Thursday, October 23, 2014

Final PLUS Loan Regulations

Final PLUS Loan Regulations

U.S. Education Department Announces Final Rule to Strengthen Federal Direct PLUS Loan Program

Click to view federal register (final rule) released on 10/23/14. 
The Department of Education announced publication of a final rule to strengthen the Federal Direct PLUS Loan Program today helping more students and families pay for college, and ensuring they have the tools and resources to make informed decisions about financing their educational pursuits. The new regulations will both expand student access to post-secondary education and safeguard taxpayer dollars by reflecting economic and programmatic changes that have occurred since the program was established more than 20 years ago.
"The Department's top priority is to ensure more students can access and successfully complete a postsecondary education," said U.S. Secretary of Education Arne Duncan. "The updated borrowing standards for the PLUS loan program demonstrate our commitment to ensuring families have access to the financing they need to reach their goal, while being good stewards of taxpayer money."
The final regulations update the definition of "adverse credit history" for PLUS loan applicants, and implement a streamlined application process for borrowers to obtain a PLUS loan, specifically for those with adverse credit histories. Economic conditions have changed considerably in the last 20 years, and this update will ensure the regulations reflect current circumstances.
The Department also is taking action to provide families with clear, customized information about their loan obligations to support their college financing decisions and ensure their loan debt stays manageable. To better ensure families are aware of, can fully understand and are comfortable with their loan obligations, the Department is developing a new loan counseling tool that would provide customized information to assist PLUS borrowers. While PLUS borrowers with an adverse credit history determination would be required to complete counseling before their loan could be approved under the Department's reconsideration process, the tool will be made available to all PLUS loan borrowers.

Finally, to provide more transparency in the PLUS loan program, the Department will also collect and, where appropriate, publish information about the performance of PLUS loans, including default rate information based on credit history characteristics of PLUS loan borrowers and individual institutional default rates.

Prior to the final regulations issued today, the definition of "adverse credit history" under the regulations had not been updated since the Direct Loan program was established in 1994.
The development of the final rule reflects extensive outreach by the Department, including four public hearings across the country to gather feedback and recommendations from students, families, higher education leaders, and community organizations. The negotiated rulemaking committee then held four sessions from February to May, and reached agreement on the definition of adverse credit history under the regulation. These draft provisions were published in the Federal Register as a proposed rule (NPRM) on Aug. 8, and included a 30-day public comment period.
The final rule, which will be published in the Federal Register on Thursday, Oct. 23, establishes a threshold debt amount of $2,085, indexed to inflation, below which a potential borrower is considered to not have an adverse credit history.
Other changes include:
  • Defining terms such as debt "charged off" and "in collection" to more accurately determine whether an applicant has an adverse credit history.
  • Reducing the time period of a borrower's credit history that is considered to determine adverse credit history from the last five years to the last two years for charge offs and collections.
  • Requiring that PLUS Loan applicants who, despite having adverse credit are able to receive a PLUS Loan based on either demonstrating extenuating circumstances or by obtaining an eligible endorser, participate in loan counseling.

Under the master calendar provision of the Higher Education Act (HEA), the final regulations are scheduled to go into effect July 1, 2015; however, the Department is designating the final regulations for early implementation under section 484(c)(2) of the HEA. The Department intends to work closely with stakeholders, including our college partners, as they implement the provisions of the new regulation. As current eligibility procedures such as adverse credit history determinations reside with the Education Department's Office of Federal Student Aid, we expect limited impact on current institutional procedures and processes for the packaging of student loans.
The Obama Administration has made historic investments to increases the maximum Pell grant award by $1,000, create the $2,500 American Opportunity Tax Credit, and enact effective student loan reforms that eliminated subsidies to banks and reinvested in America's students and families to make college more affordable. Along with these efforts, today's actions expand college opportunity and ensure families have the finances they need to succeed in their college pursuits, to help us reach the President's goal for America lead the world in college graduation.

Information submitted by Sharon Oliver, Chair, SASFAA Legislative Relations Committee.

