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Tuesday, June 25, 2024
Federal loan recipients are eligible to apply for student loan forgiveness after the official U.S. Department of Education application portal opened Monday.

Federal loan recipients are eligible to apply for student loan forgiveness after the official U.S. Department of Education application portal opened Monday.

U.S. Department of Education unveils new measures to address student debt crisis

The U.S. Department of Education explained the new measures in a meeting with members of the press on Monday.

The U.S. Department of Education held a conference Monday to unveil new measures aimed at holding colleges accountable and addressing the student debt crisis. 

In June, the U.S. Supreme Court struck down the Biden Administration’s plan to forgive up to $400 billion in federal student loan debt, arguing the administration overstepped its authority

Despite this setback, the Biden-Harris Administration is seeking to move forward with a plan to hold colleges accountable to the students and taxpayers who fund them. The move builds on a number of other recent attempts to tackle the issue of student debt, including the Department of Education’s initiative to disburse $127 billion in aid relief for nearly 3.6 million students. 

“Too many students have been abandoned by shady colleges that close their doors and leave borrowers with unaffordable debt and little hope of completing their educational journeys and embarking on rewarding careers,” U.S. Secretary of Education Miguel Cardona said. 

The regulations are split into four categories: financial responsibility, administrative capability, certification procedures and ability to benefit. 

From 2013 to 2022, the Department of Education collected $344 million of the $1.6 billion in debt it sought. The new regulations aim to change that by strengthening its ability to collect on this debt upfront.  

The measures also enhance transparency in higher education by requiring colleges to clearly disclose information about financial aid and prohibiting colleges from withholding transcripts for courses that receive federal funding.

The department expressed particular concern about growing numbers of private for-profit colleges that closed their doors in recent years, impacting their students and the taxpayers who fund student loan discharges. 

“They will help prevent fly-by-night colleges from leaving students and taxpayers holding the bag for shoddy educations. They will give students some common-sense protections like clear information on the true cost of college and access to their transcripts when their courses were federally funded,” Undersecretary of Education James Kvaal said.

Additionally, colleges will be required to demonstrate they provide access to adequate career services. Federal aid to career-training programs will be limited to the minimum duration required by state regulations. 

Students without a high school diploma or equivalent form of education will have access to a greater variety of post-secondary options once the rules come into effect on July 1, 2024, according to the Department of Education

Americans collectively owe over $1.7 trillion in student debt, and the average borrower holds over $40,000 in total debt, according to the Education Data Initiative. This figure marks a sharp increase from 2006, when total student debt stood at $520 billion.

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