Today, the Biden administration officially launches a potentially drastic review of regulations governing major federal student loan forgiveness, repayment, and bailout programs.
The regulatory rewriting process, called negotiated rulemaking, begins with a series of hearings starting today. The negotiated rule-making committee begins the process by reviewing the current student loan program and considering proposed regulatory changes. The committee is made up of a wide range of stakeholders, including student loan borrowers, financial aid managers, universities, people with disabilities, legal agencies, military service members, and lenders. The Commission’s goal is to reach consensus on drafting and approving new rules.
The Rulemaking Commission evaluates a wide range of federal student loan systems, including major loan forgiveness and dismissal programs.
- Complete and Permanent Disability Discharge (TPD) The program repays federal student loan debt for a borrower with a disability. The Ministry of Education is proposing to eliminate the post-discharge monitoring period and relax the application requirements.
- Forgiveness of Public Service Loans (PSLF)Provides student loan forgiveness to borrowers who have worked for more than 10 years in nonprofits or government agencies. The department proposes to relax the requirements of the program, create an appeal process, and provide more flexibility for what counts as eligible payments.
- Borrower’s defense against repayment, This cancels the federal student loan debt to the borrower stolen by the school. The ministry proposes to relax evidence and timing standards, enable more complete student loan bailouts, and create a group discharge process.
- Dropping out of a closed schoolCancels federal student loan debt to borrowers who were unable to complete their degree program due to school closures. The ministry proposes to streamline the program and create an automated discharge process.
The Commission will also consider new regulations to reduce interest capitalization. This is the process by which accrued interest is returned to the borrower’s loan principal, leading to an increase in the compound interest balance. The Commission may also create a new income-driven repayment plan that is more affordable than current income-based options.
Negotiating rule creation is a fairly long process and requires a series of hearings. These hearings are open to the public and will be held daily this week. The second hearing will be held from November 1st to 5th, and the third session will be held from December 6th to 10th. Individuals can participate in any of these hearings and request the opportunity to comment. You must register here to participate.
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