Federal: Comment Letter to Department of Education on Notice of Proposed Rulemaking: Student Loan Relief—ED-2023-OPE-0123

Mr. Rene Tiongquico

U.S. Department of Education

400 Maryland Avenue SW Washington, DC 20202

Re: Notice of Proposed Rulemaking: Student Loan Relief—ED-2023-OPE-0123

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Dear Mr. Tiongquico,

On behalf of The American Fintech Council (AFC) ¹, I am submitting this comment letter in response to the Department of Education’s (DoE or Department) notice of proposed rulemaking on Student Debt Relief (Proposed Rulemaking).

AFC is the premier trade association representing the largest financial technology (Fintech) companies and innovative BaaS banks. Our mission is to promote a transparent, inclusive, and customer-centric financial system by supporting responsible innovation in financial services and encouraging sound public policy. AFC members foster competition in consumer finance and pioneer products to better serve underserved consumer segments and geographies. Our members are lowering the cost of financial transactions, allowing them to help meet demand for high-quality, affordable products.

AFC has publicly advocated for clear and consistent supervisory expectations and program requirements to ensure that borrowers are able to effectively repay their student loans. Also, AFC has advocated for a unified regulatory environment for product and service offerings that are provided to consumers for a similar purpose or in a similar manner.

With respect to the Proposed Rulemaking, AFC’s members support efforts to deliver targeted relief for struggling borrowers. As the Administration’s plans for student debt forgiveness have developed over the past four years, our members support steps to educate all borrowers on their potential eligibility for relief programs and to reduce consumer uncertainty and confusion. To this end, we recognize the importance of considering a borrower’s income as part of any forgiveness plan and ensuring that the Department establishes clear and consistent requirements for borrowers to demonstrate their need for forgiveness prior to the Department waiving the debt. These efforts should be targeted towards borrowers who need assistance the most to ensure they receive the proper assistance.

As detailed in the Administration’s recent statement on student debt relief, “[m]ore than 2.5 million borrowers have had their share of student loans for two decades or longer and still carry debt from long-ago loans.”² AFC and its members recognize the impact that such student debt can have on the lives of borrowers and their families. Our members consistently seek opportunities to leverage technology and engage with their consumers to ensure that borrowers are able to repay their student loans in the manner that fits their life best. Further, AFC’s members have worked diligently to comply with the stated goals and objectives of existing and new loan programs, such as the Saving on Valuable Education (SAVE) Plan.

Under Sec. 30.83 of the Proposed Rulemaking, the Secretary of the Department of Education to “waive the outstanding balance when a borrower who only has student loans for the borrower’s undergraduate studies first entered repayment on or before July 1, 2005 (20 years) or on or before July 1, 2000 (25 years) when a borrower has student loans other than loans for the borrower’s undergraduate studies.”³ In general, AFC agrees with the administration’s decision to pursue a more robust loan forgiveness program for borrowers, especially those who have carried student loan debts for over 20 years.

Given the potential impact that finalizing Sec. 30.83 of the Proposed Rulemaking could have on borrowers and those servicing the loans, it is incumbent upon the Department to draft clear and consistent requirements for both borrowers and loan servicers that will allow for both parties to properly comply with the parameters of any forgiveness programs. This includes, but is not limited to,

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1. Department guidance that clearly conveying the supervisory expectations and programmatic requirements associated with the implementation of Sec. 30.83;

2. Timely instruction from the Department regarding its decisions to waive outstanding balances; and

3. Adequate compliance timeframes that allow for servicers to effectively engage with borrowers under consideration for forgiveness and ensure that they qualify and have completed any necessary documentation requirements.

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Further, as a matter of sound public policy AFC also advocates for the aforementioned recommendations to be applied across the Department’s loan forgiveness efforts to ensure a clear and consistent regulatory framework throughout the Department’s activities.

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AFC appreciates the opportunity to comment on the Department’s Proposed Rulemaking and thank you for your consideration of our comments.

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Sincerely,

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Ian P. Moloney

SVP, Head of Policy and Regulatory Affairs

American Fintech Council

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¹ AFC’s membership spans technology platforms, non-bank lenders, banks, payments providers, loan servicers, credit bureaus, and personal financial management companies.

² The White House, “President Joe Biden Outlines New Plans to Deliver Student Debt Relief to Over 30 Million Americans Under the Biden-Harris Administration”, (April 8, 2024), available at https://www.whitehouse.gov/briefing-room/statements-releases/2024/04/08/president-joe-biden-outlines-new-plans-to-deliver-student-debt-relief-to-over-30-million-americans-under-the-biden-harris administration/#:~:text=The%20Administration%20expects%20this%20action,million%20borrowers%20across%20the%20country.&text=More%20than%202.5%20million%20borrowers,debt%20from%20long%2Dago%20loans.

³ Department of Education, Notice of Proposed Rulemaking, Student Debt Relief for the William D. Ford Federal Direct Loan Program (Direct Loans), the Federal Family Education Loan (FFEL) Program, the Federal Perkins Loan (Perkins) Program, and the Health Education Assistance Loan (HEAL) Program (Docket Number ED–2023–OPE–0123), Fed. Reg. Vol. 89 No. 75, April 17, 2024 at Page 27568, available at https://www.govinfo.gov/content/pkg/FR-2024-04-17/pdf/2024-07726.pdf