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U.S. DEPARTMENT OF EDUCATION 

OFFICE OF POSTSECONDARY EDUCATION 

OPEN HEARING ON 

NEGOTIATED RULEMAKING 

Friday, November 16, 2007 

9:08 A.M. – 3:00 P.M. 

U.S. Department of Education 

Auditorium 

550 12t h Street, SW 

Washington, D.C. 
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 MR. BERGERON: Good morning. 

 [Discussion off the record.] 

 I’m David Bergeron. I am Director of 

Policy and Budget Development in the Office of 

Postsecondary education. Welcome to the 

Department. 

 I always feel, when I come here, that I’ve 

come to a remote outpost of the Department, because 

it is a little walk from our Headquarters building, 

and quite a walk over here for us coming from K 

Street. But I want to welcome you here. 

 We like this room, in terms of space, to 

have meetings in. I know that security is not 

always the easiest getting into the building, 

although I hope we have made it a little bit easier 

than most of our guests to this building have 

experienced. 

 But with that, there are a couple little 

parts of the deal. And part of the deal is, when 

you leave the building, see one of the federal 

staff, and they will escort you out of the 

building. That’s to prevent people getting off on 

the wrong floors and ending up in the wrong part of 
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this building, which is not completely occupied by 

the Department of Education. And some of our other 

Executive Branch colleagues in the building get a 

little concerned when they have uninvited--or 

unintended guests on their floors. 

 So, the security people of the Department 

ask that we arrange for people to be escorts, and I 

hope you find my colleagues to be good at that. If 

they are not around, you can even grab me or Danny 

and we’ll help get you out of the building without 

any trouble. 

 This is the second on the series of three 

public hearings that we’re having to consider and 

develop the agenda for our negotiated rulemaking 

that will be the result of, primarily, College Cost 

Reduction and Access Act that was signed into law 

back in September. 

 That Act includes a number of provisions, 

which I know you are aware, in which regulations 

are required. And most significantly, I think, for 

many of us, the TEACH Grants that are authorized by 

that ACT, where they become--that Program becomes 

effective on July 1, 2008. 

 We have a sense of urgency around getting 
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those regulations in place so that Program can 

begin with good rules governing it. That Act also 

includes some issues around some loan programs and 

including the changes in repayment plans and 

differential special allowance payments for lenders 

depending on whether they are for-profit or not 

for-profit. 

 So, we expect that there will be a number 

of issues that we will regulate around. The 

purpose of these public hearings is to get your 

input and advice as we begin that process, about 

what issues we should be looking at as we negotiate 

those regulations, and to give you an opportunity 

to suggest other areas that we might need to look 

at as we implement those programs and other things 

in our education act. 

 I’m going to let my colleagues here at the 

table introduce themselves. Throughout the day, 

there will be different people sitting here, I’m 

sure. I know that Danny and I have to make a trip 

back to K Street later in the day for a little 

while, and so, there will be different--we know, 

this afternoon, there will be others sitting here. 

I also know that Brian may not be here the whole 
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time either. So, if you’re here and you see us 

changing places, just bear with us. 

 Right now, we don’t have a lot of people 

signed up to testify. If you haven’t signed up, I 

would encourage you to go out and see my colleagues 

who are at the table outside this room who are 

signing people up. 

 But we do have a couple of people this 

morning and at least one for this afternoon who has 

signed up, but we will proceed as soon as the 

people who have currently signed up--as soon as my 

colleagues have an opportunity to introduce 

themselves. 

 MR. MADZELAN: Thanks, David. Thanks 

everyone, again, for coming this morning. 

 I’m Dan Madzelan, Director of Forecasting 

and Policy Analysis in the Office of Postsecondary 

Education, and I’ve done this kind of thing before, 

not only the start of the process, these public 

hearings, but also the middle part of it, the 

actual negotiations, where we all get in a room and 

enjoy each other’s company and ideas, and then, at 

the end of the process, where we actually publish a 

proposed rule and, ultimately, a final rule. 
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 And again, thanks for coming today. We 

certainly look forward to your thoughts and 

suggestions. 

