December 6, 2023


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Biden Administration Starts Overhaul Of Student Loan Forgiveness, Income Based Repayment Programs

The Biden administration is moving forward with a regulatory overhaul of key student loan forgiveness and repayment programs, including Public Service Loan Forgiveness and income-based repayment.

On Friday, the Department of Education announced a public hearing schedule that will begin in October for a negotiated rulemaking process “to rewrite regulations” governing key federal student loan programs. According to a Department of Education press release, “negotiated rulemaking is a process by which the Department convenes representatives of interested groups to discuss proposed regulations over multiple sessions with the goal of achieving consensus on the language of the proposed regulations.”

The negotiated rulemaking sessions will review the following federal student loan programs:

  • Public Service Loan Forgiveness (PSLF), which can provide student loan forgiveness to qualifying borrowers after 10 or more years of employment for nonprofit or public sector organizations.
  • Income-driven repayment plans, which allow borrowers to repay their student loans using formulas applied to their incomes and family size. The programs include Income Contingent Repayment (ICR), Income Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE).
  • Borrower Defense to Repayment, which allows borrowers defrauded by their schools to request cancellation of their federal student loan debt.
  • Total and Permanent Disability Discharge (TPD), which cancels the federal student loan debt of borrowers who are unable to maintain substantial, gainful employment due to a medical condition.
  • False certification and closed-school discharges, which provides student loan cancellation to borrowers for certain school misconduct and abrupt school closures.

The Department also indicated that other key topics will be evaluated for changes during the negotiated rulemaking hearings, including interest capitalization on federal student loans (which can have devastating cumulative impacts on loan balances), Pell Grant eligibility, and arbitration clauses in student loan and enrollment agreements.

The Department of Education suggested that revamping these programs could result in more borrowers getting their student loans forgiven or discharged. “This rulemaking committee will do the important work of improving borrowers’ access to benefits that reduce the burden of federal student loans, including targeted discharges,” said Secretary of Education Miguel Cardona in a statement. “We look forward to convening the committee and remain committed to the mission of better serving our nation’s students and borrowers.”

The Department’s stated goal of rewriting the regulations governing these programs suggests that major changes could be in store. Advocates have long argued that many of these federal student loan programs need a complete overhaul. Public Service Loan Forgiveness, for example, suffers from a catastrophic denial rate of 98%. Thousands of borrowers who have applied to Borrower Defense to Repayment have had their applications held up for years. And advocates have recently accused the Department of failing to address nearly half a million student loan borrowers who may be eligible for a TPD discharge, but do not realize it.

During his presidential campaign, Biden had proposed significant changes to these programs. He had called for a new, simplified income-driven repayment plan to replace the confusing patchwork of existing plans, with payments capped at 5% of a borrower’s discretionary income (rather than the 10-20% currently required under existing programs). Biden had also called for reforms to the PSLF program to permit all federal student loans, and all repayment plans, to qualify. He also suggested partial loan forgiveness for every year of public service over the course of the 10-year PSLF period, rather than all-or-nothing relief at the end.

The Department’s announcement comes on the heels of its decision to further extend the pause on student loan payments to January 31, 2021. The student loan moratorium was originally scheduled to expire on September 30 of this year. The four-month extension will not provide sufficient time for any new regulations to be finalized, however. Negotiated rulemaking is a lengthy process that typically takes at least one to two years.

The first negotiated rulemaking session will begin on October 4 and will continue through October 8, with subsequent hearings in early November and early December. All sessions will be virtual and open to the public. More information can be accessed here.

Further Reading

5 Key Takeaways From Biden’s Extension Of Student Loan Relief

Student Loan Cancellation Debate Continues Amidst Servicer Disruption

Huge Student Loan Servicing Shakeup: This Major Loan Servicer Is Ending Its Contract

$125 Million In Student Debt Forgiveness Announced For 50,000 Students, Using Biden Stimulus Funds