Student loan borrowers are getting closer to debt relief. Here are the next steps.

  • The Department of Education is about to hold its final round of student debt relief talks.
  • After the negotiations, the public will have an opportunity to comment on the proposals.
  • So far, the department is considering five groups of borrowers to be eligible for debt relief.

The Ministry of Education will will soon enter its next phase in the process to obtain student loan forgiveness for millions of borrowers.

After the Supreme Court rejected President Joe Biden’s first attempt at broad student debt relief in late June, the Department of Education has been working on a longer process to implement relief using the Higher Education Act of 1965.

Unlike Biden’s first attempt at relief, the Higher Education Act requires an administration to go through a process known as negotiated rulemaking, which includes a series of stakeholder negotiation sessions on the rule text and an opportunity for public comment — and could take at least a year to complete.

However, the department has vowed to act as quickly as possible and will hold its final round of talks on December 11 and 12 before moving on to finalizing the relief text.

“This rulemaking process is intended to protect borrowers who have been failed by the nation’s broken student loan system and to create new regulations that will reduce the burden of student debt in this country,” said more Education Minister Miguel Cardona said early in a statement.

Here’s what we know so far about the relief and what borrowers can expect in the coming months.

What’s on offer for student debt relief

A week before the final negotiating session, the Department of Education released an updated draft of the text for the final relief plan. He highlighted five groups of borrowers he plans to target for relief:

  1. Borrowers on income-driven repayment plans with balances greater than originally borrowed qualify for up to $20,000 in relief.

  2. Other borrowers with balances greater than what they borrowed are eligible for up to $10,000 in relief.

  3. Borrowers whose loans entered repayment at least 20 years ago.

  4. Borrowers eligible for relief under income-driven repayment plans or other targeted programs such as public service loan forgiveness but have not applied.

  5. Borrowers who went to schools that left them with too much debt compared to their earnings after graduation.

During the December session, negotiators will discuss these proposed groups, along with alternative ways to obtain relief for another group of struggling borrowers.

The proposed text also includes text that is likely intended to protect the Department of Education from any legal challenges that might arise. Specifically, there is a section in the text that explains how the department will reimburse the agencies that hold the accounts that will be exempted — protecting against potential lawsuits by agencies that could claim they lost revenue from the relief.

Next steps after negotiations

After the December session ends, the committee will determine whether it has reached consensus. For that to happen, every committee member must agree to every provision in the text, and once consensus is reached, the department will begin finalizing the draft rules for publication in the Federal Register. The public will then have an opportunity to comment on the text, and the agency may change the draft depending on the comments it receives.

According to the department’s latest regulatory agenda, the Department of Education doesn’t plan to formally issue its debt relief rule proposal until May 2024. Tammy Abernathy, the department’s negotiator, said during the October sessions that unless the secretary of education does not elect to implement the relief early, it will not take effect until July 1, 2025.

Meanwhile, the department has introduced debt relief for targeted groups of borrowers through one-time bill adjustments for those who have completed the required 20 or 25 years of payments under income-based repayment plans.

Most recently, the department announced $5 billion in relief for 80,000 borrowers, and a senior administration official told reporters that the department will continue to review borrowers’ accounts every month until next spring.

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