 MR. SIEGEL: And I am Brian Siegel, an 

attorney in the Department’s Office of the General 

Counsel, and I have primary responsibility for the 

areas covered by the CCRA. 

 MR. BERGERON: And with that, I invite 

Sandra Robinson to come forward as our first 

witness--or first presenter. I don’t know exactly 

what we call you. 

 MS. ROBINSON: Good morning. 

 I want to thank you for this opportunity 

to provide suggestions for consideration and action 

by the negotiated rulemaking committee. 

 I will probably refer to my texts for the 

remarks, because I know they need to be brief. And 

in order to be brief, I will keep with the remarks. 

 MR. BERGERON: I will add that, right now, 

we do not have a lot of people signed up. So, you 

do not need to be as brief as advertised. 

 MS. ROBINSON: All right. I have been 

practicing speed talking, so I will slow down a 

little bit. 
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 MR. BERGERON: You can slow down. 

 MS. ROBINSON: I’m from the South, so that 

is very difficult to have to practice here, so 

thank you very much. 

 I’m Sandra Robinson. I’m Dean of the 

College of Education at the University of Central 

Florida, America’s sixth largest university, and 

we’re the largest source of education degrees in 

the State of Florida. 

 Our programs graduate teachers and school 

leaders who go on to fill the high-need areas of 

science, math, educational technology, and special 

education. 

 Our college partners with 11 public school 

districts, comprised of over 6,000 K-12 schools, 

with an enrollment of over half a million students. 

And as a public university, we also appreciate the 

partnerships with key corporate entities, such as 

Lockheed-Martin, Progress Energy, Boeing, and State 

Farm Insurance, with a goal of preparing highly 

qualified teachers and educational leaders. 

 Today, I am speaking on behalf of American 

Association of Colleges of Teacher Education, 

representing nearly 800 public and private schools, 
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colleges, and departments of education at 

institutions of higher education throughout the 

nation and its territories, as well as affiliate 

members, including state departments of education, 

community colleges, educational laboratories and 

centers, and online teacher preparation programs. 

 AACTE’s mission is to promote the learning 

of all pre-kindergarten through 12t h grade students 

through high-quality, evidence-based preparation 

and continuing education for all school personnel. 

 AACTE embraces the TEACH Grant initiative, 

having vigorously supported the passage of the 

TEACH Grant provisions of HR 2669. 

 This Program will encourage and serve as 

an incentive for students to enter the profession 

of teaching and education, and encourage practicing 

educators to continue their lifelong learning and 

professional development. 

 It is a proactive measure that addresses 

the critical shortage of teachers in every 

discipline, especially in the high-need areas of 

STEM and special education, and the need for highly 

qualified teachers in hard to staff schools, which 

we know a lot about in Florida. 
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 With full support for the TEACH Grant 

Program, AACTE would like to raise the following 

issues of concern in terms of expediting and 

streamlining the implementation of the TEACH Grant 

program so that solutions to the problems that they 

address can be put quickly into place, and I have 

seven different areas to address quickly. 

 First, clarifying under the definition of 

“eligible institution,” what constitutes extensive 

clinical experiences. 

 AACTE advocates that teacher preparation 

programs include, at a minimum, 450 hours of 

supervised clinical experience. Teacher candidates 

must spend significant time in the classrooms 

during that preparation, observing expert teachers 

and teaching methods, developing classroom 

management skills, and working with diverse student 

populations. Clinical experiences improve 

candidates’ effectiveness in the classroom, and 

prepare them for the realities that they are going 

to face. 

 In addition, the value of a supervisor’s 

extensive observation of a teacher-candidate’s 

interaction with children cannot be underestimated. 
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 We recommend that the regulations include 

a standard of 450 hours of clinical experiences. 

