Borrowers with high medical debt, childcare costs and other financial burdens qualify for relief. (iStock)
The Biden-Harris administration recently released another proposal to help borrowers handle high-cost student loans. This round of student debt relief is designed to help students facing serious financial hardship.
The proposal would provide automatic relief to borrowers deemed likely to default on their loans in the next two years.
“College is meant to lead to a better life, but too many students end up struggling due to their student debt,” Under Secretary James Kvaal said.
“The ideas we are outlining today will allow us to help struggling borrowers who are experiencing hardships in their lives, and they are part of President Biden’s overall plan to give breathing room to as many student loan borrowers as possible.”
Biden’s proposal outlines the factors that the U.S. Secretary of Education may consider when determining if a borrower qualifies for hardship relief. These factors include the total loan balance and the corresponding monthly payments, as well as the borrower’s income.
Any other high-cost essentials like childcare and healthcare expenses are also considered. Borrowers that have high expenses outside their control are likely to qualify for some help under Biden’s new plan.
If you have private student loans, unfortunately, federal relief doesn’t apply to you. If you’re looking to lower monthly payments and ease the burden of student loan debt, consider refinancing your student loans. Compare interest rates with the help of Credible, an online loan marketplace.
MORE STUDENT LOAN FORGIVENESS IS ON THE HORIZON, AS U.S. COLLEGES COMMIT TO COST TRANSPARENCY
FAFSA fixes on the horizon
The Free Application for Federal Student Aid (FAFSA) was relaunched this year, but the process went anything but smoothly. Students saw inaccurate award amounts based on income miscalculations. Now, awards are being delayed, likely until March.
The U.S. Department of Education recently announced additional steps to help fix these problems and help colleges process financial aid forms faster.
These fixes include reducing verification documents students must provide. Additionally, the Education Department will suspend routine program reviews through June. Typically, the Department conducts these reviews to make sure colleges meet basic financial and educational requirements.
Colleges also typically must recertify for federal student aid programs within 90 days of their Program Participation Agreement (PPA) expiring. This year, these recertifications will be waived for schools whose PPA expires in March, June or September.
To cut down on your monthly student loan payments is by refinancing into a loan with a more affordable interest rate. To see if refinancing is right for you, use Credible to compare rates from multiple lenders at once.
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Borrowers dealing with student loan scams set to receive checks
Over 8,000 student loan borrowers were victim to a student debt relief scam from 2015 to 2020. These students are finally seeking some actual relief, the Consumer Finance Protection Bureau stated.
Performance SLC and Performance Settlement charges borrowers nearly $9.2 million in illegal upfront fees rather than directing students to free programs available through the U.S. Department of Education.
Borrowers who worked with these companies will see a check in the mail shortly, as retribution for the fees they were charged. Checks started being sent out on February 15th.
The total amount set to be distributed to students is $10,936,618. It comes from the CFPB’s victims’ relief fund.
To avoid falling victim to a student loan debt relief scam, make sure you thoroughly research any company you’re considering working with.
“Consumers should operate under the assumption that when something sounds too good to be true, it is,” John Haraburda, a robocall data expert at Transaction Network Services, explained.
Before relying on debt relief options, consider refinancing your student loans into a private loan with lower interest rates. Visit Credible to compare student loan refinancing rates from multiple lenders without affecting your credit score.
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