WASHINGTON – Today the U.S. Department of Education announced its final rules on the borrower defense to repayment, closed school, false certification, total and permanent disability, and Public Service Loan Forgiveness discharges, as well as arbitration and interest capitalization. The new rules will:
- Expand the eligibility criteria for discharges so that more borrowers are able to obtain debt relief;
- Streamline the application process (including allowing the Department to provide debt relief without an application in some circumstances);
- Make it easier for borrowers to challenge school misconduct in court; and
- Significantly reduce how many times accrued interest is added to a federal loan borrower’s principal, and so help address the problem of ballooning balances.
“We commend the Department of Education for implementing sweeping changes that will make it easier for hundreds of thousands, if not millions, of borrowers to obtain the debt relief they are entitled to under the law. These changes will make it easier for public servants, disabled borrowers, and borrowers harmed by their schools to cancel their student loan debt,” said Kyra Taylor, staff attorney at the National Consumer Law Center.
“While the rules released today will go a long way towards making sure that harmed borrowers will have a shorter path to obtaining relief, repayment is set to restart in two short months. We deeply hope that the Department will not force borrowers to restart repayment when their debt should be cancelled.”
“However, we are encouraged that the Biden Administration is continuing to make strides to provide relief to student loan borrowers. Each bold step–from one-time cancellation to the changes here–implements long-needed fixes to our broken student loan system and provides life-changing relief to families across the country.”
NCLC participated in the negotiated rulemaking committee that provided input into these rules.
The new rules will go into effect on July 1, 2023.
- Legal Aid Organizations’ Comments on the Proposed Rules, August 12, 2022
- Blog on President Biden’s One-Time Student Loan Cancellation, October 18, 2022