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Washington Update is a monthly newsletter written by Powers Higher Education Specialist Sharon Bob that summarizes the latest Congressional and Department of Education updates in education policy. Click here for a PDF.

Senator Cotton Sends Letter to Secretary of Education Asking for Legal Justification for Student Loan Forgiveness

On May 4, 2022, Senator Tom Cotton (R-AR) sent a letter to Secretary of Education Miguel Cardona demanding transparency over the Department of Education’s deliberations around federal student loan forgiveness.  “I’m firmly opposed to student debt cancellation.  It is an insult to the majority of Americans who chose not to attend college, a hand-out to the wealthy and well connected, and a get out of jail free card for universities that charge unjustifiably high tuition and fees.”  Senator Cotton also said that student debt cancellation would also exacerbate rising inflation.  Senator Cotton asked for a copy of an unredacted legal memorandum prepared by the General Counsel’s Office on the legality of cancelling debt via executive action so he can understand the legal justification for the action no later than May 20, 2022.

A copy of the press release, which includes the text of the letter, is found at:

https://www.cotton.senate.gov/news/press-releases/cotton-demands-transparency-about-biden-plan-to-transfer-student-loan-debt-to-taxpayers.

News Reports Confirm that White House is Weighing Income Limits for Federal Student Loan Forgiveness

A number of news publications confirmed on May 3, 2022 that the White House is looking at limiting any federal student loan forgiveness to borrowers making less than $125,000 per year.  White House Press Secretary Jen Psaki was reported to have said that “The President talked back on the campaign about taking steps, or looking at steps, to help people making less than $125,000 a year.  So that is the frame through which he’s considering making considerations at this point.”

Senate Democrats Ask Secretary of Education for More Information on Operation Fresh Start

On April 25, 2022, Senator Elizabeth Warren (D-MA) and seven other Senate Democrats sent a letter to Secretary of Education Miguel Cardona asking for more information on Operation Fresh Start.  The letter follows the Department of Education’s announcement that it will provide a “fresh start” to federal student loan borrowers in default by eliminating the impact of delinquency and default and allowing these borrowers to enter repayment in good standing. “Removing these borrowers from default when student loan payments and collections resume means that millions will not be immediately subject to wage garnishment, tax refund withholding, and aggressive collections practices that threaten to undermine their economic security.”  The Senators went on to say that many defaulted borrowers have been subject to collections for a lengthy amount of time and instead of subjecting them to student loan repayment, the Department should discharge the loans for these borrowers.

A copy of the press release with the text of the letter is found at:

https://www.warren.senate.gov/newsroom/press-releases/warren-warnock-colleagues-ask-department-of-education-for-its-plans-to-provide-a-fresh-start-to-student-loan-borrowers-in-default.

Scott and Murray Urge Biden Administration to Fix Problems with IDR System

On April 18, 2022, Chair of the House Education and Labor Committee Bobby Scott (D-VA) and Chair of the Senate Health, Education, Labor & Pensions (HELP) Committee Patty Murray (D-WA) sent a letter to Secretary of Education Miguel Cardona urging the Department of Education to extend the student loan repayment pause until 2023 and to use the intervening time to adopt meaningful and lasting reforms to the federal income-driven repayment (IDR) system, by finalizing a more generous IDR plan available to all federal student loan borrowers and by correcting past harms for those enrolled in an IDR plan.

The letter comes after a recent NPR investigation showed how the IDR system is failing the more than 9 million borrowers currently enrolled in IDR plans, by failing to ensure qualifying payments they have made are counted towards loan forgiveness.  NPR’s report found that because of failures by the servicers to track payments and paperwork errors during loan transfers, borrowers are being denied IDR discharges even after decades of repayment.

A copy of the press release, which includes the text of the letter, is found at:

https://www.help.senate.gov/chair/newsroom/press/murray-scott-push-biden-administration-to-fix-longstanding-failures-with-income-driven-student-loan-repayment-system.

