The Biden administration on October 4, 2023 announced that an additional 125,000 Americans have been approved for $9 billion in debt relief through adjustments the U.S. Department of Education has made to income-driven repayment (IDR) and Public Service Loan Forgiveness (PSLF), and granting automatic relief for borrowers with total and permanent disabilities. Today's announcement brings the total approved debt cancellation by the Administration to $127 billion for nearly 3.6 million borrowers. The following approvals are in effect:
· $5.2 billion in additional debt relief for 53,000 borrowers under Public Service Loan Forgiveness programs.
· Nearly $2.8 billion in new debt relief for nearly 51,000 borrowers through fixes to income-driven repayment plans. These debtors have been in repayment for 20 or more years, but never acquired the relief to which they were entitled.
· $1.2 billion for nearly 22,000 borrowers who have a total or permanent disability and have been identified and approved for discharge through a data match with the Social Security Administration.
Earlier this year, the Administration launched the most affordable student loan repayment plan, SAVE, which makes many borrowers' monthly payments as low as zero dollars and prevents balances from growing because of unpaid interest. In the wake of the Supreme Court decision on the Administration's original student debt relief plan, the Administration is pursuing an alternative path to debt relief through negotiated rulemaking under the Higher Education Act. The Education Department took an important step forward in the negotiated rulemaking, announcing individuals who will serve on the negotiating committee and releasing an issue paper to guide the first negotiating session. The paper requests the committee to consider how the Administration can help borrowers, including borrowers whose balances are greater than what they originally borrowed, who would be eligible for relief under existing repayment plans, but have not applied, and who have experienced financial hardship on their loans that the current loan system does not address.
Protecting Consumers From Unaffordable Student Debt
The Administration released final regulations that establish a set of safeguards against unaffordable debt or insufficient earnings for postsecondary students. The rule has two key components:
· A revitalized and strengthened Gainful Employment (GE) rule to protect approximately 700,000 students a year from career training programs that leave graduates with unaffordable loan payments or earnings no better than what could be obtained without pursuing a postsecondary education earns in their respective states.
· A new Financial Value Transparency (FVT) framework will give students in all programs the most detailed information about the net costs of postsecondary programs and the financial outcomes that can be expected. Prospective students will be aided in understanding potential risks involved in their program choices by requiring them to acknowledge viewing this information before enrolling in certificate or graduate programs whose graduates have been determined to face unaffordable debt.
The Department estimates that the final rule will protect nearly 700,000 students annually who otherwise would enroll in one of nearly 1,700 low-performing programs. The final rule is available here.