WASHINGTON, D.C. – The Center for Responsible Lending (CRL) urged the U.S. Department of Education to amend their notice of proposed rulemaking to expand forgiveness of capitalized interest— unpaid interest that is added to the principal of the loan— in a comment letter submitted Friday evening.
“We support the Administration’s proposal and believe that these regulatory changes will have a positive impact on millions of student loan borrowers because waiving interest capitalization serves as a tool to address the disproportionate effects of student loan debt on low-income borrowers,” said Nadine Chabrier, senior policy counsel at the Center for Responsible Lending. “As stated in the letter, we believe the Secretary of Education has the authority under the Higher Education Act to waive the total amount of unjustified capitalized interest for borrowers regardless of income.”
CRL recommends that interest waivers return borrowers enrolled in an Income-Driven Repayment (IDR) plan to their original balance per the Proposed Rule and include a refund of any additional interest accrued upon their overinflated balances.
CRL’s comment letter states the following:
The Department of Education can and should go further. We suggest the Proposed Rule be amended to clarify that capitalized interest should be forgiven and the borrower should be placed in the position they would have been but for the capitalized interest.
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Press Contact: Vincenza Previte vincenza.previte@responsiblelending.org