Senate Democrats Send Letter to CFPB Urging Investigation into Mismanagement of IDR

On April 14, 2022, Senators Sherrod Brown (D-OH), Dick Durbin (D-IL), and Elizabeth Warren (D-MA) sent a letter to the Consumer Financial Protection Bureau (CFPB) urging the CFPB to investigate recent press reports that student loan servicers mismanaged the income-driven repayment (IDR) program and to ensure that borrowers are accessing IDR program benefits they are entitled to receive under current law.

The letter stated that “[a] recent NPR investigative report found the IDR program is riddled with problems and mismanagement, even worse than the public previously understood, resulting in millions of borrowers becoming unable to obtain debt cancellation.”  The Senators went on to say that “[t]he loan servicers’ failure to responsibly manage IDR plans is evidenced by the low rate of cancellation under the IDR – out of 4.4 million eligible borrowers, recent reports indicate that only 32 borrowers have ever had their student loans canceled through IDR.”

The Senators also sent a separate letter to the Secretary of Education Miguel Cardona requesting that the agency implement a time-limited waiver of IDR to allow borrowers access to loan forgiveness promised through IDR.

A copy of the press release, which includes the text of the letters sent to ED and CFPB, is found at:

https://www.brown.senate.gov/newsroom/press/release/sherrod-brown-review-student-loan-program-mismanagement.

House Republicans Accuse FSA and CFPB of Collusion

On April 14, 2022, Ranking Members of the House Education and Labor Committee, Representatives Virginia Foxx (R-NC) and Patrick McHenry (R-NC) wrote to Federal Student Aid (FSA) and the Consumer Financial Protection Bureau (CFPB) accusing the agencies of “colluding” to advance policies which exert federal control over the federal student loan program.  The letter asserted that this was “particularly frustrating given the CFPB has zero authority to address this issue.  FSA is responsible for the administration of the Department of Education’s (Department) federal student loan program.”

The letter goes on to say that recent actions by the CFPB indicate that it is expanding its “unchecked authority over federal student loan servicers. This expanded role complicates the legislative oversight of federal student loan servicing and negatively impacts borrowers.  At the same time, the CFPB has also restarted unfairly targeting career-focused institutions, which often provide a lifeline to students who have been ignored or ill-served by other, more traditional institutions.  The CFPB’s witch hunt, which appears to be coordinated with the Department and other federal agencies, against one sector of postsecondary education will ultimately result in harming the very students the Department was established to help.”

The letter requests for any documentation and information from the agencies that will help Republicans clarify the relationship between the CFPB, the Department of Education, and FSA.

A copy of the letter is found at:

https://republicans-edlabor.house.gov/uploadedfiles/4.14.22_cordray_ltr_re_cfpb_final.pdf.

House Education and Labor Committee Approves the Workforce Innovation and Opportunity Act of 2022

On April 5, 2022, the House Education and Labor Committee approved by a vote of 29-21 H.R. 7309, Workforce Innovation and Opportunity Act of 2022 (WIOA).  The bill would reauthorize the current statute governing the nation’s workforce development programs.  During the markup of H.R. 7309, the bill was amended by a substitute amendment sponsored by Representative Mondaire Jones (D-NY), which replaced the original bill.  The amendment removed Sec. 101(h) of the bill that would have prevented for-profit institutions from participating in WIOA programs.  Under the amendment, for-profit institutions remain eligible for workforce development programs.

The legislation now moves for consideration to the House floor.

Senate Democrats Send Letter to Secretary of Education and Attorney General Asking How the Agencies are Handling Undue Hardship Claims by Students in Bankruptcy Proceedings

On March 31, 2022, Senators Dick Durbin (D-IL), Patty Murray (D-WA), Chuck Schumer (D-NY), and 24 other Senate Democrats sent a letter to Secretary of Education Miguel Cardona and Attorney General Merrick Garland requesting an update on how their agencies are handling undue hardship claims by student borrowers in bankruptcy proceedings.  The letter states that the term “undue hardship” has been “interpreted by courts to establish high hurdles for borrowers to meet – a challenge made even more difficult by federal agency policies that encourage aggressive challenges in bankruptcy courts when student borrowers bring undue hardship claims.”  The letter says that “the undue hardship exception serves as the only option in the bankruptcy code for the discharge of student loans” and that “exception has been narrowly construed by most courts.”

