At a time when the rate of delinquent student loans nearly matches that of delinquent mortgages in 2010, student loan debt relief has come to a screeching halt.
It was recently revealed that no borrower defense applications have been processed since President Trump took office. When approved, these applications allow borrowers to get student loans forgiven in cases of fraud.
Here’s what you need to know about this latest news, as well as what to do if you’re one of the tens of thousands of borrowers seeking forgiveness.
Student loan debt relief delayed under Trump
On June 14, Education Secretary Betsy DeVos announced she was pausing Obama-era regulations meant to protect students who’d been defrauded by their universities.
The regulations in question included:
- Gainful employment, which punishes universities whose students can’t find decent jobs after graduation; and
- Borrower defense, which provides an easy way for students defrauded by their schools to seek loan forgiveness
Although her decision was met with uproar — including a lawsuit from 19 state attorneys general — she promised current applications wouldn’t be affected.
“Nearly 16,000 borrower defense claims are currently being processed by the Department, and, as I have said all along, promises made to students under the current rule will be promises kept,” DeVos said in a statement.
“We are working with servicers to get these loans discharged as expeditiously as possible. Some borrowers should expect to obtain discharges within the next several weeks,” she added.
Recently released documents, however, tell another story. Not only have zero applications been approved over the past few weeks, none have been approved since Trump took office more than six months ago.
Sen. Rick Durbin, D-Ill., who received the records from the Department of Education, revealed the news to the general public on July 26.
“This response shows that while the Department of Education has illegally delayed the new borrower defense rule, it has also stopped processing federal student loan relief under current regulations for tens of thousands of defrauded borrowers,” said Durbin in a statement emailed to Student Loan Hero.
“The Department can’t ignore these borrowers any longer.”
Right now, more than 65,000 claims for student loan debt relief are pending. The majority of the claims come from borrowers who attended Corinthian and ITT Technical Institute, two schools forced to close amid increasing regulations and allegations.
What to do if your borrower defense application is on hold
Are you one of the 65,000 borrowers waiting for your loans to be forgiven?
One thing to be aware of: “Borrowers who are awaiting a decision from the department have continued to accrue loan interest, which the department revealed amounts to $143 million,” reported The Associated Press.
Most borrowers are given a grace period from loan payments while they wait for their applications to be processed. But according to the Post, that grace period will expire for 31,000 borrowers over the next six months.
So it’s vital you stay on top of your application and grace period. If it expires while you’re still waiting, you must ask to have your forbearance extended.
And if you haven’t yet made your claim for borrower defense, here are a few things you should know:
- You might be eligible for forgiveness if your school misled you or violated certain state laws directly related to your education.
- While your application is being reviewed, you can request that your student loans be placed into forbearance.
- But note that, if your application is denied or only partially approved, you’ll be on the hook for any interest accrued while your loans were in forbearance.
In other words, make sure your loans qualify for student loan debt relief before applying. Click here to read through the Federal Student Aid’s guidelines on borrower defense to repayment.
What to do if you’re struggling to pay your loans
If you’re struggling to pay your student loans but weren’t the victim of fraud, consider the following options:
- Apply for an income-driven repayment plan: These plans set your payments based on your income, which can make your student loan bills much more manageable.
- Refinance your student loans: If you have a good income and credit score, refinancing your student loans could lower your payments significantly.
Under the current administration, it’s anyone’s guess what will happen to programs that help student loan borrowers. But the best way to protect yourself is to stay educated — and stay vigilant.
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