On Oct. 25, DoE proposed set of rules to extend student debt relief.
DoE reported that it proposed rules that, if finalized, would authorize loan forgiveness for approximately 8 million borrowers experiencing financial difficulties and hardship.
The proposal follows a series of White House debt relief issuances, see rule #205457.
Proposed Rule Provisions
Could waive entire outstanding balance of loan when DoE determines hardship is likely to impair borrower’s ability to fully repay; or render costs of collection to be unjustified
First pathway would recognize authority to grant automatic relief without application.
Could provide relief on one-time basis to borrowers who the DoE determines, based on a predictive assessment, have at least 80% chance of being in default within 2 years.
Factors that could be used include household income, assets, types, balances of loans, debt balances, required payments relative to household income, Pell Grant recipients.
Could then waive loans to address hardships, prevent severe consequences of default.
Second pathway would allow current and future cohorts of borrowers to receive relief based on a holistic assessment of the borrower’s hardship; would be application-based
Would perform holistic assessment whether a borrower is highly likely to be in default.
If no other payment relief option exist, then the Secretary of DoE could waive the loan.
Would stand up an application to begin to holistically assess borrower circumstances.
Factors that may be considered when assessing borrower are included in proposal.
Consultation
Comments on the proposed rule are due 30 days after publication in federal register.
Oct. 31, 2024 DoE Fed Reg Proposal
On Oct. 31, 2024, DoE published notice of proposed rulemaking in the federal register.
Comments on proposed rulemaking regarding loan forgiveness are due Dec. 2, 2024.
Dec. 2024 DoE Fed Reg Withdrawal
On Dec. 26, 2024, DoE Published notice of withdrawal of proposed rulemaking and termination of rulemaking proceeding as of Dec. 20, 2024 in the federal register.
