July 6, 2022
Students whose colleges misled them would have an easier time seeking loan forgiveness from the federal government under a series of regulatory proposals the U.S. Department of Education released Wednesday.
One long-awaited rule would apply to the borrower defense to repayment process, which discharges loans for defrauded students. The proposed changes would also address flaws in the beleaguered Public Service Loan Forgiveness program, which clears the debt of borrowers who work in fields like teaching or government jobs and make a decade’s worth of qualifying payments. PSLF has suffered from notorious administrative problems, leading to a fraction of eligible borrowers securing loan relief.
The Biden administration aims for the new rules to take effect by July 1 next year. They would streamline procedures for seeking loan forgiveness, covering all pending and future claims as of that date.
The process for receiving borrower defense relief now is determined by a loan’s disbursement date. That’s because the prior two presidential administrations issued regulations that applied to a certain time period of loans. The new proposal would “remove the patchwork tied to the disbursement date of the loan,” an Ed Department official said in a call with reporters Wednesday.
The agency also said the borrower defense rule would make clearer what would be considered misconduct by a college and that would potentially fall under the regulation. The Ed Department’s proposal introduces a new category of such fraud — aggressive and deceptive recruitment.