The letter asks Secretary Cardona to follow through on his public statement that the Department of Education would change its approach to “undue hardship” claims to make it a more attainable option.  The Senators also asked for an update to guidance issued in 2015 on handling undue hardship claims.  The Senators also questioned the Department of Justice as to what steps have been taken to inform student loan borrowers currently in the midst of bankruptcy proceedings that they could pause their litigation so as to benefit from policy changes the Department of Education implements around “undue hardship” claims.

A copy of the press release with the text of the letter is found at:

https://www.durbin.senate.gov/newsroom/press-releases/durbin-schumer-murray-senators-call-on-department-of-education-doj-to-follow-through-on-pledge-to-improve-handling-of-student-debt-bankruptcy-claims.

Biden Administration Extends Federal Student Loan Payment and Collections Pause

On April 6, 2022, the Biden Administration announced that it would extend the pause on federal student loan payments, interest, and collections through August 31, 2022.  The current pause expires on May 1, 2022.  President Biden said that the additional four months “will assist borrowers in achieving greater financial security and support the Department of Education’s efforts to continue improving student loan programs.”

In conjunction with the White House’s announcement, the Department of Education announced that it will allow defaulted borrowers with federally-held student loans to receive a “fresh start” on repayment, which would eliminate the impact of delinquency and default so that borrowers can enter repayment in good standing.  No further details were provided on the “fresh start” plan.

As expected, Congressional Democrats and Republicans reacted differently to the announcements.  House Education and Labor Committee Chairman Bobby Scott (D-VA) said:  “Across the country, borrowers are continuing to face the economic fallout of COVID-19.  By extending the pause on student loan repayments, collections, and interest accrual, the Biden-Harris Administration has demonstrated that it remains committed to helping borrowers get back on their feet.”  Ranking Member of the House Education and Labor Committee Virginia Foxx (R-NC) released a statement that says that such action sends the wrong message to borrowers.  “President Biden is ruling by executive fiat.  Clearly, he will do whatever progressives want when they want it.  Respect for hardworking taxpayers and responsible borrowers be damned.”

A copy of the press release from the Department of Education is found at:

https://www.ed.gov/news/press-releases/biden-harris-administration-extends-student-loan-pause-through-august-31.

A copy of the press release from Chairman Scott is found at:  https://bobbyscott.house.gov/media-center/press-releases/scott-applauds-biden-harris-administration-for-extending-student-loan.

A copy of the press release from Ranking Member Foxx is found at:

https://republicans-edlabor.house.gov/news/docu. mentsingle.aspx?DocumentID=408201.

FSA Extends Deadline for Mandatory Assignment of Perkins Loans

On May 4, 2022, Federal Student Aid (FSA) released an announcement stating that an August 27, 2021 announcement had required all institutions to assign to the Department of Education all Perkins Loans that have been in default for more than two years by June 30, 2022.  However, as a result of delays brought about by the COVID-19 pandemic, the May 4th announcement delays the deadline until June 30, 2023.

A copy of the announcement is found at:

https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2022-05-04/extended-deadline-mandatory-assignment-federal-perkins-loan-default-more-two-years.

ED Discharges $238 Million in Student Loans for Borrowers who had Attended Marinello Schools of Beauty

On April 28, 2022, the Department of Education announced it will discharge $238 million in student loans for 28,000 borrowers who had attended Marinello Schools of Beauty based on borrower defense findings. According to Secretary of Education Miguel Cardona, “Marinello preyed on students who dreamed of careers in the beauty industry, misled them about the quality of their programs, and left them buried in unaffordable debt they could not repay.”  He went on to say:  “Today’s announcement will streamline access to debt relief for thousands of borrowers caught up in Marinello’s lies.  At the Department of Education, we will continue to strengthen oversight and enforcement for colleges and career schools that engaged in misconduct and uphold the Biden-Harris Administration’s commitment to helping students who have been harmed.”  The Marinello group discharge reflects the Department’s findings that the school engaged in “pervasive and widespread misconduct” that negatively affected all borrowers who enrolled at Marinello during the period 2009 through the closure in February 2016.

