On behalf of the Center for Responsible Lending, thank you for the opportunity to comment on the notice of proposed rulemaking (Proposed Rule) by the U.S. Department of Education on Student Debt Relief Based on Hardship for the William D. Ford Federal Direct Loan Program (Direct Loans), the Federal Family Education Loan (FFEL) Program, the Federal Perkins Loan (Perkins) Program, and the Health Education Assistance Loan (HEAL) Program.

We strongly believe that the Proposed Rule is a critically important tool that fits well within the Department’s compromise powers and, if finalized, will prevent many student loan borrowers from needlessly falling through the cracks. It will also prevent taxpayers from incurring unreasonable costs to collect a debt when circumstances strongly indicate that it is unlikely to be fully repaid. Specifically, CRL believes that the proposed hardship provisions will create a sorely needed program for providing debt relief for Parent PLUS borrowers facing hardship. Roughly 3.3 million borrowers owe Parent PLUS loans equaling $107 Billion as of 2024, close to 7% of the total student debt owed.

We especially commend the Proposed Rule’s effort to amend regulations to address long-standing issues these borrowers have identified and will focus the majority of our comments on discussing the Proposed Rule’s impact on Parent PLUS borrowers.

Overall, the Department’s Proposed Rule is designed to avoid default and unnecessary collection costs, which affects both borrowers and the Department of Education’s bottom line. It properly focuses on relieving only those borrowers most in need of assistance who have no other avenues for relief under other programs. The proposed revisions to §30.91 specify the methods and provide ample definitions to execute hardship relief, with the flexibility to consider the myriad ways that financial difficulties come about for borrowers. The automatic relief provision is limited to those who are 80% or more likely to default in the next two years based on hard data. The separate application process considers a number of non-exhaustive, non-exclusive hardship factors and gives relief to those who have a high likelihood of default or other severe, persistent negative consequences. For each approach, the Department has listed a range of factors that may be considered together or separately that will provide a comprehensive view of finances and the outlook needed to give relief to those facing hardships. For each of these reasons, we urge the Department to finalize the proposed rule swiftly.

Download the full comment.

Related Content