From: Jessica Ranucci, Primary Negotiator for Consumer Advocates

To: U.S. Department of Education

Re: Technical Edits Relating to Consolidation Loans

Date: December 7, 2023

Background:

I am submitting these proposed revisions to the regulations proposed by the Department in 

advance of the Third Session to provide suggested technical edits to the treatment of 

consolidations loans to ensure that no borrower loses any rights to waiver due to having 

previously consolidated their loans, putting all borrowers in the same position to receive a waiver 

regardless of whether they have consolidated or not. The proposed language in each provision is 

essentially identical to the Department’s proposed § 30.85(b).

Proposed Regulatory Text for §§ 30.83, 30.86, 30.87, 30.88, 682.403:

§ 30.83 Waiver when a loan first entered repayment 20 or 25 years 

ago. (a) The Secretary may waive the outstanding balance of a loan 

if the loan first entered repayment on or before July 1, 2005, and 

the borrower only received loans as an undergraduate student or a 

Federal Consolidation Loan or Direct Consolidation Loan that repaid 

only loans the borrower received as an undergraduate student.

(b) The Secretary may waive the outstanding balance of a loan if 

the loan first entered repayment on or before July 1, 2000, and the 

borrower received loans other than loans received as an 

undergraduate student or a Federal Consolidation Loan or Direct 

Consolidation Loan that repaid loans other than loans the borrower 

received as an undergraduate student. 

(c) For the purpose of this section, a loan enters repayment on—

(1) For a Federal Stafford Loan, a Direct Subsidized Loan, or a 

Direct Unsubsidized Loan, the day after the initial grace period 

ends; 

(2) For a Federal PLUS Loan or a Direct PLUS Loan, the day the loan 

is fully disbursed; or 

(3) For a Federal Consolidation Loan or Direct Consolidation Loan, 

the earliest day as determined under paragraph (c)(1) and (2) of 

this section for any loan that was repaid by that consolidation 

loan.

(d) If the conditions for waiver in paragraph (a) or (b) of this 

section are met but the loan has been repaid by a Federal 

Consolidation Loan or Direct Consolidation Loan that has an 

outstanding balance, the Secretary may waive the portion of the

outstanding balance of the consolidation loan attributable to such 

loan.

§ 30.86 Waiver based upon Secretarial actions. (a) Subject to 

paragraph (b) of this section, the Secretary may waive the entire 

outstanding balance of a loan associated with attending an 

institution or a program at an institution if the Secretary or 
other authorized Department official has issued a final decision 

that terminated the institution or program’s participation in the 

title IV, HEA programs or denied the institution’s request for 

recertification, or the Secretary or other authorized Department 

official has otherwise determined that the institution or the 

program in which the student was enrolled is no longer eligible for 

its students to receive assistance under the title IV, HEA programs 

and that decision, denial, or determination was due, in whole or in 

part, to any of the following circumstances: 

(1) The program or institution has failed to meet an accountability 

standard based on student outcomes established under the HEA or its 

implementing regulations for determining eligibility for 

participation in the title IV, HEA programs. 

(2) The program or institution has failed to deliver sufficient 

financial value to students, including in situations where the 

institution or program has engaged in substantial 

misrepresentations, substantial omissions, misconduct affecting 

student eligibility, or other similar activities. 

(b) The waiver described in paragraph (a) of this section is 

limited to loans that were borrowed to attend that program or 

institution during the period that corresponds with the findings or 

outcomes data that forms the basis for the action described in 

paragraph (a) of this section, unless the Secretary determines that 

the use of a different period is appropriate.

(c) If the conditions for waiver in paragraph (a) of this section 

are met but the loan has been repaid by a Federal Consolidation 

Loan or Direct Consolidation Loan that has an outstanding balance, 

the Secretary may waive the portion of the outstanding balance of 

the consolidation loan attributable to such loan.

§ 30.87 Waiver following a closure prior to Secretarial actions. 

