Education Department plans to propose regulatory changes to student aid programs

The U.S. Department of Education plans to propose changes to student aid regulations, including those governing the Public Service Loan Forgiveness Program and two income-driven repayment plans, it announced Thursday. 

Under a process called negotiated rulemaking, the Education Department intends to bring together representatives from different factions of the higher education sector to hash out the details of new regulations. 

If the representatives reach consensus on new policies, the negotiated rulemaking process requires the Education Department to adopt their regulatory language in its proposal, except in limited circumstances. If negotiators don’t reach agreement, however, the agency is free to write its own rules. 

Before that process begins, the Education Department said it will seek public feedback on “deregulatory ideas” for Title IV student aid programs. 

“This process will focus on how the Department can rightsize Title IV regulations that have driven up the cost of college and hindered innovation,” Acting Under Secretary James Bergeron said in a statement. “Not only will this rulemaking serve as an opportunity to identify and cut unnecessary red tape, but it will allow key stakeholders to offer suggestions to streamline and improve federal student aid programs.”

Part of the negotiated rulemaking process will focus on the Public Service Loan Forgiveness program. PSLF, enacted in 2007 by President George W. Bush, forgives the student loan balances of borrowers who make 10 years of payments and hold public service jobs, such as working for the government or a nonprofit. 

The program has come under fire from President Donald Trump, who signed an executive order last month aiming to limit who is eligible. 

The order alleges that the PSLF program has “misdirected tax dollars into activist organizations” and tells U.S. Education Secretary Linda McMahon to propose program revisions barring borrowers from receiving forgiveness if they work for organizations that “have a substantial illegal purpose.” 

The directive also accused the program of providing premature debt relief to borrowers. The Biden administration temporarily relaxed PSLF rules to make it easier for borrowers to receive debt relief through the program, which had extremely high denial rates due to confusing eligibility requirements and chronic loan servicer issues. 

Some groups have pushed back on the executive order, arguing that it’s an attempt to revoke student loan forgiveness eligibility for borrowers working for nonprofits with missions that the Trump administration doesn’t support. 

In a statement, Mike Pierce, executive director of Student Borrower Protection Center, called the order “blatantly illegal and an all-out weaponization of debt intended to silence speech that does not align with President Trump’s MAGA agenda.” 

The Education Department is also planning to review regulations for two income-driven repayment plans: Pay as You Earn and Income-Contingent Repayment. 

The agency restored the ability for borrowers to enroll in these programs late last month after previously taking down the online application forms. The freeze on the programs came in response to an appeals court ruling blocking a Biden-era income-driven repayment plan — Saving on a Valuable Education. 

The suspension of the plans drew a legal challenge from the American Federation of Teachers. The Education Department restored access to them less than a day after the union petitioned a judge for emergency intervention, according to a news release. 

Plans for negotiated rulemaking come amid the Trump administration’s move to dismantle the Education Department and move its responsibilities to other agencies.

For example, Trump said he plans to move the department’s student loan portfolio to the newly-downsized Small Business Administration. Both conservatives and liberals have expressed concern that the SBA won’t have the staff or expertise to perform the job. 

Fully eliminating the Education Department would require congressional approval.