their monthly payment under an IDR plan could have been as low as zero dollars. The Department will address forbearance steering by:
    • Conducting a One-Time Account Adjustment to Count Certain Long-Term Forbearances toward IDR and PSLF Forgiveness
    • Increasing Oversight of Servicers' Forbearance Use
  • Tracking Progress Toward IDR Forgiveness. The Department's review of IDR payment-tracking procedures has revealed significant flaws that suggest borrowers are missing out on progress toward IDR forgiveness. FSA has been directed by the Secretary of Education to:
    • Conduct a One-Time Revision of IDR Payments to Address Past Inaccuracies
    • Permanently Fix IDR Payment Counting by Reforming FSA's IDR Tracking
  • Tackling Student Debt. These actions, according to the press release, complement steps the Administration has already taken within its first year to cancel more than $17 billion in debt for 725,000 borrowers in addition to extending the student loan payment pause, saving 41 million borrowers billions of dollars in payments each month.

In addition, the press release said the administration has called for and Congress has included in bipartisan legislation a $400 increase in the maximum Federal Pell Grant – the largest increase in the maximum award in over a decade.

Finally, to protect students and taxpayers from predatory or low-value colleges, the Department has also restored the FSA Office of Enforcement and started efforts to strengthen key rules including borrower defense to repayment and gainful employment.