Neg Reg Day 5: Committee Looks for Clarity on Income-Driven Repayment Plans

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

The Department of Education’s (ED) proposed regulatory text on income-driven repayment plans (IDR) dominated the conversation Friday during the final day of the second  negotiated rulemaking session on student loans and affordability.

Picking up where the committee left off the previous day following some early discussion on IDR, negotiators heard from ED negotiator Jennifer Hong on the department’s plan to introduce a new IDR plan, the Expanded Income-Contingent Repayment (EICR) plan. At the outset of the day’s conversation, negotiators asked for clarification regarding how the new IDR plans fit with ED’s existing IDR offerings for borrowers and whether the department planned to get rid of any plans. 

In describing ED’s decision to re-write the IDR plans section of the regulations instead of simply adding EICR to the current language Hong said, “We're trying to gauge what is needed, what is missing, so that we can reorganize this and streamline this with what we have currently. We certainly can't get rid of any plans right now in the regulations. But we are exploring how we can better organize these plans.”

Bethany Lilly, a negotiator for individuals with disabilities or groups representing them, said borrowers can already be confused by the multiple IDR options available to them.

“Having four options or five options is just really messy,” she said. “And so the more that you can simplify that … that is something I would like to see.”

Persis Yu, a negotiator representing legal assistance organizations that serve students and borrowers, said whatever new IDR plan the department finalizes needs to be attractive enough to borrowers to become the default IDR option, effectively sunsetting the other, not as effective IDR plans currently offered.

There was spirited discussion among negotiators regarding what percentage of the federal poverty line to use for the definition of discretionary income, with Yu asserting that ED’s proposal to use 150% was not sufficient.

A temperature check on sections (a) through (d), which cover definitions as well as eligible loans and borrower eligibility, of the IDR issue paper did not bring tentative agreement among negotiators, with many pointing to their displeasure with 150% of the federal poverty line as the definition of discretionary income being used as the standard in ED’s proposed regulatory text.

Sections (e) and (f) of the IDR issue paper focused on treatment of married borrowers and setting payment amounts.

ED’s proposed regulatory text states that unless a married borrower certifies that the borrower is separated from the borrower’s spouse or unable to reasonably access the spouse’s income, a spouse’s income is included in the calculation of the borrower’s monthly payment amount for the tax year of the income used to calculate the borrower’s monthly payment under the new EICR plan.

Marjorie Dorime-Williams, a negotiator on behalf of four-year public institutions, said such language essentially amounts to double charging married couples, a point many negotiators agreed with. ED later clarified that a married couple's combined loan debt is considered in the calculation.

A temperature check on sections (e) and (f) also did not bring tentative agreement among negotiators. 

The committee then engaged in a discussion over holding a working group between the end of this second week of negotiations and the beginning of the third and final week scheduled for December 6-10. ED agreed to provide staff upon request if such meetings were held, but indicated that the Federal Mediation and Conciliation Service (FMCS), which facilitates official rulemaking sessions, would not be available. ED also noted that they would be unable to discuss regulatory language at working group meetings because the working groups would not be open to the public, and that the working group would need to summarize its meetings for the public at the December session.  

ED then solicited comments on sections (g) through (j), which covered adjustments to monthly payment amounts, interest subsidies, and changing repayment plans. The committee reported a positive temperature check on this section. 

Under the forgiveness section of IDR, the committee engaged in extensive conversation, with several members taking issue with the lengthy 20-25 year term for debt forgiveness. Committee members also used the time to remind ED that the administration promised widespread debt cancellation to student loan borrowers and called on more information concerning the status of the Public Service Loan Forgiveness (PSLF) temporary waiver

Nearly all members recorded a negative temperature check on the forgiveness issue, urging ED not to distinguish between undergraduate and graduate debt, to shorten the timeframe for forgiveness, and to count payments made during forbearance status and while rehabilitating defaulted loans toward the number of payments required for cancellation.

On the false certification paper, committee members offered a positive temperature check on ED’s proposed framework, but many indicated that they would like further discussion on the paper since it was not addressed until the tail end of the final day’s session. 

During the day’s public comments session, callers discussed their experiences with specific higher education programs, borrower defense, accessing PSLF benefits, and more specific experiences with the PSLF program like qualifying work for military spouse employment.

When the committee was wrapping up, a number of members urged the committee to take up issue papers on false certification and IDR at the start of the next session, slated to begin the week of December 6, since these two issue areas weren’t brought up until the end of the November session.

 

Publication Date: 11/8/2021


Peter G | 11/8/2021 12:8:16 PM

Thank you for the white paper links. Having read more carefully through that and the existing regulatory language, I think most of my concerns are with the existing regs and for the most part I think the cleanup here makes sense, particularly the reorganization of (c)(5).

The complete removal of signature records is simultaneously understandable, both because of the burden of providing 5 historical samples but also because it will likely be increasingly irrelevant in a digital age. But particularly for older cases this also eliminates one of the few bits that is meaningfully evidentiary.

Broadly, I'd question the extent to which any school can effectively manage (a)(1)(iv) - for the same reasons that arise in State Auth and NC-SARA repeatedly. Some of this information the school would have for a borrower (age), but others it might not (physical or mental condition) have at all. But more, how does a school manage this for every impacted program in each and every state and territory. At what point is that a deficiency on the school's part, and at what point is it just a reflection of the complexity of this pivot to distance education that public policy isn't prepared to address individual vs. institutional vs. state vs. federal obligations?

I do also think (c)(1)(i) needs some clarification. Reported to whom and in what way? And is this alleviated if the student submitted a signed FAFSA to CPS saying they had a diploma/equivalent? What's the reasonable standard here?

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