Insight

Executive Summary

• On October 31, 2022, the Department of Education released final regulations on five targeted federal student loan forgiveness programs that are slated to go into effect July 1, 2023.
• The final regulations mainly loosen the programs’ eligibility requirements, allowing the Biden Administration to forgive the loans of more borrowers.
• The loan forgiveness provided by these expanded programs will be targeted toward current and former students at for-profit colleges.

Introduction

On October 31, 2022, the Department of Education (ED) released final regulations on five federal targeted student loan forgiveness programs. These regulations, slated to go into effect July 1, 2023, originate from the regulatory changes to the loan forgiveness programs the Biden Administration proposed in July 2022. The five programs codify certain standards under which the federal government can cancel borrowers’ outstanding federal student loan balances. The final rules mainly ease the programs’ eligibility requirements, allowing the Biden Administration to forgive the loans of more borrowers, namely those who currently attend or have attended for-profit colleges.

The five programs are:

ED also released a final rule on interest capitalization on federal student loans. Those changes will eliminate instances of interest capitalization when it is not required by law. Interest capitalization occurs when unpaid interest is added to the principal of a loan on federal student...

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