The Biden administration announced Wednesday they are planning on make sweeping changes to the federal student loan system, including easier paths toward debt forgiveness and limits on the accrual of interest.
“We are committed to fixing a broken system,” said U.S. Secretary of Education Miguel Cardona. “If a borrower qualifies for student loan relief, it shouldn’t take mountains of paperwork or a law degree to obtain it.”
One key element of the proposal includes protection for defrauded borrows. Under these regulations, students who attended for-profit schools that took advantage of them could be considered for debt cancellation as a group. This would allow individuals to work with others to achieve total loan forgiveness, rather than trying each case alone.
Another element would allow individuals who work for the government or specific non-profits to receive debt cancellation after 10 years of service. This would alleviate workers who are in lower income careers to work off their debt while deferring payments.
Another major component of the proposal would affect all student loan borrowers by changing how interest is accrued.
The proposal is not official yet. The public still has 30 days to comment on the Education Department’s proposed regulations, and the final rules won’t go into effect until next July.
Student loan forgiveness is popular among younger voters, particularly because they’re the main ones struggling with debt, but remains divided among the rest of the U.S. population. Reports show that the current student loan debt totals over $1.6 trillion.
In the new issue of RELEVANT, we spoke with financial expert Art Rainer on why today’s debt is so difficult to get out of, and what Christians can do to better navigate their finances.