1 million defaulting student loan borrowers eligible for relief

The Biden administration is extending an existing pause on interest and student loan collections to include more than 1.1 million defaulted borrowers, the US Department of Education said on Tuesday.

Borrowers, whose delinquent loans are part of the federal family education loan program, were not eligible for the current payment suspension and interest waiver – implemented last year by the administration and extended by President Biden until September – due to private sector holding of their loans. entities.

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“From now on, these overdue loans will be eligible,” said higher education expert Mark Kantrowitz.

The action will protect more than 800,000 borrowers who risked having their federal tax refunds seized to pay off a delinquent loan, according to the Education Department. This relief will be retroactive to March 13, 2020, the date of the start of the national emergency linked to Covid.

The agency said it would work to automatically return any tax refunds seized or wages seized in the past year. Borrowers who have made voluntary payments during this period can apply for a refund.

In addition, all these loans that defaulted after March 13, 2020 will be brought back into good standing. The guarantee agencies that hold these loans will assign them to the education department and ask the credit bureaus to remove the default from the credit reports.