Intros and Student Loans: Negotiated Rulemaking Committee Kicks off Day 1 Session

By Owen Daugherty and Hugh T. Ferguson, NASFAA Staff Reporters 

The first round of the Department of Education’s (ED) negotiated rulemaking session formally began Monday with introductions, a review of the regulatory issues under discussion and a commitment to engaging in solution-oriented dialogue in an effort to come to consensus on a number of policy frameworks.

More than a dozen constituency groups representing a wide array of higher education parties delved into policy discussions centered on proposed student financial assistance regulations as a part of Monday’s “Affordability and Student Loans Committee.” The group kicked things off in a virtual negotiated rulemaking session by offering introductions and discussing the protocols for negotiating their lengthy agenda. 

Department of Education (ED) Undersecretary James Kvaal gave remarks at the outset and said that the agency is of the belief that the rulemaking process produces the best possible regulations for rebuilding the higher education system around equity and student access.

”We will seek to ensure that the programs and benefits authorized by Congress to help student loan borrowers live up to their promises and root out patterns of wrongdoing when colleges fall short,” Kvaal said. “The rulemaking agenda is designed to ensure that millions of borrowers holding student loans today are able to repay or get relief on their loans and that the future is even brighter for the next generation of borrowers.”

Unlike past sessions, this ongoing negotiated rulemaking will instead approach consensus by topic area as opposed to the committee having to come to consensus on the entire package of issues being discussed during the session. The facilitator indicated that the reason for this change was meant to allow for the process to move forward and not allow single issues to hold up other agreed upon issues. 

Jennifer Hong, the federal negotiator for ED, said the committee would focus on affordability and student loan programs including closed school, false certification, and total and permanent disability discharges, the Public Service Loan Forgiveness (PSLF) program, borrower defense to repayment, interest capitalization, income-driven repayment of student loans, and predispute arbitration.

According to Hong, a second committee focusing on institutional and programmatic eligibility will convene next year. 

At the outset of Monday’s discussion, Persis Yu, director of the Student Loan Borrower Assistance Project at the National Consumer Law Center®, looked to include additional student loan borrower and consumer advocate perspectives at the negotiated rulemaking table but consensus was not reached. ED representatives took issue with some individuals suggested for participation and said they would reject the inclusion of individuals involved in lawsuits against the department which, according to ED, is a long-standing ED practice.

The first topic the committee tackled on the first day was improving the process for borrowers seeking a total and permanent disability (TPD) discharge. 

ED is proposing to eliminate the three-year income monitoring period that is currently in place for borrowers to be eligible to receive TPD, with Hong noting that most borrowers fail this monitoring because of paperwork hurdles and obstacles, not because their income is too high.

Currently, those who are totally and permanently disabled can have their student loans discharged due to the fact that they will be unable to engage in any sort of significant work. For borrowers who have a TPD designation, all but a small subset must go through a three-year income monitoring period to ensure they're meeting the requirements for TPD, which ED is seeking to get rid of.

While many negotiators were in support of the recommendation, concerns were raised regarding the impact such a move would have for students still enrolled, including challenges around reinstatement of loans.

There was discussion on including more Social Security Administration (SSA) disability categories as eligible for TPD, which was met with tentative agreement. Additionally, there was conversation on the topic expanding the list of eligible "signers" for TPD eligibility, as currently only a doctor of medicine or a doctor of osteopathy may certify the TPD discharge form. 

As a solution, ED proposed expanding the list of eligible signers to include nurse practitioners and physician’s assistants who are licensed to practice in the country. Further, ED proposed adding regulatory language stating that ED will analyze physicians’ certification forms to verify any patterns that suggest potential cause for concern, such as a large number of forms coming from a single individual. 

That solution drew pushback, as many, including Yu, noted the adverse effect such a regulation may have on rural areas where there are a limited number of health professionals who could sign off on a TPD form.

“We don't want to find ourselves in a situation where somebody… in a rural community is verifying everybody, because they're the only provider who can, and get that person in trouble when really what they're doing is exactly what we want them to be doing,” said Bethany Lilly, a negotiator on behalf of individuals with disabilities and director of income policy at The Arc of the United States.

Not all were in tentative agreement on expanding the list of eligible signers. 

Before the second issue of closed school discharges was discussed in the afternoon session, Joshua Rovenger of the Cleveland Legal Aid Society attempted to add two students who attended now-shuttered for-profit institution Brooks College to join the hearing, but negotiators did not reach agreement on adding the students. 

ED is proposing to reinstate automatic closed school discharges for borrowers who do not enroll at another school when an institution closes. Additionally, ED is hoping to reduce the period before automatic discharges occur from three years to one year following a closure.

ED also wants to create a consistent window of eligibility for students who withdrew from a school before it closed, making it 180 days. 

Negotiators largely praised the proposed solutions, noting that the consistent window and more generous terms for closed school discharges will benefit borrowers. 

“For many institutions that have closed, they're often institutions that predominantly serve marginalized students… so students within these groups are further discouraged from continuing education if they've already had these loans that are not discharged automatically,” said Marjorie Dorime-Williams, an assistant professor of higher education at the University of Missouri. 

Christina Tangalakis, associate dean of financial aid at Glendale Community College and NASFAA member, cautioned against over-regulating closed school discharges, as it can overcomplicate the process for students as they attempt to navigate getting their loans reimbursed. 

Students are “already stuck in a complicated situation, then they start to feel hopeless because not only are they not seeing discharge as months go by, they can't see their way out of it. And then we start throwing our wonky language their way, and the depths of despair just begin to exponentially deepen,” she said. 

The rulemaking committee is set to reconvene Tuesday and continue with discussion over closed school discharges. As the discussion begins in earnest, ED reiterated that it is approaching these sessions in a collaborative manner and expects to come to a finalized product.

“I want to emphasize that we’re entering these sessions with an open mind and the issue papers you have before you are a point of departure,” Kvaal said. “We look forward to refining them based upon your expertise… I am confident we will emerge with a product we can all be proud of.”


Publication Date: 10/5/2021

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