FOLLOW US

Millions of borrowers will receive student loan forgiveness after the U.S. Department of Education implements changes to federal lending programs.

On Tuesday, the Education Department announced additional actions to fix the "historical failures in the administration of the federal student loan programs. These actions will also help "address the impact of the COVID-19 pandemic on borrowers with lower incomes and high debt loads."

The Department's Federal Student Aid (FSA) will end forbearance steering practices by student loan servicers. Many student loan borrowers, particularly those advised to choose long-term or serial uses of forbearance ended up having more debt.

Borrowers who were improperly directed or placed into long-term forbearances missed the critical benefits to have an affordable and effective way to repay their student loans.

To alleviate the harm of inappropriate forbearance steering to borrowers, the FSA will conduct a one-time adjustment to count long-term forbearances (more than 12 months consecutive and more than 36 months cumulative) toward forgiveness under the income-driven repayment (IDR) and Public Service Loan Forgiveness (PSLF) programs.

Additionally, the FSA will increase oversight of student loan servicers. It will restrict their ability to enroll borrowers in forbearance by text or e-mail. It will also perform an external review on student loan servicers' forbearance use and practices to address steering.

The FSA will immediately implement these changes. However, borrowers will see the effect on their accounts in the fourth quarter of 2022.

More than 3.6 million borrowers will receive at least three years of additional credit towards IDR forgiveness. At least 40,000 borrowers under the PSLF program will receive immediate debt cancellation, according to the FSA's estimate.

In a statement, U.S. Secretary of Education Miguel Cardona said, “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."

"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,” he added.

Have a story you want USA Herald to cover? Submit a tip here and if we think it’s newsworthy, we’ll follow up on it.

Want to contribute a story? We also accept article submissions – check out our writer’s guidelines here.