Well, 2017 has been quite an explosive year, hasn’t it? And there’s been a lot going on in the world of student loan law – so much, in fact, that it can be a bit overwhelming to keep everything straight. So as we wrap up this year, here’s an overview of what went down for student loan borrowers, and some hints of what’s to come in 2018.

The GOP Tax Bill Passes – With Some Changes

The GOP finally passed its tax bill, merging the House and Senate versions into a new, finalized product. There were some concerns about how the bill would impact student loan borrowers, but it looks like the final version backed off of the worst provisions that had been previously proposed:

• The student loan interest deduction has been preserved. House Republicans originally had proposed eliminating this.
• The graduate student tuition waiver – which would have been treated as taxable income under the House version – has been preserved.
• The taxability of federal student loan discharges for disability and death has been eliminated, meaning these are now tax-free events.

There are other reasons to still be concerned about the bill’s passage – including the likelihood that many millions of low and middle class folks will see tax increases – but the worst student loan-specific provisions were taken out.

More Details On Major Student Loan Reform

House Republicans finally released the text of their bill – called the PROSPER ACT – which would rewrite the Higher Education Act. The bill, if passed, would make major changes to student loan programs:

• Public Service Loan Forgiveness would be eliminated for future borrowers, although current borrowers would be grandfathered in.
• The income-driven repayment plans in their current form would be replaced by a new plan, which would be more expensive than Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE). All loan forgiveness would be eliminated, although some interest would be capped. Current borrowers would be grandfathered in to the current programs.
• Regulations of for-profit schools would be rolled back.
• States would be prohibited from regulating federal student loan servicing, such as through the proposed Massachusetts Student Loan Bill of Rights.

Now that the text of the bill has been released, it will first have to be voted out of committee before going to the full House floor. The Senate may write its own version of the bill, in which case any differences would have to be reconciled, much like the tax bill.

The CFPB’s Future is Uncertain

The Consumer Financial Protection Bureau (CFPB) – an independent federal watchdog agency which has fiercely fought the government, student loan servicers, and debt collectors on behalf of wronged student loan borrowers – has been effectively taken over by the Trump administration, and its actions have been frozen. There is still a lot of uncertainty about what this means for pending actions by the CFPB, including a proposed consent judgment with National Collegiate Student Loan Trust, a major private student loan debt buyer which has sued thousands of student loan borrowers in state courts across the country, sometimes improperly.

Ongoing Lawsuits Against Student Loan Servicers

Lawsuits against major student loan servicers such as Navient and FedLoan Servicing were filed this year. To date, most of these lawsuits are still pending, with no significant outcome yet. Most of these lawsuits have been filed by state Attorney General offices, in light of the federal rollbacks to student loan protections and ongoing lack of oversight of federal contractors. Ultimately, it will continue to be up to the states to enforce consumer protections on behalf of student loan borrowers, since the federal government does not seem particularly interested in doing so.

Borrower Defense to Repayment Updates

At the tail-end of the Obama administration, the Dept. of Education finalized regulations that would provide debt relief and loan forgiveness to borrowers defrauded by predatory schools. When the Trump administration took over, the Dept. of Education essentially froze the program, declining to review tens of thousands of applications for relief and promising to undo the new regulations. Just this week. Secretary DeVos announced that several thousand applications have been processed, some favorably, and some not. However, DeVos is indicating that many borrowers will only be granted partial relief. This issue will be litigated by consumer advocacy groups.