Student Assistance General Provisions, Federal Perkins Loan Program, Federal Family Education Loan Program, William D. Ford Federal Direct Loan Program, and Teacher Education Assistance for College and Higher Education Grant Program Open Access
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This comment on the Department of Education’s (ED) proposed rule to amend the regulations governing the Direct Loan Program does not represent the views of any particular affected party or special interest, but is designed to evaluate the effect of ED’s proposal on overall consumer welfare. As of April 2016, the total outstanding balance of student loans is estimated to be approximately $1.35 trillion. Throughout the recent period of economic crisis from the late 2000s until 2014, the student loan balance quadrupled, and default rates among student borrowers reached their highest levels in 20 years. The rule proposed by ED would make several amendments to the regulations governing its Federal Direct Loan Program. Among the most significant changes are 1) an expansion of the conditions wherein ED would forgive borrowers’ loan balances, 2) additional provisions that would broaden ED’s ability to recover losses directly from institutions resulting from approved borrower defenses, and 3) the addition of automatic triggers for postsecondary schools that would apply under certain conditions and events. Schools would be required to comply with these provisions to continue being eligible to be paid by borrowers using federal funds appropriated under title IV of the Higher Education Act (HEA).