Student Loans in the News
Quick insights on student loan topics from a trustworthy source.
ED announces policy changes to better serve disabled borrowers
Recent headlines announced student loan forgiveness totaling $5.8 billion. While many borrowers hoped this was the much-discussed mass forgiveness it was, in fact, something different.
- The referenced forgiveness is actually a loan discharge.
- The focus is on a specific group of student loan borrowers who are totally and permanently disabled (TPD).
- The new policy introduces processing simplifications and not new eligibility.
Since 2019, the U.S. Department of Education (ED) has used data matching with the Department of Veteran's Affairs (VA) to automatically identify borrowers eligible for TPD and process student loan discharges. Beginning in September 2021, ED will also utilize data matching with the Social Security Administration (SSA) to further support borrowers eligible for discharge. Estimates show this streamlined approach will help 323,000+ disabled borrowers with loans totaling $5.8 billion.
Prior to the national health crisis, if TPD borrowers who had been granted discharge didn't submit requested earnings information when requested during the three-year monitoring period, their loans were reinstated. In March 2021, ED temporarily removed the submitted earnings requirement, streamlining things for borrowers. With the new data matching process, ED looks to stop requesting earnings information and eliminate the three-year monitoring period.
Increased borrower confusion expected as student loan servicer portfolios move
Two federal student loan servicers — Pennsylvania Higher Education Assistance Authority (FedLoan Servicing) and Granite State Management and Resources — confirmed they will not be renewing their contracts with Federal Student Aid (FSA) when the current one expires in December 2021. Nearly 10 million borrowers will be impacted by this decision.
It's important to know:
- Past servicer transfers have caused borrower confusion and resulted in payment and record issues.
- PHEAA administers the Public Service Loan Forgiveness program.
- These transfers may be occurring as the federal student loan repayment suspension ends on Jan. 31, 2022.
Student loan interest waived retroactively for veterans
ED announced that FSA performed data matching with the Department of Defense (DOD) enabling them to waive student loan interest automatically and retroactively on Direct loans for more than 47,000 former and active-duty servicemembers. This streamlining alleviates the extra steps that thousands were previously required to do (e.g., formally request the benefit and include additional information to confirm their eligibility).
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