The Affordability and Student Loans negotiated rulemaking committee session, which focused on a range of topics critical to both student loan borrowers and institutions, concluded its three-month work last week having reached consensus on four of the eight topics (listed below) that were being negotiated.
 
For the four areas where consensus was reached, the Department of Education is bound to the agreement when releasing its draft regulations for public comment, and no negotiator is allowed to express negative views of the agreed upon language.  It is expected that the Education Department will release a Notice of Proposed Rulemaking in early 2022, with a final rule to be released by November 1, and an effective date of July 1, 2023.
 
On the four topics where the committee could not reach consensus, the Education Department now has the ability to rewrite the regulation as it wishes.  The Education Department is not bound to language proposed to the committee during the negotiations.
 
The committee met three times in week-long sessions during the fall and winter.  The private, nonprofit sector of higher education was represented by Misty Sabouneh of Southern New Hampshire University and Terence McTier of Washington University in St. Louis (Mo).  NAICU worked closely with both negotiators.
 
Below is a summary of the key issues and whether consensus was reached by the committee.  NAICU has also created a more detailed analysis of the committee’s conclusions.
 
Issues in Which Consensus was Reached

•  Total and Permanent Disability (TBD) Discharge: Changes include the elimination of the three-year post discharge income monitoring period; expansion of the number of Social Security Administration categories eligible for discharge; expansion of the type of health care professionals who can certify TBD discharges; and a narrowing of the conditions under which a loan can be reinstated once discharged. 
• Interest Capitalization: Interest capitalization is eliminated in a number of circumstances in which such capitalization is not required in law. 
• False Certification Discharge: The agreement would simplify current documentation requirements for borrowers seeking a false certification discharge; expand the loans eligible for such a discharge; and expand the conditions under which loans may be discharged. 
• Prison Education Programs: The agreement gives access to Pell Grants to incarcerated students in eligible programs; allows waivers of the 25% enrollment limitation on incarcerated students for certain institutions; establishes an approval process for prison education programs; and requires the prison’s oversight entity to determine whether a prison education program is in the best interests of the student. 

Issues in Which Consensus was not Reached 

• Closed School Discharge: The department proposed a large expansion of the circumstances under which students could be eligible for a closed school discharge (thereby also increasing the circumstances under which a school could be liable for reimbursement to the federal government) to include the closure of branch campuses and the termination by a school of most, but not all, programs. The department also wanted to establish a consistent window of eligibility for a borrower to qualify for a closed school discharge and proposed a reduction in the time a borrower must not be enrolled elsewhere to qualify for discharge from three years to one.  The non- federal negotiators did not agree with all the proposed expansions. 
• Public Service Loan Forgiveness: The Department proposed to expand the definition of an employee and employer; make all income-driven repayment plans eligible for forgiveness; expand the definition of qualifying payments; and ease the application process. Negotiators supported even greater expansions of the eligible employers, occupations, and payments that would qualify for discharge. 
• Income Driven Repayment Plan:  The Department proposed an expansion of income driven repayment for undergraduate loans based on a more generous definition of income and more flexibility for borrowers to switch among repayment plans. Full forgiveness was proposed after 20 years. Negotiators did not agree to the proposal to make this apply only to undergraduate loans. Some negotiators wanted an even more expanded definition of income and forgiveness sooner than 20 years. 
• Borrower Defense to Repayment: The Department proposed an expansion of who can submit a request for claims on behalf of borrowers and easing the process for group claims. A recoupment of funds from institutions was set at a 6-year limitation period, and a new process was also proposed as well as a new section on aggressive and deceptive recruiting practices. The definition of misrepresentation was proposed to include materially different selectivity rates, rankings, or student admissions profiles and assistance in securing required externships. A full amount of the loan would be made the default discharge amount unless there is clear and convincing evidence for the Department to reduce the discharge amount.  The for-profit negotiator dissented on issues surrounding pre-dispute arbitration and its potential cost to students.