Biden to overhaul student loan system, cut costs by more than 500,000
The administration of US President Joe Biden has announced measures that will allow 550,000 Americans to almost write off their student loan debts, according to reports.
The Education Department, in a statement on Wednesday, said it was temporarily waiving many of the more stringent requirements for a program covering 1.3 million public servants with student loan debt.
After its launch in 2007, as few as 5,500 civil servants were able to write off their student debt thanks to the program, 90% of whom had their applications rejected, according to The Associated Press.
Following Wednesday’s announcement, another 550,000 of the 1.3 million workers enrolled in the civil service loan forgiveness program will be eligible to nearly write off their debts, the department said.
There had previously been restrictions on who was eligible for loan cancellation, forcing officials to repay a federal student loan for 10 years before the rest were cleared or canceled.
About 22,000 borrowers who have worked 10 years in a public service job will be eligible for loan forgiveness despite the type of loan or repayment plan they have, it was said.
On top of that, around 27,000 people who have made repayments on loans that were not previously considered eligible will also be recognized, bringing another 27,000 people closer to clearing their student loans.
Among those who will benefit are teachers, social workers, the military and other civil servants, who must apply before October 2022.
In a statement following the announcement, US Secretary of Education Miguel Cardona said: âBorrowers who devote a decade of their lives to public service should be able to count on the promise of forgiveness of loans from public service “.
“The system has not delivered on its promise to date, but that is about to change for many borrowers.”
After years of criticism of the program, the military will also be allowed to count active duty time for their loan remission, the department said.
Mr Biden has come under pressure from progressives in his party to write off up to $ 55,000 (Â£ 40,500) in student loan debt for all Americans, but has avoided doing so, with smaller measures targeting instead specific groups.
Further changes are expected to address long-term problems with federal student loan repayments, with the Education Department holding hearings on the matter this week.
Additional reporting by The Associated Press.