(a) Subject to paragraph (b) of this section, the Secretary may 

waive the entire outstanding balance of a loan associated with 

attending a program or institution if the program or institution 

has closed and the Secretary or other authorized Department 

official has made a final determination that—

(1) Based on the most recent reliable data for that program or 

institution, the program or institution has not satisfied, for at 

least one year, an accountability standard based on student

outcomes established under the HEA or its implementing regulations 

for determining eligibility for participation in the title IV, HEA 

programs; or 

(2) The program or institution-

(i) Failed to deliver sufficient financial value to students 

including in situations where the institution or program has 

engaged in substantial misrepresentations, substantial omissions, 

misconduct affecting student eligibility, or other similar 

activities; and 
(ii) Is the subject of a program review, investigation, or any 

other Department action that remains unresolved at the time of 

closure and that is based, in whole or in part, on the conduct 

described in paragraph (a)(2)(i) of this section. 

(b) The waiver described in paragraph (a) of this section is 

limited to loans that were borrowed to attend that program or 

institution during the period that corresponds with the findings or 

outcomes data that forms the basis for the action described in 

paragraph (a) of this section, unless the Secretary determines that 

the use of a different period is appropriate.

(c) If the conditions for waiver in paragraph (a) of this section 

are met but the loan has been repaid by a Federal Consolidation 

Loan or Direct Consolidation Loan that has an outstanding balance, 

the Secretary may waive the portion of the outstanding balance of 

the consolidation loan attributable to such loan.

§ 30.88 Waiver for closed Gainful Employment programs with high 

debt-to-earnings rates or low median earnings. 

(a) The Secretary may waive the outstanding balance of a loan 

received by a borrower associated with enrollment in a Gainful 

Employment (GE) program as described in 20 U.S.C. 1002(b)(1)(A)(i) 

and (c)(1)(A) if--

(1) The program or institution closed; 

(2) The Secretary determines the program was not preparing students 

to become a doctor of medicine or osteopathy or a doctor of dental 

science; and 

(3) For the period in which the borrower received loans for 

enrollment in the program, the Secretary has reliable data 

demonstrating that, for students who received title IV, HEA 

assistance-

(i)(A) The median annual loan payment of graduates from the program 

is greater than 20 percent of the median annual earnings for 

graduates, minus 150 percent of the applicable FederalPoverty 

Guideline for the year being measured or the denominator of such 

calculation is zero or negative; and 

(B) The median annual loan payment of graduates from the program is 

greater than 8 percent of the median annual earnings for graduates 

of the program or the denominator of such calculation is zero; or 

(ii) The median annual earnings of graduates from the program are 

equal to or less than the median annual earnings for working adults 

aged 25–34, who either worked during the year or indicated they 

were unemployed (i.e., not employed but looking for and available 

to work) when interviewed, with only a high school diploma (or 

recognized equivalent)—

(A) In the State in which the institution is located; or 

(B) Nationally, if fewer than 50 percent of the students in the 

program are from the State where the institution is located, or if 

the institution is a foreign institution. 
(b) In determining whether a program meets the requirements under 

paragraph (a) of this section, the Secretary-

(1) Identifies a program using the program’s six-digit CIP code as 

assigned by the institution or determined by the Secretary, in 

combination with the institution’s six-digit Office of 

Postsecondary Education ID (OPEID) number and the program’s 

credential level, unless the Secretary does not have reliable data 

at the six digit-level, in which case the Secretary will use the 

four-digit CIP code; 

