Student Debt Forgiveness Plan Could Be Derailed by Details on Borrowers ‘Experiencing Hardship’

• The Department of Education wants to offer debt forgiveness to borrowers “experiencing hardship.”
• It has not, however, offered insight into how it will define who those borrowers are.
• This lack of information has made it difficult for negotiators to work with the department to develop a federal student loan debt forgiveness program.

The Department of Education (ED) has promised student debt relief for borrowers "experiencing hardship,” but it still has not defined who those borrowers are, straining negotiations for the latest plan for widespread student loan debt relief.

The Biden administration is pursuing federal student loan debt relief through the process of negotiated rulemaking, which this fall has seen ED meet with higher education stakeholders to draft new regulations. Today and tomorrow (Dec. 12) mark the final two days of rulemaking, offering one final chance for ED and negotiators to reach consensus on any final rule that could deliver debt relief to millions of borrowers.

The problem: ED has failed to provide details on a key portion of the proposal heading into the last day of negotiations.

ED recently released draft regulations to offer debt relief to the following groups of borrowers:

• Borrowers who first entered repayment 25 years ago
• Borrowers whose current balance is more than the original amount they borrowed
• Borrowers who attended a career training program that led to unreasonably high debt or "unacceptably high" loan default rates
• Borrowers who would have qualified for forgiveness under another forgiveness program, like Public Service Loan Forgiveness (PSLF), or a repayment plan but never applied

However, ED did not provide a proposal to address borrowers "experiencing hardship.” That’s despite the fact that negotiators offered numerous potential ways the department could define these borrowers during November negotiations.

Negotiators questioned whether the department was negotiating “in good faith” by refusing to offer a formal proposal before the final December sessions.

"Is the department really negotiating in good faith?” Sherrie Gammage, the representative for student loan borrowers who attended a four-year institution, asked on Monday. “Has this committee… had any meaning at all?”

Richard Haase, the representative for borrowers who attended graduate programs, said it’s difficult to approve or disapprove of the regulations ED has provided without knowing the full picture. His votes for or against consensus may be impacted by how ED defines “borrowers experiencing hardship.”

The hardship category may be the most wide-reaching portion of the debt forgiveness plan, and therefore may make up for any shortcomings in other portions of the proposal. Until negotiators know for certain, however, it’s difficult to judge individual portions of the plan, he added.

Tamy Abernathy, the lead negotiator for the department, said ED would not discuss the so-called “hardship provisions'' until the afternoon of the final session on Tuesday. She did not make any indication the discussion would include a draft proposal, only that ideas would be discussed.