The Future of Student Loan Forgiveness


​​​​​​​​​​​​​​​​​​​Aired December 2, 2​​021

The hosts talk about the pressing items members of Congress need to wrap up before the end of the year, including a deal on a bill to fund the government. They then dive into a lively discussion with Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators (NASFAA), about student loan forgiveness and other topics important to borrowers. ​

Here are some of the links and references from this week’s show:

Policy Direction on Federal Student Loan Servicing from ED Undersecretary Ted Mitchell

Navient, With Six Million Borrowers, Asks to Stop Servicing Federal Student Loans
The New York Times (sub. req.) | Sept. 28, 2021

Biden Quietly Deciding How to Restart Student Loan Payments
Politico | Oct. 18, 2021

Biden's $11.5 Billion In Student Loan Forgiveness: Some Is Automatic, Some Is Not. Here's A Breakdown.
Forbes | Nov. 2, 2021

Examining the Implementation of COVID-19 Education Funds
House Education and Labor Committee Hearing | Nov. 17, 2021

Oversight of Higher Ed COVID-19 Funds
Inside Higher Ed | Nov. 18, 2021

Off the Cuff – NASFAA Podcast


 Read this episode's transcript

Jon Fansmith: Hello, and welcome DotEDU, the higher education policy podcast from the American Council on Education. We're going to be joined later by Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators, and an incredible resource and repository of information about all things department of ed, but particularly around federal student aid. But before that, I am joyed as always by my co-host, Sarah Spreitzer and Mushtaq Gunja and guys, how was your Thanksgivings?

Sarah Spreitzer: Yeah, mine was good. Super, super quiet. It was great.

Mushtaq Gunja: I had a lovely Thanksgiving too. Thank you for asking Jon. It was filled with family and friends, the way it should be. And on the way in this morning, I don't know if you guys saw this. I saw the first snowflakes of the season.

Jon Fansmith: Yeah.

Mushtaq Gunja: Very excited about this.

Jon Fansmith: My daughters actually saw them and people should know, they were a handful of flakes that you could barely tell by squinting really hard and looking out the window. Both my daughters said this great, we get a snow day now. And I had to say, no, that's not really. Even in DC, you need a little bit more snow before they start closing the schools.

Mushtaq Gunja: Do either of your kids, are they going to get snow days this year? Because I'm not entirely sure what happens for us. My kids wouldn't physically go to school, but I think they might be doing virtual Zoom stuff on snow days, which-

Sarah Spreitzer: Oh my God, that would be horrible. That would just be horrible. I think the teachers would completely rebel. If I was a teacher, I would.

Mushtaq Gunja: I think we actually had a snow day enough for snow, but for ice or something last year. And the idea was the teachers couldn't get in to do remote learning. So, fingers crossed, I guess that's the same. I don't know, whatever gets my kids out of the house.

So Jon speaking of snow, it reminds us that it is December and December can either be an incredibly quiet time on the hill and in Washington, or it could be extremely exciting with pending deadlines and whatnot. Jon, what does this December hold for us?

Jon Fansmith: It's going to be another busy one, mostly about money, which is what Congress has done for, I don't know, Sarah, like 10 years now running. They just punt everything into December.

Sarah Spreitzer: Yeah. I want to know when these quiet Decembers happened before Mushtaq. At least, I've been doing this now for 20 years. I don't remember December ever really being quiet.

Mushtaq Gunja: Yeah, Sarah, we were been doing it for 50 years and yeah, I think was a year in 1971. That was quiet.

Jon Fansmith: Are we going to call you grandpa Mushtaq now, is that the-

Mushtaq Gunja: Back in my day.

Jon Fansmith: Sorry, tied an onion to our belts. Very obscure Simpsons reference. Sorry everyone. Yeah, no. There's the use of the holiday break as sort of leverage to get members of Congress to finalize things. Not sure why there's any more pressure to do it before the break than after the break. But they have laid out a couple big things. In fact, they have a couple big things they have to deal with in the next couple days as we record this, it's a Tuesday. Friday, December 3rd is the deadline for congressional funding to run out. So government funding expires at midnight on Friday, unless Congress does something about that, it looks like they will have bipartisan agreement to do an extension of that deadline into late January, the 14th to the 21st are the dates being talked about right now, which would be great.​

They avoid a government shutdown. The problem of course, is that they also don't do all the other things in funding that they planned to do, if they actually passed laws and made changes. And what we have seen from the bills have been proposed, we've talked about this really, really good Appell increase to $400, research money, other types of financial aid. So constantly sort of pushing this back, not only does it create havoc at the agencies, trying to figure out where they are halfway through their fiscal year with their budget, but it delays the effect of the good benefits we might be seeing if bills were passed. The other thing related to that, of course, and I've talked about this is the debt ceiling. It is expected that the federal government will run out of money possibly on December 3rd and without an increase in the debt ceiling, we'll need to do... We'll essentially stop fulfilling their financial obligations, which can be very critical, right?

