These students already face significant financial challenges: borrowers without access to familial wealth are, for obvious reasons, more likely to face challenges in repayment. Information asymmetries are especially burdensome for students who depend on student loans to finance their education. A Clearer Path to Financial Freedom for All Borrowers Given what we now know about the mounting student debt crisis and the disparate impact of student debt on borrowers of color, the focus on reforms that improve access and simplify existing programs is urgent, if not overdue. The nation’s outstanding $1.7 trillion student loan debt-which is held disproportionately by women, borrowers of color, and for-profit college attendees-is reflective of a broken system marred by high default rates and an overly burdensome loan forgiveness and discharge system.įor this round of negotiated rulemaking, the Department of Education identified eleven issue areas in need of reform and proposed solutions that improve the current repayment system, offer additional paths to loan discharge and cancellation, extend protection to student borrowers, and create processes where none previously existed. Despite the existence of repayment, refund, and forgiveness options for a broad swath of students with loan debt, the system has yet to provide a clear path to eventual financial freedom for the majority of borrowers. It is particularly surprising that the Department of Education failed to include a negotiator that would represent the interests of the civil rights community in the process-an unfortunate contrast to President Biden’s executive order on racial equity-but that should not stop the department and negotiators from putting impacted students at the center of discussions so that, at a minimum, there are burden-free processes and protections with them in mind.įor decades, an overly complex and bureaucratic student loan system has locked out many borrowers, leaving these students and their families with little recourse as they languish in the economic uncertainty that all too often accompanies college attendance. While student borrowers that were defrauded by predatory schools and representatives from the civil rights community provided valuable insights to the negotiators about deceptive tactics used to lure in students-including inflated job placement and starting salaries as well as the impact of student debt on the racial wealth gap-members of these groups were not selected to join the chorus of advocates chosen to participate in negotiations. While the Department of Education granted a number of impacted groups a figurative seat at the table, several key voices were missing from among the negotiators. Despite the dry, bureaucratic veneer of what’s colloquially known as “neg-reg,” the results can be enormously consequential for students and student loan borrowers. In the negotiation process, the negotiators come to agreement-or not-on regulatory language revisions, and the department concludes the process by releasing new regulations. In this process, negotiators are selected by the department to represent groups that it views as affected by the issues up for discussion. Department of Education’s student loan programs through what’s known as negotiated rulemaking, which began in October. The Biden administration has taken up the task of streamlining the U.S.
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