 Second, clarifying what happens when the 

teacher shortage areas change. The TEACH Grants 

require a four-year teaching service commitment in 

a high-need subject area over what happens to a 

teacher who begins teaching in a declared shortage 

area but that shortage area is no longer deemed 

such in the following year or three years? 

 AACTE recommends that the teacher be allowed to 

teach all four years in the same subject area 

regardless of whether that area remains a shortage 

filed. 

 Third, clarifying the number of the TEACH 

Grants available. The TEACH Grant Program is 

supported through mandatory spending, thus, it 

appears that as much funding as is required to meet 

the demand for applicants will be available. 

 It would be helpful to have the 

regulations clarify for students and institutions 

that the program will indeed accommodate as many 

teacher candidates as apply. This will enable the 

institutions to engage in extensive outreach 

campaigns without concern for over-promising or 
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over-promoting the scholarship opportunity. 

 Fourth, clarifying the payee of the TEACH 

Grant Program and the timing of the distribution of 

grants. AACTE supports the distribution mechanism 

for tuition assistance. However, timing and 

distribution of grants should be shaped to work in 

concert with the federal grant system. We 

recommend that institutions be able to apply for 

additional funds throughout the year, as students--

particularly our non-traditional students tend to 

enter postsecondary education at different times 

during the year. 

 Five, clarifying reporting process for 

TEACH grantees during their teaching service 

commitment. AACTE recommends that the U.S. 

Department of Education assume responsibility for 

receiving evidence required of an applicant’s 

employment at the end of each service year. 

 While institutions of higher ed are 

equipped to track students during their period of 

enrollment, tracking transient students for an 

eight-year period after graduation would 

necessitate creating and monitoring a data system, 

the cost of which is not included in the TEACH 
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Grant, so which we are not asking for. 

 As one example, the State of Florida 

successfully administered a program of this nature 

in the past. It had centralized recordkeeping 

maintained by the state. 

 Sixth, clarifying who is eligible to apply 

for a TEACH Grant in the graduate program. The 

statute, as written, appears to exclude a 

significant category of potential teachers, that 

being career changers who are not retired and who 

may not have content expertise in a teaching 

shortage area, but who want to go back to school to 

get their master’s degrees to become certified in a 

shortage area. 

 One example of this is our partnership 

with Lockheed-Martin, who is very interested, of 

course, in engineers. So, they are providing 

funding for a master’s degree program for such 

people. 

 AACTE recommends that the Department of 

Education’s regulations clarify this issue 

regarding eligibility to receive a TEACH Grant for 

a master’s degree program. 

 And finally, developing an annual report 
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on the TEACH Grant Program. In order to better 

understand the impact of the TEACH Grant Program in 

addressing serious and chronic teacher shortages in 

our Nation, AACTE recommends establishing the 

requirement for an annual public report, including 

the number of TEACH Grants issued each year by 

shortage field, the number of institutions of 

higher education participating in the program, and 

an accounting of how many applicants are teaching 

in K-12 schools, and where they are teaching, to 

include locations, school type, and the field in 

which they’re teaching. 

 AACTE urges the Department to develop and 

operationalize a significant marketing campaign to 

make sure that the TEACH Grants become a household 

name and highly sought after. 

 Members of AACTE are committed to playing 

a vital role in the spreading the word and sharing 

the good news about TEACH Grants with our 

institutions and in the K-12 schools where our 

faculty and our candidates work daily with 

students. 

 Thank you very much for the opportunity to 

present these recommendations. 
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 MR. BERGERON: Thank you. 

 Can I ask a follow-up question? 

 MS. ROBINSON: Sure. 

 MR. BERGERON: You raised the issue of 

clarifying the shortage areas, in that a teacher 

can teach for the period of their service 

obligation in that same field. 

 The concern of the--the issue that we have 

been struggling with is around how do students know 

what shortage areas there are nationally today, 

because they are the ones listed in the statute. 

