Last week, negotiators serving on the Department of Education’s (ED) negotiated rulemaking Affordability and Student Loans Committee convened for the second of three week-long work periods. (See our analysis of the first work period here.) Committee members considered new and revised proposals from ED addressing a broad array of issues including the borrower defense to repayment rule, income-driven repayment plans, the PSLF program, and discharges of federal loan balances for students whose colleges close.
During the second work period, negotiators continued to push to strengthen ED’s regulatory language and to ensure that student and borrower voices were the center of the conversations. While progress was made, at the end of the week ED and committee members were still short of reaching consensus on 12 issues, including:
Pell Grant Eligibility for Prison Education Programs – A subcommittee to discuss regulations to restore Pell eligibility for incarcerated students met between the first and second full committee work sessions. (An analysis of that work period can be found here.) Last week’s discussions began with a presentation from members of this subcommittee. Negotiators expressed a strong desire for more support from ED, and outlined areas of preliminary agreement and for continued work on topics such as the the definition of elements of a prison education program, how to ensure prison education programs are operating in students’ best interests, and how to collect data on and monitor new and existing programs. Subcommittee members noted that a leader from a state corrections agency—an important voice, given that these entities administer postsecondary programs for incarcerated students—was missing from the table, and negotiators voted to add Anne L. Precythe, Director of the Missouri Department of Corrections, to the group. The subcommittee convenes this week for its second of two work periods, with the goal of presenting recommended regulatory language to the full committee next month.
Borrower Defense to Repayment (BD) – The Department’s proposed BD language for this work session reflected the urging of some advocates—as well as House Appropriations Chair Rosa DeLauro—in the first session to strengthen requirements that ED seek repayment of funds for BD claims from schools. Committee members also grappled with how regulations should approach automatic discharges for groups defrauded by their colleges and had very different views regarding how aggressive recruiting—a basis for filing a BD claim—should be defined.
Several negotiators questioned proposed language that would prevent legal aid attorneys and other third parties from petitioning for group discharges. These members noted that borrowers should not be dependent on state Attorneys General, whose offices can be under-resourced or who might not prioritize consumer protection.
In addition, many negotiators were disappointed that ED did not include a timeline for processing claims in its proposed regulatory language (and proposed their own). There also was a discussion focused on why ED maintained a provision for partial relief. Several negotiators pushed to ensure the evidentiary standard needed for such relief didn’t prevent borrowers from receiving a full discharge.
Income-Driven Repayment (IDR) and Interest Capitalization – The discussion around IDR reforms centered on ED’s introduction of a new “Expanded Income-Contingent Repayment (EICR)” plan, which included some specifics but left a host of questions for negotiators about certain elements of the plan’s formula and which borrowers should be included. There was widespread agreement that the newly-proposed EICR plan should take variations in household resources, needs, and expenses into account and shorten the time to forgiveness (currently 20-25 years, depending on the plan). Negotiators highlighted that a simple way to be more inclusive would be to raise the protected income threshold above 150 percent of the poverty line. Negotiators representing legal assistance organizations proposed 400 percent of the poverty line as an appropriate threshold, which had support from some other negotiators.
Negotiators also indicated that the following reforms should be priorities: shortening the required time to forgiveness, allowing some debt to be forgiven along the way, eliminating balance growth by subsidizing any unpaid interest, and ensuring that FFEL borrowers, those with Parent PLUS loans, and borrowers in default have easy access to an IDR plan. There was a robust discussion around whether ED has the authority to streamline existing plans to reduce confusion for borrowers and make them easier to administer. (ED noted that it does not without statutory change, while several senators have asserted that it does.)
Finally, many negotiators pushed the Department to make data available that identifies which borrowers use IDR plans, usage patterns, and demographic and education-related breakdowns to allow the committee to make evidence-informed decisions.
Total and Permanent Disability (TPD) Discharge – During this work period, ED further outlined data matches with federal agencies to automate TPD discharges for certain borrowers. While negotiators appreciated this automation, they also underscored that, regardless of whether data matches are possible, certain categories of borrowers should still be eligible for discharges and included in regulatory language. For example, advocates representing individuals with disabilities pushed for borrowers to be automatically eligible for a TPD discharge if they have received Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) for five years prior to application. (According to statute, a borrower must experience a disability for a 5-year period to be eligible for a TPD discharge.)
Closed School Discharge – During the discussion around closed school discharges, multiple negotiators expressed concern that all students whose colleges close experience harm, and most struggle to transfer credits if they choose to continue their educations. These members advocated for students whose schools close to have their federal student loans automatically discharged. Other negotiators pressed for more nuanced definitions of events that would trigger relief for these borrowers and took issue with the Department’s proposed steps to streamline the closed school discharge process.
Public Service Loan Forgiveness (PSLF) – ED and other negotiators went back and forth on whether and which types of entities or jobs should count toward PSLF. Negotiators, especially those representing students and legal assistance organizations, pushed for the focus to be on the type of work done by the employee and not the tax status of the employer, noting that low-income workers often don’t have the luxury to choose an employer. ED expressed an interest in allowing flexibility for borrowers to work at for-profit companies but also noted that doing so could make the PSLF rules murkier and the processing of forgiveness applications less efficient. Other negotiators highlighted the importance of counting additional periods of deferment and forbearance toward PSLF, ensuring regulatory text includes veterans organizations, and making sure proposed language helps specific groups, such as adjunct faculty.
Public Comments – At the end of each day, the committee heard from members of the public. Commenters focused on the importance of incarcerated individuals having access to Pell Grants; expansion of the PSLF program to include additional occupations, some workers at for-profit companies, and additional periods of deferment and forbearance; and issues faced by specific underrepresented groups, including Latinx borrowers. The committee also heard from multiple veterans negatively affected by closed schools or otherwise defrauded by for-profit institutions and several borrowers still waiting to hear from ED on BD claims or other relief.
Four elected officials provided testimony. Rep. Mrvan (IN) supported ED’s proposals to expand PSLF and make IDR more accessible; Rep. Alma Adams (NC) advocated for holding colleges that defraud students accountable for their actions; Rep. Josh Harder (CA) advocated for expanding PSLF; and Rep. Greg Murphy (NC) pushed ED to take a narrower approach to regulations granting students loan forgiveness that would save the government money.
Members have another week-long work period scheduled for December 6-10 during which they will try to reach consensus on regulatory language. If they agree on language, ED will publish that language in a Notice of Proposed Rulemaking for public comment and will be able to move more quickly to a final rule. For issues on which members do not agree, ED will develop and publish a Notice of Proposed Rulemaking informed, at least in part, by the negotiated rulemaking process. Thus, the voices of students, borrowers, advocates, and policymakers remain critical to informing this effort and to ensuring the Department implements stronger consumer protections.
To view all materials provided to the committee and the public, visit the Department of Education’s negotiated rulemaking website.