Education Department Proposal: Additional Funds for Certain Student-Loan Borrowers

The Education Department under President Joe Biden has initiated a new series of negotiations to formulate updated regulations for higher education, with the potential to provide additional funds for certain student-loan borrowers.
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The Education Department under President Joe Biden has initiated a new series of negotiations to formulate updated regulations for higher education, with the potential to provide additional funds for certain student-loan borrowers.

Commencing in early January, the department conducted the initial session of three negotiation rounds aimed at developing a set of higher education regulations, slated for potential implementation in the upcoming summer at the earliest. 

These regulations predominantly concentrate on “cash management,” as delineated in the proposed text, specifying the procedures by which educational institutions handle federal funds.

Education Department Proposals

Students’ Meal Plan

One of the propositions put forth by the department pertains to the administration of students’ meal plans by educational institutions. 

Specifically, if a student utilizes federal student aid, such as federal loans or grants, to cover the expenses associated with meal plans, the department is proposing a requirement for schools to refund any unused funds to those students “no later than 14 days after the end of the payment period,” as outlined in the proposal. 

Previously, schools were permitted to retain any surplus funds, despite students having paid the full cost of the meal plan.

In addition to ensuring the return of unused meal plan funds, the department has introduced another proposal to facilitate students in exploring various options for textbooks and course materials.

Course Materials

Education-Department-Proposal-Additional-Funds-For-Certain-Student-Loan-Borrowers
The Education Department under President Joe Biden has initiated a new series of negotiations to formulate updated regulations for higher education, with the potential to provide additional funds for certain student-loan borrowers.

Presently, educational institutions have the authority to automatically bill students for textbooks and other resources within the framework of tuition and fees. 

Nonetheless, the department, in its proposal, expressed apprehension, stating that the insufficient disclosure and transparency hinder students’ capacity to identify more affordable materials or evaluate whether their school is providing the most cost-effective arrangement.

As part of its proposal, the department recommends incorporating course materials into tuition and fees only under specific circumstances. 

This inclusion would be justified if the school can substantiate a “compelling health or safety reason” for such an arrangement or if the institution represents the sole option for students to acquire those materials.

Accreditation Safeguard

Other proposals in the latest round of negotiations addressed how the Education Department oversees college accrediting agencies, with the purpose of ensuring students and taxpayers are not harmed in the accreditor approval process.

The department will continue negotiations on these regulations in February and March sessions with stakeholders, with the opportunity for public comment.

Debt Relief and Cash Management

In addition to the proposed measures related to cash management, the department is concurrently engaged in the regulatory procedures for its second endeavor to provide relief for student debtors.

 Following the Supreme Court’s rejection of President Biden’s initial proposal for widespread loan forgiveness, the department embarked on an alternative approach for relief, invoking the Higher Education Act of 1965.

This avenue necessitates a series of negotiations and public commentary to formulate the ultimate rule.

The department concluded its third round of negotiations for the debt relief in December, initially anticipated to be the conclusive phase of the process.

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