(2) Calculates the annual loan payment based upon the average of-

(i) The interest rate on Direct Unsubsidized Loans for 

undergraduate students for the three consecutive award years ending 

in the latest completion year for the students whose median debt 

payment is being calculated for graduates of undergraduate 

certificate programs, post-baccalaureate certificate programs, and 

associate degree programs; or

(ii) The interest rate on Direct Unsubsidized Loans for graduate 

students for the three consecutive award years ending in the latest 

completion year for the students whose median debt

payment is being calculated for graduates of graduate certificate 

programs and master's degree programs; or 

(iii) The interest rate on Direct Unsubsidized Loans for 

undergraduate students for the six consecutive award years ending 

in the latest completion year for the students whose median debt 

payment is being calculated for graduates of bachelor’s degree 

programs; or 

(iv) The interest rate on Direct Unsubsidized Loans for graduate 

students for the six consecutive award years ending in the latest 

completion year for the students whose median debt payment is being 

calculated for graduates of doctoral programs and first 

professional degree programs; and 

(3) Calculates the median annual earnings of program graduates by 

considering earnings in the third year subsequent to graduation. 

(c) The Secretary may also apply the waiver described in paragraph 

(a) of this section for loans received for enrollment in a GE 

program at an institution--

(1) If the institution has since closed; 

(2) Prior to the closure, the institution received a majority of 

its title IV, HEA funds from programs that met the conditions 

described in paragraph (a)(3) of this section; and 

(3) The Secretary did not have reliable data to evaluate the 

program’s performance as described in paragraph (a)(3) of this 

section.

(d) If the conditions for waiver in paragraph (a) or (c) of this 

section are met but the loan has been repaid by a Federal 

Consolidation Loan or Direct Consolidation Loan that has an 

outstanding balance, the Secretary may waive the portion of the

outstanding balance of the consolidation loan attributable to such 

loan.
§ 682.403 Waiver of FFEL Program loan debt. 

(a) General. 

(1) This section specifies the rules and procedures under which--

(i) The Secretary determines that a FFEL Program loan qualifies for 

a waiver of all or a portion of the outstanding balance and 

notifies the lender of any such determination; 

(ii) The lender submits a waiver claim to the applicable guaranty 

agency; 

(iii) The guaranty agency pays the claim, is reimbursed by the 

Secretary, and assigns the loan to the Secretary; and 

(iv) The Secretary grants the waiver. 

(2) For the purposes of this section, references to—

(i) “The lender” includes the guaranty agency if the guaranty 

agency is the holder of the loan at the time the Secretary 

determines that the loan qualifies for a waiver, except that the 

waiver claim filing requirements applicable to the lender do not 

apply to the guaranty agency; and 

(ii) “The guaranty agency” means the guaranty agency that 

guarantees the loan. 

(b) Determination of qualification for a waiver by the Secretary. 

The Secretary may waive the borrower’s obligation to repay up to 

the entire outstanding balance on an FFEL Program loan if the loan 

qualifies for a waiver under one of the following conditions: 

(1) First entered repayment 20 or 25 years ago. (i) The Secretary 

may waive the outstanding balance of a loan if the loan first 

entered repayment on or before July 1, 2005, and the borrower only 

received loans as an undergraduate student or a Federal 

Consolidation Loan or Direct Consolidation Loan that repaid only 

loans the borrower received as an undergraduate student. 

(ii) The Secretary may waive the outstanding balance of a loan if 

the loan first entered repayment on or before July 1, 2000, and the 

borrower received loans other than loans received as an 

undergraduate student or a Federal Consolidation Loan or Direct 

Consolidation Loan that repaid loans other than loans the borrower 

received as an undergraduate student. 

(iii) For the purpose of this section, a loan enters repayment on—

(A) For a Federal Stafford Loan, the day after the initial grace 

period ends; 

(B) For a Federal PLUS Loan, the day the loan is fully disbursed; 

or 

(C) For a Federal Consolidation Loan, the earliest day as 

determined under paragraph (iii)(A) and (B) of this section for any 

loan that was repaid by that consolidation loan. 

