Student Loan Debt, Loan Forgiveness Options Front and Center at Negotiated Rulemaking Opening Hearing

Related Topics in the Ref Desk: Direct Loans; Forbearance; Discharge, cancellation, forgiveness

By Owen Daugherty, NASFAA Staff Reporter 

Another round of negotiated rulemaking, or “neg reg,” hearings kicked off Monday, as the Department of Education (ED) attempts to reform the higher education landscape through the regulatory process with input and recommendations from affected parties and key stakeholders.

The opening neg reg hearings touched on a wide range of higher education issues, including providing borrowers better odds of loan forgiveness through the Public Service Loan Forgiveness (PSLF) program, improving income-driven repayment (IDR) plans, and how to fix the student loan and lending program.

This year’s neg reg committees differ from those of previous years as they are being convened virtually due to the coronavirus pandemic. Starting Monday, ED is holding three days of virtual hearings to establish the rulemaking agenda and committees as it seeks input to inform its rulemaking agenda.

Dozens of organizations, groups, and individuals spoke Monday across two, separate, two-hour hearings, highlighting various issues impacting higher education and offering recommendations for which topics ED should focus on and presenting possible solutions. Several of the 14 topics ED publicly posted last month were touched on over the course of the day.

Student loan debt and the federal lending portfolio were the focus of much of the day as borrowers, experts, and advocates detailed the impact that mounting student loan debt has on the lives of many, with particular focus on how the issue disproportionately impacts borrowers of color and low-income families.

Additionally, many who spoke Monday pressed for ED to fulfill President Joe Biden’s campaign pledge to provide widespread student loan debt forgiveness for borrowers amid the pandemic, arguing that such a move would address the racial wealth gap, among other positives that would come.

“Joe Biden needs to deliver for student loan borrowers before he throws them back into the badly broken student loan system,” said Mike Pierce, policy director at the Student Borrower Protection Center. “That means taking necessary action to cancel debts to the maximum extent allowable under the law.”

With the pause on student loan payments and interest accrual that’s currently in place through federal forbearance due to the pandemic set to expire at the end of September, many called on ED to clearly articulate a plan for the fall and have the issue resolved before embarking on its ambitious regulatory agenda. 

“Servicers are unsure of how to restart repayment, and the department's own analysis says that a certain amount of people are going to be thrown in default if payments don't resume smoothly,” said Kaitlyn Vitez, the government relations officer at the American Association of University Professors. “Some of the topics listed for proposed rulemaking would be greatly shaped by a decision on [debt] cancelation or federal student loan repayment and we need to have resolution on those questions before we get started.”

Further, several speakers said the negotiating table needs to be more balanced to include the voices of borrowers and consumer protection advocates, not just schools and accreditors.

David Tandberg, senior vice president for policy research and strategic initiatives at the State Higher Education Executive Officers Association, argued that more state officials should have a seat at the table, adding that robust gainful employment and borrower defense rules are needed to increase accountability for institutions.

“The gainful employment and borrower defense regulations can be vital policy tools in our effort to protect students,” he said. “These measures augment the state roll and consumer protections, and provide more protections for students and taxpayers.”

Michelle Dimino, a senior policy advisor for Third Way Education, a public policy-focused think tank, argued that addressing the backlog of borrower defense applications and ensuring the regulation works for borrowers should be a top priority of the negotiated rulemaking committees.

Many called for a return to the gainful employment rules that were implemented under the Obama administration late in his second term but then repealed under former Education Secretary Betsy DeVos. In a recent letter, ED indicated it would not seek to reverse DeVos’ repeal and would instead go through the negotiated rulemaking process to restore and make any potential changes to the Obama-era regulations.

Reforming PSLF and IDRs were also topics of primary concern, as many argued the current options available to borrowers are insufficient. Several public service workers detailed their own cumbersome experiences seeking forgiveness through PSLF, often ending unsuccessfully, as has been the case for a vast majority of borrowers throughout the program’s existence.

“It is imperative that PSLF be radically reformed to live up to its policy goals. This is an issue of equity, not only for the borrowers impacted, but for the communities who rely on their training,” said Gwen Chodur, president of the University of California graduate and professional counsel, which represents nearly 60,000 graduate and professional students in the UC system.

Stay tuned to NASFAA’s Today’s News for more coverage of the negotiated rulemaking opening hearings throughout the week, and read up on our previous rulemaking coverage


Publication Date: 6/22/2021

Peter G | 6/22/2021 6:12:15 PM

One observation on listening in was that a number of the comments really fell outside the realm of regulation and were comments on perceived/real failings in statute.

To James' question, and hearkening back to the last GE thread a few weeks ago, I think the challenge for us a sector (imo) is to acknowledge the intent of GE makes sense, but that the prior incarnation of it was simultaneously ineffective and a tremendous administrative burden.

I'm not sure how clear that reality is to people who are viewing it purely through the lens of policy intent rather than the data. It doesn't help of course that, as with seemingly everything, the OMB assessment of the labor involved was a tiny fraction of what was actually required in compiling the data, much less all the training and work that went into preparing the reports and disclosures.

James C | 6/22/2021 8:19:24 AM

Who are these people calling for a return to gainful employment? The only part of those regulations that made sense was the mandate to justify a vocational demand for new program approval of programs that fall under the gainful employment rules. The Department needs to more strongly enforce sanctions against institutions with high default rates, regardless of the school sector.

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