U.S. Department of Education Federal Update, 8:30 - 10:00 am

By Allie Bidwell, Communications Staff

Officials from the Department of Education (ED) on Wednesday provided an update to conference attendees on several federal student aid programs and regulatory changes, including year-round Pell Grants, verification, the closeout of the Perkins Loan Program, and upcoming renegotiation of borrower defense and gainful employment regulations.

ED’s Lynn Mahaffie kicked off the session by giving an overview of the fiscal year 2017 budget allocations, as well as the Trump administration’s budget proposal for the 2018 fiscal year. The budget proposal, which was released in May, includes significant cuts to several student aid programs, and proposes eliminating others, such as Public Service Loan Forgiveness (PSLF) Program and the Federal Supplemental Educational Opportunity Grant (FSEOG) Program.

Mahaffie also updated attendees on ED’s plans to rewrite the borrower defense and gainful employment rules. ED will hold two public hearings on the intent to negotiate: One on July 10, 2017 in Washington, DC, and one on July 12, 2017 at Southern Methodist University in Dallas, TX. Mahaffie also said ED will be accepting written comments until July 12, 2017. Moving forward, two separate committees will negotiate new rules for borrower defense and gainful employment. ED will request nominations for negotiators in the late summer to early fall, and anticipates conducting negotiations between November 2017 and March 2018, with final regulations published Nov. 1, 2018.

In announcing plans to rewrite the borrower defense rule, ED said it would pause the planned July 1, 2017 effective date for most provisions. However, Mahaffie said ED does not intend to postpone several provisions, including those related to:

  • Documentation for discharges for death;

  • Mandatory administrative forbearance or suspension of collection for FFEL loans that the borrower intends to consolidate for borrower defense;

  • Consolidation of Nursing Student Loans and Nurse Faculty Loans; and

  • Technical corrections.

On gainful employment, Mahaffie clarified that the intent to rewrite the rule does not affect the current July 1, 2017 effective date for institutions to comply with disclosure requirements.

During the session, ED’s Jeff Baker, who in the fall announced his plans to retire, addressed conference attendees for the last time in his federal role. Baker spent a portion of his update outlining guidance for implementing year-round Pell Grants, which were restored in Congress’s 2017 spending package. ED earlier this month released guidance for schools to implement year-round Pell, and provided additional insight to NASFAA before the National Conference, particularly as the guidance relates to crossover periods.

“We believe schools should choose what is in the best interest of the student,” Baker said, explaining schools’ flexibility in determining crossover periods. “What we do each day and why we come to work – and why I've done this for 43 years – is to help poor kids go to school.”

“We hope you find a way to provide the most aid to the student,” he continued. “If that means using them as a trailer or header, or a header or trailer, we strongly encourage you to do that, but we are not requiring it. … All we're asking is you document what your policy is.”

Baker also explained updates to the IRS DRT, which has been unavailable to financial aid applicants after security threats compromised applicant data. ED announced in May that the tool would again be available to borrowers applying for income-driven repayment plans – with additional security provisions – and that it would be available for financial aid applicants by Oct. 1, 2017. Upon its return, the DRT process will include encryption of the IRS data and masking of the data on both the IRS and FAFSA/IDR websites, Baker said. He added that institutions will be responsible for submitting all required corrections and updates, and that ED plans to release “secure access” guidance for schools to be able to share IRS DRT information with students, spouses, and parents under certain conditions.

During the DRT outage, ED announced certain measures for verification relief, including that rather than collecting tax transcripts, institutions may consider a signed paper copy of the 2015 IRS tax return for verification documentation for the 2017-18 award year. ED has not yet made a decision for 2018-19 verification, Baker said.

Baker also walked attendees through plans for the wind down of the Perkins Loan program. Schools have the option to assign Perkins Loans to ED, but are responsible for servicing their own portfolio otherwise, he said.

Baker also discussed program-level enrollment reporting and potential non-compliance sanctions, as well as FERPA requirements, and refreshed attendees on gainful employment results that could lead to loss of Title IV eligibility.



Publication Date: 6/28/2017

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