NASFAA Submits Comments On Loan Program NPRM

Yesterday NASFAA submitted comments on the Department of Education’s (ED) Notice of Proposed Rulemaking that addresses loan issues. This NPRM is the second of two NPRMs released as a result of negotiated rulemaking that took place in early 2012.

The topics that were negotiated were split into two NPRMs due to the large volume of changes to regulatory text necessary as a result of the discontinuation of the FFEL Program. The first package of regulatory changes, effective July 1, 2013, implemented the Pay As You Earn (PAYE) repayment plan, incorporated statutory changes to the Income-Based Repayment (IBR) plan, and streamlined the total and permanent disability (TPD) discharge process.

The second NPRM addresses the following topics:

  • Deadline for FFEL lender 60-day delinquent borrower repayment disclosure
  • Forbearance Provisions for Borrowers Receiving Department of Defense (DOD) Student Loan Repayment Benefits
  • Borrowers who are Delinquent when Authorized Forbearance is Granted
  • Forbearance for Post-270 day Defaulted Loan Borrowers Prior to Lender Claim Payment or Transfer to ED Default Collections
  • Minimum Loan Period for Transfer Students in Non-Term and Certain Non-Standard Term Programs
  • “Reasonable and Affordable” Payment Standard for Rehabilitation of Defaulted Direct Loan and FFEL Program Loans
  • Administrative Wage Garnishment
  • Participation Rate Index Appeal for Single Cohort Default Rate Loss of Eligibility to Participate in the Direct Loan Program
  • Repeal of unnecessary FFEL Program regulations
  • Modification of Direct Loan Program regulations
  • Title IV Closed School Loan Discharge
  • Satisfactory Repayment Arrangements on Defaulted Title IV Loans for Borrowers who also Rehabilitate the Loan
  • School Enrollment Status Reporting Requirements
  • Federal Perkins Loan Graduate Fellowship Deferment Eligibility
  • Social Security Number Requirement for Assignment of Federal Perkins Loans to the Department of Education
  • Federal Perkins Loan Cancellation Rate Progression Across Cancellation Categories
  • Federal Perkins Loan Economic Hardship Deferment Debt-to-Income Ratio Provision

The negotiated rulemaking team achieved consensus, which prohibits NASFAA from commenting negatively on the proposed rules. Our comments request clarification in two areas:

  • Use of email as a delivery method for exit loan counseling when students unofficially withdraw or do not complete exit counseling as required
  • Use of a new form, Financial Disclosure for Reasonable and Affordable Rehabilitation Payments, when a borrower wishes to rehabilitate one or more defaulted loans

Assuming that ED issues final rules on or before November 1, 2013, the final rules will be effective on July 1, 2014, unless ED authorizes certain provisions for early implementation.


Publication Date: 8/28/2013

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