The press release pointed out that the Department has now approved more than $18.5 billion in loan discharges for more than 750,000 borrowers.  The loan discharges that have been made include:

  • Cancelling $6.8 billion for more than 113,000 borrowers through Public Service Loan Forgiveness (PSLF);
  • Discharging more than $8.5 billion based on total and permanent disability for more than 400,000 borrowers; and
  • Correcting problems in the income-driven repayment plan that will help thousands of borrowers receive student loan forgiveness.

The press release also stated that while the Department continues its work to review borrower defense claims, it also brought on four key hires for the Federal Student Aid (FSA) Office of Enforcement.  The four new hires have “significant federal, congressional, and state oversight experience.”

A copy of the press release is found at:  https://www.ed.gov/news/press-releases/education-department-approves-238-million-group-discharge-28000-marinello-schools-beauty-borrowers-based-borrower-defense-findings.

FSA Announces Update of Use of “Professional Judgment” by Financial Aid Administrators

On April 29, 2022, Federal Student Aid (FSA) updated a January 29, 2021 announcement, which reminds financial aid administrators of their ability to exercise documented professional judgment when determining student eligibility for federal student aid. Because many of the difficult economic conditions persist, FSA is extending the guidance in this original announcement through the 2022-2023 award year.  The guidance from FSA states that it will not negatively view the increased use of professional judgment or use it as a selection criterion for program reviews for the 2022-2023 award year.

A copy of the announcement is found at:  https://fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2021-01-29/update-use-professional-judgment-financial-aid-administrators-updated-april-29-2022.

ED Announces Expansion of Second Chance Pell Experiment and Actions to Help Incarcerated Individuals Resume Educational Programs

On April 26, 2022, the Department of Education issued a press release announcing “actions to help incarcerated individuals access educational programs as part of the Biden-Harris Administration’s efforts to support reentry, empower formerly incarcerated persons, enhance public safety, and strengthen our communities and our economy.”  The Department has asked 73 colleges and universities to participate in the third round of the Second Chance Pell Experiment, an initiative first launched by the Obama-Biden Administration to expand Pell Grant access for incarcerated individuals enrolled in participating programs.  The expansion will bring the total number of colleges and universities able to participate in the Second Chance Pell Experiment to 200.  The Department also announced changes in policies to help incarcerated individuals with defaulted loans, including affirming that incarcerated individuals qualify for a “fresh start,’ which returns borrowers with defaulted loans to repayment in good standing and allows them to access programs, like the Second Chance Pell Experiment.

A copy of the press release is found at:  https://www.ed.gov/news/press-releases/us-department-education-announces-expansion-second-chance-pell-program-and-actions-help-incarcerated-individuals-resume-educational-journeys-and-reduce-recidivism.

FSA Reminds Institutions of Requirements to Distribute Voter Registration Forms

On April 21, 2022, Federal Student Aid (FSA) released an announcement reminding institutions of the HEA requirement for certain institutions in most states (and the District of Columbia) to make a good faith effort to distribute voter registration forms to their students prior to an election.  The distribution must be made to each student enrolled in a degree or certificate program who is physically in attendance at the institution.  The announcement said that with elections happening in fall 2022, FSA strongly encourages institutions to make preparations over the next several months to fulfill this requirement.  “This includes taking into consideration voter registration deadlines to ensure your students have the information they need to participate in the electoral process.”

A copy of the announcement is found at:  https://fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2022-04-21/requirements-distribution-voter-registration-forms.

