In a letter to Department of Education officials, NASFAA President and CEO Dr. Philip Day urged the Department to reconsider its interpretation of regulations, which would require institutions to ensure that all lenders on a preferred lender are unaffiliated.
NASFAA published an article in the April 1 edition of Today's News regarding the Department's interpretation of the meaning of the phrase "three lenders not affiliated with each other" as it relates to lenders on a preferred lender list.
NASFAA is aware of the community's concern regarding the Department's interpretation of 34 CFR 682.212(h)(1)(ii), and has sent the letter to the appropriate Department staff to convey member concerns and to recommend an interpretation that best reflects the intent of the regulation.
In the letter, Day notes that the current interpretation of the regulations appears to contradict the discussion of preferred lender lists during negotiated rulemaking last year, the regulatory language and the discussion of this issue in the preambles to the proposed and final rules.
In addition, Day argues that the current interpretation places an unreasonable administrative burden on institutions.
"While we understand the need for institutions to document the status of three unaffiliated lenders, it would pose an unnecessary burden on an institution to maintain accurate documentation from all lenders it places on its preferred list," he writes. "Combined with the present uncertainty about access to loans and the fact that many schools already have their preferred lender lists in place, this interpretation poses significant challenges as financial aid offices face their peak loan processing and student counseling season."
NASFAA encourages members to submit questions, concerns, and suggestions regarding the Department's current interpretation of 34 CFR 682.212(h)(1)(i) to Web@nasfaa.org. NASFAA will inform members of the results of its efforts to resolve the issue.
By Jennifer Martin
NASFAA Assistant Director for Professional Assessment, Training, and Regulatory Assistance
Posted 04/15/08 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.
