Biden administration proposes new student debt relief plan: Who can qualify?
NEW YORK -- The Biden administration is proposing a new student debt relief plan that would benefit those who don't qualify for loan forgiveness under the current temporary program.
Officials will meet to discuss finalized plans for the program Monday, but experts say many people may not even know they qualify for it.
"This is basically the administration taking another stab at offering student loan forgiveness to a large number of student borrowers, many of whom have been struggling for years to repay the debt that they owe," National Foundation for Credit Counseling's Bruce McClary said.
The Department of Education released a student debt relief proposal that would target four categories of borrowers:
- Those with federal student loan balances that exceed the original borrowed amount
- Those with loans that entered into repayment 25 years ago or more
- Those with loans for career training programs that led to "unreasonable debt loads or provided insufficient earnings"
- Those who are eligible for forgiveness under other repayment plans but have not applied for it
The aid would build upon the $127 billion in loan forgiveness the administration has already approved for about 4.6 million borrowers. The second phase of notifications for those borrowers went out over the last few weeks.
McClary, a former debt collector, said it's important that people who owe are keeping a close eye on their accounts. He also urged people to make sure their contact information is up to date.
"This is especially critical right now, as we just exited this long period of administrative forbearance where people have been able to skip payments. And it's one of those things where if it's out of sight, it's out of mind," McClary said. "If your servicer doesn't know how to contact you, you could be missing out on some really important information, just like this information about whether or not you may qualify for forgiveness under the new program"
Another tip, even if the email looks like it's coming from the Department of Education or your loan provider, beware of scams.
"What you should do is instead of responding directly to the email, you should contact your servicer using a previously verified authentic way of contacting them or go directly through their website," McClary said.
The latest plan is much narrower than last year's, but details about how much borrowers could see from the proposal remain yet to be finalized.