ED’s Internal Watchdog Outlines Areas of Focus, Including Transition to Repayment for Borrowers and Use of Professional Judgement

By Owen Daugherty, NASFAA Staff Reporter

In its annual report released this week, the Department of Education’s (ED) internal watchdog detailed its plan to provide oversight on the department over the course of the upcoming year, as well as new areas of focus for its oversight of the Office of Federal Student Aid (FSA).

Specifically, OIG said new areas of focus would include oversight of proprietary institutions and how those schools are following the 90/10 rule, FSA’s oversight of contractor’s acceptability review process for proprietary school annual audits, FSA’s outreach to underserved communities, and ED’s reporting on its experiential sites initiative.

Several areas of continuing focus for OIG were also outlined in the report. Notably, OIG said it would continue to prioritize evaluating financial aid offices’ compliance with professional judgment (PJ) requirements.

The report stated that OIG will “determine whether selected schools applied, documented, and reported their use of dependency override and professional judgment” as outlined in the Higher Education Act (HEA).

Additionally, OIG said it would continue its oversight of FSA’s work to streamline student aid systems and processes, including its transition to the NextGen student loan servicing landscape.

Included in that area of focus, OIG said it would work to determine “whether FSA has processes for planning and managing the transition to the Next Gen FSA loan servicing environment to achieve the project’s intended outcomes.”

The report also detailed several special areas of focus, including oversight of coronavirus pandemic relief funds and FSA’s work to transition tens of millions of student loan borrowers back into repayment next year. The final extension of the pause on student loan payments and interest accrual for borrowers with federal loans will come to an end Jan. 31, 2022, with borrowers resuming payments in February.

OIG noted it will “evaluate the results of FSA’s processes” to transition borrowers back into repayment, marking an important area of work for OIG as the department and FSA specifically take on the monumental task.

And regarding temporary relaxation of rules and regulations amid the pandemic, OIG said it will continue to evaluate FSA’s processes for waiving the return of Title IV (R2T4) funds for students who withdrew due to the coronavirus pandemic, canceling Direct Loans (DL) for students who withdrew because of the coronavirus pandemic, and excluding students’ subsidized

loan usage (SULA) and Pell Grant lifetime usage for any payment periods that the students did not complete because of the pandemic.

Three federal coronavirus relief packages sent money to higher education institutions throughout the coronavirus pandemic in the form of the Higher Education Emergency Relief Fund (HEERF), and OIG said it would work to determine whether ED “has an adequate process to ensure that grantees use HEER funds appropriately and that grantees meet performance goals.”

Additionally, OIG in the report said it would ascertain whether institutions used the student and institutional portions of their HEERF allocations for allowable and intended purposes.

Considering the breadth of ED’s work in the higher education space and FSA’s vast student loan portfolio, coupled with efforts to ensure a smooth transition into repayment amid the pandemic, OIG stressed the importance of its oversight efforts this year especially.


Publication Date: 11/16/2021

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