NASFAA Comments on ED Renegotiation Proposal

By Joan Berkes, Policy & Federal Relations Staff

NASFAA submitted comments yesterday on the Department of Education’s (ED) announcement that it intends to renegotiate two controversial areas of regulation:

  • Borrower defense to repayment (BDR), and
  • Gainful employment (GE).

BDR final rules were scheduled to become effective July 1, but that date was indefinitely postponed to allow renegotiation. Although there was general support for many of the provisions facilitating discharge of defrauded borrowers’ loans, the package went beyond borrower defenses and included contested revisions to rules governing standards of financial responsibility that must be met by institutions wishing oi participate in the Title IV federal student aid programs.

Gainful employment rules went into general effect in 2015, but certain disclosure provisions with later effective dates have also been delayed.

In responding to the Department’s proposal to renegotiate, NASFAA recommended that financial responsibility standards be negotiated separately from borrower defense provisions. A major criticism of the revised regulations concerned lack of prior notice that ED would include that topic in the negotiations, and the resultant absence of nonfederal negotiators with expertise in those matters.

NASFAA reiterated its support for the loan discharge process on behalf of students harmed by school closure, substantial misrepresentation, or other clear cases of authorized discharge, and for holding schools accountable for fraudulent activities.

For gainful employment, NASFAA asked ED to recognize that use of proxies standing for “gainful employment” will always be imperfect and leeway should be built in that recognizes that fact. Further, any accountability metric must be completely transparent and challengeable by an institution. Metrics should be appropriate to the academic level and purpose of the program. Revised rules should be formulated with a view towards preventing some of the disruptions and problems that were experienced during implementation of the current rules.

Read NASFAA's comments in full. 


Publication Date: 7/13/2017

David S | 7/13/2017 12:2:52 PM

Well done. I know that many of my colleagues consider these regulations to be burdensome, and still will if they are properly tweaked, but for the integrity of the programs themselves, they are necessary. Title IV programs are on many budget hawks' chopping blocks, and if more examples pop up of large amounts of taxpayer money being wasted on fraudulent practices and schools that are unable to demonstrate any value, I fear we could see deeper cuts than ever. I don't want to see those who want the federal government out of the student loan business to win this fight.

Of course, it will be interesting to see what the Department means when they say that previous neg reg committees "missed the opportunity to get it right." Remember, this Department reports to the founder of Trump University...

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