Student Loan Forgiveness Today
In the path towards lessening the burden of student debt or the student loan on young people across the country, the Obama administration has made some advanced strides. From forgiving debt for those who were scammed by defrauded for-profit colleges to making the government the originator of loans issued, there have been a number of improvements in the last 8 years that are important to be aware of.
Debt For The Disabled
One major change to the way student debt is handled is in regard to the permanently disabled. In mid-2016, President Obama announced plans to forgive $7.7 billion in student debt owed by the 400,000 people who have a severe enough disability to qualify. Steps had been previously take to let permanently disabled people use their Social Security designation to apply for a loan discharge, but not enough people were aware of it.
“Too many eligible borrowers were falling through the cracks, unaware they were eligible for relief,” Education Under Secretary Ted Mitchell told the Huffington Post. “Americans with disabilities have a right to student loan relief. And we need to make it easier, not harder, for them to receive the benefits they are due.”
An astonishing 179,000 of the people eligible for forgiveness are in default on their loans, which means they could lose their tax refunds or risk having Social Security benefits garnished.
‘The creation of the matching program is a great first step, but the administration needs to go further to ensure that no borrower who has a right to student loan relief has their benefits taken,” the National Consumer Law Center’s student loan borrower assistance project director, Persis Yu, said. “Borrowers receiving SSDI need these payments to survive.”
Big Changes, Slow Progress
In 2010, President Obama hid some very significant student loan provisions into the Health Care and Education Reconciliation Act — which he called “one of the most significant investments in higher education since the G.I. bill.”
The provisions changed the way students received money — meaning that private banks no longer issued government-guaranteed loans and the government became the originator. There were questions, despite the significance, of just how much students would see the effects of the provisions. This would eliminate the middlemen.
“That’s very important for students, but it isn’t going to be very visible for them,” College Board independent policy analyst Sandy Baum told CS Monitor at the time.” The changes would save the U.S. around $68 billion over the course of 11 years.
Relief For The Defrauded
Obama also made it possible for those who were defrauded or misled by for-profit schools to have some relief — providing them a clearer path to forgiveness. The administration revealed plans to cancel $27.8 million in debt for those who were scammed into taking it on.
“The Obama administration won’t sit idly by while dodgy schools leave students with piles of debt and taxpayers holding the bag,” Education Secretary John B. King said. Students who are defrauded deserve an efficient, transparent and fair process to get the loan relief to which they are legally entitled. And schools that harm their students should be on the hook for the damage.”
The debt forgiveness plan reportedly only affects 1 percent of the 125,000 students who are eligible for debt cancellation.