Department of Education releases new regulations revamping student loan relief programs
The Department of Education on Monday released a final set of new regulations for its student loan programs, which roll back a number of changes made during the Trump administration and will reduce the amount owed by many borrowers, The New York Times reports.
"The regulations announced today will streamline a needlessly complicated system and give borrowers a simpler and more often automatic path to the discharges they deserve," said Education Department Under Secretary James Kvaal.
According to the Education Department, the new regulations will "expand eligibility, remove barriers to relief, and encourage automatic discharges for borrowers who are eligible for loan relief." The news comes as President Biden's student loan relief plan, which would cancel up to $20,000 in student debt for millions of Americans, faces legal trouble. Though the application is open, many are unsure whether their debt will actually be forgiven, the Times continues.
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The regulations announced Monday include the elimination of most interest capitalization, which is when "borrowers have outstanding unpaid interest added to their principal balance"; better loan forgiveness for public servants; loan forgiveness for those misled by their institutions; and loan forgiveness for those who become permanently disabled, per the Education Department.
"Today is a monumental step forward in the Biden-Harris team's efforts to fix a broken student loan system and build one that's simpler, fairer, and more accountable to borrowers," said U.S. Secretary of Education Miguel Cardona.
The regulations will take effect in July 2023.
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