Wednesday, October 22, 2014

Limited Spots Remain Open - 2014 SASFAA Leadership Symposium

2014 SASFAA Leadership Symposium
2014 SASFAA Leadership Symposium
2014 SASFAA Leadership Symposium

Limited spaces available!  Register today to secure your spot!

Along with SASFAA members as presenters,  Dr. Michela Perrone, President of MMP Associates, Resources for Effective Leadership, from Washington, D.C., will be joining the symposium as well. 

Registration and detailed information here 

Tuesday, October 21, 2014

Condolences - T. Boyd

Dear SASFAA Members & Friends:

It is with sadness that I share with you the passing of Tarik Boyd’s grandmother, Mrs. Naomi C. Carden, who passed away yesterday morning.  Mrs. Carden was 84 years young.

Services will be held Saturday, October 25th at 2 pm at the Spanish Grove Baptist Church/5004 MacDonald Road /Scottsburg, VA. 24589.

Tarik is the current Virginia President and serves on the 2014-15 executive board.  His commitment and dedication to SASFAA is much appreciated.

Please keep Tarik and his family in your thoughts and prayers.

If you would like to send a card or note to Tarik, his address is:
Tarik Boyd/3428 Waltham Circle/Virginia Beach, VA. 23452.

May the memories of Tarik’s grandmother bring comfort, smiles, and peace.  Grandmothers give unconditional love, kindness, patience, humor, comfort, and most important lessons in life.   

Nathan Basford
SASFAA President

Monday, October 20, 2014

Negotiated Rulemaking or Regulatory Negotiation Process

Negotiated Rulemaking or Regulatory Negotiation Process

Required as stated in HEA (Sec. 492A)

A.    The issues to be negotiated come from three sources: newly enacted statutes (written laws), the Department, and the public.

B.    Once the Department determines that rulemaking is necessary it publishes a Notice in the Federal Register announcing its intent to conduct negotiated rulemaking and identifying the areas in which it intends to develop or amend regulations. The Secretary of Education must obtain public involvement in the development of proposed regulations. There are meetings with interested parties to discuss the negotiated rulemaking process.

C.    The Department develops a list of the issues that a negotiating committee (or committees) is likely to address, and publishes the list in another Notice in the Federal Register.

D.    Solicit nominations for negotiated rulemaking non-federal members. When the negotiating committee first meets, members may suggest additional issues that may be added to the agenda, subject to the full committee’s approval.
a.     Members Negotiators are nominated by the public, and selected by the Department. In the same Federal Register Notice that announces the Department’s intent to conduct negotiated rulemaking or a subsequent Notice, the Department solicits nominations for negotiators to represent the constituencies who will be significantly affected by the regulations. The Department identifies in the Notice the constituencies it believes will be significantly affected. This may include, but is not limited to, students, legal assistance organizations that represent students, institutions of higher education, state student grant agencies, guaranty agencies, lenders, secondary markets, loan servicers, guaranty agency servicers, collection agencies, state agencies, and accrediting agencies. The Department welcomes nominations for representatives of other constituencies who are thought to be significantly affected. Typically, the Department convenes committees of 12 to 15 negotiators, as well as an alternate for each negotiator to ease attendance concerns for negotiations consisting of multiple sessions. Each committee includes at least one Department representative. Once members of a committee have been confirmed, the Department publishes another Notice in the Federal Register announcing the committee and its membership.
b.   Rulemaking Steps - This Notice announces a public meeting (or meetings) to obtain advice and recommendations on the issues to be negotiated from the public.

E.     Committee Approves Protocols and Finalizes Agenda Topics-The first order of business for a negotiating committee is to finalize the agenda and protocols, which are agreed upon by consensus of the committee. Once the agenda and protocols are finalized and agreed upon, the committee begins its negotiations of the issues on the agenda.

F.     The Department of Education submits thoughts and ideas and the committee reacts and negotiations begin-During the time between sessions, the Department drafts and amends the proposed regulatory language based on committee discussions and on any tentative agreements reached on the issues. The Department provides this draft regulatory language to the negotiators prior to the subsequent session. Subcommittees formed by the negotiators may meet during this time to work on specific issues. The subcommittees bring the results of their discussions to the full committee when it reconvenes.

