On October 25, the U.S. Department of Education (ED) unveiled a set of proposed rules that would help an estimated 8 million borrowers experiencing financial hardship access student loan debt relief.
The proposed rules, which come out of ED’s negotiated rulemaking earlier this year, detail two new pathways to debt relief:
- ED would provide automatic, one-time relief to borrowers with at least “an 80% chance of being in default in the next two years,” based on an analysis of a borrower’s assets, debt to income ratios, and Pell grant recipient data, among other factors. According to ED, approximately two-thirds of borrowers eligible for this pathway would have also received a Pell grant.
- The second pathway would be “primarily application-based” and allow current and future borrowers to receive relief based on hardship. This pathway would involve a thorough review of a borrower’s financial circumstances, and if eligible and no other debt relief program would address their hardships, ED could cancel their loans. [Higher Ed Dive]
What’s next: The proposed rules will be formally published in the weeks ahead; once published, the rules will undergo a 30 day public comment period. ED expects to finalize the regulations sometime next year, as long as the plan isn’t challenged in the courts. [Forbes, subscription model]
Go deeper: Check out our team’s coverage of the Biden administration’s attempts to supply borrowers with student loan debt relief and the repayment challenges faced by borrowers here, here, and here.
