NASFAA members had the opportunity to pick the brains of the organization’s policy leaders during a town hall session on Wednesday, during which NASFAA leaders discussed issues ranging from income-share agreements and regulatory re-writes to loan servicing and the reauthorization of the Higher Education Act (HEA).
NASFAA President Justin Draeger, Vice President of Policy and Federal Relations Megan Coval, and 2016-17 National Chair Lisa Blazer answered these questions. Here are a few highlights (questions and answers edited for length and clarity).
Q: The new administration has proposed moving the servicing of loans to Treasury. What are your thoughts, and is this feasible?
A: This is a proposal that has been looked at before, just not at the current volume of the Department of Education’s loan portfolio. NASFAA has not taken a position. However, it would be difficult to make the case that from an education standpoint, Treasury would do a better job. Our primary objective is to provide students a choice in the institution they attend. Divorcing the servicing and collections completely to another agency may not put us in a better position.
Q: Do you have any information on what might be discussed during the rewrite of borrower defense and gainful employment?
A: At this point, ED has not provided much additional information. This administration likely will not get out in front of the public hearings any more than what they have already stated. From NASFAA’s standpoint, we did not oppose gainful employment or the regulating of gainful employment. We would have liked to see Congress get more involved before we had such an expansive definition. For borrower defense, holding fraudulent schools responsible is at the top of our list of priorities. On the other side of the line, it’s possible that taking federal action could push some schools into closure. The line might not be as bright as some think it is.
Q: Has the current political climate influenced leadership at NASFAA?
A: NASFAA is a nonpartisan organization, and that is vital to our own credibility. We worked with the Obama administration on several of their initiatives, and we had our differences with that administration. We are living in a post-2016 election environment, but it is issues-focused for us. When the president proposes $150 billion in cuts, that is not a fight we will back down from no matter who the sheriff is. We don’t change. Our strategy hasn’t changed. We try to stay focused on the issues.
Q: Can you explain some of the new security provisions with the IRS Data Retrieval Tool (DRT)? How can we have effective conversations with students and families?
A: ED is aware of our concerns in this regard. There is some disagreement as to whether there would be a small or large volume of students asking institutions to share the masked information. However, the takeaway is that ED has not yet decided what the institutional identification verification requirements would be, and we have a window to provide input. We have a meeting scheduled to sit down with ED and talk through the secure access issues.
Q: I’m concerned with the proposal to eliminate the in-school interest subsidy for federal loans. Does this proposal have legs, and what other issues might come up in the process?
A: When we’ve been operating under sequester, that lowers the overall amounts of funding for the entire bucket. What that means is in year when we have level funding, or maybe even increases, somebody else just got a decrease because the overall bucket didn’t change. That creates a very ugly advocatorial environment. Instead of engaging in that type of advocacy, we’ve joined with over 100 other organizations in locking arms in saying no cuts to nondefense discretionary spending. You can’t balance our budget even if you cut all ED spending. You couldn’t even come close to balancing our federal budget with that. So the idea that this hyper-focus is somehow going to magically balance our budget or have us climbing out of deficits, it’s just not mathematically possible. On eliminating the loan subsidy, some congressional committees have indicated their interest in that. We’ve seen a gradual erosion of subsidized loans. Through these campaigns, we are talking about the subsidy, the importance of it. We will be working hard on that piece. The other thing we really need to mention is if we get to a point where it looks like it’s going away, we will have to shift our advocacy to making sure those funds then stay within student aid programs. There have also been some proposals to eliminate loan origination fees. If loan subsidies were eliminated and redirected, you’d hope origination fees would be part of the conversation.
Q: Has NASFAA taken a position on ED’s plans to move to a single loan servicer?
A: There are give and takes with the different servicing models. Under the previous recompete, the plan was to have multiple contractors. The benefit there is that if one contractor isn’t fulfilling it obligations, you could put the loans somewhere else. With one servicer, the problem is you have all your eggs in one basket. Whatever we end up with, we can see both sides of this. We are happy that they maintained plans to have a single loan portal, ED branding, and common policies and procedures published to schools.
Q: Education Secretary Betsy DeVos has suggested doing away with HEA and starting from scratch. Could this happen?
A: Sometimes people in DC say things they don’t mean. This is not something that warrants a response because it’s not the secretary’s purview, it’s Congress’s purview. That sort of comment is used to make a point.
Q: What’s going to happen with Public Service Loan Forgiveness?
A: There is a proposal to completely eliminate PSLF. Previously, the Obama administration proposed modifying the program by capping the amount of debt that could be forgiven. The current political state we’re in right now is there are a number of folks on the hill who don’t want to see PSLF exist, and also loan forgiveness from other programs. Some have a philosophical issue with loan forgiveness. We do have a big battle ahead of us to preserve this program in some way, shape, or form. It will be very difficult to get through the next reauthorization without seeing some changes or modifications to the program.
Q: We’re starting to hear more about income-share agreements (ISAs). Does NASFAA have a position?
A: We are not supporting any federal-level ISA. We’ve done some work on looking at ISAs, and feel folks at the state level or institutional level may responsibly experiment with it. We are interested to see how ISAs turn out, but at the federal level we are not supporting an ISA program.
Publication Date: 6/28/2017