by Nathaniel Cline, Virginia Mercury

U.S. Education Department suggests permanently altering Public Service Loan Forgiveness, income-based repayment programs

Lawmakers and education advocates fear changes to student aid programs being solicited by the U.S. Department of Education, including altering Public Service Loan Forgiveness and income-based repayment plans, could hurt students, especially the neediest seeking support to pay for school.

According to the State Council of Higher Education of Virginia, 32% of undergraduate students in the commonwealth borrowed money during the 2023-2024 school year, which is a decrease from 43% in the 2012-2013 school year.

During the 2023-24 school year, Virginia was awarded $1.4 billion in federal funds, with an average of $11,000 going to each of 131,045 students.

On April 3, the U.S. Department of Education announced it is seeking public feedback on changes to its student aid regulations that “streamline or eliminate unnecessary regulatory processes that are not required by law.”

The agency added that the process should focus on how Title IV regulations have impacted “institutions, states and other partners,” and if implementing certain student aid programs “may be inhibiting innovation and contributing to rising college costs.”

Acting Under Secretary James Bergeron said in an April 3 statement: “Not only will this rule making 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.”

According to Federal Student Aid, an office in the Department of Education, the office provides more than $111 billion in federal student aid each year through grants, loans and work-study, which allows students at participating schools to earn money to pay for tuition, books and housing.

Virginians commonly apply for assistance by completing the FAFSA, which has recently been overhauled and faced criticism for its delays, or the VASA application to their preferred institution. 

State Sen. Ghazala Hashmi, D-Richmond, told the Mercury she anticipates hearing from her constituents soon about the proposed changes as students and families begin applying for federal financial aid for the fall semester. 

“So many of our students depend absolutely on Pell Grants (and) on the federal loans in order to have access to higher education,” Hashmi said, “and so with the wholesale firing of so many employees in the Department of Education, the ability of that department to be efficient and effective in processing these applications is on the line.” 

Hashmi said she’s also concerned that staff cuts at the U.S. Department of Education could negatively impact the agency’s ability to handle issues “as they come up” for those seeking assistance. Some of the applicants seeking assistance are first-generation and low-income students.

One of the most controversial programs being considered for a change is the Public Service Loan Forgiveness program, which 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.

On March 7, President Donald Trump directed the agency to review the program through an executive order claiming former President Joe Biden’s administration “abused” the program by using taxpayer funds to pay off employee loans before they were up. The order said the previous administration also “misdirected” tax dollars into “activist organizations that not only fail to serve the public interest, but actually harm our national security and American values, sometimes through criminal means.”

However, critics have argued the administration has instead targeted nonprofit organizations that focus on assisting immigrants and members of the LGBTQ community.

“Threatening to punish hardworking Americans for their employers’ perceived political views is about as flagrant a violation of the First Amendment as you can imagine,” said Aaron Ament, president of the National Student Legal Defense, in a March statement. “If the Trump administration follows through on this threat, they can plan to see us in court.”  

Trump also wrote in the order that individuals employed by organizations whose activities have a “substantial illegal purpose” shall not be eligible for public service loan forgiveness.

The education department will also be taking feedback to improve the Income-Contingent Repayment plan, which allows students to pay back what is owed on a fixed monthly plan over 12 years, adjusted based on their income or 20% of the extra money.

With the threats to overhaul education, including cuts to research institutions, Del. Sam Rasoul, D-Roanoke, said the idea of changing financial aid regulations is concerning for students. 

Financial aid offices at various colleges and universities are charged with processing applications and creating aid packages. But, with the FAFSA issues, administrators have already been frustrated with the delays.

Rasoul said this is going to create a “bureaucratic mess for our students and universities as we move forward.”

Hashmi added, “This is really, really concerning, and it is going to create a tidal wave of concerns for not just the students, but for our colleges and universities and especially in those institutions that have large populations of students who come with federal financial aid.”

The agency will hold an in-person meeting on April 29 and a virtual hearing on May 1. Public comments must be submitted through the Federal eRulemaking Portal.

As of April 14, 285 comments have been submitted to the Federal Register. The deadline for comments is May 5.

(Virginia Mercury is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Virginia Mercury maintains editorial independence. Contact Editor Samantha Willis for questions: info@virginiamercury.com.)