And then are there any that are designated by 

states, for example. 

 And so, the struggle I think we have been 

struggling a little bit with is “What do you do for 

the students in terms of their experience while 

they’re in school? Do you grandfather in the 

shortage areas that were--when they first received 

a grant, or do you do it only when they’ve entered 

the teaching workforce. 

 I mean, we’ve had some conversations on 

that. We would welcome your thoughts on that. 

 MS. ROBINSON: I think in terms of the 

requirements that the states have, it would be most 
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advantageous to the students themselves to 

grandfather them in. Whatever the teaching 

shortage area is when they begin their 

preparation--because, for many of us, that is so 

designed and dictated, frankly, by the states, that 

once a student starts in a certain area, it would 

be difficult to change. 

 Now, admittedly, maybe a year or two in 

here, the first two years are pretty much general 

education sorts of courses, because, by our 

national accreditation, students must take all the 

general ed fields. So, there is a little bit of 

flexibility, but once they really are admitted to 

professional education programs, they are pretty 

much following the dictates of the state in order 

to become certified. So, it would probably add 

years to their preparation programs if, indeed, 

they were not grandfathered in at some point in the 

process. 

 MR. BERGERON: Thank you. 

 Whenever I do this, I know that, 

invariably, that I will hit a name that stumps me. 

 And at these times, I generally hand them 

to Mr. Madzelan and say, “Danny, you can call our 
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next person to come to the table. 

 Dennis Patanazek [ph.]--close? 

 MR. PAKANIZZEK: I think it was pretty 

close. It is Pakanizzek. If the “z” were an “h,” 

it wouldn’t scare, but the “z” always scares 

people. It is really interesting. 

 MR. BERGERON: Yes. Thank you, Dennis. 

 MR. PAKANIZZEK: Thank you for the 

opportunity to be here. 

 I am the Dean at Salisbury University, 

which is just across the Bay. We are Maryland’s 

third largest institution for preparing teachers, 

and today, I am representing not only Salisbury 

University, but the Maryland Association of 

Colleges for Teacher Education, as well. 

 And you would think that Dr. Robinson and 

I spent some time together preparing our testimony, 

but we did not. Even though we were colleagues in 

Florida together, we prepared our testimony 

independently, but it really strikes at many of the 

same issues. 

 Maryland, like many of the states, has 

what is called “an extreme teaching shortage.” We, 

last year, hired 6,500 new teachers in the state, 
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and Maryland institutions prepared somewhere around 

2,600. So, we had to find teachers from a lot of 

other places. So, we’re very excited about the 

TEACH Grants as a way to provide incentives for 

teachers to enter the field. 

 But we do have a number of questions. We 

are very excited about the program, but want to 

raise some issues that we think that the negotiated 

rulemaking committee may want to address, and 

certainly the first of those is clinical 

experience. 

 And like Dr. Robinson, we believe strongly 

that the clinical experience portion is a critical 

part of teacher preparation, and it may be one of 

the single most important pieces that affects 

teacher retention. Without the extensive clinical 

experience, people enter the classroom unprepared 

to teach and unprepared to manage classrooms. 

 The question that I think we need to 

consider is--we know that the pipeline for a fouryear degree in teacher education often involves, 

for many, many students, beginning at the community 

college level. So, we need to figure out--one of 

the questions to figure out is how do community 
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colleges fit into this equation for extensive 

clinical experience. So, that’s one area that we 

share in common. 

 The second issue is about “post-bac,” 

because what we know is that we really, probably, 

are not going to solve the teacher shortage, 

especially in the critical fields through 

traditional four-year undergraduate teacher 

preparation programs. 

 We need to have programs that focus on 

career changes. So, my concern is that we make 

sure that--here’s what we don’t want to end up 

with. 

 We don’t want to have people who take a 

course here and then go to another college and take 

a course, and then go to another college and take a 

course, because that is going to lead to a lessthan-cohesive program, and I would think an 

accounting and accountability nightmare in terms of 

these grants, as well. 