ED Announces Steps in Fixing Failures in the Income-Driven Repayment Plan

On April 19, 2022, the Department of Education announced steps to ease student loan forgiveness through the income-driven repayment (IDR) plan by making a one-time adjustment to borrower accounts to provide credit toward loan forgiveness under the IDR plan for any month in which a borrower made a payment regardless of whether they were enrolled in an IDR plan.  The Department will also credit borrowers for months in which borrowers were in long-term forbearances (more than 12 months consecutive and more than 36 months cumulative toward forgiveness under IDR and PSLF plans) or any type of deferment before 2013.  Borrowers will not receive an automatic credit for months in which they were in default or enrolled in shorter-term forbearances.

The Department states that the adjustments will lead to “immediate debt cancellation” for at least 40,000 borrowers under the Public Service Loan Forgiveness (PSLF) program and “several thousand” borrowers with older loans will receive forgiveness under the IDR plan.  A further 3.6 million borrowers will receive at least three years of additional credit towards IDR forgiveness.

The Biden Administration has made efforts to cancel the student loan debts of borrowers working in public service jobs, borrowers who become permanently disabled, and borrowers who were “defrauded” by their school.  In total, the Biden Administration said it had cancelled $17 billion of debt for 725,000 borrowers.

A copy of the ED press release is found at:  https://www.ed.gov/news/press-releases/department-education-announces-actions-fix-longstanding-failures-student-loan-programs.

FSA Announces Virtual Financial Aid Training Conference for November 2022

On March 30, 2022, Federal Student Aid (FSA) announced that it will hold its annual Student Aid Training Conference for Financial Aid Professionals virtually on November 29, 2022 – December 1, 2022.  According to the announcement, there are many factors that support a virtual event, with the most important reason being the virtual event is accessible to the widest audience possible.

A copy of the announcement is found at:

https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2022-03-30/2022-federal-student-aid-training-conference-coming-you-virtually-nov-29-dec-1-2022.

FSA Releases Quarterly Reports on Federal Student Aid

On March 30, 2022, Federal Student Aid (FSA) released its quarterly portfolio reports on the federal student loan program and application processing to the FSA Data Center.  Some of the current data shows:

  • As of December 31, 2021, the outstanding federal student loan portfolio is $1.61 trillion, representing 43.4 million unduplicated student loan recipients.
  • As a result of the pandemic flexibilities for student loans, the number of recipients in repayment status has fallen sharply over the last 21 months. Fewer than 500,000 Direct Loan recipients were in an active repayment status as of December 31, 2021, compared to 18.1 million recipients in March 2020, just a few days after the CARES Act was passed.
  • Despite the repayment pause for most borrowers, enrollment in income-driven repayment (IDR) plans has slightly increased during the pandemic. As of December 31, 2021, almost 8.4 million Direct Loan recipients were enrolled in IDR plans, up about 2 percent from December 31, 2020.
  • Free Application for Federal Student Aid (FAFSA) applications decreased 1 percent for the 2020-2021 award year, whereas disbursements for loans and grants were down about 7 percent compared to the 2019-2020 award year. Applications for the 2021-2022 award year so far are down about 2 percent compared to this time last year.

A copy of the announcement is found at:

https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2022-03-30/federal-student-aid-posts-quarterly-portfolio-reports-fsa-data-center.

CFPB Publishes Blog on Effects of Withholding Academic Transcripts from Students

On April 18, 2022, the Consumer Financial Protection Bureau (CFPB) published a blog titled, “Transcript Withholding Holds Back Workers and Wages.”  The blog stated that schools withhold transcripts for a range of debts, spanning from library fines and parking tickets to student loans used to pay tuition.  However, the blog noted that transcripts can be required by prospective employers, professional associations, and other colleges and universities seeking to verify an individual’s education history.

The blog concluded that by refusing to release official proof of studies completed, colleges, universities, and non-degree-granting institutions are keeping their students from the very academic and labor market opportunities promised by higher education.  Students might lose the opportunity to find a job or obtain the occupational licenses required to benefit from their education.  Students might also find themselves excluded from further education by losing the ability to re-enroll at their school or transfer to another in order to complete their higher education or might need to retake duplicative courses.  Some students suffering these repercussions might find themselves financially worse-off than if they had never attended the school in the first place.

