As the Department of Education (ED) readies its next negotiated rulemaking committee, NASFAA has combined its daily coverage into one stand alone article detailing how the Affordability and Student Loans committee wrapped up its work, highlighting where members reached consensus and detailing where significant disagreements remained.
For original sourcing and reference guides be sure to make use of the resource page published by ED at the outset of the negotiating committee’s session.
Consensus: Negotiators reached consensus on four of 12 topics. On the four areas outlined below, ED is obligated to use the consensus language in the regulatory text it publishes for comment:
Total and Permanent Disability Discharge: Throughout the discussion of the issue paper, committee members largely thanked ED for the changes — which included better use of administrative data to approve claims — and highlighted a few minor technical and style corrections that were addressed by ED in its regulatory text. “I think the changes that the department has made … are going to do huge things for the borrowers that we’ve worked with,” said Persis Yu, a negotiator representing legal assistance organizations that serve students and borrowers. “In particular, eliminating the monitoring period, which I realize is a week one issue, but was a very big barrier for many of the people to actually see the relief.”
Eliminating Interest Capitalization for Nonstatutory Capitalization Events: There was broad agreement on this topic in both the last session of rulemaking in November and in December. With no concerns raised regarding the language, the committee moved straight to a vote, which yielded no dissent among negotiators that non-statutory interest capitalization, meaning interest capitalization that is not required by the Higher Education Act,should be eliminated.
False Certification Discharge: The only dissenting vote in the final week was from Josh Rovenger, representing legal assistance organizations that represent students and/or borrowers. His dissent was based on a desire to see ED add language allowing a group process for false certification discharge to the proposed language. Federal negotiator Jennifer Hong reiterated ED's strong reservations about adding such language, stating that ED's position is that the current language already provides for a group process. She did, however, offer a compromise to accept some of Rovenger's previously submitted amendatory language and he ultimately withdrew his down vote, getting the group to consensus on false certification discharge.
Pell Grant Eligibility for Prison Education Programs: Heather Perfetti, representing accrediting agencies, expressed significant concerns regarding the list of criteria ED offered for correctional facilities to use in determining whether a prison education program (PEP) is operating in the best interests of students, and noted several areas of regulatory text that went beyond what is required in statute, bringing up questions of congressional intent as well as institutional burden. Daniel Barkowitz, representing financial aid administrators, noted that after speaking with institutions currently participating in ED's Second Chance Pell program he was sufficiently convinced that his previously-stated concerns regarding Clery Act compliance could be reasonably addressed and that he could move to consensus on this issue. However, he also echoed Perfetti's concerns regarding administrative burden and argued that he believes the onerous requirements placed on schools offering PEPs will impact schools' willingness to participate. After a brief consultation with ED officials during which her alternate stepped in to allow conversations to move forward, Perfetti returned to the table and indicated her willingness to change her vote with new regulatory text ED agreed to include, despite having serious ongoing reservations. Along with Barkowitz's changed vote, this led to consensus.
No Consensus: The remaining eight issues, where ED is free to draft language as it sees fit, are outlined below.
Income Driven Repayment: ED offered no changes to income-driven repayment (IDR) language from when the first consensus vote was taken earlier in the process, although officials did express a commitment to consider the ideas raised by the group in drafting final regulatory language. Per committee protocols, no new vote was necessary and this issue ended without consensus.
Public Service Loan Forgiveness: Neither issue paper concerning improvements to the Public Service Loan Forgiveness (PSLF) application process or PSLF employer eligibility and full-time employment resulted in consensus. With no new ideas presented by the committee to move toward consensus, no new vote was required. One of the many outstanding issues was concern over individuals who work in public service but may not be employed by a nonprofit not having access to the program.
Borrower Defense: There were a trio of borrower defense issue papers that ED put forward, none of which garnered consensus, with a single dissenting vote from Jessica Barry, the negotiator representing proprietary institutions. She stated concern about reputational harm to institutions when ED publicly announces approved group discharges. Offering no resolutions, she cited her sense that ED and she were too far apart on this issue to arrive at an agreement. Negotiators urged ED to retain in the proposed regulations the amended language shared with the group in the third session, noting especially the value of ED's addition of a state law standard.
Closed School Discharge: ED did not add language proposed by Barry related to the definition of a closed school. While expressing appreciation for ED's consideration of the language, Barry indicated that she could not change her vote in light of the fact that the proposed language was not incorporated into the draft language, leaving that issue with no consensus.
Predispute Arbitration: ED's proposal to reinstate a 2016 ban on institutions participating in the Direct Loan program from requiring students to agree to use predispute arbitration for resolving complaints, and/or institutions prohibiting students from joining class action lawsuits also resulted in a single dissenting vote from Barry. Negotiators in favor of the proposed language urged ED to use that language in its proposed regulations in consideration of the wide support from other negotiators.
ED will next publish the consensus language for public comment for the four topics that reached consensus, as well as the language it develops for the other eight issues. After reviewing public comments, ED will draft final rules. If the final regulations are published on or before Nov. 1, 2022 they will go into effect July 1, 2023.
ED is slated to begin a separate committee session on Institutional and Programmatic Eligibility in mid-January. Be sure to stay tuned to Today’s News for coverage and check out our Negotiated Rulemaking page for more details.
Publication Date: 1/5/2022