January 12, 2023
President Biden's Student Loan Repayment Plan and Increased Institutional Accountability Measures Coming into Focus
The Biden Administration is moving ahead on two high-profile initiatives focused on higher education and students, specifically those on reducing loan costs and holding colleges and universities accountable for providing financial value to students.
First is a new income-driven repayment (IDR) plan released by the Department of Education in a Notice of Proposed Rulemaking (NPRM). This new plan builds on the discussions from the fall 2021 negotiated rulemaking committee and from a previous announcement by the Biden Administration regarding student loan debt forgiveness.
A key element of the Department’s proposal is to reduce the overall cost of student loans to borrowers by redesigning the current Pay-As-You-Earn (REPAYE) repayment plan. The new plan would reduce the payments required by students of various income levels, reduce interest capitalization and shorten the total number of payments required for many borrowers. NAICU has prepared a summary of the IDR plan.
In conjunction with the new loan repayment policies, the Biden Administration announced a separate initiative to reduce student debt by holding colleges and universities accountable for providing “real financial value to students” that does “not leave them with debt they cannot afford.” As part of this initiative, the Department is planning to create a methodology that will “identify the lowest-financial-value programs,” publish a warning list regarding those programs, and request improvement plans from institutions with programs on the list. These accountability measures are designed to ensure that the proposed reduction in federal student loan costs to borrowers do not lead to increased borrowing.
As part of its effort to provide additional transparency, the Department published a request for information (RFI) seeking public comments on how to identify the lowest-financial-value programs, which are described as “postsecondary programs that are most likely to leave students with unaffordable loans and provide the lowest financial returns for students and taxpayers.” The Department is seeking general feedback on its proposal, as well as specific responses to a series of questions on measures and metrics, list structure, data elements, and public dissemination. Those questions are set forth in the RFI announcement.
Public comments for both the RFI and the IDR plan must be submitted by February 10, 2023 via the Federal Rulemaking Portal at regulations.gov. NAICU is planning on submitting comments on the RFI on institutional accountability.
First is a new income-driven repayment (IDR) plan released by the Department of Education in a Notice of Proposed Rulemaking (NPRM). This new plan builds on the discussions from the fall 2021 negotiated rulemaking committee and from a previous announcement by the Biden Administration regarding student loan debt forgiveness.
A key element of the Department’s proposal is to reduce the overall cost of student loans to borrowers by redesigning the current Pay-As-You-Earn (REPAYE) repayment plan. The new plan would reduce the payments required by students of various income levels, reduce interest capitalization and shorten the total number of payments required for many borrowers. NAICU has prepared a summary of the IDR plan.
In conjunction with the new loan repayment policies, the Biden Administration announced a separate initiative to reduce student debt by holding colleges and universities accountable for providing “real financial value to students” that does “not leave them with debt they cannot afford.” As part of this initiative, the Department is planning to create a methodology that will “identify the lowest-financial-value programs,” publish a warning list regarding those programs, and request improvement plans from institutions with programs on the list. These accountability measures are designed to ensure that the proposed reduction in federal student loan costs to borrowers do not lead to increased borrowing.
As part of its effort to provide additional transparency, the Department published a request for information (RFI) seeking public comments on how to identify the lowest-financial-value programs, which are described as “postsecondary programs that are most likely to leave students with unaffordable loans and provide the lowest financial returns for students and taxpayers.” The Department is seeking general feedback on its proposal, as well as specific responses to a series of questions on measures and metrics, list structure, data elements, and public dissemination. Those questions are set forth in the RFI announcement.
Public comments for both the RFI and the IDR plan must be submitted by February 10, 2023 via the Federal Rulemaking Portal at regulations.gov. NAICU is planning on submitting comments on the RFI on institutional accountability.
For more information, please contact:
Emmanual A. Guillory and Jody Feder