 So, I think my recommendation would be 

that we talk about--that these will be for people 

who enter a program and finish that program, rather 

than people who sort of shop around for the most 
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convenient course that fits into their life. So, 

it is another area, I think, to get some clarity 

about. 

 The other is issue is probably whether or 

not any undergraduate work can be eligible for 

TEACH Grants if in fact the teacher preparation is 

at the Post-bac level. 

 Example, California. California requires 

a fifth year. Most of the fifth-year programs in 

California are post-bac programs. They are not 

master’s degree programs. And in those instances, 

people have to finish their bachelor’s degree to 

get their content before they go on to the fifth 

year. 

 So, I think some clarity about in what 

cases would undergraduate count and be eligible for 

TEACH Grants would be necessary in the rulemaking. 

 Certainly another area is eligibility, and 

this sort of relates to the whole business about 

the shortage fields. Does one become eligible 

simply by declaring a major in one of the high-need 

areas? That’s the first thing. We need to make 

sure that institutions can verify that eligibility. 

And it seems another piece that we need to make 
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sure--we are talking about, literally, people who 

would be high-school seniors in some cases. 

 We need to make sure that those student 

are aware of, when they seek money through a TEACH 

Grant, that what the requirements are for service 

afterwards--so, probably instigating some sort of 

promissory note will accomplish that and also 

provide a way, perhaps, to focus their studies. 

 I am concerned, as you are, about what 

happens--the teacher shortage areas is an 

interesting one, because the language talked about 

a number of areas pre-identified, but then others 

that would be identified by state or local 

education agencies. 

 Let me give you the Maryland example. 

Today, in Maryland, early childhood education is a 

critical shortage area. Will it be in five years 

when the student finishes the program? We don’t 

know that. So, we need to solve that problem. And 

I think that--it is sort of, like, if you sign on 

the dotted line that you are entering a shortage 

area that has been identified by the state that, in 

fact, the deal would be a deal, that if you 

continue and follow that path and teach in that 
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area, that we should probably honor our promise. 

 But in Maryland, it is a little bit more 

complicated, because we put out a teaching staffing 

report every year based on data that comes from 

somewhere. In that staffing report, then they 

declare what the shortage areas are. It is 

possible for a district in Maryland to declare 

itself a geographic shortage area. Every one of 

the school districts has done so. 

 In addition, in Maryland, minority 

teachers and males are considered shortage areas. 

 So, I think this goes way beyond the 

intent of the language of the bill, but it is one 

of those things that I think--achieving clarity 

about how state and local shortage area 

declarations will be treated is a critical piece. 

 So, I think that, you know--I also have 

attached to my testimony some comments from our 

financial aid director that get into a level of 

detail that goes way beyond the expertise of a 

dean, and I am attaching that because I think it is 

important to you, but I would be delighted to 

answer any questions that you might have or address 

anything further. 
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 But thanks for the opportunity, and I wish 

you well in the negotiated rulemaking. It is going 

to be quite a process. 

 MR. BERGERON: It is going to be quite a 

process and quite a rapid process. 

 MR. PAKANIZZEK: A rapid process. 

 MR. BERGERON: I expect--how do you think 

we should address the issue of community colleges 

and how they would fit within this. 

 MR. PAKANIZZEK: Well, I think community--

to be honest, I think community colleges serve two 

very different roles right now. 

 One is that they serve as really part of 

four-year programs by offering associate’s degree 

or, in many states, associated arts and teaching 

degrees that are really an articulated part of 

four-year programs. 

 I think in those cases, most of them have 

agreed that they will provide clinical experience 

for their students in several of the three or four 

courses that become part of the teacher education 

program. 

 I know in our state, for example, students 

will usually leave the community colleges with at 
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least 100 hours of such experience through three or 

four courses. 

