# To: US Department of Education

# From:  Shannon Sheaff, Alyssa Dobson, David Sheridan, Sharon Oliver, Emily London-Jones, Mark Justice, Dennis Cariello, Becky Thompson, non-federal negotiators representing various school sectors and state higher education executives

# Date:  March 9, 2016

# Re: §668.41 Reporting and disclosure of information, Issue Paper 5

The non-federal negotiators listed above, representing a number of different constituencies and stakeholders but all practicing financial aid professionals, would like to issue this proposal for reporting and disclosure of information as described in Issue Paper 5.

In Issue Paper 5, the Department proposes that, an institution must, upon notification by the Secretary of a Federal student loan repayment rate of less than [0 percent or 15 percent] in any given year, and/or a requirement to post an irrevocable letter of credit, make disclosure of the applicable rate or irrevocable letter of credit to prospective and enrolled students.   

The financial aid administrators at the table firmly believe that disclosure of repayment rates by all schools offering Title IV aid should not be on the table as part of this negotiated rulemaking session as more discussion is needed to create clear definitions and policy, and impacts on various sectors of higher education need to be studied. Additionally, a clear tie between DTR and repayment rates has not been established by the Department.

If the Department is intent on negotiating this topic, we recommend following recommendations made in the report from IHEP titled, Making Sense of Student Loan Outcomes: How Repayment Rates Can Improve Student Success.  In this report, institutional representatives indicated the “repayment rates are not necessarily a representation of educational quality because they are mired in student choice and behavior”.  When considered in this light, it’s important to create definitions that are clear in their intent, focus on appropriate measurements and create disclosures that are simple to understand.

Specific concerns with the current proposal:

· The definition of the repayment rate and exclusions need to be clear and fully developed. 

· This definition of repayment rate differs from BOTH the definition used on the Scorecard and the definition in the gainful employment disclosure rules, 668.413(b)(3). c.       

· If the Department chooses to move forward with the proposal in 668.41, and to require a repayment rate as a GE disclosure in the future, it is possible for a school to be required to disclose multiple repayment rates, one program-based and one institution-wide, with different definitions/calculations. This presents administrative burden to schools and confusion to students/borrowers.

· The IHEP report indicates that borrower based rates are preferable and easier to understand, and both borrower and dollar based calculations produce similar results.  This is also noted in the current GE regulations.

· Accountability measures should also apply to loan servicers as they are the main source of communication once borrowers leave school and play a critical role in repayment.  

· All borrowers who remain in good standing on their loans should be counted as “repayers” since they are taking positive steps in the repayment process.

· The Department has recently proactively encouraged, with cooperation and assistance from colleges and universities around the country, borrower enrollment into the myriad income-driven repayment plans.  With the proposal that a 15% cumulative repayment after 5 years – which is exactly on schedule and in good standing for a 20 year repayment plan – be treated as a DTR red flag and should trigger negative-sounding consumer alerts, the Department is negating the beneficial work that has been done to assist borrowers with a common sense solution to temporary repayment challenges.

· Without the ability to limit borrowing on the front end, impacting repayment outcomes on the back end is an uphill battle.