Trump Admin to Redefine Student Loan Repayment, Forgiveness Programs
Credit: BRENDAN SMIALOWSKI / AFP / Getty Images- Two income-driven repayment plans will be put under the microscope in the coming months.
- Additionally, President Trump’s administration plans to amend a loan forgiveness program for public servants.
- Negotiated rulemaking has historically allowed presidential administrations to make sweeping changes to departmental programs.
- Public hearings to set an agenda will take place within the next month.
The Department of Education (ED) plans to rewrite regulations concerning federal student loan forgiveness for public servants and income-driven repayment (IDR) plans.
ED announced its intent to establish negotiated rulemaking committees to address federal financial aid topics, including two IDR plans and the Public Service Loan Forgiveness (PSLF) program.
The Federal Register filing also said ED would entertain potential topics that would “streamline current federal student financial assistance program regulations while maintaining or improving program integrity and institutional quality.”
This filing is just the first step ED must take to rewrite regulations regarding financial aid programs.
In the coming weeks and months, the department will have to more clearly define the topics under review in a future negotiated rulemaking committee. ED will also have to call for negotiators from different higher education stakeholder groups and set dates for future rulemaking sessions.
DEFINITIONS:
- Negotiated rulemaking: A process for rewriting federal regulations. Involves ED putting forth proposals and higher education stakeholders offering suggestions to improve those proposals. While negotiators vote on the proposals, ED ultimately gets to decide what moves forward.
- IDR plans: Income-driven repayment plans calculate a borrower’s monthly payment based on their wage, rather than by how much they owe. Plans offer complete debt forgiveness after 20-25 years of continuous repayment.
- PSLF: A federal program that offers complete forgiveness of federal student loan debt for people who work in a public service industry — including nonprofit and government work — for at least 10 years.
ED clarified that it intends to issue new regulations involving the Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans.
This means the Income-Based Repayment (IBR) plan would remain unchanged. The Saving on a Valuable Education (SAVE) plan — formerly the REPAYE plan — is still being challenged in courts, and SAVE borrowers remain in forbearance.
It’s unclear what the administration’s goals might be regarding the PAYE and ICR plans.
President Donald Trump’s administration has already given some indication of how it may amend the PSLF program.
Shortly after taking office, Trump signed an executive order directing ED to revise the PSLF program to exclude organizations that serve a “substantial illegal purpose” from being considered a public service entity. His list of actions that would meet this definition largely centered on culture war issues that defined his presidential campaign.
Negotiated rulemaking would be a logical way for ED to comply with this executive order.
ED will hold two public hearings to discuss the rulemaking agenda. An in-person hearing is scheduled for April 29 in Washington, D.C., while a virtual hearing is slated for May 1.
Any future negotiated rulemaking would take place before the backdrop of Trump’s quest to dismantle ED altogether. While it would take congressional action to completely shutter the department, it remains to be seen how extreme staff reductions at ED could affect the rulemaking process.