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- The Education Dept. announced it is waiving interest on student loans for 47,000 service members.
- Receiving the benefit will also be automated so borrowers don't have to submit individual requests.
- This benefit was created under the Higher Education Act, but paperwork held back many from accessing it.
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A day after the Education Department wiped out $5.8 billion in student debt for borrowers with disabilities, it announced service members will also be getting relief: waived interest that has been a benefit under the Higher Education Act but has barely been accessed.
On Friday, the Education Department announced the Federal Student Aid (FSA) office will be retroactively waiving interest on student loans for 47,000 former and active-duty service members. The relief will happen automatically, removing the requirement for service members to make individual requests to access the benefit. According to the press release, automating the process means eight times more current and active-duty service members will receive the benefit than in 2019.
"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. "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."
Service members deployed to areas that qualify them for "imminent danger or hostile fire pay," according to the Higher Education Act, should not accrue interest on student loans that were first disbursed on or after October 1, 2008. But since the process was not previously automated, only a small proportion of eligible service members were able to access the benefit, with only about 4,800 of them getting relief in 2019.
Along with waived interest, service members also qualify for full student-debt relief under the Public Service Loan Forgiveness (PSLF) program, which forgives student debt for public servants after 120 monthly qualifying payments. But not only is this program flawed, rejecting 98% of applicants, if a service member is deployed and puts payments on pause, that time doesn't count toward loan forgiveness, extending the period they have to keep paying.
And according to a Government Accountability Office report, as of January 2020, 287 Dept. of Defense personnel received loan forgiveness, while 5,180, or 94% of DOD borrowers, were denied.
In April, Republican Sen. Marco Rubio of Florida and Democratic Sen. Maggie Hassan of New Hampshire introduced legislation that allows service members who deferred their student loan payments while deployed to count that period of time toward their PSLF progress, expediting the process for student-debt relief.