The blog found that withholding transcripts as a debt collection tactic is particularly perplexing, as it can undermine rather than enhance a student’s likelihood of repaying.  Depriving a student of an official transcript can prevent them from finishing their degree, getting a job, or getting a raise.  Those earnings could be used to pay off debt that a person owes to their school, while withholding the transcript can keep them stuck in a cycle of collections while denying them a path to employment, earnings, and successful repayment.

The blog post also indicated that CFPB recently announced that it will begin examining schools’ in-house lending programs, where schools extend credit directly to students or their families to fund undergraduate, graduate, or other forms of postsecondary education.  CFPB has found that schools that engaged in institutional lending, leave many students burdened with debt and subjected to strong-arm collection tactics.

A copy of the blog post is found at:  https://www.consumerfinance.gov/about-us/blog/transcript-withholding-holds-back-workers-and-wages/.

CFPB Releases Report that Identifies More than 5 Million Student Loan Borrowers at Risk of Default When Payment Pause Expires

In April 2022, the Consumer Financial Protection Bureau (CFPB) released a report titled, “Student Loan Borrowers At-Risk When Payment Suspension Ends,” which identified the types of student loan borrowers that will struggle to resume repayment once the payment pause and interest accrual expires.  The CFPB found that more than 5 million student loan borrowers face heightened risk factors.  The report stated:  “With the record number of borrowers entering repayment at once, recent servicing changes, and many unresolved financial difficulties from well before the pandemic, millions of borrowers might face a difficult road after pandemic related relief expires.”

The sample represented around 34 million student loan borrowers, a larger sample size than the GAO estimate of 26.6 million borrowers used in its study (see article below), who are likely to re-enter repayment when the pause ends.  The larger sample used by CFPB is due to the inclusion of borrowers who had not yet entered repayment.  Using data from the agency’s Consumer Credit Panel, CFPB identified five risk factors that could better indicate which types of borrowers could face the most significant financial burden in re-entering repayment.  The risk factors include pre-pandemic delinquencies on student loans, pre-pandemic payment assistance on student loans, multiple student servicers, delinquencies on other credit product since the start of the pandemic, and new third-party collections during the pandemic.  According to CFPB, about 15 million borrowers were identified as having one of these five risk factors, while 5 million were determined to have experienced two risk factors.  “These borrowers can be found in all demographic groups but are concentrated in low-income and high-minority census tracts and are more likely to be 30 to 49 years old.”

A copy of the CFPB report is found at:  https://files.consumerfinance.gov/f/documents/cfpb_cares-vulnerable-student-loan-borrowers_report_2022-04.pdf.

GAO Releases Report About the Legality of Online Program Providers

On May 5, 2022, the Government Accountability Office (GAO) released a report titled, “Education Needs to Strengthen its Approach to Monitoring Colleges’ Arrangements with Online Program Managers,” which highlights the need to ensure companies managing colleges’ online programs are not violating the ban on paying recruiters based on their success in recruiting students.

The GAO was asked to review the Department of Education’s role in overseeing colleges’ use of Online Program Management (OPM) companies.  The report concluded that the Department of Education needs to collect more data to ensure OPMs, third-party servicers that help colleges and universities run and recruit students for online academic programs, are not violating the Higher Education Act’s ban on compensating student recruiters based on their success.  The Department is urged to require more and clearer information from institutions about the extent and nature of these outsourcing agreements to better help the Department of Education and auditors understand whether OPMs are being compensated for the number of students they recruit.  The GAO report said:  “To protect students from predatory recruiting practices, it is important for [the Department of Education] to ensure that OPMs that provide recruiting services for colleges, as well as OPM recruiting staff, do not receive incentives based on their success in enrolling students.”

