We won a bonus #NegReg session on hardship, here's how it went:

WE DID IT!!!!! With your help, we convinced the Department of Education (ED) to hold a fourth negotiated rulemaking (Neg Reg) session dedicated to creating a debt relief proposal for borrowers experiencing hardship—and today, the negotiators reached consensus to do just that! The proposal now moves forward to the next phase and has the potential to be one of the most inclusive, far-reaching, & life-changing federal student debt relief rules to date. 👏🎉😭😍💯

This session would not have been possible without organizing and borrowers standing up and demanding not to be left behind. And we succeeded against the wishes of student loan servicers (yes, the negotiator representative for servicers refused to support the proposal and abstained—because they would much rather continue profiting off of student loan borrower hardship than see ED deliver necessary relief).

Check out our live Twitter thread from yesterday's session here and today's session here.

How Did We Get Here?

After the Supreme Court struck down President Biden's first attempt to deliver widespread student debt relief, the President announced his intent to still cancel student debt using authority under the Higher Education Act. To develop this policy proposal, ED initiated the Neg Reg process which brings together stakeholders to inform the final proposal.

Initially, the process was slated as three two-day sessions aimed at discussing ED proposals for providing targeted relief to borrowers in certain circumstances, including ‘hardship.’ However by the end of the third session, despite extensive feedback, ED had still not presented a proposal that would address student loan debt hardship–running the risk of leaving behind borrowers in desperate need of relief.

For weeks after, we urged ED to schedule a fourth session to address hardship. First, we organized more than 65 organizations representing millions of students, workers, people of color, veterans, and people with disabilities to send a letter to ED. Next, members of both chambers of Congress also called for a hardship session. Finally, members of ED's own negotiating committee joined the chorus of calls urging ED to return to the table. Our pressure worked. ED scheduled a fourth session and released draft language that will give the Secretary of Education the necessary flexibility to address the many ways that student loan borrowers experience hardship and provide much-needed relief! To learn more about how student loan debt leads to economic hardship, check out our blog here.

Below is a detailed rundown of the language, but the top takeaway is that ED is considering ways to cancel a borrower’s debt if they are likely to struggle to repay their loan or if the cost of collecting the debt exceeds the benefits.

Hardship #NegReg Session Round-Up

This bonus session of negotiations kicked off with a review of ED’s new hardship proposal. The rule applies to federal student loan borrowers, including Parent PLUS borrowers and borrowers with ED-held FFELP loans, and outlines a list of hardship factors that the Secretary may consider (but is not limited to) for qualifying a borrower for relief. In summary, these cover: a borrower’s overall finances; a borrower’s loan history; a borrower’s education information; and a borrower’s demographic information.

Throughout the session, the committee discussed ways that the proposal can be made stronger to ensure all borrowers in need receive relief, including:

Automation: Negotiators repeated over and over that debt relief should be as automatic as possible for as many people as possible. They referenced historical issues with the Total and Permanent Disability Program, and how applications make it difficult for people to access similar relief programs. Data sharing came up a lot with the negotiators, but ED stated that they didn’t want to include that in the regulations.
Servicing errors: The need to explicitly provide relief for borrowers who have been victims of servicing errors arose frequently both from the negotiators and borrowers giving public comments. ED decided not to include language on this in the draft proposal for these regulations, and pointed to their efforts to correct prior servicer errors through the IDR Account Adjustment and most recently through the administrative forbearance period during the turbulent first few months of return to repayment. We know servicing errors are rampant and continue to cause a lot of issues for borrowers, including driving them further into debt. Everything from a servicer getting your Social Security number wrong to losing years of payment history has wreaked financial havoc on borrowers and kept them trapped in debt.
Parent PLUS Borrowers: Negotiators and borrowers pushed ED to add language to definitively clarify that Parent PLUS Borrowers are eligible for relief. Negotiator Dr. Jalil Bishop summed up the importance powerfully: “I've learned being a Black person navigating student loan policy, that it’s really important to put your trust, not just in what people say, but in what they do. How can Parent PLUS borrowers trust what will be done when they have been served poorly by the system in the past? How can we send the message and make it clear that these borrowers are included even though they have been excluded in the past?”
GOING BROAD and STAYING BROAD: Borrower advocate negotiators raised that all provisions should be broad so that they could be used both right now, and by future administrations to herald lasting change.
Default: Default has come up a lot over the past few months of rulemaking, and this time was no different. ED’s proposed rule includes a provision for automatic and total debt cancellation for folks who are 80% likely to default. Negotiators argued that this threshold is too high and could leave too many borrowers behind. ED did not budge on this. Negotiators also looked for confirmation that borrowers who have signed up for Fresh Start this year wouldn’t be excluded just because they recently got out of default (they are likely to still be in default if not for the one-time program).
Racial equity: ED also explained that they plan to use artificial intelligence (AI) to help them determine who would be eligible for this immediate relief, and negotiators raised concerns about whether those models could ensure racial equity in implementation, as we know this is a problem with other AI underwriting.

Our Favorite Moments

Up Next

With this MASSIVE win locked in, now we move into the next phase. In the next few months, ED will release its proposal (which will resemble what the committee reached consensus on) and will allow one last opportunity for the public to provide feedback. Then, hopefully by summer, ED will implement the final rule.

The Biden Administration is delivering on its promise to borrowers, and now ED must work swiftly to enact relief for the millions who have been forced to wait too long for cancellation.

Thanks for sticking with us!

The Student Borrower Protection Center Team