Chatbots, Loan Simulators, and a Stand-Alone FSA — ED Reveals Ambitious Plans at Annual Training Conference

By Joelle Fredman, NASFAA Staff Reporter

Kicking off the first day of the Office of Federal Student Aid (FSA) Training Conference in Reno, Nevada, Education Secretary Betsy DeVos told a room full of financial aid professionals that FSA would function better as a stand-alone agency, arguing that its “mission is to serve students and their families, but its structure is set up to serve politicians and their policies.” Following her opening remarks, FSA Chief Operating Officer Mark Brown unveiled a handful of forthcoming online tools for student borrowers and financial aid administrators. 

“One has to wonder, why isn’t FSA a stand-alone government corporation, run by a professional, expert, and apolitical Board of Governors?” DeVos asked the crowd Tuesday. “A separate FSA would be better positioned to deliver world-class service to students and their families as they finance higher education. It would manage the student loan portfolio and work to secure its financial strength and sustainability. And it would do all the things it’s been charged to do — only far better.”

During her speech, DeVos cited a NASFAA white paper that proposed structural changes to help FSA fulfill its mission as a performance-based organization (PBO), such as creating an oversight board that reports directly to the public, the secretary of education, and Congress. NASFAA did not recommend a stand-alone agency. 

DeVos said that the concept of a stand-alone FSA “warrants far more discussion,” adding that “we should be talking about the benefits of professional, experienced leadership who, as in the private sector, would be responsible for setting strategy for FSA, for overseeing the management of the loan portfolio, for ensuring institutions hold up their end of the bargain, and for reporting to Congress.”

DeVos also told conference attendees that ED is continuing to improve FSA “with the limited tools Congress gave us.” 

During the 2018 FSA conference, DeVos announced the office would focus on financial literacy through its overhaul of the federal student loan system — the NextGen Financial Services Environment — and modernize the financial aid application process through efforts such as the myStudentAid mobile app. 

On Tuesday, DeVos told conference attendees that “this year, ‘NextGen’ is ‘NowGen,’” as she unveiled a new chatbot — “Aidan” — that’s intended to answer students questions about the federal student aid system, especially as ED continues to update the app with “more real-time and transparent information.” 

“At last year’s conference, I urged everyone to rethink student lending. ... The financial aid process must be modern, streamlined, and simply easier for students — and for you,” DeVos said. “... So, we are modernizing FSA’s infrastructure and totally revamping the way we connect with students.”

Following DeVos’ remarks, Brown previewed two new online tools he said will be launching in a few months: the “Informed Borrower Tool” and “Loan Simulator.” The first tool, Brown explained, will be initially hosted on the MyStudentAid website and integrate information from the recently updated College Scorecard to help borrowers “know what they are getting into before they take out student loans.” The tool will allow students to see how much they have borrowed, preview what their monthly payments might be, and explain concepts such as capitalization and the difference between federal and private loans. Brown said that, beginning with loans disbursed for the 2020-21 award year, both students and parents will have to certify that they have used the tool before receiving their funds. During a federal update following the opening remarks, ED representatives said they plan to roll out the tool in April 2020.

Brown said the Loan Simulator will function as an online wizard that will suggest loan options for students based on their “goals and personal information,” and allow them to “test drive and compare personalized scenarios” with regard to repayment. It will also guide students to enroll in the repayment plan they choose, he said.  

Brown also previewed a new online resource for financial aid administrators, the “NextGen PPO,” which he said will be rolled out at next year’s conference and was developed with input from six instituions.

Brown explained that the resource, which will require a one-time sign-in, will feature “real-time FSA interaction,” and allow financial aid administrators to electronically sign and upload documents. The interface that Brown previewed to conference attendees included a dashboard with data such as open financial aid cases, the amount of loans disbursed at the institution, the number of students receiving aid at the institution, and the Direct Loans and Pell Grants disbursed and drawn down.

“[The NextGen PPO] is more than just a website, it’s a single gateway for everything you do with federal student aid,” he said.

Brown also discussed upcoming plans to redesign both the FSA Handbook and the Information for Financial Aid Professionals (IFAP) website, and intentions to create a new training model to allow financial aid administrators more flexibility to take FSA classes — and to develop classes that will be better tailored to their needs.

“I want your administrative headaches to go away so you can focus on what really matters —  helping students,” he said, referring to FSA and financial aid administrators as partners.

During the federal update, ED representatives said they will next month be releasing a new process for reporting foreign gifts that they believe will result in a larger number of schools reporting more gifts, which will require “more time at your schools” and collaboration between institutional departments. They also said that this summer they planned to implement the second phase of a help tool for the Public Service Loan Forgiveness (PSLF) program they revealed at last year’s conference, which will include a database of qualifying employers and the ability to sign and submit PSLF forms online, among other things.    

Stay tuned to Today’s News for continued coverage of the FSA conference this week.


Publication Date: 12/4/2019

Pamela L | 12/30/2019 4:43:36 PM

Please tie this to the FAFSA. Every year we have to figure out how to implement these changes on our systems.

Christopher F | 12/10/2019 6:23:10 PM

Regarding the IBT (which btw I am all for, and have been waiting for something like this to use when counseling students), why on earth are they tying completion to loan disbursements? I thought the idea was to reduce the administrative burden on schools. Whoever thought this up hasn't had to chase a student down for paperwork in awhile! Not to mention the financial burden when payments are delayed. Why not tie it to the FAFSA? When a student renews, it would take the student to the IBT for a review, then back, like the IRS DRT. For parents, they could tie it to the PLUS application when a parent logs in and starts a new application. Anyone think this is going to be burdensome? I'm a single-person office at a school with 300 students, and I know for sure that I spend a lot of time chasing down 20% of our aid recipients. Now I can add another hurdle for them to have to jump over.

David S | 12/4/2019 11:37:55 AM

More robust communication tools I'm all for, but there's still only so much that can be done there, because no matter how well ED pulls that off, there are inevitable "you'll have to ask your school" questions, that's the nature of the beast. And students will keep feeling as though they're being bounced around.

But too much of this vision is clearly an attempt to privatize a public good...something that has a poor track record both within higher ed/financial aid and elsewhere. Private industry cannot replicate government services, its commitment is to owners and stockholders rather than the public. And if in the course of the same speech, the Secretary envisions an "apolitical" governance of this standalone FSA and then makes a thinly veiled accusation of the whole problem with student aid being thanks to Congress...well then I wonder about her commitment to removing politics from this whole process.

Bronwyn G | 12/4/2019 11:26:45 AM

It will be interesting to see what the new process for reporting foreign gifts will entail (I assume this includes foreign contracts as well...?) I wonder if there is any chance of a stand alone agency actually happening.

Ben R | 12/4/2019 10:51:46 AM

If the goal is to lend more responsibly this might be a good thing, but it is not yet clear they will be able to do much outside of what is already done in loan entrance counseling which is limited to passive advising. Income driven repayment plans make any amount "affordable" so when that is included in estimating repayment, it does not serve as much of a deterrent and may in fact encourage more borrowing.

Tony T | 12/4/2019 10:4:32 AM

I do not understand the purpose of requiring a parent to complete the IBT requirement in order for their loan to be disbursed. In order to obtain their loan request, their application had to be approved by ED. Currently some parent loans require entrance counseling. Why complicate the process further by adding another step? This just adds further delays in the processing of the student's aid.

Heather B | 12/4/2019 9:1:12 AM

The chatbot I think was spelled "Aidan" - which I thought was pretty clever.

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