The timing of processes for implementing federal regulations is clearly defined in law and it cannot be changed no matter what politicians are promising about loan forgiveness. In a Forbes article1 titled, “Timeline for Biden’s New Student Loan Forgiveness Plan Gets Clearer”, readers are led to believe there is flexibility in the timeline and that loan forgiveness can happen in early 2024. The reality is quite different as defined in the Negotiated Rulemaking Act of 1990 and its amendments2. The earliest these rules can go into effect is July 1, 2025.
Here’s how the negotiated rulemaking process works:
A FEDERAL LAW IS PASSED. The Higher Education Act of 1965 (HEA) came about during the civil rights movement to make higher education available to all. It is within the domestic discretionary budget, so it is reauthorized by Congress every few years. Reauthorization was scheduled every four years until 2008 when Congress redefined this to schedule every six years. That was the last Higher Education Amendments written so Congress intends to work on this bill soon.
The intent of the regulatory process is to define the law in clear and understandable language that tells citizens how to implement the law.
Recent administrations have used the negotiated rulemaking process to bypass Congress and the debate of executive branch overreach is common with this.
FEDERAL REGULATIONS ARE NEGOTIATED. Regardless of whether the regulations are tied to legislation or initiated by the current administration and its departments like the United States Department of Education (ED) in this case, the timelines are consistent and clearly defined.
1. ED announces its intent for negotiated rulemaking and outlines the subjects involved.
2. Nominations for representation of the parties who will be affected by the law or rules are submitted.
3. Primary and alternative negotiators are chosen by ED for each group affected.
4. Negotiations take place usually in several meetings over a period of time.
5. Negotiators must get consensus (all negotiators agree) on the entire package, or it is not accepted, and the department can publish rules as they wish. It is suggested that the rules are at least close to those negotiated however it is not mandated. If consensus is reached, the details of negotiations must not be disclosed. If consensus is not met, the negotiations can be disclosed to the public.
6. ED publishes the rules in a Notice of Proposed Rulemaking (NPRM) and the public is given a comment period of no less than 30 days.
7. ED reads and analyzes all comments received.
8. ED publishes the final rules with an explanation of all comments, its response to the comments, and any changes made from the language agreed upon by the negotiators. The final rules must be published by the end of the master calendar year, November 1st, to go into effect on July 1st of the following year.
On June 30, 2023, the U.S. Supreme Court struck down Biden’s loan forgiveness program3 because he and his administration lack the authority to substantively change statue especially when citizens who are not involved in the debt are saddled with paying the debt. The option for doing this is negotiated rulemaking as defined by the HEA.
On August 31, 2023, ED published an “Intent to establish rulemaking committee” announcement4 to establish a Student Loan Relief Committee (Committee) that will negotiate aspects of the Saving on a Valuable Education (SAVE) plan and student loan forgiveness.
TIMELINE FOR THE STUDENT LOAN RELIEF NEGOTIATED RULEMAKING
- AUG 31, 2023. ED announces intent to form the Student Loan Relief Committee for negotiated rulemaking.
- SEP 14, 2023. Nominations for committee members who represent parties who will be affected by the rules are due.
- OCT 10-11, 2023. Session 1 of negotiations.
- NOV 6-7, 2023. Session 2 of negotiations.
- DEC 11-12, 2023. Session 3 of negotiations.
- Early to middle of 2024. ED publishes draft regulations in the NPRM regardless of the outcome to reach consensus.
- Minimum of 30 days for public comments. A record number of comments is expected that speak in support and against these rules.
- Analysis of public comments. Depending on the number of comments, this can be a lengthy process.
- ED can change draft regulations. Based on comments, ED can change draft regulations that were agreed upon in consensus.
- OCT 31, 2024. This is the last date defined in the federal “master calendar” and regulations must be published on or before this date to go into effect the following July. If the final regulations are not published by this deadline, it will be another year before they go into effect, or they may not be published at all.
- JUL 1, 2025. Final regulations published by the end of the prior master calendar go into effect.
The interested parties defined by ED for the Student Loan Relief Committee include:
- Student loan borrowers who attended programs of two years or less.
- Student loan borrowers who attended four-year programs.
- Student loan borrowers who attended graduate programs.
- Currently enrolled postsecondary education students.
- U.S. military service members, veterans, or groups representing them.
- Civil rights organizations.
- Legal assistance organizations that represent students or borrowers.
- State officials, including State higher education executive officers, State authorizing agencies, and State regulators of institutions of higher education.
- State attorneys general.
- Public institutions of higher education, including two-year and four-year institutions.
- Private nonprofit institutions of higher education.</li>
- Proprietary institutions.
- Historically Black Colleges and Universities, Tribal Colleges and Universities, and Minority-serving institutions (institutions of higher education eligible to receive Federal assistance under title III, parts A and F, and title V of the HEA).
- Federal Family Education Loan (FFEL) lenders, servicers, or guaranty agencies.
It is unlikely that Congress will pass a bill for the reauthorization of the HEA in an election year; however, they may introduce it through the education committees in the U.S. House of Representative or the U.S. Senate. The House is the most likely to do so with Chairwoman Virginia Foxx at the helm. Her passion for education has fueled numerous education laws during her time in Congress. The statute introduced by the committees or even passed by the House or Senate may be dynamically different that the final regulations. If it comes down to a showdown between lawmakers and regulators, the statute overwrites regulations.
Education has traditionally been politically charged because it is reauthorized every few years and it is budget driven. Once the law passes, it goes through a funding process within the Office of Management and Budget (OMB) The OMB may not fully fund items in the HEA Amendments. For example, the HEA may define an annual Pell Grant limit of $4,500; however, the OMB may only fund a $3,800 annual limit.
Politics is at play with loan forgiveness. Politicians may use the process as talking points for their campaigns and, if the regulations are not published on time, borrowers may not ever see it come to fruition.
The best advice is still to pay student loans on time and begin as soon as possible. Payments reduce the interest accruing and the number of payments to pay the loans off. Debt burden is no joke so take this seriously. Waiting to pay is never a good option for any borrower regardless of income.
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