The United States Department of Education took a significant step in reforming the student loan system by publishing an issue paper discussing various pathways for reducing student debt. This was an important move toward achieving the department's goal of making the student loan system more transparent and accessible.
The topic paper discusses five major challenges that student borrowers are up against, along with proposed solutions to those challenges.
According to a statement that was released on September 29 by the United States Secretary of Education, Miguel Cardona, it was stated that "The Biden-Harris Administration has taken unprecedented action to fix the broken student loan system and deliver record amounts of student debt relief."
This issue paper's objective is to provide answers to five questions that were posed by a qualified audience of prospective borrowers. Borrowers who fall into these categories may have outstanding balances that are bigger than the amounts they were initially loaned, may have started the repayment process a significant number of years ago, or may be participating in programs that are not financially practical. Additionally, opinions are being solicited from borrowers who are eligible for income-driven repayment programs but have not yet applied for them, as well as from persons who are going through financial difficulties that the current loan system does not account for in any way.
The provisions of Section 432(a) of the HEA have been adhered to in order for this action to be legal and valid. In the past, the Department of Defense has taken action to negotiate reduced payments and in some cases, even stopped trying to collect on some debts. The Supreme Court's decision to overturn a Department of Defense policy that was founded on the HEROES Act of 2003 was a significant setback for advocates of broader student loan forgiveness. This plan had the potential to help close to 43 million people who were behind on their payments.