PSLF Takes Center Stage as Neg Reg Enters Day 4 Agenda
By Hugh T. Ferguson NASFAA Staff Reporter
Following the Department of Education’s (ED) recently announced agency-wide changes in store for the Public Service Loan Forgiveness (PSLF) program, the negotiated rulemaking committee continued discussions centered on additional proposed changes.
After a lengthy breakout caucus session focusing on issues related to organizational protocols, which did not reach a resolution, the committee reconvened to wrap up Issue Paper #4: Improving the PSLF Application Process.
Committee members reached a tentative agreement, noting a positive temperature check, for discussions on the PSLF reconsideration process where ED sought to codify a formal reconsideration process in their regulations that will allow borrowers to request an appeal of their application when they believe they have been wrongfully denied.
Under that same issue paper the committee did not reach tentative agreement for requiring Federal Family Education Loan (FFEL) lender notifications to borrowers about PSLF eligibility. While ED’s regulatory language sought to require FFEL lenders to send annual disclosures to borrowers informing them of how they may access PSLF benefits, and to respond to any verbal or written questions about PSLF from borrowers, committee members expressed concern that disclosures are inadequate to get borrowers’ attention.
ED then called up their issue paper concerning PSLF eligibility where it looked to garner feedback from committee members on establishing a definition of the primary service an organization provides in instances where the organization is not a government entity or a 501(c)(3) nonprofit organization but wants to qualify as a public service employer. Currently such employers may meet the criteria to be a qualifying employer, but many of the eligible primary services provided are undefined, leading to confusion about whether they would qualify a borrower for PSLF.
One area of concern was expressed by Christina Tangalakis of Glendale Community College, representing two-year institutions, who asked how language could be crafted to account for instances where a borrower is working in a public service field but was unable to secure employment with a nonprofit organization, such as a borrower who trained to be a nurse and couldn't find full-time work at a nonprofit or a hospital that meets this definition of eligible employer. If that borrower went on to work for a private company, Tangalakis worried that they would be precluded from relief even though their day to day work is the work of public service.
Following the lunch break the committee returned to discussing PSLF eligibility language where ED proposed defining full-time employment, another requirement to receive PSLF, as 30 hours for all borrowers, removing the criteria that sets full-time employment at the greater of 30 hours or how the employer defines full-time employment.
Committee members did not reach tentative agreement, mainly expressing concern over the issue of individuals who piece together full-time work from multiple employers — such as contingent faculty — and how those hours could be accurately counted and verified, an issue that was raised in public comments on Monday.
The committee then worked through Issue Paper #9 concerning institutions requiring students to sign pre-enrollment agreements requiring pre-dispute arbitration. ED’s proposal would revert back to the 2016 regulations that would prohibit Direct Loan-participating institutions from using certain contractual provisions regarding dispute resolution processes, and to require certain notifications and disclosures by institutions regarding their use of arbitration.
In those discussions the committee did not reach tentative agreement. Joshua Rovenger of Legal Aid Society urged the department to go further in student protections arguing that simply going back to 2016 regulation is not enough to meet the moment right now.
The conversation then moved to income-driven repayment (IDR) with Issue paper #10 where ED expressed interest in creating a new IDR plan. In order to ground the conversation, Raj Darolia, a professor of public policy and economics serving as an advisor to the negotiating committee, provided a background brief on poverty guidelines to inform discussions related to the IDR issue paper.
Committee members provided a variety of feedback into how ED should address IDR centered on thresholds for payment percentages in relation to discretionary income, percent of poverty level to use for protected income, forgiveness timelines, achieving equitable outcomes and reducing borrower confusion over what IDR plans are available to them.
Throughout the conversation of IDR language Persis Yu, of the National Consumer Law Center, urged the committee to consider additional topics during this negotiated rulemaking session related to protections for defaulted borrowers, especially ahead of the student loan payment resumption slated to resume in early 2022. Yu expressed concern that ED needed to address this and that seizure of benefits like refundable tax credits could endanger the fiscal well-being of these borrowers.
Brian Siegel, representing ED’s Office of General Counsel, urged the committee not to consider this topic in part due to the regulatory timeline. These regulations under consideration, at the earliest, could be published next fall and go into effect in July 2023. ED indicated that it is discussing this issue, as well as other concerns related to borrowers re-entering repayment on their federal student loans, internally. The department’s representative on the negotiating committee, Jennifer Hong, did indicate that ED was willing to consider issues related to defaulted borrowers so long as they are relevant to the current list of topics.
The committee’s Friday session, their fifth day agenda, is expected to wrap up discussions on all the issue papers under consideration.
Publication Date: 10/8/2021
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