We don't pay social security. We don't pay interest on our debt service. And there's a lot of things that could cause a global financial recession. It looks, it seems, there are just going to be some tricks that the Treasury's going to use to maybe push us into the new year. Complicated, but they'd use some of this actual infrastructure money that just got approved. They'd hold onto it rather than pushing it out. They could use that for other purposes, that gets them towards the end of the year where there's corporate tax money comes rolling in and that sort of refills the Treasury. So now they're saying, well, maybe we can squeeze it till mid-January before we actually hit the hard line.

Positively, the Senate, the big thing was Senator McConnell, refusing to agree the last time and finally agreeing with the last moment. They seem to be a lot more calm this time around. There's not the rhetoric around it. There's interest in solving this problem somehow, there's a possibility of a compromise that's been laid out. So we're hoping that both on government funding and on the debt ceiling this week, we'll see action that will if not solve these problems, at least push them back and buy more time for a long term solution.

Sarah Spreitzer: Doesn't sound like a great solution though, Jon. It sounds like, when you try and write a check right before your paycheck hits your checking account, isn't that considered illegal, right? Oh, the money will be there by the time the check goes clear, not a great way to run the government.

Jon Fansmith: No, not a great way to do anything, but I think a bad solution is better than no solution. And that's really where we are with the state of our federal government right now. There's so little interest in working across the aisle to solve things, even things, frankly, that should be pretty basic like funding the government and avoiding, falling short on our debt obligations that a bad solution still beats chaos and collapse.

Sarah Spreitzer: Yeah. Well, I've been following the National Defense Authorization Act, which I know you two are very excited about, which is the annual bill that authorizes all the programs that the department of defense. And if it doesn't get passed, the Department of Defense gets very antsy and a little concerned. And that was supposed to be the easy thing for December, right? Coming back from Thanksgiving.

Jon Fansmith: Why haven't you solved this yet, Sarah? It was the easy one.

Sarah Spreitzer: I'm working on it, Jon. They were supposed to have it pretty well set up before pre-Thanksgiving. They had worked on what amendments they were going to take. There were like thousands of amendments that were going to be considered. And so they were working on which ones were actually going to be debated and which were going to be put into the manager's amendment. And then late yesterday, Senator McConnell announced, no, the Republicans wanted to go back to the negotiating table on amendments. And so Senator Schumer is having to go back to the negotiating table for a bill that I think he thought they would have cleared by the time they got to December 3rd so that they could take up the CR. So, not great. The NDAA is one of those must pass pieces of legislation that gets used to use a holiday reference as a Christmas, right?

You can hang a lot of different things off it since you're not doing kind of legislation in regular order. And so we've seen a lot in the past couple years, a lot of research security provisions put on there, a lot of directions to agencies about how they fund colleges and universities, research and development. And then this year, we have a provision in there regarding Critical Race Theory, which has become a popular topic for Congress to try and weigh in on. And so we are following that very closely and we will be working to try and get that provision struck during the conference, after the Senate passes their version of the bill. So, it's an massive piece of legislation because it's at the end of the year, it's an opportunity to stick a lot of things on there.

Jon Fansmith: And even though you haven't clearly done anything on NDAA, there is something else though, where you have been leading the community. And I think in a really important way that if you want to talk about.

Sarah Spreitzer: Yeah. So then in my spare time, we submitted our comments to the proposed rule for the Deferred Action for Childhood Arrivals. And so this was a proposed rule around the existing DACA program, which was established back in 2012, under the Obama administration by then DHS Secretary Napolitano. And when President Biden took office, he talked about actions that the administration would take to protect and fortify the DACA program. Unfortunately, Congress has been unable to act. And so therefore the program is still not in statute. It was established under executive authority during the Obama administration. It's been tested in a series of court cases and in the most recent court case, one of the issues that was raised by the judge about why DACA had been established incorrectly was that it had never actually gone through any sort of rulemaking process.

