Citing 'Operational Challenges,' ED Withdraws Hardship Rule and Three Program Integrity and Institutional Quality Issues

By Hugh T. Ferguson, NASFAA Managing Editor

The Department of Education (ED), in a recent notice, indicated that it has withdrawn the proposed rule seeking to provide student loan debt forgiveness for borrowers experiencing financial hardship. In a separate notice ED also terminated three Program Integrity and Institutional Quality issues that were considered during the negotiated rulemaking (neg reg) process.

The proposal was part of the Biden administration’s larger student debt relief plan, which was developed through the negotiated rulemaking process. It came in response to the U.S. Supreme Court rejecting the administration’s first effort to implement a student loan debt cancellation program through executive authority.

According to the notice, the “operational challenges” include the limited time remaining in the Biden administration and other priorities, such as court-ordered settlements and assisting borrowers now at risk of default following the end of the on-ramp to repayment.

“Given that many newer borrowers are at risk of default, and the Department expects that many of these newer borrowers would not have been otherwise eligible for immediate relief under the proposed rules in the NPRM, along with the uncertainty around the implementation of the NPRM proposals, the Department at this time intends to commit its limited operational resources to helping at-risk borrowers return to repayment successfully,” the department explained in the notice.

However, ED still believes it has the authority to carry out the program.

“Importantly, the Department is not withdrawing this NPRM and terminating this rulemaking proceeding based upon a changed view of the Secretary’s authority under section 432(a) and 468(2) of the HEA, or based upon any preliminary determination about the limitations of such authority,” the notice reads. “Rather, the Department continues to believe that the NPRM is authorized by the Secretary’s longstanding and existing authority under the HEA, as explained in the NPRM.”

Even if the administration had been able to finalize the hardship rule, it was expected to be subject to legal challenges and, if left in the proposed rule stage likely would have been abandoned by the incoming Trump administration.

In addition to the proposal on hardship ED also terminated three Program Integrity and Instituonal Quality Issues related to accreditation, state authorization, and cash management. The department considered a number of factors before reaching their decision to terminate these identified issues.

“We considered that two of the areas—state authorization and accreditation—have recently undergone significant changes, as explained below, that continue to affect the field even after the conclusion of negotiated rulemaking, and we decided it is preferable to wait and see the effectiveness of those changes before issuing further regulations,” the notice read. “Waiting to assess the effects of these changes will allow the Department to better identify any needed future alterations and improve the evidentiary base for future rulemaking.”

 

Publication Date: 12/20/2024


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