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ED Propose Improvements to Student Debt Relief Programs


Pexels Matthias Groeneveld 4200744 (1)The U.S. Department of Education (ED) released proposed regulations Wednesday that aim to strengthen and expand major federal student loan discharge programs. 

These proposals include making debt relief paths clearer for borrowers whose colleges closed or lied to them, who have a total and permanent disability, or who have met the public service work commitments through the long-dysfunctional Public Service Loan Forgiveness (PSLF) program.

“We are committed to fixing a broken system,” said U.S. Secretary of Education Dr. Miguel Cardona in a statement on the news. “If a borrower qualifies for student loan relief, it shouldn’t take mountains of paperwork or a law degree to obtain it. Student loan benefits also should not be so hard to get that borrowers never actually benefit from them.”

The Biden-Harris administration has thus far approved almost $26 billion in student debt relief for more than 1.3 million federal student loan borrowers. Many experts and advocates agreed that this latest regulatory package, if approved, would be a large step toward streamlining the often confusing maze of federal student loan discharge programs.

“Overall, these proposed changes are big improvements to current regulations,” said Michelle Dimino, education senior policy advisor at Third Way, a public policy think tank. “The proposals altogether really acknowledge that borrowers should not have to jump through endless hoops to get relief through existing federal student loan forgiveness programs. All the proposed language here is in service of that goal: to make relief clearer for borrowers to navigate.”

One set of proposed regulations known as borrower defense would better help borrowers receive a discharge if their colleges “lied to or took advantage of them,” according to ED’s statement. Such proposals would let borrowers file group claims and get timelier decisions on those claims.

Tight limits on when borrowers could file a claim would also be removed. In addition, the kind of misconduct that a college commits and that could result in a borrower's approved claim would broaden to include “aggressive and deceptive recruitment practices.”

“The Department’s borrower defense proposal would bring 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 higher education policy research and advocacy group, in an email to Diverse. “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 recoupment of lost funds from institutional leaders. Perpetrators of financial aid fraud schemes should pick up the cost of making defrauded borrowers whole—not taxpayers.”

ED’s 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 points to more than 500,000 borrowers who qualify for student debt discharge via TPD yet have not received loan cancellation.

“Expanding TPD will make it easier for these borrowers to access the relief they are entitled to by law,” added Streeter in an email to Diverse.

The proposed regulations will be published by ED in the next few days. The public will then be allowed to comment on them over 30 days. ED stated it aims to make these rules final by Nov. 1, 2022. The regulations would then be on track to go into effect no later than July 1, 2023.

“Whether it is for closed school discharges, borrower defense claims, PSLF, or relief after a total and permanent disability, borrowers have had to navigate narrow rules and a needlessly complicated system,” said U.S. Under Secretary of Education James Kvaal in a statement on the package. “The regulations we’ve proposed today would remove many of those barriers and help create a federal student loan system that works better for borrowers.”

Rebecca Kelliher can be reached at [email protected]

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