And so by going through this rulemaking process, the department of Homeland Security believes that it will strengthen the program against future court cases. I'm not a lawyer. I don't know, Mushtaq if you think that that is going to help, but it is a helpful exercise to go through. And so we submitted comments along with 45 other higher education associations yesterday on the proposed rule. And DHS, in the proposed rule, is trying to adhere very closely to the Napolitano memo, which basically is only going to capture around 700,000 people who are here in the country, because you would have to have arrived in the country before 2012.

And we know that there are a lot of other dreamers that could be covered under the DACA program. And so, our comments, I think are very aspirational. They talk about what the DACA program could actually be if you were able to expand the criteria and really actually strengthen it. So for example, in the proposed rule, DHS proposes separating out the deferred action from work authorization and our comments talk about how important work authorization is for those people that get deferred action, because we know that that's what's really allowed people to come out of the shadows, to kind of live their life and be full members of our society. So we think it's really important that those two things be kept together.

Jon Fansmith: Great. And for people listening, you can find a copy of that letter, as well as AC updates on all of these issues on our website. We're going to be back in just a moment with Justin Draeger. But before we do, this is also a momentous for DotEDU staff and that our producer, Catherine Ahmad is leaving us to a much to our great sadness. So we thought we'd break a tradition and give Catherine the chance to come on and say something before she signs off for the last time. So, Catherine, do you have anything to say to the audience?

Catherine Ahmad: Of course, I do. I've deeply enjoyed being able to help our hosts cover vital higher education issues and learn a thing too about Philly and LA sports teams. Thank you for helping make higher ed policy accessible to our listeners. And I will miss hearing all of your banter and behind the scenes laughs.

Jon Fansmith: Wow. Well, thank you so much. That's really sweet.

Catherine Ahmad: Of course, [crosstalk 00:12:18] here.

Mushtaq Gunja: We will miss you terribly Catherine, and thank you for making this podcast, the great podcast that it is. And we will be back shortly with the president and CEO of NASFA, Justin Draeger.

And we are back and we are joined with, by a very special guest, old friend of ACE, old friend of mine, Justin Draeger, the president and CEO of the Association of Student Financial Aid Administrators. Justin is probably no stranger to many of you who are listening to this podcast. He's been in the financial aid world since 2002 in administering, interpreting, communicating, developing student financial aid policy. And his voice is just incredibly important representing financial aid administrators, and really thinking about financial aid policy and Justin and I have something in common. We spend most of our weekends taking our kids to various events and supporting mostly sporting events. True Justin?

Justin Draeger: Yeah, that's all true. Although my oldest is a licensed driver and Mushtaq, I just got to tell you a game changer. Okay. She is like our... She is now shuttling the other kids around, so I've got a lot more free time on the weekends.

Mushtaq Gunja: Justin, is it possible for me to hire her to bring, take my kids around-

Justin Draeger: Totally.

Mushtaq Gunja: I'm three years away, unfortunately.

Justin Draeger: Yeah, absolutely. I'm totally open to that. Obviously I take a cut because as we remind her, it's not her car. She does drive my car around. So, I'll just take my cut and it's all good.

Mushtaq Gunja: We've got three possible clients on this podcast. So, this could be a really lucrative sideline for you.

Sarah Spreitzer: Yes. Send us your rates.

Justin Draeger: Okay. Will do, right afterwards.

Mushtaq Gunja: And Justin, we are so happy to have you on podcast. This is an incredibly important time in financial aid. We have a looming repayment start date of February 1st. We've just come through or still really potentially in the middle of this pandemic, but I'd love it if we could start sort of pre pandemic in the olden days. The financial aid system was working, I'm not entirely sure which adjective to use, was working okay pre pandemic. I'm sort of curious if we could start there. What was working, what wasn't working the financial aid system sort of-

Justin Draeger: Yeah, start really broadly and I'll just say what was working, what's worked for a long time is getting money to schools to get the students works. We've got that down really well. What wasn't working so well was some of the backend policy and implementation, particularly around loans. So if we were to take a snapshot, if we go back in time, this reminds me a little bit of a Christmas Carol and Mushtaq, we're going to do like the, the ghost of Christmas past here. We go back in time, March 2020, that winter, December, January, February, March. At that time, if you were to just look at the loan portfolio and let's make it simple, we'll say 10 borrowers represent all borrowers, all federal student loan borrowers. Roughly five out of those 10 would be an active repayment. That doesn't mean they're necessarily paying down their loan principle balance, but they are in repayment.

