July 9, 2021

Higher Ed Policy Roundup: Vol. 5 - Issue 24

Policy and Advocacy


This Week in Washington

On Thursday, the Pennsylvania Higher Education Assistance Agency (PHEAA) which is responsible for servicing millions of federal student loans announced that it would not be extending their contract with the Education Department (ED) beyond December 14, 2021.  PHEAA, which has come under fire for its handling of the Public Service Loan Forgiveness program, said that the contract had “grown increasingly complex and challenging while the cost to service those programs increased dramatically.” There is no word yet from ED on who will be responsible for the reassigned loans. 

In internal discussions, ED officials have been urging the White House to extend the payment and interest pause on federal student loans through the end of January 2022. The payment pause, which is set to expire at the end of September, has been a growing concern for congressional leaders because no plan has been set in place to ease borrowers back into repayment. Recall that Democratic leaders sent a letter to President Joe Biden urging him to extend the pause until March 31, 2022, or until the employment rate hits pre-pandemic levels. In that letter, they argued that restarting the payments would create significant challenges for borrowers, ED and its servicers. To date, the White House has not made a decision on extending the pause.

The Government Accountability Office (GAO) released a report outlining 80 recommendations for ED that were outstanding as of May 2021.  Regarding higher education, the recommendations included a review of ED’s methods for providing instructions and guidance to student loan servicers, and an ED-sponsored evaluation of the effectiveness of Title IV programs and higher education tax expenditures in improving student outcomes.

News You Can Use

Most student loan borrowers aren't ready to resume payments, says new survey by student borrower advocacy group.

National Student Legal Defense Network alleges that ED aggressively collects outstanding debt from student loan borrowers, while failing to collect from institutions.

Toby Merrill, founder of the Project on Predatory Lending at Harvard Law School and author of the legal analysis used by Senator Elizabeth Warren to support her assertion that the president has the authority to cancel student debt, has been appointed Deputy General Counsel at ED.

Recent Legislation

The following bill has been recently introduced for consideration by the 117th Congress (2021-2022):

H.R. 4120Comprehensive Consumer Credit Reporting Reform Act [Rep. Ayanna Pressley (D-MA-7)] would establish a credit rehabilitation process for distressed private education loan borrowers. The bill would also require the Government Accountability Office to conduct a study on how credit scores impacted by a student borrower’s defaulted or delinquent private education loan affects applying for future loans.