This Week In Washington
The U.S. Department of Education (ED) has decided to move forward with plans to shift some borrowers’ non-paying accounts from five large private collection agencies to ED. The collection agencies immediately filed for an injunction to prevent ED from doing so. Potential confusion is understandable because ED’s decision was made after the publication of last week’s Roundup when we told you that ED announced the move was on hold.
On Wednesday, Rep. Peter Roskam (R-IL) filed a declaration in the ongoing lawsuit regarding ED’s initial decision to end the contracts. In it, Roskam said he is “struck by the lack of transparency around which the Department is operating, especially given the significance of its decisions to millions of borrowers.” Finally, on Thursday, the Court denied the injunction and allowed ED to proceed with recalling the accounts from private collection agencies, stating that doing so is within ED’s contractual rights.
Senators Patty Murray (D-WA) and Ron Wyden (D-OR) sent a letter this week to Treasury Secretary Steve Mnuchin and Acting IRS Commissioner David Kautter asking them to issue guidance clarifying that the cancelled private loans of former Corinthian Colleges students, who were defrauded by their schools, should not be considered taxable income. This request comes on the heels of nearly 50,000 Corinthian borrowers receiving tax forms related to the discharge of their private loans, resulting in many borrowers paying taxes they may not have actually owed.
On Thursday, Senate Budget Committee Chairman Mike Enzi (R-WY) and Senate Health, Education, Labor, and Pensions Committee Chairman Lamar Alexander (R-TN) sent a letter to the Congressional Budget Office (CBO) requesting an analysis of how changes to the federal student loan programs (e.g., loan limits, interest rates, etc.) have affected borrowing levels and repayment. They are seeking a separate analysis on the outstanding loans in income-driven repayment plans, citing concern about the sustainability of the program. They requested that CBO estimate the date when, absent legislative changes, the federal government will begin to lend more money than is repaid from borrowers.
News You Can Use
Inside Higher Ed examines the impact of Congress’ 2019 spending proposals on higher education financing, such as the Public Service Loan Forgiveness program and Pell Grants.
On Wednesday, the National Association for Equal Opportunity in Higher Education (NAFEO) released a statement regarding the seven guidance provisions that President Trump rescinded pertaining to affirmative action and racial diversity in education, saying, in part, that this rescission will “erode and undermine hard-fought civil rights progress, equity, excellence and diversity in education.”
The following bill(s) have been recently introduced for consideration by the 115th Congress (2017-2018):
S. 3189 – Income-Based Repayment Debt Forgiveness Act [Sen. Jeff Merkley (D-OR)] would change policy to now exclude income-contingent and income-driven repayment plans’ loan forgiveness from taxable income.
S. 3205 / H.R. 6352 – Know Before You Owe Private Education Loan Act of 2018 [Sen. Dick Durbin / Rep. Jared Polis (D-CO)] would mandate that institutions fully certify private education loans and require that private loan lenders obtain information from institutions before issuing loans, such as a school’s cost of attendance and the amount a potential borrower is eligible to borrow. Additionally, the bill would require that private loan lenders update borrowers quarterly about their loans, including information about the interest accrued.