G.    Consensus means that there is no dissent by any member of the negotiating committee. All agreements reached during the negotiations are assumed to be tentative agreements until members of the committee consider all of the issues included on the agenda, and vote on the entire proposed regulatory language at the end of the final session of the negotiated rulemaking. If final consensus is achieved, committee members may not withdraw their consensus and the Department will use this consensus-based regulatory language in its NPRM. Only under very limited circumstances may the Department depart from this language.

H.    Once a consensus is achieved, the Department uses that regulatory language in its Notice of Proposed Rulemaking (NPRM).

I.      Once the proposed regulatory language for the NPRM is finalized, the Department drafts the preamble language (the portion of the NPRM that explains the proposed regulatory text). The Department usually shares the preamble language with the negotiators who may review it for accuracy. Although the preamble language is not negotiated, the Department may agree during the negotiations to include in the preamble explanations of certain issues.

J.      When the NPRM is published in the Federal Register, it contains a request for public comments and a deadline for submitting those comments. If consensus was reached, negotiators and those persons and entities whom they represent may not comment negatively on the consensus-based regulatory language. The Department considers the comments received by the close of the comment period in developing final regulations. The final regulations published in the Federal Register contain the regulations with which affected parties must comply and the date by which they must do so. The preamble of the final regulations includes a summary of the comments received, the Department’s response to the comments, and an explanation of any changes made to the regulations that differ from the proposed regulations.

Thursday, October 16, 2014

Mechanics of the Federal Process and Understanding the Legislative Process

Understanding the Legislative Process


Ø  Statutes are the written laws passed by Congress (The House and Senate) governing the financial aid industry. Statutes governing the financial aid industry are:
ü The Higher Education Act of 1965
ü The Department of Education Organization Act
ü The Privacy Act
ü The Freedom of Information Act
ü Others

Ø  Regulations are the equivalent of an operating or implementation manual for a part of a statute (written law).  A regulation gives those subject to its requirements more detailed instructions regarding activities addressed by the statute (written law). Code of Federal Regulations our industry operates under are:
ü Code of Federal Regulations-Chapter 34 (CFR 34)
§  Part 86-Drug-Free Schools
§  Part 99-Family Education Rights and Privacy-FERPA
§  Part 600-Institutional Eligibility
§  Part 602-Accrediting Agency
§  Part 603-State Agencies
§  Part 668-General Provisions
§  Part 673-General Provisions-Campus Based Programs
§  Part 674-Federal Perkins Loan
§  Part 675-Federal Work-Study
§  Part 676-Federal SEOG
§  Part 682-FFEL
§  Part 685-Federal Direct Loan
§  Part 690-Federal Pell Grant
§  Part 692-LEAP/Special LEAP (SSIG)

§  Part 692-GEAR UP (NEISPP)

Ø  Legislative Process is the process by which BILLS are considered and laws enacted.  Laws begin as ideas or BILLS sponsored by members of Congress, the Administration or others.
ü  Authorizing Committees request proposals, hold hearings, draft proposed legislation, debate the proposals and then submit the approved BILL to the respective House.
ü  Both the Full House and Senate separately debate the BILL and then pass their version of the BILL and appoint a Conference Committee to resolve disagreements about a particular BILL.
ü  The Conference Committee is formed to work out the differences between similar BILLS in both houses.  The Conference Committee operates after the House and Senate have passed different versions of a BILL. Conference committees exist to draft a compromise BILL that both houses can accept. Both houses of Congress must eventually pass the identical legislation for the BILL to become law.      
ü  The Full House and Senate debate the proposed law and there is discussion on the Floor that can result in amendments before the final legislation is passed.  Next, the original papers are transmitted to the enrolling clerk, who has the measure printed on parchment, certified by the chief officer of the originating chamber, and signed by the Speaker of the House and by either the Vice President (who is the President of the Senate) or the authorized presiding officer of the Senate.  The BILL then goes to the President for his approval or veto.
ü  Every BILL passed by the House and Senate must be presented to the President for his approval in order to become a law.
ü  The Secretary of Education is responsible for the implementation of the new Law. 

