Education Department Focuses on Student Loan Forgiveness

Richard Cordray, Chief Operating Officer of Federal Student Aid, discussed the status of broad student loan forgiveness at a U.S. Department of Education conference for university financial aid administrators.

Richard Cordray said he won’t say anything about broad student loan forgiveness, which he called general loan forgiveness, leaving all decisions to the White House.

He did discuss Federal Student Aids’ efforts toward targeted loan forgiveness and the resumption of federal student loan repayments in February 2022.

Targeted loan forgiveness includes efforts by the U.S. Department of Education related to automatic disability discharge, borrower defense against repayment forgiveness, and the public loan forgiveness (PSLF). The PSLF waiver ensures that payments in the FFEL program and in any installment plan count toward PSLF, if the borrowers consolidate their loans and/or submit a PSLF form through October 31, 2022.

Finally, Richard Cordray discussed with the U.S. Department of Education the resumption of federal student loan repayments in February 2022. These include direct and indirect communications with borrowers, making it easier for borrowers to renew or sign up for direct debit, and encouraging struggling borrowers to sign up for means-tested amortization.

This is a transcript of the relevant section of Richard Cordray’s comments:

Finally, let me address a topic that is much discussed at the moment, which is student loan forgiveness. To be more precise for our purposes today, they are actually three different but related topics: general loan forgiveness, targeted loan forgiveness programs, and the return to repayment.

A lot of people seem to have a lot to say about general loan forgiveness, but as the head of FSA, I don’t have that. Instead, I’ll just say it’s a decision for the White House to make, not for me. And whatever they decide, FSA will carry it out faithfully.

Targeted loan forgiveness programs are a different matter altogether. We are closely involved in this in several areas.

Over the summer, the Department announced that more than $5.8 billion in total and permanent disability waivers would be granted to several hundred thousand borrowers through a data agreement with the Social Security Administration. We’re working to make that happen.

The ministry has also announced multiple rounds of borrower defense layoffs for students who have been victims of failed for-profit schools and we are carrying out these layoffs.

Recently, the ministry announced major changes to the public loan forgiveness program. As you know, PSLF has been a hot topic in recent years and has been a source of frustration for many borrowers.

Under a program expansion the Secretary recently announced, PSLF will reach a wider audience of qualified borrowers, especially borrowers of the Federal Family Education Loan or FFEL programs who previously had not received credit for years of payments on those loans. The goal here is to deliver on the core promise of full loan forgiveness to government officials, military personnel, teachers, nurses, police officers, firefighters, and others who have chosen to put their communities first.

A program that has so far brought relief to only a few thousand recipients will now expand to reach many more, including hundreds of thousands of borrowers who see their payment counts advance to the magical ten-year mark to pay off their loans. As you may have guessed, FSA is hard at work getting all of this done.

With all these student grant opportunities, I am asking for your help in spreading the word. Visit studentaid.gov/announcements for the latest news. Expand it within your circles and bring up any questions or concerns with us so we can address them together. Our customers, the borrowers we serve, rely on us to deliver for them and we will.

Today I find that I cannot talk about the work of FSAs without drawing attention to what we call Return to Repayment. This is the most pressing problem we are facing right now.

Tens of millions of student loans have been suspended during the pandemic. Most have not made payments since March 2020. That was no doubt a welcome relief. But after multiple extensions of the payment break, the deadline to return to redemption is now set at January 31, 2022.

We recognize that the stakes are extremely high as we rise to this challenge. Let me tell you how we at FSA intend to approach this task. We will focus on supporting borrowers and their families with clear communication and with an emphasis on execution by our credit managers.

First, to help people prepare to pay back, FSA is conducting a communications campaign that includes a series of email communications directly to borrowers, general education messages on various forms of social media, paid searches advertising federal student loans. resources and information within the results of internet search engines, and work with all kinds of community groups, alumni associations, unions, professional organizations, many of you to share information and spread the word.

We inform borrowers about their options, such as signing up or renewing their registration in our direct debit program. which is the easiest way to make their monthly payments.

We also encourage borrowers to sign up for income-driven repayment plans if they need help making their monthly payments more affordable.

But FSA cannot do this alone. We need strong partners like you to be effective. You don’t want your cohort’s default rates to rise because borrowers are confused or reluctant to repay their loans, some of them for the first time ever. It is not positive for a borrower to fall into delinquency and then default regardless of the reasons. We all need you to help people get this right.

There is nothing abstract about the challenges we face. The students, families, and borrowers we serve are you and your children. They are mine and mine. For example, this spring my wife and I had the undeniable pleasure of watching our twins receive their college degrees. I’m sure you can appreciate the emotions parents feel when they see their children reach a milestone that took many years of dedication and effort to achieve. The higher education they receive will help them meet the challenges that life will surely throw at them.

Thanks to the work we do, we share the goal of helping more young people seize the same opportunities to learn, grow and thrive. We can change the trajectory of their lives by helping them achieve fulfilling and productive careers.

If we can do that, we will also strengthen the capacity of American society to address the global challenges we face today and in the years to come. As every student succeeds, we all succeed.

This idea is ingrained in FSA’s mission, which at its core is to make the American dream possible. So we should strive for that together.