Two out of those 10 would be in default. They went almost 300 days without making a payment. They have collection costs. They're probably being pursued in collections by a private agency or Treasury Department directly. And one of those 10 would be in forbearance. That means they're accumulating interest. And then you have the other two that are in a grace period because they're in school or some sort of deferment. That was the loan portfolio. So, that's where we were. We had problems with loan servicing. This is a very tough nut to crack, right? How do we hire servicers to treat borrowers well, while also trying to get money from them and this sort of intersection between market efficiency, let's get the most bang for our buck, but then also we want the best service around. So in all the politics around loan servicing, we had accountability issues. So we were arguing about in higher ed about proxies for institutional quality, not just default rates, but how are borrowers doing at your school? Are they repaying their loans?

We had a sort of an emergence of an issue there too with parent plus loans, which have historically not been well tracked, but oof. If you're looking for like a problem area, parent plus loans are like the next problem area and maybe ripe for accountability. And then the final thing I'd say, and we can dig into any one of these in is broke, just outright broken programs, like public service loan forgiveness. So prior to the pandemic, lots of scrutiny from Democrats and Republicans, one of those rare areas where there's bipartisanship, that a program is not working and PSLF, prior to the pandemic, had a 98% rejection rate. 98% of the people who applied for forgiveness through public service loan forgiveness were rejected. So that was like March 2020, right before we went into the pandemic.

Sarah Spreitzer: And wasn't that like 98.5%. It was pretty close to like 99%, right? It was just over 1% were seeing their loans forgiven.

Justin Draeger: Depending on which Lotto program you looked at, your odds of winning a lottery, like a scratch off were better than getting public service loan forgiveness at one point. So-

Mushtaq Gunja: Was [crosstalk 00:18:29] advocating that as a strategy to borrowers? Put it all on scratch offs?

Justin Draeger: It was an idea we pursued, obviously, if you were rejected, here's a scratcher. It didn't go anywhere.

Mushtaq Gunja: I would love to dig into a couple of those sort of problem areas, pre pandemic, and I guess the overarching question I guess I might have is one about servicers, right? So, if you think about what's going on, on the PSLF side, and you think a little bit about those numbers of borrowers that are in either forbearance or are in default, at least some of that seems like it should be at the feet of the servicers, not all, but at least some of it, because we have an income based free payment program, that theoretically means that we should be in a zero default world, right. That $0 payments are possible with income based repayment. So talk to me a little bit about how much of the problem is one around servicers and how much of that servicer problem is one about sort of clear guidance to servicers.

Justin Draeger: Yeah. And I think you've probably... I think Mushtaq, these are the sorts of things you've worked on in your work history. So you probably have more light to shed on this than I do. And maybe we'll have some areas of light friction. I don't know. I sort of see this as servicers as they've become so politically hot that it's hard to have any nuanced opinion on loan servicing anymore. It's sort of like you're with us or against us when something gets politically hot. But, we have lawmakers who are calling service, laying the blame of like PSLF and loan default at the feet of greedy servicers. And I'm not saying that servicers don't play to incentives. So, if you build a contract and a servicer's going to get more money for putting students into a forbearance than they would by spending a significant amount of time exploring deferment options, then I understand that companies played it to incentives.

But I'll go back to the memo that Ted Mitchell worked on when he was at the department, which is, there are just so many different policy intersections that you have to balance when creating these contracts, because we're talking about care of students and borrowers.

We're not treating them as if they took out a loan in the private market with underwriting that determine how much they could take out in loans. These are blunt instrument loans, and people have varying ability to repay. And then you combine with that with the fact that, what do you want? I'm saying that to you Mushtaq, but like in general, what do you want? Do you want quality servicing? Well, like anything, you got to pay for it. Quality servicing takes money and I've toured servicing facilities. Our programs are complex. Hiring a workforce that can actually understand these programs and help borrowers, man, that is no easy task. It's up there. You would have to hire and pay really qualified staff to navigate these programs. So this is not like a rock bottom dollar pricing model. I think we should be pursuing, but I don't know that lawmakers and different administrations really get that.

