Higher Ed Policy Roundup: Vol. 8 - Issue 13

On Wednesday, the Education Department (ED) released a proposal rule in the Federal Register of its plan to pursue federal student debt forgiveness using the Higher Education Act. Recall that after the U.S. Supreme Court ruled against the Biden-Harris Administration’s debt forgiveness plan, President Biden announced that his administration would pursue debt forgiveness through the negotiated rulemaking process. The proposed rule seeks to waive:

• Up to $20,000 or the amount by which the current outstanding balance on a borrower's loan exceeds the balance owed upon entering repayment;
• For single borrowers earning at most $120,000, head of households earning at most $180,000, and married borrowers filing jointly earning at most $240,000, the full amount by which the current outstanding balance on a loan exceeds the amount owed when the loan entered repayment for loans being repaid on any income-driven repayment (IDR) plan;
• The outstanding balance of loans for borrowers otherwise eligible for loan forgiveness under an IDR plan but who are not enrolled;
• The outstanding balance of loans for borrowers with only undergraduate debt if they first entered repayment on or before July 1, 2005, and borrowers with any graduate school debt if they first entered repayment on or before July 1, 2000; and
• The outstanding balance of loans for borrowers enrolled in institutions or programs that lost their eligibility to participate in the federal student aid program or were denied recertification because they cheated or took advantage of students, or borrowers who attended institutions or programs that closed and failed to provide sufficient value.

The public will be allowed to provide comments on the proposed rule until May 17, 2024, and ED says that it hopes to finalize the plan by this fall.

The Biden-Harris Administration announced another tranche of federal student loan forgiveness totaling $7.4 billion and impacting 277,000 borrowers. This most recent announcement targets borrowers receiving forgiveness through the Public Service Loan Forgiveness program, administrative adjustments to IDR payments, and the Saving on a Valuable Education (SAVE) plan. So far, the Biden-Harris Administration has canceled approximately $153 billion in student loan debt for 4.3 million borrowers.

Despite steady increases in college enrollment over the past several years, experts predict recent troubles with the new Free Application for Federal Student Aid (FAFSA) rollout may result in prevalent decreases, as 27% fewer students have submitted their FAFSA for the upcoming year.

A recent brief from Penn Wharton Budget Model on the Biden-Harris Administration's new SAVE income-driven repayment plan revealed it is estimated to cost $475 billion over the 10-year budget window.

A research article from the Pew Research Center investigates how borrowers who repay their loans via SAVE can benefit from interest subsidies during the first year and beyond.

There were no relevant student-aid related bills recently introduced for consideration by the 118th Congress (2023-2024).