This Week In Washington
On Tuesday, the U.S. Department of Education (ED) announced its intent to open up the Next Generation Processing and Servicing Environment (a single data processing platform to house all student loan information) to multiple servicers. ED had previously planned to award a contract to one servicer to handle all student loans, but this proposal received considerable pushback. In fact, on Monday, lawmakers on both sides of the aisle, introduced legislation that would block having only one company service all student loans. More information on the process can be found here.
Late last week, we learned that no applications for loan forgiveness have been processed under borrower defense to repayment regulations since the new administration took over in late January. ED’s acting undersecretary James Manning, responding to inquiry from Senator Dick Durbin (D-IL), stated that there are more than 65,000 applications that are currently pending decisions on claims, with nearly 15,000 received since the new administration took over. Mr. Manning gave no indication when borrowers’ claims might be processed. These claims face even greater uncertainty because Education Secretary Betsy DeVos halted the implementation of the defense to repayment regulations earlier in the year, and ED has begun the process to renegotiate the regulations.
Note: Both chambers of Congress are now on August recess. Because of this, our Higher Ed Policy Roundup may be less frequent than the current weekly schedule provides because there may be fewer developments to share. However, we will certainly update you on any relevant major breaking news that occurs.
The following bills were recently introduced for consideration by the 115th Congress (2017-2018):
H.R. 3346 – Student Opportunity Act [Rep. Al Lawson (D-FL)] would eliminate the tax penalty for loan balance forgiveness, allow borrowers with high federal student loan debt to refinance their loans at lower rates, and eliminate loan origination fees.
H.R. 3554 – Streamlining Income-driven, Manageable Payments on Loans for Education (SIMPLE) Act [Rep. Suzanne Bonamici (D-OR)] and companion bill S. 1712 [Sen. Ron Wyden (D-OR)] would streamline the process for enrolling struggling borrowers in income-driven repayment plans and annually recertify their income to verify eligibility for IDR plans and total and permanent disability discharge of federal student loans.
S. 1628 – Know Before You Owe Federal Student Loan Act [Sen. Chuck Grassley (R-IA)] would require annual loan counseling before new loans are disbursed and increases the amount of information that students are required to receive about their federal student loans.
S.1675 --- Student Loan Servicer Performance Accountability Act [Sen. Roy Blunt (R-MO)] would promote competition in federal student loan servicing by prohibiting the Department of Education from awarding all federal student loans to a single federal student loan servicer.