Negotiated Rulemaking Closes Thursday With More Work To Come

By Katy Hopkins, Communications Staff, and Karen McCarthy, Policy & Federal Relations Staff 

Several negotiators hailed some revised draft regulations released by the Department of Education (ED) Thursday as wins for their constituents, but other issues remain up for debate ahead of the third and final negotiated rulemaking session in late April.

On the third day of this negotiated rulemaking session, ED officials revealed draft text for participation rate index (PRI) challenges and appeals for cohort default rates. Under the draft regulations, institutions could challenge or appeal rates based on low participation as early as the first year in which their draft or final rate is at least 30 percent, giving institutions that appeal successfully reassurance that their Title IV eligibility is not threatened. 

The ability to submit a PRI challenge or appeal in any year with a rate 30 percent or higher wouldn’t go into effect until April 2017, when ED expects to have a new, automatic appeals system, originally created for gainful employment regulations. 

The new provisions would be beneficial for community colleges, said two-year public institution representative Shannon Sheaff. But with the expected implementation date so far off, she cautioned some schools may leave the loan program before the process is established. 

“Right now is really the critical time to keep schools in the program,” said Sheaff, the director of financial aid at Mohave Community College. “That year may significantly impact some schools’ decisions.”  

ED officials also reviewed new proposed text to allow lump sum payments from the Department of Defense (DoD) to active duty servicemembers to count as separate payments toward Public Service Loan Forgiveness. Under the draft regulations, ED will count DoD payments in the same fashion as payments from AmeriCorps and the Peace Corps, and officials are considering broadening the scope beyond active duty servicemembers. While Gail McLarnon, the federal negotiator, said it’s only a small change for ED, it would be a significant benefit for borrowers, according to negotiator Matt Randle, the representative for servicemembers and veterans.

“This is a big win for all those who started school, couldn’t finish because of affordability, joined the military for the loan [repayment] program and are still going to be able to count military service as public service,” he said.

Nonfederal negotiators continue to have issues with other draft regulations from ED, including the plan for the Revised Pay As You Earn (REPAYE) program. After a private caucus without ED officials, nonfederal negotiators announced plans to send ED draft text for a Pay As You Earn (PAYE) plan that incorporates several of ED’s proposed changes, but also eliminates  partial financial hardship (PFH) as an eligibility criterion and ED’s proposed tiered system of loan forgiveness. In their proposal, the non-federal negotiators will make modifications to the existing PAYE plan, rather than create an additional PAYE plan. They are also exploring ways to “sunset” the existing PAYE plan and/or offer a grandfathering provision. Nonfederal negotiators plan to provide the draft text for their proposal by next week, in time for ED to consider the proposals ahead of the third and final negotiated rulemaking session scheduled for April 28-30. 


Publication Date: 4/3/2015

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