Biden Administration Grants Student Loan Interest Waiver to 47,000 Service Members

By GQ Pan
GQ Pan
GQ Pan
Reporter
August 24, 2021 Updated: August 24, 2021

The Biden administration announced on Friday that it has retroactively waived interest on federal student loans held by more than 47,000 current and former military service members.

Under federal law, service members deployed to overseas combat zones where they’re subject to imminent danger or hostile fire can have their interest waived on loans such as Federal Student Aid (FSA) for up to 60 months. But until now, they had to individually apply for the benefit by providing documents that can prove their military service, including a formal application along with a certifying official’s statement and signature, or military orders showing they have been serving in a hostile area, or a Leave and Earnings Statement showing hostile or imminent danger pay.

This paperwork burden had prevented many eligible student veterans from successfully getting the interest waiver, according to the Department of Education. In 2019, the benefit was only granted to about 4,800 service members.

In the new policy change, the Department of Education (DOE) said it is matching federal student loan borrower records to the Department of Defense’s personnel files. As a result, the DOE can automatically identify those who are eligible and provide them with the interest rate benefit.

“Brave men and women in uniform serving our country can now focus on doing their jobs and coming home safely, not filling out more paperwork to access their hard-earned benefits,” FSA Chief Operating Officer Richard Cordray said in a statement announcing the change. “Federal Student Aid is grateful for our strong partnership with the Department of Defense, and we will seek to reduce red tape for service members wherever possible.”

The announcement comes a day after the DOE said it will automatically discharge more than $5.8 billion in student loans for hundreds of thousands of borrowers who have total and permanent disabilities (TPD).

The change will apply to 323,000 eligible borrowers who are identified through an existing data match with the Social Security Administration (SSA). Starting this September, those who qualify for a TPD discharge based on information the DOE receives from the SSA will be notified of their approval for a discharge in the weeks after the match, and all discharges are expected to occur by the end of the year.

“Today’s action removes a major barrier that prevented far too many borrowers with disabilities from receiving the total and permanent disability discharges they are entitled to under the law,” said Education Secretary Miguel Cardona in a statement. “This change reduces red tape with the aim of making processes as simple as possible for borrowers who need support.”

GQ Pan
GQ Pan
Reporter