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- 22 Democrats urged Education Sec. Miguel Cardona to quickly implement reforms to student loans.
- The reforms include simplifying forgiveness for defrauded borrowers and borrowers with disabilities.
- Cardona has begun the process of issuing new rules, but Democrats want him to act quicker on relief.
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President Joe Biden's Education Department has just started the lengthy process of implementing new rules for the student-debt system, but Democrats want to ensure the new rules will truly help borrowers and provide relief as soon as possible.
Last week, Chair of the Senate Health, Education, Labor, and Pensions Committee Patty Murray and Senate Majority Leader Chuck Schumer led 20 of their Democratic colleagues in a letter to Education Secretary Miguel Cardona, urging him to prioritize reforms to the student-debt system in his regulatory agenda. Cardona held public hearings to get feedback on possible reforms last month, and as he's now entering the negotiated rulemaking stage, the lawmakers want to ensure the new rules will best help borrowers get relief.
"As part of the upcoming negotiated rulemaking process, we encourage the Department to pursue policies that reduce disparities in the burden of student debt, simplify loan repayment, close donut holes in forgiveness programs, and improve the overall confidence of borrowers in the federal student loan system," the lawmakers wrote.
According to the lawmakers, Cardona's Education Department should:
- Simplify the income-driven repayment plans to expand the relief they provide to borrowers and ensure monthly payments are capped at no more than 10% of borrowers' incomes;
- Reverse President Donald Trump's "borrower defense to repayment" rule for borrowers defrauded by for-profit schools, and instead establish a fair and consistent rule that would give those borrowers full – not partial – relief;
- Reinstate automatic discharges of student loans within 90 days of a school's closure;
- Move forward with loan forgiveness for borrowers with disabilities and expand eligibility requirements for borrowers;
- And "close donut holes" and improve eligibility for the Public Service Loan Forgiveness (PSLF) program.
They also requested that Cardona implement the rules early and "take advantage of existing statutory and regulatory authorities to provide student debt relief administratively while it finalizes the new rules."
Insider reported last month that while the department's agenda included reforms to PSLF and debt forgiveness for defrauded borrowers, among other things, details of what the improvements would look like were vague, and Democrats want borrowers to get as much certainty as possible as soon as possible.
That's why Sen. Elizabeth Warren of Massachusetts led other Democrats in sending a letter to the CEOs of all student-loan servicers, requesting they improve their outreach to borrowers to help them resume paying off their loans, and most recently, both Warren and Murray sent letters to Cardona asking for the pause on student loan payments - currently set to expire at the end of September -to be extended through next year, given that borrowers are still suffering financial hits from the pandemic.
Murray, Schumer, and their colleagues said their proposed new rules would "help build borrowers' confidence in the federal student loan program's efforts to put higher education within reach for more students, rather than creating complex or burdensome requirements that stop students from accessing or pursuing educational opportunities."