According to Education Department of the US the number of student loan increased up to 1 million borrowers. For this reason, a new relief is cultivated in order to relieve financial aid for borrowers who defaulted on student loans during pandemic.
Education Secretary Miguel Cardona said in a statement, "At a time when many student loan borrowers have faced economic uncertainty, we're ensuring that relief already provided to borrowers of loans held by the Department is available to more borrowers who need the same help so they can focus on meeting their basic needs".
The aid is only for those borrowers who have defaulted on their Federal Family Education Loan Program, which parents take on the behalf of their children in order to pay the tuition and for students, who can take the loans on their own. Private leaders offer federal student loans to borrowers under this program, known as FFEL, which is reinsured by the federal government. When borrowers take FFEL loans, they are transferred from the lender to the guaranty agency.
Some FFEL loans are held by the Education Department because they were taken by the federal department during the financial crisis, and Education Department will expand 0% rate to more than 1 million borrowers who defaulted on a privately directed FFEL loan and will defend around 800,000 borrowers who were in danger of having their government charge discounts seized to repay a defaulted credit. In addition, those borrowers who made self-willed payments have the chance to request a refund and the department will implement the 0% interest rate for those borrowers. Those loans that were defaulted since pandemic, will be returned to a good standing.
Senior department officials announced that they plan to work with private lenders to automatically return any tax refunds seized over the past year, despite the difficult process of it.
Earlier this month, the Education Department also announced plans to revoke the formula established by D. Trump, based on which only partial debt relief is provided to student loan borrowers, who were defrauded by their schools.