The GAO report was released by Chairman of the House Education and Labor Committee Bobby Scott (D-VA) and Chair of the Senate Health, Education, Labor and Pensions (HELP) Committee Patty Murray (D-WA), and Senators Tina Smith (D-MN), Sherrod Brown (D-OH), and Elizabeth Warren (D-MA).  The press release said:  “Students should have complete and unbiased information when making key decisions about their higher education.  Unfortunately, the GAO report confirms that our higher education system lacks adequate oversight of online program managers, which are hired by institutions to help with student recruitment and marketing, among other services, in exchange for substantial portions of a student’s tuition payments.  Without this oversight and transparency, our guardrails to prevent abusive recruiting practices – and to ensure students know the entities involved in and profiting from their education – are insufficient.”

The GAO report generally affirms the view that revenue-sharing arrangements are legal as long as a company or other provider bundles recruiting with other services, such as instructional design or student support.

A copy of the GAO press release, which includes the report, is found at:

https://www.gao.gov/products/gao-22-104463.

A copy of the press release from Chairman Scott is found at:

https://edlabor.house.gov/media/press-releases/chairs-scott-murray-colleagues-release-report-highlighting-need-to-ensure-companies-managing-colleges-online-programs-arent-violating-ban-on-abusive-recruiting-practices.

GAO Report Released that Concludes Income-Driven Repayment System Needs Reform

On April 20, 2022, the Government Accountability Office (GAO) released a report titled, “Federal Student Aid:  Education Needs to Take Steps to Ensure Eligible Loans Receive Income-Driven Repayment Forgiveness” which concludes that the flaws in the Department of Education’s Income-Driven Repayment (IDR) plan have left thousands of student loan borrowers without the loan forgiveness for which they may be eligible.  According to the report, mismanagement of student loan repayment data has caused loan servicers and the Department of Education to miscount repayments and inaccurately track borrower’s program toward forgiveness.  As a result, at least 3,000 student loan borrowers who may be eligible for IDR forgiveness have not received forgiveness.

Chairman of the House Committee on Education and Labor Bobby Scott (D-VA) said:  “Today’s GAO report confirms serious problems with the management of Income-Driven Repayment plans, which were intended to serve as a safety net for low-income student borrowers and provide them with a clear path to loan forgiveness.”  Ranking Member of the House Committee on Education and Labor Virginia Foxx (R-NC) said:  “A program that was the brainchild of, and expanded by, Democrats, turned out to be a complete disaster and taxpayers are forced to foot the bill for these mistakes. Color me shocked.  In a certainly predictable trend, the Department of Education has blamed everyone except itself for its ineptitude.  It is shameful this administration keeps putting politics above the interests of the American people.”

A copy of the press release from Chairman Scott, which includes a link to the GAO report, is found at:

https://edlabor.house.gov/media/press-releases/new-gao-report-income-driven-repayment-system-in-urgent-need-of-reform.

A copy of the press release from Ranking Member Foxx is found at:  https://republicans-edlabor.house.gov/news/documentsingle.aspx?DocumentID=408228.

NY Governor Hochul Signs Bill Banning Colleges from Withholding Transcripts

On May 4, 2022, New York Governor Kathy Hochul signed S. 5924-C/A.6938-B, which prohibits institutions of higher education from withholding a student’s academic transcript because of unpaid debts or charging individuals who owe debts a higher fee to obtain their academic transcript.  Governor Hochul said that the legislation ensures that students can access their academic transcript when necessary so that they may continue their education or find a job.  The new law comes after she ordered both the State University of New York (SUNY) and the City University of New York (CUNY) to end the practice of withholding academic transcripts.  Governor Hochul said:  “Transcripts are critical for students to continue pursuing their educational and career goals.  To hold transcripts hostage until outstanding debts are paid is an unfair, predatory practice that prevents our students from reaching their full potential.”

A copy of the press release for Governor Hochul is found at:

https://www.governor.ny.gov/news/governor-hochul-signs-legislation-preventing-colleges-withholding-student-transcripts-because.

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