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Senator Patty Murray

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Thousands of comments were sent to the Education Department on a new set of proposed regulations aimed to improve “targeted” debt relief programs for some student borrowers. Among the comments sent in before the deadline last Friday were letters from Senate Democrats and congressional Republicans.

The department proposed a set of rules in July that would make it easier for students who were defrauded by their college or who attended a college that closed to get debt forgiveness. It also proposed simplifying the process for public service workers and borrowers with disabilities to get debt relief, among other changes.

A letter from Senator Patty Murray of Washington, who serves as chair of the Senate Committee on Health, Education, Labor, and Pensions, which was joined by 22 Democratic senators, said the proposal was “an enormous step forward for students and borrowers.” On the other hand, a letter from Representative Virginia Foxx and Senator Richard Burr, both Republicans from North Carolina, called for the department to withdraw the proposal, arguing that it does not have the executive authority to enact such changes.

The Education Department will now review the submitted comments before releasing a final rule.

Senate Democrats Praise the Proposal

The Education Department proposed to create a “single standard and streamlined” application process for borrower defense, a rule that allows borrowers who say they were defrauded by their colleges to apply for student debt relief. It also proposed to count aggressive and deceptive recruitment as a new standard for what counts as misconduct.

Democrats called this “the strongest borrower defense rule we have ever seen” but expressed some concern about the proposal. Specifically, Democrats said that the department should allow legal assistance organizations, and state attorneys general, to bring forward group claims. Under the current proposal, a group claim can be formed by the department if it notices many similar claims filed by the same institution or from an application from a state-level official.

Additionally, Democrats asked the department to not allow interest to accrue for individual borrower-defense claims. Under the proposed rule, borrowers in group claims would have their interest paused immediately, while individual borrowers’ interest would stop accruing only after their claim has been pending for 180 days or more.

The department also proposed changes to the Public Service Loan Forgiveness program that would simplify the application process by expanding the types of payments that count toward PSLF, including certain periods of deferment and forbearance. Although Democrats praised these changes, they would like the department to count all periods of deferment and forbearance toward PSLF to “reduce unnecessary complexity.”

Democrats also welcomed proposals that would eliminate interest capitalization and make it easier for borrowers who become disabled or who attended colleges that permanently closed to get their debt forgiven.

“The department’s proposed rules will help to provide additional relief to struggling borrowers, protect students and taxpayers from fraud and abuse committed by institutions, and ensure our federal student loan program fulfills its promise to put higher education within reach for more students without subjecting them to complex, burdensome, or punitive requirements that make it harder to get the relief they are owed,” said the letter.

Republicans Claim the Proposal Exhibits Executive Overreach

In their letter, Burr and Foxx wrote that “rather than work with Congress, the department, through this [notice of proposed rule making], brazenly seeks to enact Democrats’ wish list of policies through executive fiat.” The letter said that the proposed changes could cost taxpayers up to $85.1 billion over the next decade.

Specifically, Republicans believe that the proposed changes to borrower defense in PSLF are most out of line with the department’s executive authority because they are the most “costly provisions” of the NPRM. House Republicans proposed to eliminate the PSLF program in a bill introduced earlier this month.

Recently, the Supreme Court ruled in West Virginia v. Environmental Protection Agency that federal agencies only have powers given to them by Congress and that they are not an “open book to which the agency [may] add pages and change the plot line.” Burr and Foxx argue that this ruling applies to the department’s authority to create new rules on the federal student loan program, which they say should be up to Congress.

“Congress did not give the department a blank check to spend federal taxpayer dollars ad infinitum,” said the letter.

The two top Republican leaders on education asked the department to withdraw its proposal and instead work with Congress to enact such changes.

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