Provisions in Senate Education Funding Bill Address Cohort Default Rates, PSLF

By Brittany Hackett, Communications Staff, and Stephen Payne, Policy & Federal Relations Staff
The Senate Appropriations Committee last week adopted several provisions in its fiscal year (FY) 2018 spending bill, including several related to higher education topics like cohort default rates (CDRs), borrower defense to repayment, public service loan forgiveness, and preferred lender list requirements. 
The FY 2018 Labor, Health and Human Services, and Education and Related Agencies (Labor-HHS) Bill passed out of committee last Thursday and included $68.3 billion in discretionary funding for the Department of Education (ED). The bill included an increase in funding for the maximum Pell Grant award, funding for year-round Pell, and level funding allocations for campus-based programs.
The bill includes an accompanying committee report, which provides explanation and instruction for the executive branch, including the Department of Education. The committee report included  a provision encouraging the education secretary to use his or her available authority to provide flexibility on CDRs to public institutions facing challenges managing and preventing student loan defaults due to being located in “severely distressed communities.” The committee directs the secretary to report to several congressional committees on any additional statutory authority that may be needed to provide flexibility to these institutions.
Another provision would require ED to report quarterly to Congress on the receipt and processing of borrower defense to repayment claims made under section 455(h) of the Higher Education Act (HEA). The reporting, which the committee “strongly encourages” be made public, should include the total number of pending and approved borrower defense claims, the total dollar amount of relief, and the total number of denied claims, including a breakdown of the figures by state. The report should also include specific actions ED has taken and planned to address the situation in a timely matter. 
The committee also is proposing some changes to how ED manages the Public Service Loan Forgiveness (PSLF) program, encouraging the Department to work with its federal loan servicers to update guidance, information, and processes regarding eligibility for the program. The committee also calls on ED to provide further clarity regarding employer eligibility under PSLF, particularly for employees of public service non-profit organizations that are not included in the Internal Revenue Service’s (IRS) code related to PSLF. “This information should be publicly accessible and include real-world examples of organizations that qualify in certain fields,” according to the report text.
The Department is also encouraged to provide borrowers more regular and current information about the status of processing their employment certification for PSLF, the number of qualified payments made, and the projected date of their forgiveness. ED is also encouraged to expand its use of digital technology in the PSLF program to allow electronic completion of employment certifications and PSLF applications, and with each student loan servicer. The committee also encourages ED to revisit decisions to rescind employment certification for borrowers who were previously approved. 
An additional provision notes  the bill funds the full implementation of the Memorandum of Understanding (MOU) establishing a framework regarding the requirements for electronically sharing tax data over multiple years for student loan borrowers participating in income-driven repayment (IDR) plans. The MOU was announced by ED and the Department of Treasury on Jan. 17, 2017.
The committee also includes language in the report to direct ED to issue guidance to clarify how colleges and universities can allow state-based organizations to participate in advising students on campus without violating Preferred Lender List rules. The committee notes, “Preferred Lender List requirements enacted in 2008 are intended to protect students and families from unfair lending practices in higher education. The implementation of these requirements have affected State-based organizations—including State agencies or authorities, or nonprofit organizations that are authorized, established, or chartered by State statute—in ways that were not intended by Congress.” The report language continues, “State-based organizations report difficulty in partnering with institutions of higher education to advise students on their individual education financing decisions, including student loan repayment and forgiveness options, even when such advising is requested by the institution’s financial aid administrator.” ED would have 180 days after enactment to issue clarifying guidance. 
Any or all of these provisions may be included in a final spending package. Most likely, these provisions would be included in a funding deal passed in December.


Publication Date: 9/11/2017

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