NASFAA Urges ED to Use 2011 Negotiated Rulemaking to Reduce Regulatory Burden
NASFAA suggested several ways to streamline financial aid administration to reduce administrative and regulatory burdens in a letter to Education Secretary Arne Duncan in response to the Department of Education’s (ED) request for issues to discuss during the latest round of negotiated rulemaking sessions.
The Department has established negotiated rulemaking committees to prepare proposed regulations under the Higher Education Act (HEA). To prepare for the latest round of negotiated rulemaking, the Department has been holding public hearings where interested parties can propose issues to be considered for negotiation by the appointed committees later this year.
At the first two sessions held earlier this month, financial aid administrators asked the Department to reconsider the new state authorization, credit hour and gainful employment regulations because they increase administrative burden. The third and final session is scheduled for May 26 in Charleston, South Carolina.
NASFAA encourages members in the Charleston area to attend the public session and highlight any burdensome regulations you’d like the Department to address.
"One of our most pressing issues is the regulatory and administrative burden faced by student financial aid administrators and how that burden ultimately impacts student services," writes NASFAA President Justin Draeger in the letter to Duncan.
In a 2010 NASFAA survey, financial aid administrators indicated that they are increasingly unable to administer one-on-one student services due to a combination of increased administrative burden and stagnant or even reduced financial aid operating resources.
To address these growing concerns, NASFAA has proposed the Department consider reducing regulatory burden in the following areas.
- When a student leaves an institution, determining whether the student must return any Title IV Funds to Department is simple in principle, but complicated in execution. Federal guidance increases specificity, rather than allowing institutional discretion.
- Regulation of nontraditional program formats - such as Pell Grant payment calculation formulas, return of Title IV funds calculations, determination of payment periods, distance education and disbursement rules - is scattered.
- The proliferation of differing code of conduct standards at the state level, imposed on the administration of federal funds, carries the potential of schools being subject to 50+ individual codes of conduct. State codes should not be superimposed on federal law and regulations; a clear statement of precedence should clarify that federal rules supersede state rules.
- The requirements to link FSEOG awards to Pell Grant eligibility and to use "lowest EFC order" in making those awards have been problematic since they were instituted.
- Consumer information that must be provided to students has mushroomed to the point where it is more confusing, duplicative, and voluminous than helpful. Methods of distribution are inconsistent.
- Regulations for the total and permanent disability discharge process should be streamlined. These provisions are not only administratively difficult, but burdensome to borrowers as well.
- When Pell Grant payment formulas were designed there were more traditional and fewer nontraditional approaches to academic program formats. Although the Department has adjusted use of the formulas to ease constraints somewhat, the regulations remain complex, and it is time to review them with financial aid community input. Several other grant programs are modeled on this aspect of the Pell Grant Program, and a reduction in complexity would benefit those programs as well.
- Alongside ED efforts to streamline the FFEL program by repealing unnecessary regulations, there are several other sections of the regulations that should be streamlined due to the elimination of the FFEL Program, such as part 601, 668.167, and other FFEL program references in subpart K of part 668.
- ED should also set the maximum repayment period for both Income-Based Repayment (IBR) and Income-Contingent Repayment (ICR) at 20 years, rather than the 25 years in current rules. Providing forgiveness after 20 years of responsible, qualifying payments would reduce the risk that student loan payments permanently displace critical savings for retirement and children’s education in households with little or no financial security.