Burr And Foxx Say Dept. Of Ed Is Rushing Rules To Help Student Loan Borrowers

Last week, the Department of Education (ED) officially published draft regulations designed to increase protections for borrowers and make it easier for them to access loan discharges in certain situations. ED is accepting public comments on the proposals for 30 days (until August 12). Representative Virginia Foxx (R-NC) and Senator Richard Burr (R-NC)—ranking members of the House and Senate Committees, respectively, with jurisdiction over higher education law—believe ED is providing too little time for the public to weigh in and suggest politics is driving the timing of the regulations.

The proposed rules cover seven topics, including borrower defense to repayment (BD). This regulation provides a way for students defrauded by an institution of higher education to have their loans forgiven. In addition, there are improvements to the Public Service Loan Forgiveness (PSLF) process, which provides loan forgiveness after 120 qualifying payments to those working in government or for non-profit organizations.

In their letter to the Department, Representative Foxx and Senator Burr accused ED of pushing through the rules quickly to help Democrats in the midterms in November. They say, “It is evident this proposal is part of a frenzied effort to meet a campaign promise to forgive as much student debt as possible before the November midterm elections. In doing so, this proposal seeks to override the legislative process and ignore input from the American people.”

These comments will inform any changes to the rules before they are finalized and go into effect next year, and Foxx and Burr ask ED to extend the timeline for public comments to 60 days.

How were the new rules created, and what’s next?

The proposed regulations were arrived at after an extensive rulemaking process unique to ED called “negotiated rulemaking.” The Higher Education Act, the law that governs many aspects of postsecondary education, requires that ED bring together representatives from across higher education, including those from colleges and universities, students, and legal aid organizations that assist students in submitting BD claims. These representatives spend weeks reviewing regulatory proposals from ED, suggesting changes and improvements with the goal of reaching a consensus agreement on proposed rules. Even when negotiators fail to reach a consensus on a proposed rule, the negotiations inform the final draft rules.

After the negotiations, proposed regulations take a lengthy path through several government offices before they are released for comment. This includes a review by the Office of Management and Budget to determine how much a proposed rule could cost and a legal review to ensure it does not contravene legislation.

How do the new rules help students?

The proposed BD rule will make it easier for students to receive loan forgiveness if the institution they attended misrepresented things like job placement rates or used aggressive and deceptive recruiting tactics to enroll students. The existing BD rule has recently been used recently to cancel billions of dollars of loans for students defrauded by for-profit colleges like Corinthian Colleges, Ashford, and the University of Phoenix.

The changes to PSLF are intended to make the application process easier and allow some periods of deferment and forbearance to count towards the 120 payments needed to qualify for forgiveness under this program, among other reforms.

In addition to strengthening the BD rule and improving PSLF, the other proposed regulations—which represent seven of fourteen topics on the table for reform—will make it easier for students to seek loan forgiveness if they become disabled or the school they attend closes. ED will release another set of four proposed rules—including a new income drive loan repayment plan—this summer. However, it will delay submitting regulations on the remaining topics, including rules meant to ensure students do not leave career preparation programs loaded with more debt than they can afford until next Spring.

It has been suggested that other topics have been delayed due to concerns there was insufficient time for the rules to be appropriately crafted and give sufficient time for ED to receive, review, and respond to public comments.

Once the public comment period closes on August 12, ED must review all substantive comments, decide whether to make any changes to the regulations, and then publish the final rule alongside responses to the public comments. If ED sticks to its current schedule, the final rules proposed in early July will be published in November and go into effect in 2023.