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Some student-loan borrowers could get extra money from their school under a new Education Department proposal

President Joe Biden.
President Joe Biden.Kevin Dietsch via Getty Images
  • The Education Department is crafting new regulations to ensure better cash management for students.

  • It proposed requiring schools to return unused meal plan funds to students who received federal aid.

  • It also wants students to have more flexibility to purchase course materials from outside sources.

President Joe Biden's Education Department has kicked off another round of negotiations to craft new rules for higher education — and it could get some student-loan borrowers extra cash.

In early January the department held its first of three negotiation sessions on a series of higher education regulations it's hoping to implement next summer, at the earliest. They're primarily focused on "cash management," per the proposed text, which outlines how schools manage federal funds.

One of the department's proposals concerns how schools manage students' meal plans. Specifically, if a student receives federal student aid — like federal loans or grants — and uses that aid to pay for meal plans, the department wants to require schools to return the unused funds to those students "no later than 14 days after the end of the payment period," according to the proposal.

Previously, schools were allowed to keep the leftover funds despite students paying the full cost of the meal plan.

"These plans often include the use of 'flex' accounts that can be used like cash to cover expenses at campus grocery stores, food courts, and other meals if students have used their allotted meals for the week," the proposal said. "At the end of a term, institutions can keep any remaining funds. This creates a financial penalty for students when institutions sweep unused meal plan dollars that include Title IV funds."

Along with ensuring students receive unused meal plan funds, the department also proposed making it easier for students to shop around for textbook options and course materials. Currently, schools can automatically charge students for textbooks and other resources as part of tuition and fees. However, the department said in its proposal that it's "concerned that lack of disclosure and transparency limits students' ability to find less expensive materials or assess if their school is offering the most affordable arrangement."

The department proposed to include course materials in tuition and fees only when the school can demonstrate there is a "compelling health or safety reason" for doing so or if the school is the student's only option for obtaining those materials.

Other proposals in the latest round of negotiations addressed how the Education Department oversees college accrediting agencies, with the purpose of ensuring students and taxpayers are not harmed in the accreditor approval process.

The department will continue negotiations on these regulations in February and March sessions with stakeholders, with the opportunity for public comment.

Along with the cash management proposals, the department is also in the regulatory process of crafting its second attempt at student-debt relief for borrowers. After the Supreme Court struck down Biden's first attempt at broad loan forgiveness, the department began pursuing a new route for relief using the Higher Education Act of 1965, which requires the administration to undergo a series of negotiations and public comment to craft the final rule.

The department wrapped up its third — and what it planned to be the final — round of negotiations for the debt relief in December. However, some advocates and lawmakers are urging the department to add another round for negotiations to discuss including borrowers experiencing economic hardship in the final plan for relief.

"Failing to finalize a proposal to provide relief for borrowers experiencing hardship would result in millions of borrowers — including most recent graduates, many low-income borrowers, borrowers of color, and borrowers with disabilities — being left out of the necessary debt relief," nearly 70 advocacy groups sent to Education Secretary Miguel Cardona last week. "This cannot be an option."

A department spokesperson told Business Insider that it's reviewing the request and will move "as quickly as possible to provide student debt relief to as many borrowers as possible, including through the regulatory process."

Read the original article on Business Insider