Student Debt Relief Based on Hardship for the William D. Ford Federal Direct Loan Program (Direct Loans), the Federal Family Education Loan (FFEL) Program, the Federal Perkins Loan (Perkins) Program, and the Health Education Assistance Loan (HEAL) Program

DEPARTMENT OF EDUCATION <CFR>34 CFR Part 30</CFR> <DEPDOC>[Docket ID ED-2023-OPE-0123]</DEPDOC> <RIN>RIN 1840-AD95</RIN> <SUBJECT>Student Debt Relief Based on Hardship for the William D. Ford Federal Direct Loan Program (Direct Loans), the Federal Family Education Loan (FFEL) Program, the Federal Perkins Loan (Perkins) Program, and the Health Education Assistance Loan (HEAL) Program</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Office of Postsecondary Education, Department of Education. <HD SOURCE="HED">ACTION:</HD> Notice of proposed rulemaking. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Secretary proposes to amend the regulations related to the Higher Education Act of 1965, as amended (HEA), to provide for the waiver of certain student loan debts. The proposed regulations would specify the Secretary's authority to waive all or part of any student loan debts owed to the Department based on the Secretary's determination that a borrower has experienced or is experiencing hardship related to such a loan. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> We must receive your comments on or before December 2, 2024. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Comments must be submitted via the Federal eRulemaking Portal at <E T="03">Regulations.gov</E> . Information on using <E T="03">Regulations.gov</E> , including instructions for finding a rule on the site and submitting comments, is available on the site under “FAQ.” If you require an accommodation or cannot otherwise submit your comments via <E T="03">Regulations.gov</E> , please contact <E T="03">regulationshelpdesk@gsa.gov</E> or by phone at 1-866-498-2945. The Department will not accept comments submitted by fax or by email or comments submitted after the comment period closes. Please submit your comment only once so that we do not receive duplicate copies. Additionally, please include the Docket ID at the top of your comments. <E T="03">Privacy Note:</E> The Department's policy is to generally make comments received from members of the public available for public viewing on the Federal eRulemaking Portal at <E T="03">Regulations.gov</E> . Therefore, commenters should include in their comments only information about themselves that they wish to make publicly available. Commenters should not include in their comments any information that identifies other individuals or that permits readers to identify other individuals. If, for example, your comment describes an experience of someone other than yourself, please do not identify that individual or include information that would allow readers to identify that individual. The Department may not make comments that contain personally identifiable information (PII) about someone other than the commenter publicly available on <E T="03">Regulations.gov</E> for privacy reasons. This may include comments where the commenter refers to a third-party individual without using their name if the Department determines that the comment provides enough detail that could allow one or more readers to link the information to the third party. For example, “a former student with a graduate level degree” does not provide information that identifies a third-party individual as opposed to “my sister, Jane Doe, had this experience while attending University X,” which does provide enough information to identify a specific third-party individual. For privacy reasons, the Department reserves the right to not make available on <E T="03">Regulations.gov</E> any information in comments that identifies other individuals, includes information that would allow readers to identify other individuals, or includes threats of harm to another person or to oneself. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Tamy Abernathy, U.S. Department of Education, Office of Postsecondary Education, 400 Maryland Avenue SW, 5th floor, Washington, DC 20202. Telephone: (202) 245-4595. Email: <E T="03">NegRegNPRMHelp@ed.gov</E> . If you are deaf, hard of hearing, or have a speech disability and wish to access telecommunications relay services, please dial 7-1-1. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Executive Summary</HD> A brief summary of these proposed regulations is available at <E T="03">https://www.regulations.gov/docket/ED-2023-OPE-0123.