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Biden administration moves to fix past flaws in student loan forgiveness program

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President Joe Biden announced that the student loan forgiveness program will be expanded, a welcome relief for Americans struggling with debt.

On Tuesday, the Biden administration moved to offer more income-based repayment programs and full debt offloading. These new measures will help almost 3.6 million student borrowers, according to a press release from Department of Education. With the last Revisions to the Civil Service Loan Relief Scheme, at least 40,000 Americans will receive immediate debt forgiveness. The DOE wants to correct the “historic failures” of federal loan programs.

There are currently two types of student debt management systems: Civil service loan forgiveness (PSLF) and reimbursement based on income (RID). After ten years of one-time payments, the PSLF is supposed to cancel civil servants’ school debt. IDR plans were designed to provide borrowers with affordable monthly payments based on their income and family size. Borrowers in these repayment programs may receive a rebate after 20 to 25 years old.

One of the main flaws of the system is that borrowers who would have been eligible for IDR plans were not informed of all their options. Many lenders have engaged in “forbearance direction,” which encourages debtors to choose a forbearance program rather than an income-driven repayment plan.

“Student loans were never meant to be a life sentence, but it certainly feels that way for borrowers stuck on the debt relief they qualify for,” said US Secretary of Education Miguel Cardona.

The new pardon system came after the Biden administration came under scrutiny for its handling of student loan repayments during the pandemic. In Aprilthe administration announced it would extend the pause on loan repayments until August 2022.