Who Will Benefit from the Expansion of Pay As You Earn (PAYE)?
Negotiated rulemaking, affectionately referred to as Neg Reg, is underway! Committee members met to discuss a proposed agenda, and the Department of Education will release the committee’s final agenda before they reconvene on March 31st.
Over three months the negotiators will discuss, among other things, how to implement the President’s directive to expand Pay As You Earn to five million additional borrowers by the end of this calendar year. The Department of Education has proposed creating a new plan, PAYE2, for Direct Loan borrowers ineligible for the current PAYE program. Negotiators suggested it would be simpler to change the current PAYE plan, rather than adding a new PAYE2 plan.
The rulemaking committee will debate how to target the new PAYE to “the neediest borrowers,” as directed by President Obama. For example, negotiators are considering:
- whether to modify or eliminate PAYE’s partial financial hardship standard,
- whether to limit capitalization of unpaid interest, and
- whether total payments should be capped at what a borrower would pay under a 10-year standard plan.
Here is the list of negotiators and a link to the Department of Education's negotiated rulemaking page.