 The other role that community colleges 

play, often, is a provider of alternative 

certification programs. And in my belief, it is at 

that point that we really need to think about the 

clinical experience that is required as comparable 

to what you would require of any other teacher 

education program, an extensive clinical 

experience. 

 So, I mean, I think it depends on the role 

of the community colleges. You just can’t say for 

community colleges it is this way, because they 

play very different roles. 

 So, that would be my take. 

 MR. BERGERON: So, you would see, at least 

as a first role, the role as the first two years of 

the undergraduate program, some kind of articulated 

agreement between the community college and a fouryear institution that awards degrees in teacher 

education. 

 MR. PAKANIZZEK: Yes. Either institutions 

or institution. In Maryland, we have a statewide 

agreement that we have all agreed to accept the 
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associative arts degree in teaching as an 

articulated program. 

 They come into our institutions with no 

further course review. So, I think that’s the key 

for the first scenario, is some sort of an 

articulated agreement, whatever that might look 

like. 

 MR. BERGERON: In the second scenario, do 

you think it is covered in some manner by the 

general eligibility requirements? 

 MR. PAKANIZZEK: I think so. 

 MR. BERGERON: Right, right. 

 Other questions? 

 MR. MADZELAN: Yes, you touched upon, you 

know, the notion of, at least initially, the 

student eligibility for the grants. 

 You mentioned that they were trying to 

ensure that--at least at the start--that we get 

into the TEACH Grant Program those people that 

intend to be teachers. And again, I think you 

mentioned we try and stay away from scenarios where 

students are kind of shopping around a bit. 

 And you, you know, talked about a 

promissory note or some sort of agreement, or 
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something like that. And again, these are the same 

kinds of issues that we’ve been discussing back in 

the office. 

 And, you know, it is a concern for us, 

because, obviously, this is not a trivial amount of 

money, $4,000, that--you know, this is a grant 

program, but, in a sense, it is a loan program 

that--where the loan is either repaid through 

service or cash. 

 And so, that’s the concern for us is to 

minimize at the front end that pool of students 

that, kind of on the back end, will not be repaying 

via service. And you know, so we think about the 

counseling that needs to be provided. And you know 

obviously who is in the best position to provide 

that counseling? The schools. 

 I mean, we can do a little bit of that 

upfront in a sort of FAFSA screening and stuff like 

that, but that’s a real concern for us, that we 

don’t have individuals--we don’t have students that 

say, “Wow. A free $4,000.” 

 MR. PAKANIZZEK: Right. I think it is a 

critical piece. 

 It is a critical piece in a couple of ways 
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also, because it seems to me that receiving a TEACH 

Grant, then, is computed into a student’s overall 

eligibility for other awards, and so, the timing 

becomes critical. The accuracy of the information 

that the student receives becomes critical. And 

that is all a timing issue, also, and that is why 

the Department needs to move forward with more 

deliberate speed than we in higher education have 

ever imagined. 

 But we’re on board with you in terms of 

knowing how fast this has to work, because really 

it will become--it will become a recruiting tool. 

 I was at an open house for prospective 

students last Saturday, and I was talking about the 

TEACH Grants, and people said nobody seems to know 

about these. And I said, “Well, that’s because 

we’re a much better university than any of the 

others that you’ve been looking at.” 

 But the reality is we really do have to 

get this pretty clear and pretty quick so that we 

can actually make it available for prospective 

students in the fall. 

 MR. BERGERON: When we implemented 

Academic Competitiveness and National SMART 
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Grants--it will be two years on July 1s t --we did it 

through a process that involved us publishing an 

interim final regulation without negotiated 

rulemaking and the normal customary public comment 

process. 

 Our goal here is not to do that in this 

case. Our goal here is to do the normal, though 

expedited dramatically, negotiated rulemaking 

process in the advance of doing an NPRM, with a 

very short comment period in turning around a final 

rule so that it is in place by July 1s t . 

 And that is an extraordinarily ambitious 

calendar. And to the extent that you all in the 

community can help us with that, we appreciate it. 

