BOSTON – Today, the Department of Education announced that it is taking another step forward on plans to provide federal student loan debt relief to millions of people by alerting borrowers of the potential for relief this fall and giving them an opportunity to opt out of relief. This step follows the Department’s proposal of new debt relief rules published in April. It proposes to provide relief to millions of borrowers who owe more now than they did when they began repayment and to cancel remaining balances for some borrowers, including those who entered repayment more than 20 or 25 years ago.
Borrowers who wish to be considered for debt relief do not need to do anything. Borrowers who wish to opt out of forgiveness should call their servicers. Before any borrower can receive relief under these plans, the rules will have to be finalized and implemented, which the Department anticipates could happen this fall.
In response to the announcement, Kyra Taylor, staff attorney at the National Consumer Law Center issued the following statement:
“I am heartened to see that the Biden Administration is continuing to work to fix longstanding problems with the student loan program and to provide relief to the people harmed by those problems. While the student loan program has opened up access to higher education for students from low-income families, it became a life sentence of debt for many due to years of mismanagement and flawed policies. Poor servicer oversight and policy design flaws caused millions of peoples’ loan balances to balloon even as they made payments, and prevented many of the most vulnerable borrowers from accessing debt relief programs. The Biden Administration has made significant progress in fixing these policies going forward, and now proposes to provide relief to people already harmed. This relief is particularly important to the people who have suffered the most as a result of past student loan program failures, including borrowers from low-income families, first-generation college students, Black borrowers, people with disabilities, and older borrowers.
“The Department is just sending borrowers emails today, however, it is not canceling any loans. These emails are just a first step; they don’t indicate who will or will not receive relief or how much relief borrowers will get. We won’t know who will or won’t be eligible for debt relief until the Department issues its final regulations. Borrowers who do want to be included in the relief program don’t need to do anything. Instead, while they wait for the final debt relief regulations, borrowers should make sure their contact information is updated on studentaid.gov so that when the final rules are released, they’ll be sure to get the news.”
Additional Resources:
- Legal Aid Comments on Proposed Debt Relief Rules, May 2024
- Abby Shafroth & Kyra Taylor, Delivering Distress to Borrowers in Default, October 2023
- NCLC & Center for Responsible Lending, Data Point: Almost Two in Three Navient Borrowers Making Payments During COVID-19 Federal Student Loan Payment Pause Are Underwater, August 2021
- Abby Shafroth, op-ed in The Hill: “Limiting student loan relief by income sounds sensible – it is not,” May 12, 2022
- Leadership Conference on Civil and Human Rights, Civil Rights Principles for Student Loan Debt Cancellation, April 2021
- NCLC & Student Borrower Protection Center, Policy Brief: Education Department’s Decades-Old Debt Trap: How the Mismanagement of Income-Driven Repayment Locked Millions in Debt, March 2021
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