Changes to Student Loan Programs May Result in Loan Forgiveness
ST. CLOUD -- New fixes to federal student loan programs could mean lower balances for millions of recent college students.
According to a news release from the U.S. Department of Education, changes to income-driven repayment programs will result in loan forgiveness for 40,000 borrowers and move more than 3 million borrowers closer to loan forgiveness.
Mike Uran, Director of Financial Aid at St. Cloud State University says anyone with questions should contact their loan servicer for details.
The most important thing would be to get into direct contact with their loan servicer. So that's the company that they're making their payments to. Check the website, get a phone number for that company, and give them a call. They're going to be the ones that can give the students, or the in this case, the former student the information about programs like public loan forgiveness public service, loan forgiveness, and income-based repayment plans.
The changes are part of the Department of Education's commitment to addressing the impact of COVID-19 on borrowers with lower incomes and high debt loads.
Uran says new loan forgiveness programs have had a long list of problems.
The public service loan forgiveness program has been around for a while it's had some bumpy periods throughout its implementation. But ideally, the Public Service Loan Forgiveness gives students an opportunity to make payments over a 10 year period, and then whatever the remaining balance on their student loan at that point is, can be forgiven through that program that partners closely with an income-driven repayment program because mostly loan federal student loans are tied to a 10 year standard repayment period. So if you make your payments over 10 years, your debts going to be paid in full.
Other changes will include additional oversight of loan servicers and efforts to strengthen rules for borrower defense from predatory or low-value colleges.