This Week In Washington
On Wednesday, the U.S. Department of Education (ED) released its draft rewrite of the Borrower Defense to Repayment regulations, which govern how borrowers can have their federal student loans discharged if the institution they attended misled them. Recall, that ED delayed the Obama-era rules just prior to them taking effect so that the new administration could renegotiate the rules.
The new rules set a higher bar for students to meet in order to receive forgiveness; a move ED estimates could save upwards of $700 million each year. The proposed rules would require borrowers to prove that the college they attended intentionally misled or deceived them or acted with reckless disregard for the truth. Senator Lamar Alexander (R-TN), chairman of the Senate education committee, praised the new rules saying that they “set important safeguards and clear standards.” The ranking member of the same committee, Senator Patty Murray (D-WA) blasted the rules saying the “rule would cut billions in debt relief to students who were simply trying to do better.”
ED still has not decided whether to increase the burden of proof (from preponderance of the evidence to clear and convincing evidence), which would also make it harder to receive forgiveness. ED is also considering only hearing claims from borrowers after they have defaulted on their loans, a change from the current process. Beginning next week, ED will seek comments from the public on the proposed regulations. The official version of the proposed regulations will be published in the Federal Register next Tuesday (July 31, 2018), and from that date, the public will have 30 days to provide comments.
On Tuesday, House Democrats released their proposal to reauthorize the Higher Education Act (HEA). Dubbed the Aim Higher Act, the proposal would, among other things, implement more borrower-friendly repayment terms like verbal enrollment in income-based repayment plans and auto-certification of income. The Act also would preserve the Public Service Loan Forgiveness program, require annual loan counseling and repeal the current ban on obtaining and reporting student-level data. Democrats’ proposal stands in stark contrast to the House Republican HEA reauthorization bill, known as the PROSPER Act, on most, but not all, proposals (see first news article below). Several higher education organizations, including AccessLex Institute, have praised some of the ideas contained in the Act but wish to see Congress work in a bipartisan manner to complete HEA reauthorization.
This weekend, ED rolled out a new mobile-friendly version of the online Free Application for Federal Student Aid (FAFSA) website. The redesign is part of ED’s Next-Gen overhaul of financial student aid products. When speaking to various reporters, ED indicated it would unveil its student aid mobile app next month, and it hopes to start its student aid debit card pilot program later this year.
News You Can Use
How do the House Republican and Democratic Higher Education Act reauthorization proposals compare?
A look at what the proposed changes to the borrower defense to repayment rules may mean for borrowers.
Norwich University becomes the latest in a growing number of schools to offer income share agreements to help students finance higher education.
No relevant bills, outside of the Aim Higher Act announcement (which does not yet have legislative language), have been recently introduced for consideration by the 115th Congress (2017-2018).