NAICU Washington Update

Access to Student Loan Forgiveness Eased for Some Borrowers

August 26, 2021

Education Secretary Miguel Cardona announced a series of relief measures for student loan borrowers during the past week, easing the rules for students who are on active duty, students who are totally and permanently disabled, and students who have been defrauded by their schools.

Congress amended the Higher Education Act in 2008 to eliminate interest charges on student loans for military personnel serving in combat zones. But few eligible recipients ever received the benefit because of the extensive documentation required in the application process. A data sharing agreement initiated two years ago between the Department of Defense and the Department of Education now allows this to be done automatically. The Education Department also plans to backdate the benefit for more than 47,000 current and former service members.

The Education Department also made it easier for all students with a total and permanent disability to have their loans discharged without filing an additional application if they are already receiving certain federal disability benefits. This provision only applied to disabled veterans previously.

The Education Department also announced that they were revising the approach to borrower to defense claims, by assuming a borrower that qualified for student loan forgiveness would have their full loan forgiven unless evidence indicates that only partial relief was appropriate. This approach is opposite from the Trump Administration’s 2019 implementation methodology that determined the percentage of forgiveness based upon a complex comparison of earnings of borrowers who have successfully filed a debt relief claim to the earnings of borrowers in unaffected programs.The ruling is likely to affect the student loan forgiveness levels of thousands of borrowers who have been defrauded by their schools.

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