Final Day of Neg Reg Concludes Without Consensus on Proposed PSLF Rules
By Megan Walter, Senior Policy Analyst
The Department of Education (ED) began its final day of negotiated rulemaking (Neg Reg) with hopes of reaching a consensus on its proposed rules on changes to the Public Service Loan Forgiveness (PSLF) program. ED sent out updated proposed language Tuesday evening, and even provided a newer updated version just minutes into the session's start, but ultimately, consensus eluded the committee.
Earlier this week, the committee met and discussed a variety of definitions in the PSLF program and outlined new provisions for the program. Throughout the committee discussion, many negotiators expressed concerns about changes to the PSLF program and whether such changes would penalize borrowers and target institutions of higher education.
Tamy Abernathy, the federal negotiator representing ED, started the session by summarizing ED's efforts regarding their work on the proposed rules.
“I would like to open today up with saying that we are very happy to present the reg text to you that we just circulated,” Abernathy said. “It is a compilation of our initial proposed language with all of the many changes that we've made based on our discussions, based on your proposals, and based on your recommendations, where we could make the changes. We feel like what we are providing you is the very best that we can provide you.”
Picking up on a topic from the previous day, the committee delved into the operational challenges of implementing a borrower notification process, revealing a deep tension between administrative procedure and the lived experience of borrowers.
Eric Hardy, program manager from the Policy Implementation and Oversight (PIO) division within ED, detailed ED’s ability to handle employers with a single Employer Identification Number (EIN) covering multiple departments with varying eligibility. He explained that the new proposed language was designed to give the ED Secretary "leniency" to "split" these employers, and work on a "future-proofing" measure to certify employment for specific departments or timeframes without affecting the entire organization.
However, this proposed flexibility immediately drew concern from negotiators.
Emeka Oguh, of PeopleJoy, representing student loan borrowers in repayment, noted that the proposed language says the Secretary "may" separate employers. He argued that this word choice introduces subjectivity and discretion where there should be a requirement, suggesting that the language be strengthened to "should" or "is expected to" to ensure borrowers are not left at the whim of the department. After the committee took a 10-minute break – referenced later in this article – ED returned to inform the committee that they updated the language to “shall.”
This technical debate prompted a broader critique of the conversation's focus. Laurel Taylor, of Candidly, representing taxpayers and the public interest, articulated that the discussion was sounding "tone deaf," reminding the committee of the immense difficulties borrowers face navigating a volatile system with high default rates. Her comments shifted the focus to the human impact of these administrative decisions.
Mary Lyn Hammer, of Champion College Solutions, representing proprietary institutions of higher education, underscored this by insisting that if borrowers receive a notification about a complex eligibility issue, it is an "equally important step" that they receive a clear follow-up notice once the matter is resolved.
Alyssa Dobson, of Slippery Rock University, representing financial aid administrators, questioned how borrowers would certify their employment if their employer’s eligibility were split over time, asking if they would be limited to a paper-only process. In response, Hardy outlined the intended digital solution: the online application would clearly list the employer's "split" status, provide an explanation, display the specific dates of eligibility, and then allow the borrower to certify their employment for only that eligible period.
The discussion then pivoted to a change in the legal standard ED would use to determine employer misconduct. Abernathy announced that the proposed language had been updated, replacing the “preponderance of evidence” standard with a “clear and convincing evidence” standard. She explained this significantly increases the burden of proof on the Secretary, requiring evidence that is “highly and substantially more likely to be true than untrue.” While this change was intended as a concession, it sparked a fierce debate about ED’s fundamental authority.
Negotiators Abby Shafroth of the Student Loan Borrower Assistance Project and Betsy Mayotte of The Institute of Student Loan Advisors argued that while the higher standard was an improvement, it failed to address the core issue: the proposal grants the Secretary the power to adjudicate violations of complex laws (such as immigration or medical regulations) that fall far outside ED’s expertise.
Mayotte contended that ED was operating “out of its sandbox,” and Shafroth warned that giving the Secretary this authority without a formal court finding would be a “dramatic expansion of government power.”
Conversely, Robert Carey, Jr., of the National Defense Committee, representing U.S. military service members and veterans, was “relatively satisfied,” trusting that the higher legal standard and the court system would sufficiently check any potential overreach.
As counsel for ED, Jacob Lallo sought to provide reassurance by emphasizing that the process would be transparent and subject to the Freedom of Information Act (FOIA) and that no employer would lose eligibility until all procedures, including the ability to rebut evidence, were completed. He stressed that settlement was the ideal outcome, but ultimately maintained that ED has the authority to consider evidence and make these determinations.
Prior to a 10-minute caucus, Abernathy quickly circled back to a topic from the past two days, brought up by negotiators Oguh and Heather Boutell, of Vanderbilt University, regarding the downstream consequences for workers employed under strict contracts with companies that lose their PSLF eligibility, and affected employees are unable to get out of their contracts.
Aberbathy acknowledged a potential path forward, stating that if an employer were to lose its eligibility, ED could suggest that the company attempt to renegotiate its contracts to add new language allowing these employees out of their contracts without harm. However, she carefully managed expectations by clarifying that this action was “beyond their purview,” framing it not as a requirement or a guarantee, but simply as an option ED could express to the affected employer.
ED took the time to conduct a pulse check of the committee on the proposed language, a process to see where general feelings fall, which differs from the final consensus check. The pulse check revealed strong consensus on borrower eligibility (c) and the application process (e).
However, significant disagreements arose concerning the definitions in (b) and, most critically, the standard for determining a qualifying employer in (h). The debate over subsection (h) reached an impasse between Mayotte and ED regarding the Secretary's authority. This led to a caucus being called to resolve the issue with a handful of dissenting negotiators.
The selected negotiators and ED went into caucus and came back before the lunch break to announce they’ll need to continue their caucus after the break.
Following the caucus, ED offered a concession to address concerns about the definition of a "child” that were brought up in discussions yesterday. They agreed to add language to the preamble specifying that applicable state law regarding age would supersede the federal text. This was intended to resolve conflicts where a state defines a child as up to age 18, while the proposed rule might have implied up to age 19.
The group proceeded to a "pulse check" vote on several other provisions, which received strong support, including subsections (h), Standard for qualifying employer, (i) Determining a violation, and (j) and (k) Regaining eligibility.
Although the ED's concession was made and there was general agreement on the individual provisions, the group failed to reach a final consensus. Mayotte blocked the complete package of proposed rules by voting against the measure. Scott Buchanan, of the Student Loan Servicing Alliance, representing Federal Family Education Loan (FFEL) lenders and/or guaranty agencies, abstained, though that act does not block consensus.
Next Steps
ED will now take the conversations and text created by this committee back and publish a Notice of Proposed Rulemaking (NPRM) in the coming months, though ED is not bound to use any of the language discussed in this session. As a reminder, to implement final rules by July 1, 2026, ED would need to publish the proposed rules for public comment and publish final rules on or before November 1, 2025.
“I want to thank you, committee,” Abernathy said. “You've given us a lot of solid ideas, which will assist us in the coming months as we prepare the draft rule. In addition, we appreciate your time and engagement. It's our first negotiated rulemaking back in person. So it's taken time to get some of the problems ironed out. We appreciate your patience and your willingness to dedicate time to this important endeavor.”
Stay tuned to Today’s News for more updates on the next steps of this neg reg process.
Publication Date: 7/3/2025
You must be logged in to comment on this page.