This Week in Washington
The Government Accountability Office (GAO) released a report slamming the U.S. Department of Education’s (ED) administration of the Public Service Loan Forgiveness Program (PSLF). The GAO found that ED “does not provide key information to the PSLF servicer and borrowers.” Specifically, GAO said ED “provides piecemeal guidance and instructions to the PSLF servicer[s],” and that ED has not sufficiently delineated who are qualified employers, thus “making it difficult for . . . borrowers to make informed employment decisions.” GAO concluded that “[t]hese weaknesses are contrary to federal internal control standards for using and communicating quality information, creating uncertainty for borrowers and raising the risk some may be improperly granted or denied loan forgiveness.”
The GAO recommended that ED “(1) develop a timeline for issuing a comprehensive guidance and instructions document for the PSLF servicer, (2) provide the PSLF servicer and borrowers with additional information about qualifying employers, (3) standardize payment information other loan servicers provide to the PSLF servicer, and (4) ensure borrowers receive sufficiently detailed information to help identify potential payment counting errors.”
On Wednesday, the House passed the fiscal year 2019 education funding bill that the Senate passed last week. The bill includes a spending increase for several education programs over last year’s bill. The bill also continues to fund the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program, which will provide loan forgiveness to those who may have been in an ineligible repayment plan, but otherwise qualify for PSLF. The education bill is packaged with the defense appropriations bill and a continuing resolution that would fund other parts of the federal government until December. The President is scheduled to sign the bill today.
On Tuesday, ED announced that the national Cohort Default Rate (CDR) for fiscal year 2015 had decreased to 10.8 percent. An institution’s CDR is the percentage of borrowers who default on their federal student loans within three years of entering repayment. The metric is used chiefly to determine whether institutions are eligible to participate in Title IV student aid programs. You can find your institution’s CDR here.
News You Can Use
According to a study on student perspectives published by the Association of American Law Schools and Gallup, undergraduates cited wanting to pursue a career in politics, government, or public service as their top reason for considering law school. (Disclosure: This study was funded in part by AccessLex Institute).
Rising student loan default rates, along with other evidence to suggest that more borrowers are struggling with repayment, has some experts warning that student loan debt may have negative consequences for our economy.
The following bill(s) have been recently introduced for consideration by the 115th Congress (2017-2018):
H.R. 6921 – Students and Families Empowerment Act [Rep. Kathleen Rice (D-NY-4)] would end taxation of loan forgiveness received via an income-driven repayment plan, extend the student loan repayment grace period from 6 months to 12, preclude interest from accruing during the grace period, and effectively remove the $2,500 student loan interest tax deduction cap.