Ø  Secretary of Education:
ü  Advises Congress on proposed legislation, provides technical assistance and assists constituents on issues
ü  Enforces laws and regulations
ü  Communicates with interested parties and the public
ü  Facilitates the Negotiated Rulemaking process

Ø  Negotiated Rulemaking or Regulatory Negotiation (Neg Reg or Reg Neg) brings together representatives of a rulemaking agency and stakeholders to jointly prepare the text of a proposed regulation or rule in a consensus seeking negotiation before the agency formally submits the rule to the formal rulemaking process before it becomes a part of the Code of Federal Regulation (CFR). The goal of Negotiated Rulemaking is to develop Notices of Proposed Rulemaking (NPRM) that reflect a final consensus of the negotiating committee. 

Wednesday, October 15, 2014

New FSA ID to Replace the Federal Student PIN

New FSA ID to Replace the Federal Student PIN

In spring 2015, the Department of Education (DOE) will implement a new login process for the student and borrower-based websites, including FAFSA on the Web, NSLDS® Student Access, StudentLoans.gov, StudentAid.gov, and the TEACH Grant website. The new FSA ID, which will be comprised of a user-selected username and password, will replace the Federal Student Aid PIN as the process by which students, parents, and borrowers authenticate their identity to access their federal student aid information. DOE is excited about the new functionality that the FSA ID will offer, including a single sign-on process for most systems.

The changes are being made to eliminate the need for individuals to enter personal identifiers (Social Security number, name, and date of birth) when accessing Federal Student Aid's systems. This change is critical to comply with new security requirements and industry best practices.

The transition from the FSA PIN to the FSA ID will be as seamless as possible for customers. Existing users will be able to link their PIN information to the FSA ID.




James Bergeron, President, National Council of Higher Education Resources

Mid-term elections are important because they give us the clearest sense of what the American electorate is thinking and what they care about outside of public polling, which can be unreliable. But it's also about previewing the themes that will be used and players that will be involved in the upcoming presidential race that will start sooner than you think (some say in 61 days). The major political candidates will pour over exit polling and interview data from the night’s election, especially from reliable partisans. What motivated them to vote? Why did they vote? What were the main issues that they cared about? The main talking points, narrative, and list of major candidates can change overnight.

If student loan debt burden, for example, leads to an increase in student turnout in targeted Senate races, we can expect continued emphasis on student loan refinance, additional hearings on the impact of debt on home ownership and retirement, and more policy developments. If the issue is a dud, we could be facing a new landscape. In short, it's the best road map and product testing of the political landscape for the next two years that we have available. It's that important.

The majority party in the House and in the Senate are in charge of setting the legislative agenda for the year.  They have the most votes, after all. But you may not realize what factors into that process and what other advantages they enjoy, process-wise. For starters, the majority party gets the lion-share of the money for operations - two-thirds of all budget and - just as important - staff slots. It takes staff to conduct investigations, write letters and talking points, research certain topics, argue over 100+ issues during consideration of legislation, plan hearings, prepare amendments, etc. The more staff, the more activity. The less staff, the less interest when it's more about "picking your battles.”

The majority also approves the use of all House/Senate rooms, which is a big issue when you're trying to do a mock hearing or a press conference, but you don't want to hold it in the one room allocated to the House minority that is the size of a closet. The majority sets the schedule and topics for hearings, and gets the lion-share of witnesses allowed to testify - in the House, the majority gets 3 witnesses for every one witness allocated to the minority; the Senate usually picks their witnesses together but the majority opinion still carries a lot of weight. During Committee markups and Floor consideration, the majority obviously puts forth the legislative vehicle that will be amended but they also get priority in getting their amendments drafted and considered, allowing them to steal ideas or proactively address problems coming from the minority. The majority gets priority consideration for research and reports conducted by the Government Accountability Office (GAO), which is used to push legislative action. They get their bills scored first by the Congressional Budget Office (CBO), which is a big issue when you're trying to draft legislation that's budget neutral. And, as we learned in 2010, they are able to put together a budget reconciliation bill that's immune from the Senate filibuster. This list could go on and on - the advantages, while not always stark, are extremely important.