Several taxpayer groups will meet with Obama administration budget officials on Friday to voice concerns about the cost of a proposed student loan regulation that the Department of Education estimates would cost up to $43 billion.
The regulation, which would allow student borrowers to sue for debt relief if they claim they were victim to a “substantial misrepresentation” by their school, has been submitted to the Office of Management and Budget for review.
The taxpayer advocate groups requested the meeting with OMB in a letter last week. They said the rule had not undergone sufficient analysis and that Congress should be consulted on a change that carries a possible price tag of $43 billion.
“Such an enormous commitment of federal taxpayer dollars should not be made through agency rulemaking without an express directive from Congress, and it certainly should not be made without a far more rigorous analysis and estimate of what the costs to taxpayers will end up being that the Department of Education has conducted to date,” the groups wrote in a letter to OMB official Howard Shelanski.
“We formally request that a new analysis of the proposed regulation be conducted, independent of the Department of Education, in order to more precisely determine the expected economic impact of this rule, and that finalization and implementation of the regulation be delayed until such an analysis is completed,” the groups wrote.
The letter stated that the threshold for debt forgiveness was too vague and predicted it would “create a stampede to file claims.” The regulation permits class-action claims and could bankrupt institutions with smaller endowments, including many historically black colleges.