With Sessions Winding Down, Neg Reg Committee Tackles Outstanding Consensus Checks, But More Work Remains

By Owen Daugherty and Hugh T. Ferguson, NASFAA Staff Reporters  

The Department of Education's (ED) negotiated rulemaking committee continued work on its agenda, covering language from the Prison Education Programs subcommittee, both papers concerning Public Service Loan Forgiveness (PSLF), and income-driven repayment (IDR) plans, with the department warning that the committee was slightly behind on its agenda.

During the day’s discussion, ED warned that if the committee did not reach consensus on the given issue papers at hand that the department would not be bound to the currently published papers, and could instead issue regulations on those issues where consensus was not reached that depart from the most recently amended language.

ED made clear that this announcement was meant to serve as a reminder to the process and not come across as a threat of the department rewriting the proposed regulations in a way that departs from negotiators' suggestions.

The committee began Thursday by resuming its discussion on the language developed by the Prison Education Programs subcommittee, which was first discussed in Wednesday's session, with ED officials providing their legal analysis of the applicability of the Clery Act as it relates to Prison Education Programs, and how authority under that law relates to institutional eligibility.

In the continued discussion, negotiators focused on  ED’s proposed classification of Prison Education Programs as additional locations, and the implications for compliance with the Clery Act. ED legal counsel clarified that Clery Act compliance is predicated not on classification as an additional location, but on whether the institution owns or controls property at the additional location, and offering to address the issue later in guidance interpreting the regulation after it is published.

Heather Perfetti, a negotiator on behalf of accrediting agencies, expressed appreciation for the quality of the papers from the subcommittee, but said that ED seemed immoveable on some issues that lacked clarity on process and annual reporting. Perfetti warned that institutions will exit this program if the regulatory burden seems too great, indicating that those were the primary areas of concern.

The committee ultimately did not reach consensus on the subcommittee language, with two members objecting. Members indicated that more language would be circulated as a way to address issues over administrative burden to ensure that the proposal addressed significant concerns that there won’t be the level of participation in the program that subcommittee members want.

The committee then went back to its discussion on PSLF, with ED warning that the committee had many more topics to sort through before the end of the week’s session.

In resuming its PSLF discussion, the committee largely reiterated concerns voiced during the previous session and ultimately did not reach consensus on either PSLF paper, again citing concern over individuals who work in public service but may not be employed by a nonprofit not having access to the benefit.

Members then moved to discussion on IDR and many again expressed their disappointment with ED not going far enough to overhaul the program and provide members with specific data sets that could better demonstrate the shortcomings of the program. The conversation resulted in an overwhelming rejection of consensus, with members expressing concern over how far apart the negotiators' positions were from ED’s language.

The committee wrapped up the day’s discussion with borrower defense to repayment, where several members expressed appreciation for the improvement in this language over past iterations.

Jessica Barry, representing proprietary institutions, argued that the department’s proposal is not equitable because it does not offer the same due process standards for institutions as it does for students. 

Financial aid administrators pushed for more clarification on record retention requirements for borrower defense claims with respect to their alignment with standard financial aid record retention requirements, with ED agreeing to wordsmith the language to match intent and provide more clarity.

Finally, ED discussed circumstances under which partial relief would be granted, noting some changes to the text from the second session and stressing that there would be a presumption of full relief and that partial relief would be granted only under limited circumstances.

The committee will convene on Friday for its final session.

 

Publication Date: 12/10/2021


Ben R | 1/6/2022 2:55:04 PM

Being counted as “current” by paying zero was already an issue before the negotiation. The committee was discussing a payment plan which expanded that group even further to those who owe the most, meaning even fewer borrowers would be paying anything on an even smaller slice of the portfolio. When loans, especially the largest loans, are issued without limit then primarily paid by taxpayers and not the borrower, that is a program integrity issue that only exacerbates over borrowing, which in turn contributes to the pricing issue (the majority of which is “indirect cost” that often has nothing to do with the school or the education).

Frederick G | 12/24/2021 5:42:29 AM

I am concerned about what "undermining the integrity of the loan program" really means. If it means that graduate student studies get to remain overpriced to what their subsequent worth is in the so-called "free market", then it just sounds like graduate borrowing is simply predatory borrowing. The whole concept of student loans was that the borrower would be able to amortize the loan versus increased future earnings---AND, even, gain back the several years of zero or low earnings for those years spent obtaining the graduate degree.

I am not sure I see the solution to this "integrity" problem in stating that some borrowers can do $0 IDR (which is a REPAYMENT under the rules), or avail of the UNEM/HRD (if it's still offered?) type deferments, usually capped at three years. (There may or may not be evergreening on those three years, depending on which administration or servicer it is.) The problem is that loans are being offered, and tuitions accordingly structured, as if these loans could reasonably be paid back OFF INCREASED EARNINGS.

Outside of the ivory tower that is being financed by these loans, anyone would say that this is a giant con that should be on the radar of every state attorney general's office.

Ben R | 12/10/2021 8:15:29 AM

I agree with ED on IDR and PSLF. IDR cannot be made any more generous to graduate students or Plus borrowers (which comprises over half of the dollars in the portfolio), nor can they further expand the definition of public service without completely undermining the integrity of the loan program. It is true that there are many borrowers taking on excessive loans they cannot fully pay and would love to see their loans cancelled, but that is an over-lending/over-borrowing problem, not a repayment plan design problem. Borrowers already can pay as little as $0/month or defer for years under existing IDR plans and forbearance rules regardless of how much they borrowed. Getting them cancelled sooner while paying even less amounts to a blank check for graduate students and Plus loans.

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