This post was originally published on Defender Network
By Laura Onyeneho
The Biden-Harris administration has taken a significant step towards providing much-needed relief to millions of student loan borrowers. This fall, the U.S. Department of Education will begin informing borrowers about potential debt relief, marking a crucial phase in the administration’s efforts to alleviate the burden of student debt.
Starting Aug.1, the Department of Education will email all borrowers with at least one outstanding federally held student loan. These emails will provide updates on potential debt relief and inform borrowers that they have until Aug. 30 to contact their loan servicer and opt out if they do not want this relief. While the rules for this relief are not yet finalized, this move represents a proactive effort to keep borrowers informed and prepared.
U.S. Secretary of Education Miguel Cardona stressed the importance of this initiative.
“Today, the Biden-Harris administration takes another step forward in our drive to deliver student debt relief to borrowers who’ve been failed by a broken system,” Cardona said. “These latest steps will mark the next milestone in our efforts to help millions of borrowers who’ve been buried under a mountain of student loan interest, or who took on debt to pay for college programs that left them worse off financially.”
This proposed debt relief builds on the administration’s previous actions, which have already approved over $168 billion in student loan relief for nearly 4.8 million borrowers. If these new rules are finalized as proposed, they would extend relief to over 30 million borrowers, significantly expanding the reach and impact of the administration’s efforts.
The proposed rules target several key groups of borrowers:
- Borrowers with Growing Balances: Borrowers whose loan balances have increased due to accumulating interest would be eligible for relief. This category is estimated to impact nearly 23 million borrowers, with a significant portion being Pell Grant recipients.
- Long-term Borrowers: Borrowers who have been in repayment for more than 20 years for undergraduate or more than 25 years for graduate loans would qualify for relief. This aims to assist those who have been burdened by student debt for decades.
- Eligible but Unenrolled Borrowers: Borrowers who qualify for loan forgiveness but have not enrolled in income-driven repayment (IDR) plan or other forgiveness programs would also be eligible for relief. This includes those who missed out on opportunities like closed school discharge.
- Low-Financial Value Program Attendees: Borrowers who attended institutions that failed to provide sufficient financial value or meet accountability standards would be eligible for debt relief. This provision aims to support those who invested in education but did not receive the promised returns.
One of the standout features of these proposed rules is that eligible borrowers would receive relief automatically without needing to apply. However, those who prefer to opt out of this debt relief can do so by contacting their loan servicer by Aug. 30, 2024. It’s important to note that borrowers who opt out will not be able to opt back in and will be temporarily excluded from other forgiveness opportunities until their eligibility is reassessed.
The Biden-Harris administration’s commitment to reducing the burden of student debt is evident in its track record. The administration has already secured a $900 increase to the maximum Pell Grant and finalized new rules to protect borrowers from career programs that leave graduates with unmanageable debt. Additionally, the administration has approved significant debt relief through various initiatives, including:
- $69.2 billion for 946,000 borrowers through fixes to Public Service Loan Forgiveness (PSLF).
- $51 billion for more than 1 million borrowers through administrative adjustments to IDR payment counts.
- $28.7 billion for more than 1.6 million borrowers who were cheated by their schools or saw their institutions close.
- $14.1 billion for over 548,000 borrowers with total and permanent disabilities.
- $5.5 billion for 414,000 borrowers through the SAVE Plan.
Borrowers should stay informed about these developments and take the necessary steps to understand their eligibility for relief. More information is available at StudentAid.gov/debt-relief.
