NCLC Statement in Response to Proposed Rules to Provide Student Debt Relief

April 16, 2024 — Press Release

BOSTON – Today, the Department of Education released proposed rules that would provide federal student loan debt relief to four categories of borrowers:

• Borrowers who have had their balances balloon with interest; 
• Borrowers who have been trapped in student debt for two decades or more; 
• Borrowers who have missed out on relief that they are eligible for due to administrative red tape, and; 
• Borrowers who took out debt to attend programs that failed to deliver value and subsequently closed or were kicked out of the federal student aid program.

Under the proposal, millions of borrowers who owe more now than they did when they began repayment would have some or all of the amount that their balance has grown due to interest canceled. Other borrowers, including those who entered repayment more than 20 or 25 years ago and those eligible for existing loan cancellation programs but who have been blocked by red tape, would have their outstanding debts fully canceled. A forthcoming proposal is expected to provide a pathway to relief for borrowers on the basis of financial hardship. A 30-day public comment period will begin tomorrow.

NCLC participated in the negotiated rulemaking process that helped develop these rules, with NCLC representing the interests of legal aid attorneys who work with low-income borrowers.

In response to the proposed rules, Abby Shafroth, co-director of advocacy at the National Consumer Law Center and director of NCLC’s Student Loan Borrower Assistance Project, issued the following statement:

“Decades of mismanagement of the federal student loan program left millions of borrowers with more debt than when they began repayment, saddled students with unaffordable debts for failing schools, and prevented millions more from benefiting from loan cancellation programs that they were eligible for. Other recent policy changes, including the SAVE plan and GE rules, should prevent many of these same harms going forward. But this new proposal is necessary to help make things right for the millions of families already harmed by past failures.  

“This proposal is especially important to the borrowers who have been the most burdened by the student loan system and its failures. This includes students from low-income families, first-generation college students, students who attended low-value schools, borrowers with less than a 4-year degree, low-income older borrowers, and Black borrowers–who must borrow more to access education and are stuck in debt for longer. We applaud the administration for working to ensure that these long-neglected borrowers are not left behind and can finally have a shot at breaking free from student debt, and we encourage the administration to move swiftly in finalizing and implementing these rules and the forthcoming hardship relief rules.”

Additional Resources:

• Abby Shafroth & Kyra Taylor, Delivering Distress to Borrowers in Default (October 2023)
• NCLC & CRL, Data Point: Almost Two in Three Navient Borrowers Making Payments During COVID-19 Federal Student Loan Payment Pause Are Underwater (August 2021) 
• Abby Shafroth, Op-Ed: “Limiting student loan relief by income sounds sensible – it is not” (The Hill, May 12, 2022)
• Leadership Conference on Civil and Human Rights, Civil Rights Principles for Student Loan Debt Cancellation (April 2021)
• NCLC & SBPC, Policy Brief: Education Department’s Decades-Old Debt Trap: How the Mismanagement of Income-Driven Repayment Locked Millions in Debt (March 2021)