Student Loan Updates Take Center Stage at Department of Education and Congress

The Department of Education announced steps this week that will bring borrowers closer to public service loan and income-driven repayment (IDR) forgiveness by addressing failures in administering the student loan programs. “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,” said U.S. Secretary of Education Miguel Cardona. “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.”

According to the Department of Education press release and an article from Inside Higher Education, the department will address the issue of “forbearance steering.” Specifically, the department will require loan servicers to provide borrowers with clear and accurate information for staying out of delinquency, as well as the financial consequences of choosing short-term options of forbearance. “The department will address forbearance steering by conducting a one-time account adjustment that will count forbearances of more than 12 months consecutive and more than 36 months cumulative toward forgiveness under IDR and Public Sector Loan Forgiveness (PSLF).” For more detailed information about the department’s plans for fixing these loan programs, please read the press release.

The department announcement came right before the Government Accountability Office (GAO) noted in a report that the Department of Education has had trouble tracking payments and has not done enough to ensure that all eligible borrowers receive the forgiveness to which they are entitled. The GAO found thousands of borrowers still in repayment who were eligible for forgiveness. For more information of the recent GAO report, please read the House Education and Labor Committee press release.