This week, the Department of Education held the first of three negotiated rulemaking sessions to provide an alternative path to student loan debt relief. Fourteen negotiators convened to discuss the best path forward for the Department following the Supreme Court’s decision to strike down the Administration’s previous attempt at debt relief.
The committee’s first act was to propose and approve the addition of two negotiators representing consumer advocates and disabled student loan borrowers. However, consensus could not be reached on a proposed third negotiator who would represent middle-income borrowers, so this person was not added to the committee. In addition, the Department took time to make two important clarifications:
- Making changes to student loan interest rates, while important, is the purview of Congress and therefore not something the Department can change; and
- Broad-based cancellation of student loan debt, as contemplated in the original debt relief proposal, is off the table.
These clarifications were disappointing news to borrower advocates hopeful for the broad-based relief originally proposed, but the Department appears to be taking this new tack to survive the inevitable legal challenge that awaits whatever proposal comes out of this process.
The session then discussed the five questions posed by the Department to the committee in its issue paper, with the goal of tailoring this round of debt relief more narrowly to specific categories of borrowers, such as those who have made payments for years but have not made progress in paying down their balance due to interest, or those experiencing significant hardship.
Over the two days, the Department listened to the committee’s discussion on a wide variety of suggestions from the negotiators on how to improve their debt relief program. These suggestions included urging the Department to forgive any accrued interest and apply all payments directly to a loan’s principal balance, and to include Parent PLUS loan borrowers in those eligible for forgiveness, as well as those with Federal Family Education Loans (FFEL) and Perkins loans. The negotiators also suggested that for borrowers who may qualify under a future “hardship waiver,” that “hardship” be defined in a broad way that includes being on Medicaid, having a chronic illness, being incarcerated for a certain length of time, or having significant childcare costs, among other suggestions.
Negotiators also suggested cancelling loans issued prior to 2010, because that is when the Department began issuing loans directly to students and the negotiators claimed outstanding loans from that period are uncollectable and a burden on the system, particularly when a loan’s payment and history are missing – an occurrence experienced by the legal office run by the consumer advocate negotiator.
The committee will reconvene on November 6 and 7 for its second session. Before then, the Department will draft its proposed regulations, which will be the topic of discussion for the next session. Any updates regarding the topics of discussion for the committee, or future proposals from the Department, can be found on the Department’s negotiated rulemaking webpage.