Dept. of Education to tackle longstanding issues with student debt programs
The Department of Education will soon take new actions to tackle student debt and address longstanding issues with paying off federal student loans, Axios has learned.
Why it matters: The move comes as the Biden administration struggles with growing calls to cancel student debt. The moratorium on federal student loan payments has been extended through August, but lawmakers like Sens. Chuck Schumer (D-N.Y.) and Elizabeth Warren (D-Mass.) are pushing the White House to cancel $50,000 in debt per borrower.
Details: In the next few weeks the department will provide more defrauded borrowers with debt relief, similar to the steps it took in February.
- And though the department would not provide specific details, it plans to introduce a rule to change the way income-driven repayment plans have been administered, which will impact borrowers retroactively as well as those who borrow in the future.
Context: These actions are meant to address underlying issues that have piled up in the last decade, making the path to debt relief a long and tedious process.
- A March report from the think tank Brookings Institute found that the Education Department's income-driven repayment program suffers a myriad of "bureaucratic, technical, or legal difficulties" that become barriers for people who hope to participate in repayment plans tailored to their income and family size.
- Errors and abuses by servicers hired by the Education Department often prevent borrowers from properly utilizing the program, the report noted.
- This kind of mismanagement is especially harmful to low-income borrowers, NPR reports.
The big picture: The average federal student loan debt is $37,013, according to data compiled by the Department of Education. The crisis disproportionately impacts Black borrowers.