On Monday, we saw brand-new announcements out of the White House, of plans to provide more student debt relief for America’s students and alumni who carry billions of dollars in debt.
A White House press release on the announcement notes that this could provide relief to over 30 million American borrowers, in conjunction with past actions of the administration.
This help comes at a time when it is needed – a lot. The resumption of repayments last year has hit borrowers hard, and some significant paperwork chaos has added to the burden. So it’s good that the President and staff are thinking about how to help fix problems with student loan debt.
Student Debt Relief: The Big Numbers
The press release also shows that the Biden administration has approved $146 billion in student loan debt relief, helping more than 4 million borrowers to date. More will get either loan modification, lower debt, or completely erased student loan debts, under new rules.
The announcement mentions past programs we have covered, like the SAVE plan, and the PSLF program that provides relief to some borrowers pursuing professional careers in areas related to public service. There’s also the emergence of IDR (income-dependent repayment) plans to help keep loan payments affordable for borrowers.
Five Groups of Borrowers Who are Eligible for the Student Debt Relief Program
Here are five groups of borrowers who will tend to benefit most from the administration’s new efforts:
1. Borrowers with high interest payments
The White House characterizes many student debt loans as having “runaway interest,” where borrowers owe more than they originally took out in loans. The sense of unfairness here is evident: because of the way the loans are set up, borrowers keep paying the most that they can, month after month, and the debt – keeps going up! The new program, reportedly, could cancel up to $20,000 for these types of student borrowers.
2. Borrowers pursuing other programs
The new program may also expedite canceling debt for borrowers who are working with SAVE or PSLF, or on a “closed school” discharge debt relief process.
3. Borrowers with 20 years of payment history
The federal government estimates that 2.5 million student borrowers are still carrying student loans after 20 years! These are some of the borrowers who are going to benefit most from the new April plan.
4. Borrowers who bought into low-value schools
The administration has, in the past, talked about how they want to enforce action against schools that do not provide value for students, or schools that close unexpectedly without providing for graduates.
5. Borrowers experiencing hardship
A core premise of the new program is helping people who are having tough times paying back their student loans, for reasons which are mostly beyond their control, and many of which are related to lender and loan servicer malfeasance. You can read a lot more about this on the blog: for example, borrowers who call or contact lenders in good faith, and never receive timely answers, or borrowers who find the loan servicers are providing faulty information, etc.
What You Should Keep An Eye On
This announcement is more big news for those who understand only too well how lenders have manipulated the student loan industry and bloated debt for many millions of borrowers!
We see this as an effort to help level the playing field. Keep an eye out and utilize resources like the Consumer Finance Protection Bureau (CFPB), a government agency that some have tried, often and unsuccessfully, to gut or neutralize, but where officials keep tabs on the student loan industry. And we’ll keep bringing you the news of the day that will help you understand your rights as a borrower!