Mushtaq Gunja: Yeah. No, I think we might have less friction on, on some of this than you might think. Our payment universe, the number of options that are available to borrowers are tricky, I think, for our servicers to be able to explain. And I do think that it takes some significant time with each borrower, for us to be able to, for our services, to really know what is the exact right payment option and plan for you. And I think incentives haven't helped. I think some of the guidance, both from the department, but also from the servicers to their, to the actual folks that are on the phone, haven't been as good as they could be. But, the base problem is a very, very complicated loan system, that's sort of a... We haven't started from scratch. We just keep layering on more and more complexity. And I think, at some point, there may be some simple solutions, but it may involved sort of going back to square one, and I don't know where your head is there, Justin.

Justin Draeger: No, I think you're right. I'll just point out, let's use now we're jumping ahead to the future here, but for those who are following this sort of thing, services are leaving the program at this point. And part of it's pricing, part of it's like the political headache, I think, but some of these servicers I'll use Navien, that was sort of the favorite punching bag for like Senator Warren and a few others. So Navien federal loan servicer, but they also do other servicing. In fact, they do loan servicing for states, progressive states, blue states. They do servicing on state loan programs, not related to student loans, and they don't have near the trouble or challenges that they have with the federal student loan marketplace. So, I kind of look at that and I say, Navient says, look, we're not servicing direct loans anymore.

It makes up, I don't remember what they said, like 15% of our portfolio and it's 99% of our headaches. So that math makes sense to me, but they are successfully servicing other financial products in public space. It's just federal loans in general, I think are really sticky wicket. And at some point, the buck has to stop with either federal student aid or Congress to fix this, because I don't know, I'm embarrassed that these are serviceable loans. They're just impossible to navigate. The department needs servicers and the servicers want business and want to service federal loans. But like any relationship, I go back to like Seinfeld, like it's like, who has the upper hand in any relationship? And if all the servicers walk, then what? Then what do we do? So, at some point I think the servicers are doing the math on, what's it worth for us to continue to service? And some servicers are still all in and other servicers have done the calculation and said, I got 99 problems and they're all federal student loans servicing related.

Jon Fansmith: It's a great reference, which actually kind of brings me to, first of all, I admire your confidence in that this will be a fairly smooth transition. I don't know that there's been anything about the management of federal student loans recently that would indicate that's the right course of, that's the right take. But you've outlined where we were heading into the pandemic, right? The pandemic blew up everything and not just all the other areas, but as we're talking about student loans, right, there has been a pretty strong response by both Congress and then subsequently the administration to address the impact of student loans, through the pandemic, suspending repayment entirely we're at roughly two years at this point of repayment being suspended.

That's a big deal, right? What are some of the implications for where we find, it's one thing if servicers are coming and going, if they can arrange servicing, there's obviously huge challenges related to that. But in an interim, when I think it's something like 90% of borrowers are not actively repaying their loans, doesn't that raise a whole lot of other questions about what we're doing right now and especially what it's going to mean going forward.

Justin Draeger: Yeah. So the first point I would make is that you're absolutely right. So during the pandemic, first under President Trump and then reaffirmed by Congress and then reaffirmed again by Congress and then extended by President Biden, we've had several delays of any borrowers having to go back into repayment. Now borrowers can voluntarily make payments. Right now we're sort of in a no payment required, there's no interest accruing and any non-payments are counting towards any forgiveness requirements that would be required in PSLF or other forgiveness programs. So this is a huge benefit. And if you continue to make payments, you're paying down your loans faster because there's no interest.

So for all the talk going into the 2020 about loan forgiveness, let's just forgive all loan debt. I think it's unfortunate that one of the biggest things that's been missed, is that in the history of the federal aid programs, I can't think of a time in a two year span where we've had such a large borrower benefit. Now, depending on whether you're using Department of Ed numbers or the New York federal reserve, we're talking somewhere in the neighborhood of 110 to 150 billion in benefits that have gone to all federal student loan borrowers through the pandemic.

That's never happened before. That is a huge benefit.

Jon Fansmith: And that benefit though is about to expire, right?

Justin Draeger: Right, yeah. So it will expire, but I guess my point is like, I feel like this is something I feel like the administration should be really talking up. Everybody keeps hammering them on loan forgiveness, but this is huge. This has been a huge benefit.

Jon Fansmith: Kind of hard to take credit for it though, if Congress in the previous administration started policy, right.

