Negotiators Wrap Up Second Round Of Neg Reg With Focus on False Certification Discharges

By Brittany Hackett, Communications Staff

The second session of negotiated rulemaking for borrower defense to repayment (DTR) regulations wrapped up last Friday with the bulk of the discussion focused on a proposed update to existing categories of false certification discharges.

The Department of Education (ED) proposes to update and expand current regulations about what constitutes a false certification discharge, including specifying that a borrower may receive such a discharge if the institution falsified his or her high school graduation status or if the student reported not having a high school diploma or its equivalent and did not satisfy an alternative to high school graduation. Several financial aid administrators on the committee expressed concern with the implications for school liability in the case of student falsification of high school graduation status, particularly those representing community colleges, which have open enrollment policies and have a high volume of students without high school diplomas. Shannon Sheaff, director of financial aid and operations manager at Mojave Community College, said that she hoped the intention of the regulations would be to hold accountable schools who show a pattern of abuse, rather than schools who may simply make occasional "every day oopses."

Student and consumer advocates also proposed increasing the number of existing categories of false certification discharges, such as cases when there is a sufficient language barrier and promised language services are not offered, or where schools continually approve unwarranted Satisfactory Academic Progress (SAP) appeals or alter grades to preserve the student's Title IV eligibility. Financial aid administrators said that while they understood the concerns with SAP, they were reluctant to include it in the false certification regulations as it might limit their ability to work with the student to address SAP concerns through appeals and academic plans.

Sheaff also cautioned the committee against over-regulating the issue in general. "We're starting to regulate exceptions," she said, adding that instead they "need to use overall safeguards to keep the process intact, keep [the program's] integrity, without putting so many teeny tiny things in place to try to regulate things."

The afternoon portion of the discussion largely focused on proposed regulations that aim to increase awareness of the availability of closed school discharges among affected borrowers. The issue was not initially included in this negotiated rulemaking but was adopted on Friday by the committee.

ED Senior Director of Policy Development, Analysis, and Accreditation Service Gail McLarnon said that ED finds it “disturbing” that so few eligible borrowers apply for a closed school discharge and that it is “important that [borrowers] are aware of all of their options” when faced with a school closure.

The proposed regulations would require an institution that is closing to provide enrolled students with the application for a closed school discharge and notify them that they have the option to seek such a discharge as an alternative to the teach-out option. The proposal received some support from student and consumer advocates, though they expressed concern about what language would be used in the disclosure and whether it would be easy for students to understand. They also expressed concern at the timing of the notification, noting that schools in the process of closing often are lacking in personnel that would address such issues.

Among the other issues discussed by the committee was the proposal to allow the discharge of Title IV loans and TEACH Grant service obligations based on the submission of electronic death certificates. According to ED officials, the department is looking to revise these regulations to make it easier to file death certificates by fax or scanned copy, as they have heard complaints it can be difficult or costly to obtain adequate paper copies.

The committee also discussed making what ED referred to as technical changes to the regulations for the Pay As You Earn (PAYE) Plan and Revised Pay As You Earn (REPAYE) Plan.

Of the 10 issues before the committee, they were able last week to reach tentative agreement on only two:

  1. Revising Direct Consolidation Loan regulations to allow borrowers of Nurse Faculty Loans to consolidate them; and
  2. Modifying when the capitalization of interest is allowed under loan rehabilitation.

The committee will next meet March 16 through 18 for the final round of negotiations on these issues. Stay tuned to Today's News for continuing coverage of this round of neg reg, and see coverage of previous sessions on our Negotiated Rulemaking resource page and archive page.

 

Publication Date: 2/22/2016


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