$5.8 billion in automatic student loan discharges due to a new regulation

#EDUCATION

CANCEL STUDENT LOANS

Over 323,000 borrowers who have a total and permanent disability (TPD) will receive more than $5.8 billion in automatic student loan discharges due to a new regulation announced by the Department.  The change will apply to borrowers identified through an existing data match with the Social Security Administration and begin with the September quarterly match.  The Department also announced two other policy items related to TPD.  First, it will indefinitely extend the policy announced in March to stop asking these borrowers to provide information on their earnings — a process that results in the reinstatement of loans if and when borrowers do not respond — beyond the end of the national emergency.  Second, it will pursue complete elimination of the three-year monitoring period required under current regulations during the upcoming negotiated rulemaking.

On August 18, President Biden issued a memorandum to Secretary Cardona directing him to use all available tools to ensure that governors and other leaders are providing a safe return to in-person learning for the nation’s children.  Students have experienced tremendous disruptions in their learning over the past two school years, but, with increased access to vaccinations for school staff and students age 12 and older, proven prevention and mitigation strategies, and unprecedented resources from the American Rescue Plan (ARP), all schools can and should open safely this fall for full-time, in-person instruction.  Nevertheless, some state governments have adopted laws and policies that interfere with the ability of schools and school districts to keep children safe during in-person learning — with some going as far as blocking school officials from adopting safety protocols aligned with recommendations from the Centers for Disease Control and Prevention (CDC).  Both state and local leaders must do everything possible to put students’ health and safety first and comply with legal obligations to their communities.  This memo will ensure the Department is doing everything it can to prevent any interference with school officials taking steps to keep all students safe in full-time, in-person learning, without compromising students’ health or the health of their families or communities.

“Meeting the President’s Call to Support the Safe and Sustained Reopening of Schools,” The Department’s commitment to protecting the rights of every student and supporting local districts that are protecting students and educators.

Following letters he sent to Florida and Texas last week, the Secretary issued similar letters to six states — Arizona, Iowa, Oklahoma, South Carolina, Tennessee, and Utah — that have blocked masking mandates in schools, noting on Twitter: “We. Must. Protect. Children.”

A reminder of key resources:

Last week, the Department announced approval of six more ARP Elementary and Secondary School Emergency Relief (ESSER) Fund state plans — Alabama, Indiana, Kentucky, New Jersey, North Dakota, and South Carolina — and distributed remaining ARP ESSER funding to those jurisdictions.  The plans detail how states are using and intend to use ARP ESSER funds to safely reopen and sustain the operation of schools and classrooms and address the essential needs of students, including by equitably expanding educational opportunities for students disproportionately impacted by the pandemic.  Earlier this year, the Department distributed two-thirds of ARP ESSER funding, or $81 billion, to all 50 states and the District of Columbia.  The remaining third is being made available to states once plans are approved.  A total of 28 plans have been approved to date (see state-by-state press releases and highlights online).

Secretary Cardona also issued a letter to Chief State School Officers and school district superintendents regarding additional supports to assist them with successful implementation of the ARP’s maintenance of effort and maintenance of equity requirements.

HIGHER ED

First, on August 6, the Department announced a final extension of the pause on student loan repayment, interest, and collections until January 31, 2022.  The agency believes this additional period and a definitive end date will allow borrowers to appropriately plan for the resumption of payments and reduce the risk of delinquency and defaults after restart.

Second, that same day, the Department announced it will publish a notice in the Federal Register establishing a negotiated rulemaking committee that will meet virtually beginning in October to rewrite regulations for a range of issues, including Public Service Loan Forgiveness, income-contingent repayment plans, and Borrower Defense to Repayment.  These regulations will help borrowers manage repayment or receive a discharge or forgiveness of their federal student loans.  The committee will also establish regulations — to be discussed in a subcommittee — to implement Pell Grant eligibility for prison education programs.  (Note: The notice requests nominations for negotiators, subcommittee members, and advisors and sets dates for negotiation sessions.  The agency is especially interested in nominations from individuals and organizations that represent the perspective of historically underserved and/or low-income communities.)

Third, on August 9, the Department released a new interpretation that revises and clarifies the agency’s position on the legality of state laws and regulations that govern various aspects of the servicing of federal student loans.  This action will help states enforce borrower bills of rights or similar laws.  It is part of Federal Student Aid’s (FSA) efforts to strengthen the student loan program by enhancing oversight and accountability for student loan servicers in order to protect students, borrowers, and taxpayers.  (Note: The prior interpretation broadly preempted state efforts to regulate student loan servicers and has been uniformly rejected by the courts.  The new interpretation is in effect, but the Department is also seeking public comment for 30 days so it can identify any additional changes that may be needed.)

 

Fourth, FSA issued Final Program Review Determinations to two institutions — Harrison College and RWM Fiber Options, Inc. — identifying more than $2.5 million in liabilities in each instance.

 

Fifth, the Departments of Education and Labor launched an initiative to help connect millions of unemployed Americans to postsecondary education, especially those displaced from their employment during the pandemic, by alerting higher education institutions and state workforce agencies about ways to help unemployment insurance (UI) beneficiaries access opportunities.  Specifically, Education updated its guidance to financial aid administrators about their authority to exercise “professional judgment” for individual financial aid applications and adjust recently unemployed applicants’ income to zero, ensuring that students receive the maximum benefit to which they are entitled toward their education, and Labor notified state workforce agencies that, in many cases, UI recipients are eligible for postsecondary education funding like federal student aid.  Additionally, Education created a new landing page to help UI beneficiaries identify offerings at institutions that are also eligible training providers under the Workforce Innovation and Opportunity Act (WIOA).