President Joe Biden freezes student loan interest for 47,000 service members.
Here’s what you need to know.
In another victory this week for student borrowers, the US Department of Education retroactively waived interest on federal student loans held by more than 47,000 current and former active duty personnel. This student loan relief enhances access to a student loan interest relief benefit for service members through a data matching agreement with the U.S. Department of Defense.
“The brave men and women in uniform serving our country can now focus on their jobs and return home safely, without filling out more paperwork to access their hard-earned benefits,” said Richard Cordray, Director of the operation of Federal Student Aid. “Federal Student Aid is grateful for our strong partnership with the Department of Defense, and we will seek to reduce red tape for the military wherever possible.”
Student Loan Relief: How This Interest Rate Freeze Works
Here’s how this student loan relief will work for eligible service members:
- Under the Higher Education Act of 1965, service members deployed to areas that qualify them for imminent danger or hostile fire compensation will have no interest in running on certain federal student loans that have been disbursed for the first time on or after October 1, 2008.
- Historically, this student loan benefit was not available to many military personnel.
- For example, in 2019, the Department of Education waived interest on student loans for only about 4,800 service members. Why? Matching data between the Department of Education and the US Department of Defense was not available.
- Today, the Department of Education and the Department of Defense can match federal student loan borrowers who are on active duty.
- Now, this student loan benefit can be applied automatically.
Student loan relief follows cancellation of student loans
This student loan relief for service members follows Biden’s action to forgive $5.8 billion in student loans for student borrowers with disabilities. Biden has now canceled $8.7 billion for student borrowers, helping nearly 500,000 federal borrowers. Biden has continued to pursue a targeted student loan forgiveness strategy, which has helped provide student loan relief to certain groups of student borrowers. Today’s announcement is focused on service members, while yesterday’s announcement focused on student borrowers with total and permanent disabilities. Student loan forgiveness previously provided student loan relief to student borrowers subject to the repayment defense rule, totaling more than $1.5 billion in student loan forgiveness.
As Biden proceeds with targeted student loan forgiveness, it is important to note that you may not qualify as this student loan forgiveness does not apply to all student loan borrowers. Many federal student loan borrowers and private student loan borrowers will not be eligible for this type of student loan forgiveness. Therefore, make sure you understand all of your student loan repayment options. Here are smart ways to pay off student loans and save money: