Education Dept. estimates 40K borrowers to receive ‘immediate’ loan forgiveness
by Aris Folley - 04/19/22 3:55 PM ET
The Department of Education announced on Tuesday that thousands of borrowers could see immediate forgiveness under changes the agency said it will be making to address long-standing failures in federal student loan programs.
As part of the changes, the agency said at least 40,000 borrowers will be set for debt cancellation under the Public Service Loan Forgiveness (PSLF) Program, which allows full-time public service workers to be eligible for forgiveness after a certain number of qualifying payments.
Additionally, the agency said thousands of borrowers with older loans will receive forgiveness through income-driven repayment (IDR) forgiveness plans, and over 3.6 million borrowers will “receive at least three years of additional credit toward IDR forgiveness.”
The actions, the agency said, will be the result of new “corrective” steps it will be taking beginning immediately to provide relief to borrowers harmed in the past by historic failures in the programs, and to improve the system for future borrowers.
The changes include ending so-called “forbearance steering” by conducting an account adjustment to count long-term forbearances toward IDR and PSLF Forgiveness, and increasing oversight of servicers’ forbearance use.
In announcing the changes, the agency said reviews by the Federal Student Aid (FSA) suggested that loan servicers put borrowers into forbearance in violation of federal rules, even in instances when “their monthly payment under an IDR plan could have been as low as zero dollars.”
The agency said borrowers advised to enter an IDR plan “can get a reduced payment, stay in good standing, and make progress toward loan forgiveness,” while borrowers advised to choose forbearance “can see their loan balance and monthly payments grow due to interest capitalization and lead to delinquency or default.”
more
https://thehill.com/policy/finance/3273313-education-dept-estimates-40k-borrowers-to-receive-immediate-loan-forgiveness/
