4 things to know about possible changes to your student loan debt

Enlarge this image


Richard Cordray is the chief operating officer for the office of Federal Student Aid.





John Minchillo/AP



hide caption



toggle caption


John Minchillo/AP



Education
Student loan forgiveness is a lot closer for some borrowers, and they are pumped

«I think if that were the decision, it would benefit many, many borrowers who are otherwise in trouble,» Cordray responded, «but it is not my decision to make.»

Cordray also ducked a question from Democratic Rep. Frederica Wilson of Florida, who asked about a memo, reportedly being drafted by the Education Department, explaining whether President Biden has the legal authority to discharge federal student debts.

«That’s a matter for the White House to determine,» Cordray said, «obviously not for me.»


The Public Service Loan Forgiveness program is being fixed, slowly


Earlier this month, the Biden Administration announced that it is overhauling the troubled Public Service Loan forgiveness program, which promised federal student loan forgiveness for borrowers who work 10 years in public service. Its poor management and confusing rules have left many borrowers in the cold.

Wednesday, Cordray said the overhaul is «game-changing» for hundreds of thousands of borrowers while acknowledging «there’s an awful lot of work to do to make that announcement into reality.»



Education
What borrowers need to know about the Public Service Loan Forgiveness overhaul

One challenge: The U.S. government doesn’t directly manage student loans. It pays loan servicers to do that. Democratic congressman Joe Courtney of Connecticut told Cordray he’s worried these servicers aren’t prepared for the big changes.

Courtney said he’s already hearing from constituents who complain, when they ask for help, their servicers say they «don’t have the guidance to implement the PSLF changes.»

Borrowers have shared similar stories with NPR. Several say they’ve called their servicers since the overhaul announcement, believing they now qualify for forgiveness, and asked, «What do we need to do?» But they were told, essentially: «We don’t know yet.»

One borrower told NPR, when she called to ask about her eligibility for this new PSLF waiver, her servicer «was about as useless as a chocolate teapot.»

Followed instructions provided by @fafsa & resent my PSLF form; got a letter saying I'm ineligible b/c I made my payments before consolidation (which doesn't matter under new rules). Called @MyFedLoan; they said they don't have updated guidance from DOA. BLARGH. Trying tweets! https://t.co/QXKFOvo7sm

— Melissa Crowe (@MelissaMCrowe) October 26, 2021

«We’ve heard some of the same things you’ve heard,» Cordray admitted to lawmakers, «and we want to get these things sorted out as quickly as possible.»

But he also urged patience, saying «we’re operating in real time here. It’s been a matter of days since the [Education] Secretary’s announcement. And we want to make sure people have the right guidance here, and sometimes the quick is the enemy of the good.»


Cordray’s bottom line, though: «We do intend — and we will — deliver on the announcement that was made and get relief to people.»

If you’re a public service borrower eager for clarity, check out this handy thread:

1/ A Loan Forgiveness Thread…

If you work in public service, have federal student loans and are confused about changes to the Public Service Loan Forgiveness program, THIS is for you… pic.twitter.com/Ah1aRexOcL

— Cory Turner (@NPRCoryTurner) October 25, 2021


If you ran a failed, predatory school, you might be held liable


One of the most interesting moments in Wednesday’s hearing could signal a big policy shift.

Rep. Bobby Scott, the Democratic Chairman of the House education committee, reminded Cordray that the Education Department has the authority to hold executives liable for financial costs when a school defrauds students and collapses. But the Department has been loathe to use it, even in the high-profile failures of Corinthian Colleges and ITT Technical Institute.

This is a big issue for Scott, who sent Education Secretary Miguel Cardona a letter in August and convened a hearing in March, where Dan Zibel, of Student Defense, laid out the legal case for holding executives personally liable. On Wednesday, Scott again urged Cordray to embrace the idea as «a deterrent» to prevent future fraud.

Keep in mind, this is a controversial idea. But, unlike Cordray’s muted responses to some of the hearing’s other controversial questions, this time he was forthcoming.

«We see eye to eye on this,» Cordray told Scott. «We absolutely agree. More needs to be done to prevent people from abusing these student aid programs.»

«We agree on the direction here,» Cordray continued, «and I thought [your letter] was a good bit of a kick in the behind for us to make sure we’re moving down the road on this. And we will.»

And we will.

With those three words, Cordray forcefully embraced a policy that is likely to send a shudder through the for-profit college space.