</E> These proposed regulations would clarify the use of the Secretary's longstanding authority to grant a waiver of some or all of the outstanding balance on a Federal student loan. <SU>1</SU> <FTREF/> Under this proposed rule, the Department would specify how the Secretary would exercise discretionary authority to grant waivers using the following standard: the Secretary would determine that a borrower is experiencing or has experienced hardship related to the loan: (1) that is likely to impair the borrower's ability to fully repay the Federal government, or (2) that renders the costs of enforcing the full amount of the debt not justified by the expected benefits of continued collection of the entire debt (proposed § 30.91(a)). <FTNT> <SU>1</SU>  As discussed more fully below, these proposed regulations focus on the Secretary's waiver authority under sections 432(a)(6) and 468(2) of the HEA. Section 432(a)(6) provides that, “in the performance of, and with respect to, the functions, powers and duties, vested in him by this part, the Secretary may . . . waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.” 20 U.S.C. 1082(a)(6). Section 468(2), the Perkins Loan Program's authorizing statute, features a similar waiver provision. 20 U.S.C. 1087hh(2). The Department views sections 432(a)(6) and 468(2) as permitting the Secretary to waive the Department's right to require repayment of a debt when there are circumstances that warrant such relief, such as the circumstances specified in these proposed regulations. The Department acknowledges that several states have challenged the Department's authority to waive loans under sections 432(a)(6) and 468(2) through litigation focused on separate proposed rules issued by the Department on April 17, 2024 (89 FR 27564) that also rely on the Department's waiver authority under the HEA. <E T="03">See Missouri</E> v. <E T="03">Biden,</E> No. 24-cv-1316 (E.D. Mo.). In that separate litigation, a Federal district court has preliminarily enjoined the Department “from implementing the Third Mass Cancellation Rule,” a term that the plaintiffs used to refer to the April 2024 NPRM, and “from mass canceling student loans, forgiving any principal or interest, not charging borrowers accrued interest, or further implementing any other actions under the Rule or instructing federal contractors to take such actions.” Memorandum and Order, Doc. 57 at 3, <E T="03">Missouri</E> v. <E T="03">Biden,</E> No. 24-cv-1316 (E.D. Mo. Oct. 3, 2024). As of the publication of this NPRM, this litigation remains pending with no final decision on the merits, including no final decision pertaining to the Secretary's authority under sections 432(a)(6) and 468(2) of the HEA. </FTNT> The proposed regulations would then provide a non-exhaustive list of factors the Secretary may consider in deciding whether to grant relief (proposed § 30.91(b)). Then, proposed § 30.91(c) would provide a process by which the Secretary may grant individualized automatic relief through a predictive assessment based on the factors in proposed § 30.91(b). Should the Secretary choose to exercise such discretion, proposed § 30.91(c) would provide immediate, one-time relief as soon as practicable. And, proposed § 30.91(d) would provide a primarily application-based process by which the Secretary may provide additional relief on an on-going basis. The proposed regulations describe two different pathways that the Secretary could take to exercise discretion to grant a waiver in instances where the borrower meets the hardship standard in proposed § 30.91(a). We describe those pathways in greater detail in the preamble below to assist the public in understanding how the proposed regulations would operate and to clarify terminology to guide such a discussion. The first pathway would be a “predictive assessment,” pursuant to proposed § 30.91(c), under which the Secretary would consider information in the Department's possession to determine whether the borrower meets the proposed standard for hardship in § 30.91(a) such that their loans are at least 80 percent likely to be in default within the next two years. The Department would make a predictive assessment that considers factors indicating hardship (described in proposed § 30.91(b)) and may, in the Secretary's discretion, then provide immediate relief by granting waivers to eligible borrowers, without requiring any action by those borrowers to seek that relief. The second pathway, which is under proposed § 30.91(d), would be a determination based on a “holistic assessment” of the borrower's circumstances (based on the factors in proposed § 30.91(b)) that meets the proposed hardship standard for waiver specified in proposed § 30.91(a). This assessment would focus on borrowers who are not otherwise eligible for the immediate relief under proposed § 30.91(c) and who are not eligible for relief sufficient to redress their hardships through other Department programs supporting student loan borrowers. Under this pathway for relief, the Department would conduct a holistic assessment of the borrower's hardship based on information about the borrower's experience with the factors in proposed § 30.91(b) obtained through an application or based on information already within the Department's possession, or a combination of the above. A borrower would be eligible for relief if, based on the Department's holistic assessment, the Department determines that the borrower ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 268k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━