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OMB has told agencies to reduce the impact of medical debt in eligibility determinations under direct loan and loan guarantee programs that focus on consumer loans or small and medium businesses where a consumer’s credit history is a factor.
“The administration is committed to taking actions to mitigate the burden of medical debt on American families and in particular preventing medical debt from unfairly limiting Americans’ access to federal loans and loan guarantee programs,” says OMB memo M-22-17.
Under programs governed by the Federal Credit Reform Act of 1990, agencies are to take steps including: identifying statutory, regulatory, or administrative changes needed to modify criteria and consideration factors, exclude medical debt, or otherwise lessen the impact of medical debt consideration or underwriting; and assessing whether model updates are required for FCRA cost estimation, especially if the exclusion of medical debt would explicitly or implicitly affect particular underwriting requirements such as debt-to-income ratios.
Agencies are to incorporate those plans in their submissions to OMB for the fiscal 2024 budget proposal to be released early next year.
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