The White House announced Wednesday it was moving to make changes to the federal student loan system, which would include setting new limits on the accrual of interest.

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In addition, the Biden administration said it would overhaul the Public Service Loan Forgiveness Program, changing the way certain types of service are counted towards the debt repayment.

“We are committed to fixing a broken system,” U.S. Secretary of Education Miguel Cardona said in a statement about the proposals.

Federal student loans are currently in COVID-related forbearance and payments have been paused until Aug. 31.

Borrowers are not required to make payments on their loans and interest rates have been set to 0% until the end of August.

President Joe Biden is expected to announce that some amount of federal student loan debt will be forgiven. Biden has said he is considering forgiving up to $10,000 in loans per student.

A recent poll from NPR/Ipsos showed that a majority of Americans, 55%, said they support forgiving up to $10,000 in federal student loan debt.

Those who hold private loans will not qualify for any federal student debt forgiveness.

The administration is proposing:

Total and permanent disability discharges

“The proposed regulations would help more borrowers who are totally and permanently disabled receive and keep the discharge they are entitled to under the law,” the Department of Education said in a news release. “The proposed regulations would allow for a broader set of disability statuses recognized by the Social Security Administration (SSA) to qualify for discharge, eliminate the three-year income-monitoring period for borrowers who receive discharges based upon a determination by a physician or SSA, and widen the types of documentation and signatures borrowers may submit to demonstrate they are eligible for relief.”

Protections for defrauded borrowers

“The proposed regulations would create a fair path for borrowers to receive a discharge if their colleges lied to or took advantage of them,” according to the DOE. “This includes allowing for group claims, eliminating overly strict limits on when borrowers can file a claim, expanding the type of misconduct that can lead to an approved claim to include aggressive and deceptive recruitment practices, and ensuring borrowers receive timely decisions about their claims.

“To curb predatory behavior by colleges, the Department proposes a strong process for recouping the costs of such discharges from the college, running for at least six years following the borrower’s last date of attendance at the school.”

An overhaul of the Public Service Loan Forgiveness Program

“The Department proposes allowing more payments to qualify for PSLF including partial, lump sum, and late payments, and allowing certain kinds of deferments and forbearances (such as those for Peace Corps and AmeriCorps service, National Guard duty, and military service) to count toward PSLF,” the DOE said in the release.

“The Department also proposes to ensure the rules work better for non-tenured instructors whose colleges need to calculate their full-time employment.”

Changes to how interest accrues

“The Department proposes to protect borrowers from seeing their balances balloon by removing instances of interest capitalization wherever it is not required by statute,” the DOE said.

“Interest capitalization occurs when accrued interest is added to the principal balance of the loan, so that future interest accrues on a higher amount. The Department proposes to eliminate capitalization when a borrower enters repayment, exits forbearance, defaults on a student loan, and exits most of the income-driven repayment plans. These changes will help borrowers who struggle to repay their loans.”

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