Biden’s education department has asked for comment on his student loan reform proposals. Over 4,000 people responded, sharing their struggles with debt.

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  • The Department of Education has asked for comments on its list of proposals to reform the student loan industry.

  • After a 30-day public comment period, over 4,000 people responded.

  • Republicans criticized the short time frame for comment and said the proposals should be withdrawn.

President Joe Biden’s Education Department has asked for comment on his proposals to reform the student loan industry, and thousands of people have responded.

In July, the department unveiled a list of regulatory proposals aimed at providing further relief to borrowers by reforming targeted loan forgiveness programs, such as civil service loan forgiveness, and preventing interest capitalization, i.e. when interest accrues and is added to a borrower’s principal balance. Before moving on to finalizing and implementing the rules, the next step in the regulatory process was to public comment periodwhich took place from July 12 to August 12.

During this period, the ministry’s proposals received slightly more 4,000 responsesranging from borrowers sharing their struggles with student debt to advocates criticizing or supporting the plans that have been put forward.

One person who commented wrote that they “appreciated the proposed changes to student loans. However, I think there needs to be a full $50,000 student loan forgiveness. At the very least, give credit for all % paid and apply it to the main balance.” And another person noted that “the biggest problem with loans though is compound interest. You can pay long after 20-30 years and never touch the balance capital”.

Student advocacy group Student Defense also submitted a comment regarding debt relief for borrowers defrauded by for-profit schools, saying the department “should add provisions to facilitate the pathway to hold homeowners and leaders personally liable for losses suffered by students and taxpayers”.

However, ahead of the public comment period, some Republican lawmakers criticized the proposals — and the 30-day deadline for the public to respond. GOP representatives Virginia Foxx and Richard Burr wrote in a letter to Secretary of Education Miguel Cardona last week that they were “extremely disappointed” that the department had not extended the public comment period and urged him to withdraw the proposals and instead work with Congress on the reforms.

“Rather than working with Congress, the Department … is brazenly seeking to enact the Democrats’ wish list through executive order,” the lawmakers wrote, adding that it “simply does not have the power to to create a convoluted and costly framework that Congress has not authorized.”

They specifically referenced the Public Service Loan Forgiveness Program (PSLF) and Borrower Defence, which forgives student debt for borrowers defrauded by for-profit schools, and said the department had no authority to restructure these programs. For reference, the department has proposed reducing paperwork requirements to ease the burden of applying for relief to both programs, as well as expanding employment eligibility for the PSLF.

On the other hand, Democratic lawmakers praised the department’s efforts, calling them in a recent letter “not hugefor student borrowers. But they called for continued relief and the expansion of a PSLF derogation which allows prior ineligible payments to count toward rebate progression, but expires October 31, 2022.

At this point, the ministry is poised to move forward with finalizing its implementation plans by July 2023 – but it also has other news to act on before then. Student loan repayments are expected to resume after Aug. 31, and federal borrowers are not only waiting to hear if that pause will be extended — Biden is also expected to announce a broad student loan forgiveness by then. Cardoon said Tuesday that borrowers should be informed “soon” of any relief to come, leaving many to wait for a decision with the restart of fair payment two weeks.

Read the original article at Business Intern

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