Student loan debt forgiveness: Education Department begins talks over new plan

A year ago, President Joe Biden’s plan was to forgive up to $20,000 in student loan debt for tens of millions of Americans. 

With that plan now extinct, the first of several conversations to hash out a new strategy for erasing loan balances en masse began Tuesday and continues Wednesday.  

"Creating clearer regulations will ensure the authority to waive student debt is used in a fair and lawful manner," said James Kvaal, under secretary of education said Tuesday, as the first of three of these two-day talks began. "We believe that doing so will strengthen the entire student loan system, help us tackle pervasive problems in the system, and help ensure postsecondary education is a path to opportunity for more students."

As the process of negotiated rulemaking, or neg reg as it’s sometimes called in federalese, gets underway, tens of millions of Americans are wrestling with student loan payments for the first time in more than three years. Social media is littered with evidence of confusion about the size of monthly payments. Some people say they are puzzled about why they are being billed at all. One set of borrowers has their payments set to zero because of a new federal repayment option called SAVE that aims to be more generous than any other.

The negotiators resume their conversation at 10 am Eastern time Wednesday, and it will be livestreamed with a chance for the public to weigh in. Here’s what you need to know:  

Mass student loan forgiveness?It's likely off the table in President Biden's Plan B

Who is on the committee to negotiate a student loan forgiveness rule?

The process the Biden administration has turned to is called negotiated rulemaking. It has been used many times over the years to draft rules related to higher education, including on how Title IX law on sexual assault is applied at schools and colleges and how well colleges produce graduates whose jobs can cover their student debt.

The people who will hash out the student loan plan applied or were nominated to participate and then were selected by the Education Department. They represent different groups who have a stake in student loans, such as borrowers, student loan servicers and colleges and universities. Some of the members include Wisdom Cole, national director of the NAACP Youth & College Division; Yael Shavit, an assistant attorney general in the Consumer Protection Division of the Massachusetts Attorney General's Office; and Jada Stanford, a student at Stephen F. Austin State University in Texas. 

This is a list of the committee members, including alternates, selected ahead of Tuesday's meeting. But on the first day, the committee chose to add representatives of two additional groups – consumer advocates and individuals with disabilities.

What will happen at the first student loan negotiated rulemaking meeting?

Their meeting agenda doesn't give very much away. But the focus of the virtual meeting is wide-reaching, with discussion reserved for each of the five guiding questions mapped out by the department. 

The questions are described in this issue paper published late last month. They are, in short:

1. Many borrowers have seen their overall balances snowball to amounts larger than they originally took out thanks to the accrual of unpaid interest. Are there ways to help these borrowers and ease their path to repayment? 
2. How can the department better help borrowers who are eligible for forgiveness under existing programs but haven’t applied? These programs include income-driven repayment, public service loan forgiveness and relief for individuals with total and permanent disabilities. 
3. What about borrowers whose higher education programs failed to secure them the income needed to pay off their loans? How should the department handle their debt?
4. Many borrowers entered repayment before certain benefits were created to ease the student loan debt burden. How should the department handle these loans? 
5. What kinds of hardships do borrowers face that make it difficult to pay off their student loans? How can the department address those difficulties beyond the options currently in place?

Public comment comes at the end of each day of conversation. To sign up to speak, send your name and, if applicable, organization to negreghearing@ed.gov no later than noon Eastern time on each meeting day. 

4 takeaways from the first day of talks

On Tuesday, negotiators focused on questions No. 1 and 2 – how to better support borrowers with outsize balances and better engage borrowers who are eligible for forgiveness but haven’t applied. The discussion was civil, though at times it meandered into territory not technically covered by this neg reg process. Some, for example, focused on the need to ease burdens on parents who took out student loans on behalf of their kids, known as Parent PLUS loans, which are not eligible for most income-driven repayment options. Others highlighted obstacles to participating in the public service loan forgiveness program. 

Four takeaways from the day’s discussion:

• Even in the housekeeping portion of the meeting, there were disagreements. One negotiator, a representative of for-profit colleges, questioned the move to increase the time allowed for public comment. Another, an attorney who works with borrowers, asked for additional perspectives to be included on the committee – voices representing consumer advocates and those representing student loan borrowers who have disabilities. The Department agreed to add those perspectives, and by the afternoon the committee had three new people. 
• Borrowers and advocates on the committee complained, in various ways, of a student loan system that benefits from people’s lack of options or financial literacy. Many spoke of being steered into forbearance without knowing the consequences, only to wind up – often decades later – with balances that feel unsurmountable. The interest, which accrues during forbearance, “is what’s killing people,” said negotiator Sherrie Gammage, a borrower and former four-year college student who’s now over 65 and has been paying off her loans since about 2004. When the discussion turned to borrowers who haven’t signed up for forgiveness despite being eligible, some negotiators demanded better outreach and more automation. Ashley Pizzuti, an advocate and borrower who attended a two-year college, said that to this day many people tell her they’d never heard of a given forgiveness program even though they’re covered by it.
• Over the course of the day, there were moments of confusion over the scope and purpose of this rulemaking. At one point, Tamy Abernathy, a policy coordinator with the department, stressed that the mission of this committee isn’t to provide “broad-based debt cancellation, where we are going to wipe off debt in its entirety.” While the provisions crafted by the group could end up forgiving all the debt for certain groups, she continued, “it could not cancel all borrowers’ debt completely.” Later in the day, when the conversation veered into borrowers’ challenges accessing public service loan forgiveness, Abernathy stressed “we’re going to have to draw the lines in what is within our control.” Adjustments to PSLF rules are not part of this neg reg process, she noted.
• Several members of the public spoke at the end of the day, and their comments largely reflected pain points highlighted by negotiators. A few accused servicers of spreading misinformation or abusing borrowers. “Education should not be a route for servicers to profit off people,” said commenter Melissa Byrne, a student loan forgiveness organizer. “It’s not that borrowers don’t listen. It’s that borrowers can’t get through to servicers because servicers don’t care about borrowers.” 

How does the 'neg reg' process for student loan forgiveness work?

The negotiators have to come up with a plan to which every committee member has to agree. If they don’t arrive at a consensus, the Education Department will come up with its own proposal. Either way, there will be another opportunity for the public to comment on what is developed before it’s finalized. Congress will then have the opportunity to review the rule, and has the option of passing a joint resolution to overturn it. 

A final rule must be published by Nov. 1 for it to take effect in July of the following year. This rulemaking schedule is a big reason the Biden administration is so intent on publishing a rule developed under its Education Department. If the process goes according to plan, the earliest borrowers would see forgiveness is summer of 2024. 

When the Supreme Court struck down Biden’s original plan this past summer, it ruled that student loan debt relief could not happen through the president’s executive authorities the way he’d hoped. That means the only viable routes are through federal legislation – which given partisan gridlock is all but impossible – or federal higher education policy changes, a.k.a. neg reg. 

If a rule isn’t finalized through this neg reg series and a Republican wins next year’s presidential election, the chances of broad student loan forgiveness becoming reality are even slimmer. 

How to watch

First, sign up to watch the negotiators discuss policies that could make large-scale loan forgiveness a reality. You’ll need to register at this link. 

The first meeting spans over two days, Tuesday and Wednesday, for five hours each – from 10 am to noon Eastern, then 1 pm to 4 pm.

When are the other student loan relief meetings?

The next meeting is scheduled for Nov. 6-7, and the one after that for Dec. 11-12. Both of the sessions, like the one that kicks off Tuesday, will be virtual and include opportunities for the public to comment. The links to register will be different for the next two sessions.

Biden has a Plan Bfor mass student loan forgiveness. It could be excruciatingly long