Higher Ed Policy Roundup: Vol. 6 - Issue 14

This week, the U.S. Department of Education (ED) released a Notice of Proposed Rulemaking (NPRM) related to several federal student aid programs that were part of negotiated rulemaking sessions last winter. This regulatory package includes changes to interest capitalization, Total and Permanent Disability (TPD) discharge and Public Service Loan Forgiveness (PSLF), among other programs. Specifically, the proposed rules would eliminate non-statutory interest capitalization, make it easier for borrowers to obtain a TPD discharge and modify PSLF by counting payments made on Direct Loans prior to consolidation and allowing certain deferments and forbearances to count toward forgiveness, among other changes. It does not include the creation of a new income-driven repayment (IDR) plan, which is expected to be released later this summer.

The NPRM is open for a 30-day public comment period on the proposed regulations. Read a summary of the NPRM here. Final regulations are expected to be released by November 1, 2022 and implemented on July 1, 2023.

The U.S. Government Accountability Office (GAO) released a report, which calls on ED to offer additional guidance on the federal student loan process. One of GAO’s specific recommendations is that ED needs to provide loan servicers with guidance that better clarifies how to treat retirement benefits when calculating borrowers’ earnings for IDR plans.

Law.com’s The Legal Intelligencer posted commentary on a different approach to tackling student loans in bankruptcy, detailing how some American courts have adopted their own student loan management programs to better meet the needs of borrowers.

There were no relevant student-aid related bills recently introduced for consideration by the 117th Congress (2021-2022).