The Department of Education (ED) on Monday outlined options for student debt relief in draft regulatory text that detailed proposals for four different subsets of borrowers.
The text was released ahead of next week’s negotiated rulemaking session, the process by which the Biden administration is hoping to move forward with its debt relief plans after the U.S. Supreme Court struck down its initial proposal for widespread student debt relief.
ED kicked off its first committee session of negotiators in October, gathering a committee of stakeholders from the higher education community representing 16 constituency groups. The committee discussed several ideas and solutions to providing debt relief to borrowers.
During the October session, ED made it clear that the department is not looking to implement a broad-scale student loan cancellation policy. Under Secretary James Kvaal told negotiators that ED is “particularly focused on the waiver authority,” meaning ways that the secretary can exercise his authority to grant waivers for student loan debt relief.
Monday’s draft regulatory text specifies four groups of borrowers who could be provided debt relief. That includes borrowers who: currently have outstanding federal student loan balances that exceed what they originally borrowed; borrowers who have loans that first entered repayment 25 or more years ago; and borrowers who took out loans to attend career-training programs that created “unreasonable debt loads” or “provided insufficient earnings for graduates, as well as borrowers who attended institutions with “unacceptably high student loan default rates.”
Additionally, the text states that the secretary may be able to provide forgiveness to borrowers who are be eligible for forgiveness under repayment plans have not yet applied, such as income-driven repayment (IDR), or targeted relief programs like Public Service Loan Forgiveness (PSLF) or closed school loan discharges.
Along with the regulatory text, ED released an issue paper outlining questions for the committee to consider a fifth group of borrowers – those “experiencing financial hardship that the current student loan system does not currently adequately address.” Questions in the paper include: which types of borrowers may be experiencing hardship; if the hardship process was based on an application, what criteria should be put in place; what types of administrative data might be available to ED to identify borrowers going through hardships; and more.
ED said that the forgiveness delivered to borrowers through negotiated rulemaking will “build on the historic actions the Biden-Harris Administration has already taken to provide student debt relief to millions of Americans.”
“We are fighting to ensure that student debt does not stand in the way of opportunity or prevent borrowers from realizing the benefits of their higher education," Education Secretary Miguel Cardona said in a statement.
ED in a press release said that negotiators will spend the afternoon of the second day of the next session discussing the issue of hardship. The next negotiated rulemaking session is slated for November 6 and 7. Updates in the negotiated rulemaking process and a link to register to watch November's sessions online will be posted on ED’s website.
Publication Date: 10/31/2023