Oct. 25 (UPI) — The Education Department announced on Friday that it will be using new rules to help almost 8 million people who are struggling with their student loans and other costs like high medical bills, child care, and natural disasters.
The rules say that the Education Department can forgive up to the full balance of a student loan if it “determines that a hardship is likely to impair the borrower’s ability to fully repay the loan or render the costs of continued collection of the loan unjustified.”
The rules for getting rid of student loans were made in February 2024.
In a statement, Education Secretary Miguel Cardona said, “For far too long, our broken student loan system has made it too hard for borrowers who are going through heartbreaking and financially devastating hardships to get help, and it’s not right.”
He said that the rules for student debt relief put in place by the Biden-Harris administration would give hope to millions of Americans who are having a hard time and “whose challenges may make them eligible for student debt relief.”
The Education Department said that people who qualify for help would have to have been struggling with long-term financial problems like “medical bills, high child care costs, significant expenses related to caring for loved ones with chronic illnesses, or devastating economic circumstances from the effects of a natural disaster.”
There are two ways that the rules could work. The first one says that the Education Secretary has the power to give one-time, individualized debt relief without an application.
The borrower data would be used to make a “predictive assessment” that showed the borrower getting help would have at least an 80% chance of not paying back the loan within two years.
As per the Education Department, the second way would be to apply for debt relief “based on a holistic assessment of the borrower’s hardship.”
“The Department would holistically assess whether a borrower is highly likely to be in default or experience similarly severe negative and persistent circumstances,” it said. “If no other payment relief option exists to sufficiently address the borrower’s persistent hardship, the Secretary could waive the loan.”
According to the Education Department, the new rules will help people with student loans now and in the future through generations.
Before the rules are made official, they will be put in the Federal Register for a few weeks. The public will have 30 days to comment on the new rules after that. The rules will be finalized in 2025.
So far, the Biden-Harris administration has given almost 5 million people relief from their student loans.
More than a million people were able to get $74 billion in loan relief through the Public Service Loan Forgiveness program.
Through the Income-Driven Repayment program, which uses administrative changes, more than 1.4 million borrowers were given $56.5 billion in aid.
Due to cheating by schools, court settlements, or schools closing, more than 1.6 million people got $28.7 billion in relief from their student loans.
Due to total and permanent disability, nearly 572,000 borrowers were able to get $16.2 billion in debt relief.
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