ED Unveils ‘Hardship’ Draft Text, Detailing New Effort to Carry Out Student Loan Debt Relief

By Hugh T. Ferguson, NASFAA Senior Staff Reporter

The Department of Education (ED) on Thursday unveiled its draft regulatory text for next week’s negotiated rulemaking session  – known as neg reg – that will focus on the issue of “hardship,” and seek to deliver student loan debt relief to borrowers who were not covered by the regulations offered during the committee’s previous session.

Earlier this month ED formally announced that the student loan debt relief committee would reconvene for a fourth session to consider a final issue paper, focused on how the department can provide student loan debt relief to borrowers facing financial hardships, which was not released before the conclusion of the previous session.

In releasing the draft text the White House said it was continuing with its efforts to provide “a new path to provide debt relief for as many borrowers as possible under the Department of Education’s existing rulemaking authorities,” in response to the U.S. Supreme Court having blocked their initial program.

According to the draft language the secretary would be able waive “up to the outstanding balance” of certain federal student loans when “the Secretary determines that a borrower has experienced or is experiencing hardship related to such a loan such that the hardship is likely to impair the borrower’s ability to fully repay the Federal government or the costs of enforcing the full amount of the debt are not justified by the expected benefits of continued collection of the entire debt.”

Loans that would be eligible under this proposal would be limited to the: 

  • Federal Family Education Loan Program; 

  • William D. Ford Federal Direct Loan Program;

  • Federal Perkins Loan Program; and

  • Health Education Assistance Loan Program.

The draft regulatory text then outlines 17 factors that the department proposes in determining whether a borrower meets conditions for forgiveness. These factors include income, current repayment status, student loans and total consumer debt balances relative to household income, whether the borrower received a Pell Grant, and whether the borrower completed their program. The draft text also says that the secretary would be able to identify “any other indicators of hardship.”

The text also contains a provision that would enable ED to offer “immediate relief” to borrowers who are “likely to default” if the department determines, based on their own data, that the borrower is “at least 80 percent likely to be in default in the next two years.”

The department would also enable itself to acquire borrower data through an application where borrowers could demonstrate instances of “hardship” in order to make themselves eligible for relief.

The student loan debt relief committee will reconvene on Thursday February 22 and conclude its fourth session devoted to the issue of “hardship” on Friday February 23. 

Those interested in watching the session can register on ED’s website


Publication Date: 2/16/2024

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