In recent months, there have been significant developments in student loan policies that may impact your repayment strategy. Here's a concise overview of the key updates:
Borrower Defense to Repayment Discharge
The Borrower Defense to Repayment program offers loan forgiveness to borrowers misled by their educational institutions. The Biden administration has actively approved discharges for borrowers who attended schools with deceptive practices. Notably, over 5 million borrowers have received debt relief, addressing more student debt than any previous administration. Under the Biden Administration there were attempts to make Borrowers Defense to Repayment more accessible and application process easier to navigate. However, appeals have sent these attempts to the Supreme Court. The Supreme Court has decided to take up the appeal and a decision as to if Borrowers Defense falls under the Higher Education Act should be decided later this year.
IDR Account Adjustments
The Department of Education is implementing a one-time adjustment to Income-Driven Repayment (IDR) accounts, crediting time toward forgiveness, including periods of deferment, forbearance, and non-payment. This adjustment aims to rectify past missteps in the IDR and Public Service Loan Forgiveness (PSLF) programs, where servicers miscounted payments and inappropriately placed borrowers into forbearance. While this process was expected to be complete by September 1, 2024, many borrowers were still awaiting these adjustments to reflect on their accounts.
The Department of Education announced on Thursday, January 17, 2025 that it had completed the payment count adjustment for borrowers enrolled in the Income-Driven Repayment (IDR) plan. Borrowers can log into their Studentaid.gov account to see their adjusted repayment counters.
Open Enrollment for IDR Plans
As of December, enrollment has reopened for Income-Driven Repayment plans, including Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR). This week the Biden Administration has announced that borrowers who have applied, those applications are now being reviewed. Borrowers are encouraged to assess their eligibility and consider enrolling in a plan that aligns with their financial situation.
Policy Shifts in Debt Cancellation
The Biden administration recently withdrew its proposed plan to cancel debt based on hardship determination. This decision leaves many borrowers seeking alternative relief measures. Staying informed, reviewing alternative payment plans, and assessing your financial plan for student loan repayment essential for those affected or who may be delinquent.
Increased Delinquency Rates
The resumption of student loan repayments has posed challenges for many borrowers. Approximately 15.5 million borrowers are currently delinquent, and 20% are utilizing postponement options such as deferment or forbearance. It's crucial for borrowers facing difficulties to explore available repayment plans and seek assistance to avoid default.
At Student Debt Solutions, we continue to monitor these developments closely and will provide updates as they happen. For now, we encourage borrowers to stay proactive in managing their loans and exploring the options currently available to them. Log in to your account and explore your options!
