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The U.S. Department of Education has announced major changes to student loan forgiveness.

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

Student Loans

President Joe Biden is continuing his commitment to fixing student loans and student loan forgiveness. On Wednesday, the Biden administration proposed regulations that would help more student loan borrowers get student loan cancellation. These significant reforms include changes to:

  • public service loan forgiveness;
  • borrower defense to repayment;
  • student loan interest; and
  • total and permanent disability.

“We are committed to fixing a broken system,” U.S. Secretary of Education Miguel Cardona said. “If a borrower qualifies for student loan relief, it shouldn’t take mountains of paperwork or a law degree to obtain it…These proposed regulations will protect borrowers and save them time, money, and frustration, and will hold their colleges responsible for wrongdoing.”

Student loan forgiveness: borrower defense to repayment

Total student loan cancellation: $8 billion

  • Borrower defense to repayment helps student loan borrowers get total student loan cancellation if their college or university misled them;
  • Biden recently canceled $6 billion of student loans for 200,000 student loan borrowers;
  • the Biden administration proposes several changes to borrower defense to repayment, which can help more borrowers get student loan relief;
  • student loan borrowers would have six years to file a claim for student loan forgiveness;
  • group claims for student loan forgiveness (rather than only claims from individual borrowers) would now be permissible;
  • time limits on when a borrower can file a claim for borrower defense to student loan repayment would be relaxed; and
  • student loan borrowers would receive a decision on student loan forgiveness more quickly.

Public service loan forgiveness

Total student loan cancellation: $8 billion

  • Biden wants more student loan borrowers to qualify for public service loan forgiveness;
  • partial, lump sum and late student loan payments would count under the new proposals;
  • certain types of student loan forbearance and student loan deferment (such as military service) would count toward public service loan forgiveness; and
  • help student loan borrowers who are denied student loan forgiveness get reconsidered for student loan cancellation more easily.

Student loan forgiveness: total and permanent disability

Total student loan cancellation: $9 billion

  • The Biden administration wants to help more student loan borrowers who have a total and permanent disability get student loan cancellation;
  • The proposed regulations would allow a broader set of disability statuses to qualify for student loan forgiveness;
  • the three-year income-monitoring period would be eliminated; and
  • the requirements for documentation would be relaxed.

Student loan interest: proposed changes

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

Student loans: next steps

The Education Department has proposed these huge changes to student loans as part of its rulemaking process. The public will have 30 days to comment on these proposals and submit any feedback. After the public comment period, the Education Department will finalize the rules by November 1, 2022 and implement the final rules by July 1, 2023. While these changes are potentially exciting for student loan borrowers, it’s critical to remember that federal student loan payments restart on September 1, 2022. Are you prepared for student loan repayment? Here are some great options to consider so you can save 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 of student loan forgiveness

Education Department announces major overhaul of student loan servicing


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