Justin Draeger: That's never stopped an administration for taking credit for previous administration. Come on. That's politics 101.

Jon Fansmith: Fair point. Fair point.

Justin Draeger: Okay. The second thing I would say that we've learned out of the pandemic though, is that yeah. Congress stepped in and provided some extensions, but President Trump in the last administration did it unilaterally, paused payments. It was reaffirmed by Congress. And then it was extended by the presidents as well, all without Congress, because true to form, Congress can't keep up.

They never keep up with their own expiration dates. So there's really, and then on top of that, through the pandemic, this administration has also granted roughly $12 billion in backlogged forgiveness, whether it's PSLF forgiveness or borrower defense, like borrowers who were misled or went to a closed school or were in some way, who attended a school that led them astray. So all of that to say is these things were backlogged because they were caught in these regulatory schemas and bureaucracy, just pushed through $12 billion in loan forgiveness. And probably more on the way. And I guess the second major headline here is that when the president is given emergency authority by Congress, it's not clear to me at least where that authority begins and ends. So the president clearly without congressional authority has extended repayment relief for months to the tune of billions of dollars every month, didn't ask Congress, didn't check in with, maybe they sent up a memo, but just did it.

We have an entirely new way to fix PSLF through these waivers, where we're going to go back to previous PSLF recipients who are denied, who are in the wrong repayment plan, maybe paid their loan back on the wrong date, like they missed their date by five days or something that made their payment ineligible. All these sort of bureaucratic stupid reasons people were denied, and we're just going to clean all that up all by the president using emergency authority. So I don't know, I think this opens up a lot of legal questions like, well, where does the president's authority begin and end when during a time of national emergency?

Jon Fansmith: Well, there's a couple, sorry to Sarah's point earlier about the 98.5% being rejected. Part of that was just like you said, though, it wasn't like there was a judgment call being made. There were reasons that applications weren't conforming with the statute, the statute was incredibly complicated, but the flip side of this is the emergency authority is, like you're saying simply saying, well, we have a law that governs this. We're going to do something different. Right.

Justin Draeger: Right.

Jon Fansmith: We see that again with the FAFSA implementation that the department of education said we're required by law to implement it by 23. No, we can't make that. So we're going to implement it by 24. It's this realm of executive authority. It's one thing to say, well, we're going to expand on sort of our, where there is flexibility. It's another thing to say, what statute dictates, we're simply going to ignore and do what we think is best anyway.

Justin Draeger: Yeah. And if I was one of the people and I don't know where ACE's exact position on this is, but if I was one of the people who was saying, I think the president should forgive all loan debt, I would say this whole sort of game of cat and mouse, where the president has said, well, we're exploring it. The Justice Department's going to figure it out or we have attorneys that are looking at this. I would be totally frustrated if I was one of those people. I'm not, by the way. We're not leading the charge against loan forgiveness, but there are lots of other ways that we would try to address systemic issues in the loan programs. But that aside, I would be really frustrated because I would say, well, what do you mean? You're throwing, you've forgiven $12 billion of loan debt using emergency authority. You've paused payments and interest for two years, largely on executive authority to the tune of 150 billion.

What do you mean you can't do it? So I just think it's sort of interesting that there are arbitrary lines, I guess, in what the president believes or the administration believes it can and can't do well.

Jon Fansmith: That's back to your point. Oh sorry. Sorry, go ahead.

Sarah Spreitzer: Sorry. I was just going to say, back to this February 1st date, there are a lot of people that want to see that extended even further. There's arguments to be made that we are still in the pandemic. What do you think the chances are that it would be extended? Do you think February 1st is a hard and fast date?

Justin Draeger: Yeah. I think it's not going to be extended. February 1st is a hard and fast date. Now, let me add some caveats to that. So Sarah, you're taking us into the future a little bit here, so-

Sarah Spreitzer: Sorry.

Justin Draeger: No, you're good. Let's do it. I think February 1st is a hard and fast date. However, I wouldn't be surprised if the department and they have to walk a really tight rope here because on the one hand, they can't tell borrowers we're all going into repayment on February 1st. And then on the other say, but really we're going to give you a few more months, but I do think that there's going to be some leniency here. So February one is the start date, but if a borrower is MIA or we can't get ahold of them, or they're not in contact with their servicers. They haven't checked in. I wouldn't be surprised and I would advocate and we have advocated the department that they're ought to be some grace. And I don't necessarily mean that in the technical word of a grace period, but more in sort of a figurative, let's show some grace to borrowers. Now, I don't know if that's like 30 days or 60 days or 90 days, but there's going to have to be some leeway when we restart this machine.

