The U.S. Department of Education (ED) on Wednesday released proposed regulations aimed at strengthening and expanding key federal student loan relief programs.
These proposals include clarifying debt relief pathways for borrowers whose colleges have closed or lied to them, who are totally and permanently disabled, or who have completed public service work commitments through the long dysfunctional Civil Service Loan Forgiveness Program (PSLF).
“We are committed to fixing a broken system,” US Secretary of Education Dr. Miguel Cardona said in a statement to the news. “If a borrower qualifies for student loan relief, they shouldn’t need mountains of paperwork or a law degree to get it. Nor should the benefits of student loans be so difficult to obtain that borrowers never actually benefit from them.
The Biden-Harris administration has so far approved nearly $26 billion in student debt relief for more than 1.3 million federal borrowers. Many experts and advocates agreed that this latest regulatory package, if approved, would be a big step toward streamlining the often confusing maze of federal student loan release programs.
“Overall, these proposed changes are great improvements over the current regulations,” said Michelle Dimino, senior education policy adviser at Third Way, a public policy think tank. “The proposals truly recognize that borrowers shouldn’t have to jump through endless hoops to get relief through existing federal student loan forgiveness programs. All of the language offered here serves that purpose: to make relief clearer to borrowers.
A proposed set of regulations, known as borrower defenses, would better help borrowers get a discharge if their colleges “lie to them or take advantage of them,” according to Declaration of ED. Such proposals would allow borrowers to file group claims and get faster decisions on those claims.
Strict limits on when borrowers could file a claim would also be removed. Additionally, the type of misconduct a college commits that could result in a borrower’s application being approved would expand to include “aggressive and deceptive recruiting practices.”
“The Department’s Borrower Defense Proposal would make a dramatic improvement and help realize the intent of the law,” wrote Kyle Southern, associate vice president of the Institute for College Access & Success (TICAS), a group of research and higher education policy advocacy, in a send to Various. “Beyond streamlining the rule’s protections for students, the proposed rule would deter the kind of fraud that leads to claims by strengthening the Department’s ability to seek recovery of lost funds from institutional leaders. The authors of Financial aid fraud schemes should bear the cost of repairing defrauded borrowers, not taxpayers.
The ED proposals further included expanding eligibility for Total and Permanent Disability (TPD) discharge. Michele Streeter, Associate Director of Policy and Advocacy at TICAS, noted that recent data indicates that more than 500,000 borrowers are eligible for student debt relief via TPD but have not received loan forgiveness. .
“The expansion of TPD will make it easier for these borrowers to access the relief to which they are entitled under the law,” Streeter added in an email to Various.
The proposed settlement will be published by ED in the coming days. The public will then be allowed to comment on them for 30 days. ED said it aims to make these rules final by Nov. 1, 2022. The regulations would then be on track to take effect no later than July 1, 2023.
“Whether it was closed school holidays, borrower defense claims, PSLF or relief after total and permanent disability, borrowers had to navigate narrow rules and an unnecessarily complicated system,” said US Undersecretary of Education James Kvaal in a statement on the package. “The regulations we have proposed today would remove many of these barriers and help create a federal student loan system that works better for borrowers.
Rebecca Kelliher can be reached at email@example.com