This Week In Washington
The House and Senate have passed the Consolidated Appropriations Act, otherwise known as an omnibus spending bill, which funds the federal government for the remainder of fiscal year (FY) 2018. The bill contains two provisions to help borrowers interested in Public Service Loan Forgiveness (PSLF). First, there is a new fund that allows borrowers who would otherwise qualify for PSLF except for being in an ineligible repayment plan to apply and possibly receive loan forgiveness. Second, the bill allocates funds for the Department of Education (ED) to conduct outreach to borrowers about the PSLF program and improve the certification process.
The omnibus bill would also block Education Secretary Betsy DeVos’ efforts to replace current student loan servicing contracts with ones that have different loan servicers processing discreet parts of the Next Generation Financial Services Environment. Finally, the omnibus prohibits Secretary DeVos from moving forward with plans to dismantle ED’s central budget office. The bill now moves to the President’s desk for his signature; he has until midnight tonight to sign it or risk another government shutdown.
On Tuesday, Secretary DeVos testified before the House Appropriations education subcommittee about ED’s requests contained within President Trump’s FY 2019 budget proposal. While there was scant mention of higher education issues at the hearing, DeVos did reiterate her position that the federal government is the sole regulator of companies servicing federal student loans. Recall that two weeks ago, ED published an interpretation of law that declared states did not have the authority to regulate these servicers; however, several attorneys general and states disagree.
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Jason Delisle, resident fellow at the American Enterprise Institute, argues that lowering the percentage of wages that can be garnished on defaulted federal student loans could incentivize borrowers to remain in default if the garnished amounts are lower than what they would pay each month to cure their default.
Proposals to end the Public Service Loan Forgiveness program may make it harder to recruit individuals into lower-paying fields that require advanced degrees.
The Project on Predatory Student Lending at Harvard University has accused the Department of Education of illegally using earnings data to grant partial relief to defrauded borrowers.
Cost of living figures can vary greatly among institutions in the same city or region. What role can or should states play in establishing cost of living estimates?
The following bills were recently introduced for consideration by the 115th Congress (2017-2018):
H.R. 5220 – Don’t Tax Higher Education Act [Rep. John Delaney (D-MD)] would eliminate the 1.4 percent tax on certain large college endowments.
H.R. 5277 – Financial Literacy College Education Act [Rep. Joyce Beatty (D-OH)] would require the Financial Literacy and Education Commission to establish best practices for higher education institutions related to teaching financial literacy skills and providing useful information to students to assist them with making borrowing decisions.