As noted in another article in this issue of TRENDS, a moratorium on student-loan payments was approved by Congress in the early days of the COVID-19 pandemic in 2020. The purpose was to suspend payments, interest charges, and collections on more than $1 trillion in debt. Originally intended to expire after a six-month period, it has been extended eight times. As a result, the federal government has lost an average of $5 billion in revenue each month since the pause began. The debt-ceiling agreement that recently became law would resume student-loan payments next August 30th.
The June 3 issue of The Economist indicates that by the end of 2022, beneficiaries of the repayment pause accumulated an additional $2,500 in student-loan debt plus an additional $2,000 in credit-card, mortgage, and car-loan debt, boosting total household indebtedness by 8%. Jefferies, an investment bank, reckons that the return of student-loan payments, which are around $200 a month for the typical borrower, will weigh on consumer spending and push up delinquency rates. For those borrowers who took advantage of the student-debt moratorium, and accumulated additional debt over the past three years, the financial pressure could be especially acute. Meanwhile, the fate of President Biden’s proposed student debt relief program is under review by the U.S. Supreme Court. A ruling is expected to be announced this month. His proposal would cancel as much as $10,000 in federal student debt for borrowers making under $125,000 a year, or $250,000 for a married couple. Recipients of Pell Grants would be entitled to an extra $10,000 of debt cancellation.
Title IX Rulemaking Update
Changing the Department of Education’s regulations that implement Title IX of the Education Amendments of 1972 is a top priority to ensure full protection against sex discrimination for all students in federally funded education programs and activities. Title IX proposed regulations that the Department released in July 2022 would strengthen protections for students who experience sexual harassment and assault at school, and they would help protect LGBTQI+ students from discrimination. The Department received more than 240,000 public comments on the proposed rule, which is nearly twice as many as the Department received during its last rulemaking on Title IX.
A careful review of comments takes time and is essential to ensuring that final rules are enduring. The Department is updating its Spring Unified Agenda to reflect an anticipated date of October 2023 for the final Title IX rule. Also, the Department is updating the Spring Unified Agenda to reflect an anticipated date of October 2023 for its proposed athletics regulation, which received over 150,000 comments during its recent public comment period from April 12 to May 15, 2023.
Proposed Regulations On Gainful Employment
The May 19, 2023 issue of the Federal Register announces a proposed regulation involving gainful employment. Comments are invited on or before June 20, 2023. The financial assistance students receive under the Title IV, Higher Education Act programs for postsecondary education and training represents a significant annual expenditure by the federal government. When used effectively, this aid is a powerful tool for promoting social and economic mobility. Many programs fail to enhance students’ skills or increase their earnings effectively, however, leaving them no better off than if they had never pursued a postsecondary credential and with debt they cannot afford.
The Department of Education is aware of a significant number of instances where institutions shut down with no warning. A recent study shows that, of closures that took place over a 16-year period, 70% of the students at such institutions (100,000 individuals) received insufficient warning that the closures were coming, which often represents a significant cost to taxpayers. Students who were enrolled at or close to the time of closure and did not graduate from the shuttered institution may receive a discharge of their federal student loans. The cost of such discharges rarely is fully reimbursed because once the institution closes, there often are few assets to use for repaying federal liabilities. Unfortunately, the Department has lacked authority under existing regulations to take action based on those indicators of risk in order to secure financial protection before the institution runs out of money and closes.