Comments on the proposal that would modify the department’s existing debt collection regulations are due May 17.
04/23/2024 10:15 A.M.
4 minute read
The Department of Education has issued its Notice of Proposed Rulemaking (NPRM) outlining revised plans from the Biden administration to cancel student loan debt for approximately 30 million Americans.
“Last June, in the wake of the Supreme Court’s decision blocking the Biden-Harris [a]dministration’s original student debt relief plan, President Biden vowed to keep fighting to deliver student debt relief to borrowers held back by the burden of student loan debt,” according to a White House news release. “Immediately following that, the Department of Education began pursuing an alternative path to debt relief through negotiated rulemaking under the Higher Education Act.”
The NPRM would forgive unpaid interest for 25 million borrowers whose loans have surpassed the amount they originally borrowed; assist more than 2 million borrowers with debt for at least 20 years; and help 2 million borrowers who would have been eligible for existing federal programs but did not enroll.
“The administration has expressed confidence that this new plan is sufficiently different from the original plan that was struck down by the Supreme Court last year, relying on the Education Secretary’s legal authority under the Higher Education Act, rather than COVID-19-related emergency powers,” according to a summary of the proposed rule by Brownstein Hyatt Farber Schreck LLP.
The Supreme Court issued its decision in two cases challenging the Biden administration’s student loan debt relief plan last summer, ultimately striking it down, ACA International previously reported.
In the Biden v. Nebraska decision (PDF), authored by Chief Justice John Roberts, the court ruled 6-3 agreeing with the state attorneys general that brought the case “that the HEROES Act does not authorize the debt forgiveness plan,” according to ScotusBlog.com.
In the Department of Education v. Brown decision (PDF), authored by Justice Samuel Alito, the Supreme Court unanimously found the plaintiffs did not have standing to sue.
The case was brought by two individuals and backed by the Jobs Creators Network Foundation. A Texas district judge ruled in the initial complaint that the Biden administration lacked the authority to establish the student debt relief program.
Proposed Rule
The proposed regulations would modify the Department of Education’s existing debt collection regulations to provide greater specificity on the Secretary of Education’s discretion to waive federal student loan debt, according to the NPRM.
They would also specify the secretary’s authority to waive all or part of any debts owed to the department based on several different circumstances:
- Growth in a borrower’s loan balance beyond what was owed upon entering repayment.
- The amount of time since the loan first entered repayment.
- Whether the borrower meets certain criteria for loan forgiveness or discharge under existing authority, and
- Whether a loan was obtained to attend an institution or program that was subject to secretarial actions, that closed prior to secretarial actions, or was associated with closed Gainful Employment programs with high debt-to-earnings rates or low median earnings.
The department conducted a negotiated rulemaking process last summer to develop the NPRM and address major challenges with student loan repayment for borrowers.
In particular, the NPRM focuses on issues related to circumstances:
- When borrowers’ balances have grown beyond what they originally owed at the start of repayment.
- When loans first entered repayment at least two decades ago.
- When a borrower is eligible for forgiveness or a discharge opportunity but has not successfully applied for such relief or enrolled in the repayment plan that would provide that forgiveness or discharge opportunity.
- When a borrower received loans for attendance in a program or at an institution that has since lost access to federal aid because it failed to meet required student outcomes standards, was subject to an action by the secretary due to failing to provide sufficient financial value or closed after failing required student outcomes metrics or the initiation of a secretarial action process.
Comment Deadline
Comments are due on May 17, 2024, and the department is working to finalize its rules by the fall.
A separate proposed rule related to relief for borrowers experiencing hardship is expected to be released in the coming months, according to Brownstein’s summary.
Comments may be filed on the Federal eRulemaking Portal at Regulations.gov using document number 2024-07726.
ACA is reviewing the NPRM to consider filing comments. If you have feedback to share with ACA on the proposal, contact our advocacy team at [email protected].
Brownstein Hyatt Farber Schreck LLP Client Alert Editor’s Note: THIS DOCUMENT IS INTENDED TO PROVIDE YOU WITH GENERAL INFORMATION REGARDING AN FTC VOTE ON NONCOMPETES. THE CONTENTS OF THIS DOCUMENT ARE NOT INTENDED TO PROVIDE SPECIFIC LEGAL ADVICE. IF YOU HAVE ANY QUESTIONS ABOUT THE CONTENTS OF THIS DOCUMENT OR IF YOU NEED LEGAL ADVICE AS TO AN ISSUE, PLEASE CONTACT THE ATTORNEYS LISTED OR YOUR REGULAR BROWNSTEIN HYATT FARBER SCHRECK, LLP ATTORNEY. THIS COMMUNICATION MAY BE CONSIDERED ADVERTISING IN SOME JURISDICTIONS.
Remember, subscribe to ACA Daily and Member Alerts under your My ACA profile when logged in to acainternational.org.