Also, there's been rumors and I think Politico is the first to break this news that the department might be making some executive action on borrowers who are in default and Politico dubbed this operation fresh start. And we don't have details out of the administration. And I don't know if that they have them all worked out, but if I were to predict, I think one of the things they might be looking at is how do we take all the borrowers in default and say, we're starting over, okay. Your loans are, as of this moment, rehabilitated. We're going to roll back collection costs and fees. Now this is our collective chance. Let's do this right. So, I think there's a chance that this February start date is hard and fast. There might be some grace figuratively or literal, and maybe we can get all borrowers sort of back up to this starting point. Let's all start even and move forward. And I think that would all be great news.

Sarah Spreitzer: But I think heading into 2022 and a big midterm election, right. Is that going to be enough? Because we saw a loan forgiveness as a huge issue that was brought up during the presidential election. It's on the minds of members of Congress and some senior senators. Is that going to be enough for the department of ed to say, we're rehabilitating loans. We're expanding public service loan forgiveness. We're working with borrowers when the repayment starts. Is that enough messaging to kind of say, we're offering these flexibilities or will they need to do more?

Justin Draeger: Politically speaking, you mean?

Sarah Spreitzer: Yeah, yeah. Politically speaking, will people recognize that or is it a hundred percent forgiveness or nothing?

Justin Draeger: I feel like there's a certain fervor amongst certain groups that it's a hundred percent or nothing.

Sarah Spreitzer: Yeah.

Justin Draeger: But look, the president over the last two months has had his approval ratings are shrinking, which isn't unexpected for any administration. This happens, you come in on a high and sort of modulate, but they've been shrinking and that's when we've been cutting like $1,500, 500 to $1,500 child tax credit checks to people every month. So I don't know if this politically staves off what happens almost in every midterm election, which is the president and his party have always historically taken a hit. I don't know if there's any way to stave that off.

Sarah Spreitzer: Yeah.

Justin Draeger: But this is where I think it comes down to the principal piece. This administration has not been for large scale debt forgiveness, but that doesn't mean they haven't done some really positive things that address systemic issues and borrowers, who've just been caught up in bureaucracy for years. PSLF and borrower defense.

Sarah Spreitzer: Yeah. And I think that we've seen members of the administration trying to deliver that message. And I know Justin, you probably watched the hearing in the house, was it last week with the under secretary talking about HEERF spending, but some of the questions were all over the place. They wanted to talk to the department about PSLF and other issues. Do you have any thoughts on the hearing and kind of what the under secretary said during that hearing? Or any of the topics that he touched on?

Justin Draeger: Well, I'd actually be interested in your all's take on some of this. Can we use sort of the Republican questions as a precursor to what they would focus on if they were to retake the house next year? That's a question I have for you all. As far as James, under secretary Kvaal, he knows higher ed. I think he knows how to navigate the politics. He knows the policy, so I wasn't necessarily surprised by anything.

Sarah Spreitzer: That's a really good point, right. Was that a preview of if the house flips in the midterms, the kind of agenda that we would see from the ed and labor ed and workforce committee under Republican leadership, for me, my perennial favorite issue section one, 17 was brought up, which is the foreign gift and contract reporting that I know Justin we've worked on together, which this Department of Education is still not kind of addressed anything or taken any steps beyond what was done in the previous administration. And so that's still hanging out there. And I think there are some Republicans that are really concerned about foreign influence and foreign interference.

And they took the opportunity during that hearing to bring up section one 17 and to ask what steps the department has taken and really, I don't think they've done anything beyond what was done in the previous administration. And so, we're continuing to watch that closely, but there's so many priorities out there, right. They have such a long list of things to do. It must be really overwhelming, but I don't know, Jon and Mushtaq. What did you think?

Jon Fansmith: Yeah, no, I thought actually, what was really interesting was remember, this was a hearing about how the higher education emergency relief funds were being used. And the amount of time that was spent talking about how the higher education emergency relief funds were being used was such a small percentage of the overall. You had understandably democratic members who sort of teed up, aren't you doing great work with us. And the under secretary say, we are. It's great. This is wonderful, which it is. Let me be clear. It very much is, but Republican line of questioning, we had Critical Race Theory. We had section one. So we had a huge range of issues that weren't really related to the subject. And frankly, weren't really related to a lot of what the department itself is responsible for and Critical Race Theory is curricular. It's something the department's proven by law from getting into.

