This Week In Washington
Since our last update, Republicans in the House and Senate released their respective tax reform bills to the public. The House passed its bill on the floor, while the Senate Finance Committee approved its bill last night. In both versions, there are provisions that could negatively impact graduate and professional students and certain institutions. Read our brief summary here.
Also this week, the Department of Education (ED) started the process of renegotiating the borrower defense to repayment (DTR) regulations it delayed earlier this year. The negotiating committee is tasked with revising the 1994 rules that govern when a borrower may have his or her federal student loans discharged in the event of fraud by a school. Topics of discussion included whether to use a federal or state-based standard, which acts or omissions by a school would serve as the basis for a claim, and the process for evaluating claims. The committee will meet again in January and February to continue negotiations.
On Tuesday, Under Secretary of Education James Manning provided the negotiating committee with an update on the 95,000 borrower defense claims pending review by ED. Manning said that after modifications to the process this year, adjudication of the delayed claims is now “imminent.” Manning also announced that interest that has accrued on loans for denied claims will be forgiven starting one year after the claim is filed.
POLITICO reported (subscription required) that ED’s inspector general, the independent watchdog of an executive agency, objected to Secretary Betsy DeVos’ delay of the gainful employment (GE) and borrower defense to repayment rules. Responding to a request from Senator Patty Murray (D-WA), the ranking member on the Senate Health, Education, Labor, and Pensions Committee, the inspector general wrote in a letter (subscription required) that delaying the GE rules negatively affects the integrity of federal student aid programs, and that enforcing DRT rules would help “mitigate potential harm to students and taxpayers.” The inspector general also noted it was “reviewing [ED’s] controls over its borrower defense loan discharges process,” after it was revealed that no DRT claims had been processed since the new administration took over. The renegotiated rulemaking on DTR rules started this week, and the GE rules will be renegotiated in December.
The following bills were recently introduced for consideration by the 115th Congress (2017-2018):
H.R. 4274 -- Higher Education Reform and Opportunity (HERO) Act [Rep. Ron DeSantis (R-FL)] would require institutions to publish the percentage and number of students that receive federal, state, and institutional grant aid or loans by source, and to publish the average amount of total federal loan debt. The bill would also create a risk sharing measure that would hold schools partly responsible for the defaulted loans of their students.
H.R. 4372 – Help Students Repay Act [Rep. Drew Ferguson (R-GA)] would create a single income-based repayment plan that calculates the borrower’s monthly payment as 15 percent of discretionary income. The plan would not include time-based loan forgiveness, but no additional interest would capitalize after 10 years.
S. 2081 – Empowering Students Through Enhanced Financial Counseling [Sen. Mark Warner (D-VA)] would require federal student loan borrowers to receive interactive counseling that reflects their individual borrowing situation.