US proposes regulations to improve student loan programs

ANKARA

The US introduced proposed regulations Wednesday to improve student loan programs, the Education Department said in a statement.

The proposal will alleviate student loan debt burdens for some borrowers and public service workers who have met commitments and it would stop interest capitalization that causes unpaid interest to be added to a borrower’s principal balance.

It would also give borrowers a court hearing if they have disputes with their colleges.

"We are committed to fixing a broken system," said Secretary of Education Miguel Cardona. "If a borrower qualifies for student loan relief, it shouldn’t take mountains of paperwork or a law degree to obtain it."

"Student loan benefits also should not be so hard to get that borrowers never actually benefit from them,” he said. “These proposed regulations will protect borrowers and save them time, money, and frustration, and will hold their colleges responsible for wrongdoing.”

The agency said President Joe Biden administration's policies have resulted in the approval of nearly $26 billion for more than 1.3 million federal student loan borrowers.

The department allowed 30 days to receive comments from the public as it pushes to finalize the regulations by Nov. 1, while the final rules will take effect before July 1, 2023.

US student loan debt stands at more than $1.7 trillion with almost $40,000 per borrower.

The Biden administration last month approved more than $8 billion in student loan forgiveness which affects 145,000 borrowers.

The administration in December extended a pause on federal student loan repayments through May 1, marking the third relief provided for approximately 41 million borrowers.