Millions of student loan borrowers just came close to being granted forgiveness, but a government report found that thousands more likely ‘entitled’ to forgiveness. 2022-05-01 05:19:26


  • The Department of Education says changes are coming in income-driven repayment plans for student debt.
  • A regulator recently discovered flaws in the plans that appeared to prevent eligible borrowers from getting relief.
  • Advocates and lawmakers praised the changes but said more was needed to fix systemic problems.

The student loan industry was full bureaucratic obstacles to millions of borrowers since its inception – and a new government report reveals that there is still much work to be done.

A recent area of ​​focus for President Joe Biden’s Department of Education and activists alike have been income-driven reimbursement programs, which aim to keep monthly payments affordable for borrowers, sometimes as low as $0 based on family income. These plans were signed into law by Congress in 1992 and now run by the Department of Education, and they promise full loan forgiveness after 20 or 25 years.

“Student loans were not intended to be a life sentence, but that is certainly the way for borrowers deprived of the debt forgiveness they are eligible for,” Education Minister Miguel Cardona said on April 19. during advertising Steps designed to bring 3.6 million borrowers into income-to-forgiveness payment plans.

Management plans to do this by doing a one-time review of borrowers’ accounts for months of depositing in previously unaccounted repayment, which would have happened if they were on a different or deferred payment plan.

The next day, a Report From the Government Accountability Office raised questions about the effectiveness of the plans.

As of June, the Government Accountability Office report found, the Department of Education had approved only 157 loans for full forgiveness under income-driven repayment plans, with an additional 7,700 loans “potentially eligible” for forgiveness. The report said it could not definitively conclude whether those thousands of additional loans were eligible due to “gaps in education data”.

In response, in February it issued recommendations to the Ministry of Education to encourage it to better verify and track payments made under the IDR schemes. Melissa Emery Arras, author of the Government Accountability Office report, Tell Insider she is “happy” that management “has agreed with the findings and recommendations in our report and is taking steps to implement our recommendations.”

Focus on income-driven reimbursement comes just weeks after Biden they expanded A pandemic-era pause on all federal student loan payments, with interest waived, until August 31, following calls from Democratic lawmakers and human rights advocates who wanted to see continued relief. He also announced plans to return more than 7 million delinquent student loan borrowers to good standing before they have to repay. But while some in Congress remain skeptical about efforts to forgive student debt, advocates see recent reforms in the department as just a starting point.

Failure to track payments that would qualify borrowers for tolerance

Persis Yu, a former student loan attorney at the National Center for Consumer Law who is now director of policy at the Center for Student Borrower Protection, which advocates for student loan relief, said the department’s announced steps to reform the IDR were certainly a “good place to start.”

But Yu is just one of the defenders who did it argue This approach is not enough to fix the long-standing problems that have prevented borrowers who should have been eligible for tolerance under current rules from obtaining them.

Yu said, referring to the companies the federal government has contracted to manage student loans. “And I think acknowledging this issue is very helpful in terms of how we can tackle this in the future.”

A primary focus of the GAO report was the ability of the Department of Education and student loan companies to accurately track data and payments, particularly when it comes to payments made prior to 2014 through the IDR. The department, as part of its overhaul of the IDR system, announced that it will implement a payment tracker on the Federal Student Aid website beginning in 2023 so that borrowers can track their progress toward forgiveness.

“Education officials said data limitations make it difficult to track some eligible payments, and older loans are at greater risk of payment tracking errors,” the report said. “Until education takes steps to address such errors, some borrowers may not receive the IDR exemption they are entitled to.”

As it turns out, the department has been aware of payment tracking errors for years. According to the report, issues with calculating older eligible payments were highlighted in 2015, but even with knowledge of these issues, management “advises servants to consider previous servants’ statistics as accurate,” the Government Accountability Office said.

What’s more, the standard policy of loan companies is not to regularly inform the borrower of repayment progress, and while the borrower can request information on his progress, many of them do not even know that they have an option to do so.

“This is frankly unforgivable,” Yu said. “And it paints a bigger picture of how our system deals with the most financially vulnerable people and how long the student loan system has been in stagnation.”

Democrats applaud relief. The Republican Party takes the issue of broad tolerance

In recent months, a growing number of Democratic lawmakers have pushed the Department of Education to work on the IDR, hailing the latest announcement as a step forward.

Senator Elizabeth Warren, Sherrod Brown, and Dick Durbin said at joint statement It is “an important step to ensure the effectiveness of our student loan cancellation programs and enable low-income borrowers to get out of debt so they can buy a home, start a business, and participate fully in the economy.”

“We will continue to work to ensure that these programs are not overly complex, that we deliver on their promise of tolerance, and that we make it easier for all Americans to afford a quality education,” they added.

But not all lawmakers have the goal of ensuring broad student loan forgiveness. Rep. Virginia Fox, the Republican member of the House Education Committee, wrote in a statment That “the program, which was the brainchild of Democrats and expanded upon, turns out to be a complete disaster and taxpayers are forced to foot the bill for these mistakes,” likely referring to the cost of loan forgiveness. “Color shocked me.”

However, Democrats maintain that the department is heading in the right direction when it comes to student loan forgiveness. Senator Patty Murray, Chairman of the Senate Education Committee, issued a statment He said the new developments would “make a huge difference in the lives of many borrowers” and were “an urgently needed step in the right direction”.

Do you have a story to share about income-driven payment plans or student debt? Contact Ayelet Sheffey at