(2) Closed school discharge. The Secretary may waive the borrower’s 

obligation to repay up to the entire outstanding balance of a loan 

where the Secretary determines that a borrower has not successfully 

applied for, but otherwise meets the eligibility requirements for, 

a closed school discharge on that loan under § 682.402(d). 
(3) Cohort default rate. For loans received for attendance at an 

institution that lost its eligibility to participate in any title 

IV, HEA program because of its cohort default rate, as defined in 

20 U.S.C. 1085(m), the Secretary may waive the outstanding balance 

of the loan, provided that the borrower was included in the cohort 

whose debt was used to calculate the cohort default rate. 

(c) Notification. If the Secretary determines that a loan qualifies 

for a waiver under paragraph (b) of this section, the Secretary 

provides notice to the lender that the lender must--

(1) Submit a waiver claim to the applicable guaranty agency; and(2) 

Suspend collection activity, or maintain a suspension of collection 

activity, on the borrower’s FFEL Program loan. 

(d) Claim procedures. 

(1) The guaranty agency must establish and enforce standards and

procedures for the timely filing by lenders of waiver claims. 

(2) The lender must submit a claim for the full outstanding balance 

of the loan to the guaranty agency, within 75 days of the date the 

lender received the notification from the Secretary described in 

paragraph (c) of this section. 

(3) The lender must provide the guaranty agency with the following 

documentation when filing a waiver claim: 

(i) An original or a true and exact copy of the promissory note. 

(ii) The notification described in paragraph (c) of this section. 

(4) The guaranty agency must review the waiver claim and determine 

whether the claim meets the requirements of paragraph (d)(3) of 

this section. 

(5) If the guaranty agency determines the waiver claim meets the 

requirements of paragraph (d)(3) of this section, the guaranty 

agency must pay the claim within 30 days of the date the claim was 

received by the guaranty agency. 

(6) If the lender receives any payments on the loan from or on 

behalf of the borrower after receiving a claim payment from the 

guaranty agency, the lender must promptly return the payments to 

the sender. 

(7) The Secretary reimburses the guaranty agency for the full 

amount of a claim paid to the lender after the agency pays the 

claim to the lender. 

(8) The guaranty agency must assign the loan to the Secretary 

within 75 days of—

(i) The date the guaranty agency pays the claim and receives the 

reimbursement payment; or(ii) The date the guaranty agency receives 

the notification described in paragraph (c) of this section if the 

guaranty agency is the lender. 

(9) After the guaranty agency assigns the loan, the Secretary may 

waive the borrower’s obligation to repay up to the entire 

outstanding balance of the loan. 

(10) After the Secretary grants the waiver, the Secretary notifies 

the borrower, the lender, and the guaranty agency that the 
borrower’s obligation to repay the debt or a portion of the debt, 

has been waived. 

(e) Payments received after the Secretary's payment of a waiver 

claim. 

(1) If the guaranty agency receives any payments from or on behalf 

of the borrower on a loan that has been assigned to the Secretary 

in accordance with paragraph (d) of this section, the guaranty 

agency must promptly return these payments to the sender. At the 

same time that the agency returns the payments, it must notify the 

borrower that there is no obligation to make payments on the loan 

after the Secretary has granted a waiver unless—

(i) The borrower received a partial waiver of the outstanding 

balance of the loan; or 

(ii) The Secretary directs the borrower otherwise. 

(2) If the guaranty agency has returned a payment to the borrower, 

or the borrower's representative, with the notice described in 

paragraph (e)(1) of this section, and the borrower (or 

representative) continues to send payments to the guaranty agency, 

the agency must remit all of those payments to the Secretary. 

(3) If the Secretary receives any payments from or on behalf of the 

borrower on the loan after the Secretary waives the entire 

outstanding balance of a loan, the Secretary returns the payments 

to the sender.

(f) If the conditions for waiver in paragraph (b) of this section 

are met but the loan has been repaid by a Federal Consolidation 

Loan that has an outstanding balance, the Secretary may waive the 

portion of the outstanding balance of the consolidation loan 

attributable to such loan once the loan has been assigned to the 

Secretary.