Student Loan Debt Relief and All Six Program Integrity & Institutional Quality Regulations Will Not Be Published As Final Rules Before November 1st Master Calendar Deadline
Overview
The clock has essentially run out on the ability of the U.S. Department of Education when it comes to their ability to publish Final Rules related to any of the Student Loan Debt Relief and Program Integrity and Institutional Quality regulations before the November 1st Master Calendar deadline.
For weeks CSPEN had been wondering whether or not the unofficial Final Rules would be published, clearing the way for a possibly expedited turnaround of the review process, and publication in final form in the Federal Register by this Friday.
Given where things stand as of this afternoon, it is clear that the process for both Committee’s proposals will not be completed in time to go into effect July 1st of next year – with the caveat that some regulations could provide for early implementation if the impacted parties choose to take action sooner. This may well be the case for the future publication of a Final Rule on Student Loan Debt Relief, and students are likely to seek loan reductions or cancellation sooner rather than later. But not likely to be implemented early on the six topics still under various stages of review from the Institutional Quality and Program Integrity negotiations.
Where Do The Various Proposals Stand In the Process
One of the easiest ways to track the status of pending regulations is the Unified Agenda for the U.S. Department of Education housed on the Regulations.gov website here (www.reginfo.gov/public/do/eAgendaMain?operation=OPERATION_GET_AGENCY_RULE_LIST¤tPub=true&agencyCode=&showStage=active&agencyCd=1800&csrf_token=345AAE4668AD2D7EBF4C28E2F463A84D48815006AA0FCCFA…).
As you can see when you go to the site, the current status of every education agency regulation and the details are all contained on there. Deciphering the terms is pretty straightforward. Regulations are either in the Notice of Proposed Rulemaking (NPRM) Stage or the Final Rule Stage – two stages which both provide the Administration with the ability to review to proposals in draft and final form respectively AND the opportunity for public comment both prior to the publication of the NPRM and before the publication of the Final Rule.
As of today, the Student Loan Relief proposals – amending regulations related to the authorities granted to the Secretary under 20 U.S.C. 1082(a) of the Higher Education Act of 1965, as amended (HEA), to provide relief to Federal student loan borrowers – are in the Final Rule Stage (www.reginfo.gov/public/do/eAgendaViewRule?pubId=202404&RIN=1840-AD93). Meaning that they will soon undergo one final public comment period under Executive Order 12866, have final comments from the White House/Administration provided to the Department, and then the Department will make any final revisions and publish a Final Rule.
But what about the announcement last week regarding Student Loan Debt Relief and the unofficial publication of a new NPRM on entitled Debt Relief for Student Hardship? While this is certainly tied directly to the aforementioned regulatory proposals, it is on a different trajectory as it is just about to begin the NPRM Stage as shared in the Department’s announcement, press release (www.ed.gov/about/news/press-release/biden-harris-administration-releases-proposed-rules-authorize-debt-relief), and unofficial publication (www.ed.gov/media/document/nprm-hardship-sldr). Once officially published in the Federal Register, interested parties will have thirty days to submit comments.
One of the provisions that provides borrowers with the prospect of student loan debt relief under the general heading of “borrower postsecondary experiences” is “Whether the borrower has completed any postsecondary certificate or degree program for which the borrower received title IV, HEA financial assistance.”
In describing the justification for the inclusion of this factor for debt relief, the Department’s summary states:
“The Department proposes to include these factors because there are clear connections between student outcomes and the type of institution attended. Similarly, there are very strong correlations between non-completion of a certificate or degree program and struggles to repay student loans, as described further below. This information could be particularly helpful for determining whether a borrower may be at heightened risk of default, which might indicate that the borrower satisfies the hardship standard in proposed § 30.91(a). The level of education pursued, and the type of institution attended, can have a substantial impact on a student’s earning trajectory and on their propensity to default and propensity to experience hardship as defined in proposed § 30.91(a). Across multiple studies and datasets, the sector and level of education provided by the institution correlate with propensity to default. In particular, students who attended for-profit institutions are more likely to default.
For example, among a cohort of borrowers who first entered undergraduate education in 2003-04, borrowers who entered a for-profit institution were 10 percentage points more likely to default than those who enrolled at other types of institutions. Further, students enrolled in two-year schools, or vocational schools, were more likely to default relative to students enrolled in four-year institutions. And students who enroll in non-selective four-year institutions were more likely to default than those who enroll in selective four-year institutions. The Department has long used a CDR measure to assess an institution’s continued participation in title IV aid programs. An institution’s CDR is highly predictive of future student loan delinquency.
Research also has shown that there can be differential financial returns to programs of study. Certain programs are also more likely to produce graduates with high amounts of debt, relative to typical earnings, which may affect loan repayment outcomes. While the prevalence of loan default among borrowers who attended a particular institution or program is not a direct measure of academic quality, it can provide insight into whether the financial returns provided by a program or institution are sufficient for borrowers. While not independently determinative of hardship, whether a borrower has completed their program of study generally correlates with student loan delinquency and default. Borrowers who leave school without the credential they were pursuing have debt but lack the additional earnings premium that can come with attaining a degree or certificate. Students who leave school without completing their degree are less likely to report financial well-being and are more likely to express a desire to have done things differently in their higher education experience. These factors are relevant to the Secretary’s determination of whether the borrower is experiencing or has experienced hardship that meets the eligibility requirements.”
With respect to the Program Integrity and Institutional Quality regulatory, now all six sets of proposals – including the three (Distance Education, R2T4, and TRIO) that are in the NPRM Stage and three (Cash Management, State Authorization, Accreditation) which have yet to enter the NPRM Stage.
What’s Next
CSPEN will continue to provide detailed updates on where all of these various regulatory proposals are in the process, how you and your institution, students, and third-party servicers could engage in the process, and the outcome of the development of the regulations once finalized. For now, what the community needs to be prepared to do is develop comprehensive responses to the Student Debt Relief Hardship NPRM.
We are here to assist you with those responses, as are your State Associations, national organizations, and others.
