On Friday, negotiators met for the final day of discussions in the Department of Education's (ED) Affordability and Student Loans negotiated rulemaking process.
Ultimately, negotiators reached consensus on four of 12 topics: total and permanent disability discharge, eliminating interest capitalization for nonstatutory capitalization events, false certification discharge, and Pell Grant eligibility for Prison Education Programs. Negotiators failed to come to agreement on the remaining eight topics.
Friday's discussions picked up where they left off Thursday, with borrower defense to repayment back on the table. ED proposed several changes to the borrower defense regulations over the course of this rulemaking session, including allowing group claims and setting processing and adjudication deadlines.
There was broad support from negotiators regarding ED's proposed addition of a definition of aggressive and deceptive recruitment tactics. Several negotiators applauded the bravery demonstrated by borrowers in coming forward during public comment sessions to share their stories, and noted their influence on these proposed regulations.
Ultimately, however, the group did not reach consensus on borrower defense to repayment, with a single dissenting vote from Jessica Barry, the negotiator representing proprietary institutions. She stated concern about reputational harm to institutions when ED publicly announces approved group discharges. Offering no resolutions, she cited her sense that ED and she were too far apart on this issue to arrive at an agreement.
Negotiators urged ED to retain in the final regulations the amended language they shared with the group in the third session, noting especially the value of ED's addition of a state law standard.
Discussion moved on to ED's proposal to reinstate a 2016 ban on institutions participating in the Direct Loan program from requiring students to agree to use predispute arbitration for resolving complaints, and/or institutions prohibiting students from joining class action lawsuits. As with borrower defense, a single dissenting vote from Barry prevented consensus and negotiators in favor of the proposed language urged ED to use that language in its final regulations in consideration of the wide support from other negotiators.
Having visited and voted on all 12 topics aside from Prison Education Programs, which was already scheduled for discussion in the afternoon session, negotiators went back to earlier areas where agreement was not met earlier in the week.
First up was false certification discharge, where the only dissenting vote earlier was from Josh Rovenger, representing legal assistance organizations that represent students and/or borrowers. His dissent was based on a desire to see ED add language allowing a group process for false certification discharge to the proposed language. Federal negotiator Jennifer Hong reiterated ED's strong reservations about adding such language, stating that ED's position is that the current language already provides for a group process. She did, however, offer a compromise to accept some of Rovenger's previously submitted amendatory language and he ultimately withdrew his down vote, getting the group to consensus on false certification discharge.
Closed school discharge was up next, with Hong noting that ED did not add language proposed by Barry related to the definition of a closed school. While expressing appreciation for ED's consideration of the language, Barry indicated that she could not change her vote in light of the fact that the proposed language was not incorporated into the proposed regulations, leaving that issue with no consensus.
The afternoon's session began with Pell Grant eligibility for Prison Education Programs (PEPs). Heather Perfetti, representing accrediting agencies, again expressed her significant concerns regarding the list of criteria ED offered for programs to use in determining whether a program is operating in the best interests of students, and noted that several areas of regulatory text go beyond what is required in statute, bringing questions of congressional intent as well as institutional burden.
Daniel Barkowitz, representing financial aid administrators, noted that after speaking with institutions currently participating in ED's Second Chance Pell program he is sufficiently convinced that his previously-stated concerns regarding Clery Act compliance could be reasonably addressed and that he could move to consensus on this issue. However, he also echoed Perfetti's concerns regarding administrative burden and argued that he believes the onerous requirements placed on schools offering PEPs will impact schools' willingness to participate.
After a brief consultation with ED officials during which her alternate stepped in to allow conversations to move forward, Perfetti returned to the table and indicated her willingness to change her vote with new regulatory text ED agreed to include, despite having serious ongoing reservations. Along with Barkowitz's changed vote, this led to consensus on Prison Education Programs.
ED offered no changes to income-driven repayment (IDR) language from when the first consensus vote was taken earlier in the week, although officials did express a commitment to consider the ideas raised by the group in drafting final regulatory language. Per committee protocols, no new vote was necessary and this issue ended without consensus.
No new ideas were presented by the committee to move toward consensus on Public Service Loan Forgiveness (PSLF). As such, no new vote was required and this issue was also closed without consensus.
With all 12 topics having been voted on and an hour of remaining time scheduled for negotiations, participants agreed to continue to hash out specific issues related to IDR and PSLF to better inform ED's drafting of final regulatory language.
Hong, in final comments at the day's conclusion, expressed appreciation to the negotiators, acknowledging that consensus was reached on only four topics, but noting that they were close on two additional topics. She characterized the negotiated rulemaking process as hard, but also "a testament to democracy."
With negotiations completed, the next step in the process is for ED to draft regulatory language for public comment. On the four areas where negotiators reached consensus, ED is obligated to use the consensus language in the regulatory text it publishes for comment. On the areas where consensus was not reached, ED is free to draft language as it sees fit, although ED typically does not make substantive changes to areas where the group was largely in agreement even if ultimate consensus was not reached.
After the public notice and comment period, if final regulations are published prior to Nov. 1, 2022, the provisions in this regulatory package would become effective July 1, 2023 unless ED exercises its statutory authority to provide for early implementation.
Publication Date: 12/11/2021