# Presentation: 272504

## Session 8

- Student Loans Going Forward
- Gail McLarnon
- Dan Madzelan
- Office of Postsecondary Education

## Agenda

- Legislative Update
- Negotiated Rulemaking
- Student Loans
- General Provisions
- Administrative Issues
- Compliance Issues
- Dear Colleague Letters

## Legislation 

**Legislation**** **

## 		Legislative Update

- Higher Education Reconciliation Act of 2005 (P.L. 109-171)
- Third Higher Education Extension Act of 2007 (P.L. 110-109)
- “Sunshine” Legislation
- H.R. 890, S. 486, S. 1262
- Senate Reauthorization Bill – S. 1642
- House Reauthorization Bill – H.R. 4137
- HEROES (P.L. 110-93)
- College Cost Reduction and Access Act (P.L. 110-84)

**Notes:**
Another in a long line of bills enacted to extend the HEA is the Second Higher Education Extension Act of 2007.  This was passed back in late July to extend the HEA through October 31, 2007.   Tick, tick, time is running out.  Look for another extension in the absence of a House reauthorization  proposal.
As you can see in the next bullet, the Senate has got a HEA reauthorization bill out there which passed the Senate on July 24 by a vote of 95-0.  See attached sheet for Perkins provisions.
The House has yet to introduce its version of reauthorization.  
As you know, and as we’ll go over next in some detail, the Congress passed a significant piece of legislation affecting student financial aid when it passed their budget reconciliation bills or the College Cost Reduction and Access Act of 2007.  It was Senator Enzi’s, ranking minority member of the Senate Higher Ed Committee, strong hope that the Congress take up reauthorization as well as budget reconciliation.  As we know, that did not occur.
It looks right now like we will not see reauthorization this fall.
House lawmakers considered H.R. 3625, legislation to permanently extend the Higher Education Relief Opportunities for Students (HEROES) Act of 2003. The legislation would make permanent the waiver authority of the Secretary of Education with respect to student financial assistance during a war or other military operation or national emergency, and it addresses the unique situations that active duty military personnel and other affected individuals may face in connection with their enrollment in postsecondary institutions and their Federal student loans.

## CCRAA — Benefits for Students

- Lower Interest Rates
- New Income Based Repayment
- Expanded Loan Forgiveness
- Revised Deferments:
- Economic Hardship
- Military Service
- TEACH Grants

## CCRAA — Offsets

- Lenders:
- Exceptional Performer Status
- Insurance
- Loan Fees
- Special Allowance Payments
- Guaranty Agencies:
- Collection Retention Allowance
- Account Maintenance Fees
- Origination Auction for PLUS (Parent)

## 2006-07 NegotiatedRulemaking 

**2006-07 ****Negotiated****Rulemaking**** **

## 2006-2007 Negotiated Rulemaking

- 2008-2009 & subsequent award years
- Federal Register notice
- Published on August 18, 2006
- Regional hearings
- Berkeley, CA			September 19
- Chicago, IL			October 5
- Orlando, FL			November 2
- Washington, DC		November 9

## 2006-2007Negotiated Rulemaking

- Four negotiating committees were established:
- Accreditation
- General Provisions
- Academic Competitiveness & National SMART Grants
- Loans

## Regulations Calendar - LOANS

- NPRM:  Published June 12, 2007
- Deadline for Comments:
-       August 13, 2007
- 241 comments received
- Final rules:  November 1, 2007
- Effective date:  July 1, 2008 with possible early implementation

## 2006-07 Negotiated Rulemaking

-  LOANS NPRM—
- “No Consensus” on NPRM
- NPRM Reflects What ED Heard and Internal Deliberations of Secretary’s Loan Task Force

## Negotiated Rulemaking – Loan Issues

- Loans Committee Agenda
- FFEL/DL Issues
- ID Theft
- Entrance Counseling for PLUS borrowers
- Maximum Length of Loan Period

## 	Negotiated Rulemaking			Loan Issues

- Loans Committee Agenda
- FFEL/DL Issues (cont.)
- Frequency of Capitalization for Consolidation Loan Borrowers
- Determination of Deferment Eligibility by One Loan Holder

## Negotiated Rulemaking – Loan Issues

- Loans Committee Agenda (cont.)
- FFEL Issues
- Eligible Lender Trustee Relationships
- Preferred Lender
- Prohibited Inducements

