Student Loan Debt Relief Negotiated Rulemaking Ends, Proposed Rule Expected By May
In June, following the U.S. Supreme Court’s rejection of the Biden administration’s
initial student loan debt relief proposal, the U.S. Department of Education (ED)
promptly began working on what it called “Plan B.” ED announced it would pursue
another route, using the Higher Education Act to secure student loan debt relief.
This new route required the administration to undergo a process known as negotiated
rulemaking. The process is lengthy, entailing a series of negotiation sessions
with stakeholders to help create the draft text. The draft text is issued as a
Notice of Proposed Rulemaking, which the public has an opportunity to comment
on. The negotiated rulemaking sessions began in October and ended on December
12 without a consensus on relief provisions.
Negotiators failed to reach a consensus on some elements of the Biden administration's
student loan forgiveness plan. While some common ground was found, there were
disagreements on provisions intended to limit relief and eligibility. ED and the
negotiators agreed on the former’s proposed relief aimed at specific groups,
including those with high-interest balances, individuals paying for 20 or 25 years,
attendees of certain career training programs, and those eligible for existing
forgiveness programs who never applied.
ED’s proposed plan also includes canceling up to $10,000 for borrowers with balances
inflated by interest and up to $20,000 for those in an income-driven repayment
plan earning less than 225% of the poverty line. However, negotiators, particularly
borrower and consumer representatives, opposed these caps, arguing that they are
insufficient for those with significantly increased balances. Two additional contentious
points included: the use of 225% of the federal poverty line for relief caps,
which some argued would exclude struggling borrowers in high-cost areas, and the
exclusion of a relief category for borrowers facing hardship, leading negotiators to express disappointment.
Draft rules will be released for public comment in May 2024,
with the final rule expected before the end of next year and its implementation in 2025.