It also kind of shows what the interest areas in higher ed policy would be. If you had a Republican house after the next midterms, it's not the kind of nuts and bolts administration, it's these sort of flashpoint, big picture area issues that and certainly we're in an election year. It appeals to your voters understandable, but will have to be followed up with once you actually claim power, if they do.

Mushtaq Gunja: Hey, Justin, as we think about the, I guess we're in the ghost of the future part of this conversation, and I guess we're in the middle of a negotiated role making session that we'll get into sort of high gear probably in the coming year. What are you tracking in that [inaudible 00:40:55] and what are the issues you'd like to see tackled there?

Justin Draeger: Yeah. So it's hard because the department negotiated rule making is becoming a bit of a Frankenstein. It had a very definitive process and you would have different rulemaking committees that would meet on various topics. And just in terms of bandwidth and how much can actually get done, we're basically, and this has been happening across several administrations. So, but now we're seeing the culmination of one rule making committee with various subcommittees, all tackling this huge breadth of issues, which makes it really hard to track. I think if you're at an institution, so we're ACE, NASFA, we're working together to try track all these issues. One of the big headings is going to be accountability. And while some of that is directed at for-profit institutions, not-for-profits aren't going to escape some of the regulations around borrower defense to claims.

We're talking about schools that engage in or accused of misrepresentation. We'll be talking potentially in the future about how much liability institutions should carry for students who feel like they've been misled or didn't have the outcomes that they were promised or felt that they were promised from institutions. So, that's not just a for-profit issue. And then in the future, just we might as well flag for like community colleges who have a lot of certificate programs. Gainful employment is definitely on this administration's agenda. We'll be circling back around to that. And for our part at NASFA, we're not against accountability standards.

We just want to make sure the implementation matches the policy. We can have really good policy ideas that if they're not implemented well, really turns our members, aid administrators who live at the nexus of policy and implementation, it can turn the best policy idea right around on its heels to a 180 for our members, if it's not implemented correctly. So we're paying very close attention to how these policies would actually play out on campuses. But Mushtaq, I guess I should say is more to come on that because the current rule making wouldn't go into effect at institutions until July 1st, 2023 at the earliest and things like gainful employment haven't even started yet. So that would be presumably 2023 or even 24.

Jon Fansmith: Well, it is a good thing, Justin, you and NASFA will be tracking these things. We work very closely with you guys and are tremendously appreciative of the great work your organization and you in particular put forward. We're also really thankful to have such a talented podcast guest and host, I should reference you host your own podcast, which occasionally has some incredibly talented guests on, but thank you for making the time to come and join us on ours.

Justin Draeger: Yeah, our pleasure. And Jon, once you agreed to come on our podcast over at NASFA, I felt like it would be in really poor taste to turn down this offer. So I hope I didn't mess anything up and-

Jon Fansmith: It's the only reason soon I came on.

Justin Draeger: Okay. Well social motivation. Yeah. That's perfect. No, I get it. All right. Thanks very much. Thanks for having me.

Jon Fansmith: Thanks Justin.

As always, you can check out earlier episodes and subscribe DotEDU on Apple, Google podcasts, Spotify, Stitcher, or wherever you listen to your podcast for show notes and links to resources mentioned in the episode, you can go to our website And while there, please take a short survey to let us know how we're doing. You can also email us at to give us suggestions on upcoming shows and guests. And a very special thank you to the producers who help pull this podcast together. Laurie Arnston, Audrey Hamilton, Malcolm Moore, Anthony [Truhart 00:44:43], Catherine Ahmad, Carly O'Connell and Fatma Nago. They do an incredible job making this happen and making Mushtaq, Sarah and I sound as good as possible. And finally, before we leave, thank you so much for listening.

About the Podcast

​Each episode of dotEDU presents a deep dive into a major public policy issue impacting college campuses and students across the country. Hosts from ACE are joined by guest experts to lead you through thought-provoking conversations on topics such as campus free speech, diversity in admissions, college costs and affordability, and more. Find all episodes of the podcast at the dotEDU page.

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