## 	Negotiated Rulemaking 			Loan Issues

- Loans Committee Agenda
- FFEL/DL/Perkins Issues
- Use of True & Exact Photocopy of a Death Certificate
- Prospective Discharge for Total and Permanent Disability

## Negotiated Rulemaking – 		Loan Issues

- Loans Committee Agenda
- FFEL/Perkins Issues
- Standardize NSLDS Reporting
- Retention of Disbursement Records & Certification of E-signatures for Assigned MPNs

## Negotiated Rulemaking –		Loan Issues

- Loans Committee Agenda
- Perkins Loan Issues
- Clarify eligibility requirements for Child & Family Service Agency Cancellation
- Define “reasonable” Collection Costs
- Mandate Assignment of Defaulted Perkins Loans

**Notes:**
We are clarifying in regulation that in order to qualify for cancellation a Perkins Loan borrower  must be providing services exclusively and directly to high-risk children from low-income communities.
Collection costs imposed on defaulted borrower in the Perkins Loan Program must be “reasonable,” however, that term is not defined in regulation. Borrowers often complain that collection costs assessed on a defaulted loan are excessive, sometimes amounting to as much as 30-40% of the outstanding balance.  34 CFR §682.410 of the FFEL Program regulations define “reasonable” collection costs as those costs charged to the borrower that are the lesser of the amount the borrower would be charged under the formula in 34 CFR §30.60 or the amount the borrower would be charged for the cost of collection if the loan were held by the Department. 
Current Perkins Loan Program regulations do not provide for the mandatory assignment of defaulted loans.  NSLDS and FISAP data show a large dollar volume in outstanding Perkins Loans that have been in default for five years or more.  Effective collection on these defaulted loans by the Department, using tools not available to schools, could be realized if schools were required to assign the loans that are not currently receiving payments to the Department. We will be discussing this issue in tandem with the requirement in the HEA that the Department reallocate money collected on such defaulted loans.

## 	Negotiated Rulemaking		General Provisions

- Negotiating committee reached consensus
- NPRM published August 8, 2007 reflected the consensus language agreed to by committee
- 22 Public Comments were received by end of comment period on September 7, 2007
- Final rules:  November 1, 2007
- Effective date:  July 1, 2008 with possible early implementation

## 	Negotiated Rulemaking		General Provisions

- Loan Related Cash Management Provisions:
- Recovery of Unclaimed Title IV Funds
- Electronic Disbursements of Title IV Funds
- Late, Late Disbursements

## 	Negotiated Rulemaking		General Provisions

- Loan Related Cash Management Provisions:
- Minor Prior Year Charges
- Loan Cancellation Notice & Affirmative Confirmation of a Loan
- Excess Cash

## 	Negotiated Rulemaking 		General Provisions

- Loan Related Provisions:
- Minimum Period for Certifying a Loan
- Treatment of Title IV Loan Funds if a Student Does Not Begin Attendance
- Single Disbursement for Perkins Loans

## Alternative Loans

- Alternative loans must be included as “estimated financial assistance” if:
- Enrollment is a condition for the loan
- Does not matter where loan proceeds are sent or  whether school certified enrollment
- May replace EFC
- Think about it like an outside scholarship

## NSLDS Access

- Web access to the National Student Loan Data System (NSLDS) was suspended for some Title IV student aid program participants on April 17
- To ensure privacy is protected and that access to NSLDS is used only for authorized purposes

- Web search now requires SSN, Name, and DOB
- Ability for schools to add new users reinstated
- Guaranty agency web access reinstated
- Some lender web access reinstated
- State grant agency access reinstated
- Lender ELT access still on hold

## Recent Letters & Announcements

## Dear Colleague Letters & Electronic Announcements

- Dear Colleague Letter
- GEN-07-03  Consolidation Loan Process Issues
- Electronic Announcement
- FFEL Prohibited Inducement Guidance (9/14/2007)
- Secretary Spellings wrote to all institutions and lenders urging them to assure students and parents that we have their best interests at heart in providing competitive student loans

**Notes:**
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## Contact Information

- We appreciate your feedback and comments. You can reach us at:
- Dan Madzelan
- Phone:	202-502-7816
- Email:	_[Dan.Madzelan@ed.gov](mailto:Dan.Madzelan@ed.gov)_
- Fax:  202-502-7874
- Gail McLarnon
- Phone:  202-219-7048
- Email:  _[Gail.McLarnon@ed.gov](mailto:Gail.McLarnon@ed.gov)_
- Fax:  202-502-7874