This Week In Washington
It has been a while, but we are back and so is Congress. September was shaping up to be a busy month with several must-pass pieces of legislation, but on Wednesday, President Trump and Congressional leaders agreed to a three-month deal that would raise the debt limit, extend funding for the government, and provide initial aide to help victims of Hurricane Harvey. Both the House and the Senate passed the legislation, which means Congress will now have until December 8, 2017 to negotiate long-term spending solutions. Although a short-term spending deal has been reached, there could still potentially be major changes to federal financial aid programs this fall due to a process known as budget reconciliation (see below).
On Tuesday, the Department of Education (ED) released the application for those seeking loan forgiveness under the Public Service Loan Forgiveness (PSLF) program. The application’s release is timely because October 2017 will be the first time borrowers could potentially be eligible for forgiveness. Under this program, federal student loan borrowers may qualify for forgiveness of the remaining balance of their federal Direct Loans after making 120 qualifying payments on eligible loans while employed full-time by qualified public service employers.
Late last week, ED notified the Consumer Financial Protection Bureau (CFPB) that it was terminating its operating agreement which allowed the two agencies to share information in connection with oversight of federal student loans. In the letter, ED accused CFPB of violating certain terms of the memorandum of understanding, including one requiring CFPB to direct all Title IV federal student loan complaints to ED within 10 days. ED alleges the CFPB tried to handle these complaints itself and said CFPB's intervention added confusion to borrowers and servicers. POLITICO reported CFPB responded (subscription required) to the termination by noting it had not heard any concerns about their work from ED. The agreement will terminate in 30 days.
While Congress can spend money without first passing a budget, it hopes to pass a budget this year in order to open a process called reconciliation. Reconciliation allows both the House and Senate to pass certain legislation with a simple majority vote, which is often not the case in the Senate due to the use of a procedural tactic known as a filibuster.
The Republican majority could use the reconciliation process to pass two major priorities, tax reform and repeal of the Affordable Care Act (ACA). However, because the opportunity to use the fiscal year 2017 reconciliation process terminates on September 30th, and only one of these priorities can be passed via each reconciliation bill, the Republican majority will push very hard to ensure it passes another budget out of both chambers.
The House has passed its fiscal year 2018 budget resolution, which contained reconciliation instructions, out of committee and is expected to bring it to the floor for a vote next week; however, its fate on the House floor is far from certain. The Senate has not yet released its budget resolution for committee markup.
Again, this budget reconciliation process could result in substantial changes to federal financial aid programs, including capping/eliminating PSLF or increasing loan repayment amounts. Be sure to read our brief analysis on the budget resolution here, and be prepared to get involved by visiting our #MakeTheCase advocacy campaign’s website.
The following bills were introduced prior to the August recess by the 115th Congress:
H.R. 3573 – Student Loan Interest Tax Deduction Expansion Act [Rep. David Cicilline (D-RI)] would increase the tax deduction on student loan interest from $2,500 to $7,500 based on certain levels of Adjusted Gross Income (AGI).
H.R. 3630 – Student Loan Borrowers’ Bill of Rights Act of 2017 [Rep. Frederica Wilson (D-FL)] would discharge borrowers’ student loans in bankruptcy, including Parent PLUS loans, prohibit suspensions of professional licenses for loan defaults, and forgive 50 percent of borrowers’ loans balance if they were employed in public service jobs for 5 years.