It is a challenge. I will say I am comfortable 

that we can accomplish it working it together. We 

got--while we did not have a formal negotiated 

rulemaking or any formal public comment process 

around ACG and National SMART Grants, we got a lot 

of people from the community telling us stuff early 

on in the process that helped us make sure that we 

weren’t too far off track. 

 And then, we did do--go through a process 

of finalizing the rule, and then doing a Neg Reg. 
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We’ve had lots of comment on that. But this will 

be a process that we’ll have to all be working very 

closely together and moving very quickly. 

 And I appreciate your coming today and 

providing us your thoughts early in this process. 

So, thank you. 

 MR. PAKANIZZEK: Good. 

 MR. BERGERON: Right now, we have no one 

else signed up to testify that I know of. I will 

check with my colleagues in a second. So, we will 

just take a little break and, when someone is 

ready, we will reconvene. 

 [Recess.] 

 MR. BERGERON: We’re going to reconvene 

now. We have a couple of additional people who 

have signed up to speak. 

 I think it is S. Saunders from American 

Assistance--NASLA. 

 How are you? Good to see you again. 

 I was looking for a first name, and there 

wasn’t one. 

 MS. SAUNDERS: Shelley. 

 MR. BERGERON: I know that, Shelley. 

 MS. SAUNDERS: So, good morning. 
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 As we discussed, my name is Shelley 

Saunders, and I am Vice-President of Strategic 

Services with American Student Assistance, and I am 

here on behalf of ASA and my fellow guarantors up 

in the National Association of Student Loan 

Administrators. 

 NASLA is a private, non-profit, voluntary 

membership organization, comprised of four VFA 

guarantors, who are: ASA, California Student Aid 

Commission Education Fund, Great Lakes, and Texas 

Guaranteed. 

 NASLA is organized to ensure consistent 

and reliable delivery of student loan services to 

America’s students, parents, and post-secondary 

institutions. 

 First thing I would like to talk about is 

participation in negotiated rulemaking. Over the 

last several years, many factors have impact 

student loan borrowing, including the rising cost 

of education, increasing borrower indebtedness, the 

rapid growth of private loan borrowing, significant 

changes in interest rates and the popularity of 

loan consolidation. 

 Because of the importance in these trends 
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and changes in student loan borrowing, NASLA 

believes that it is important that guarantors 

participate as both a lead and backup negotiator on 

the loan issues team in negotiated rulemaking. 

 A core focus of guarantors is to maximize 

the success of borrowers in repaying their loans, 

and as an administrator of the FFELP, a guarantor 

works closely with the Department, students, and 

families, schools, lenders, and loan servicers 

through the life of the loan. Inclusion of a 

guarantor voice in the negotiations will promote 

broad-based, well informed rules. 

 NASLA has been an effective participant in 

negotiated rulemaking during the last several times 

it has been conducted, and we encourage the 

Department to approve a NASLA guarantor 

representative as a participant in negotiated 

rulemaking once again. 

 Our first issue is federal preemption. We 

believe the Department of Education should provide 

explicit and total preemption of state laws which 

regulate the conduct of Title IV institutions to 

allow for consistent administration of the Title IV 

student loan programs throughout the Nation. 
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 The Secretary’s comments to the final 

Title IV regulations, implementing changes under 

HERA and CCRAA published on November 1s t included 

language which clearly reiterates that federal 

regulations preempt any state statute or regulation 

which stands as an impediment to the federal law. 

 Such an explicit statement was welcomed by 

Title IV institutions as providing a solid 

foundation from which we may assess our program 

obligations. 

 The difficulty for Title IV institutions, 

meaning schools, lenders, guarantee agencies, 

servicers, and secondary markets stems from state 

laws or regulations which do not appear to stand as 

an impediment to the federal law, but which, in 

effect, create multiple and competing obligations, 

and regulatory schemes through which Title IV 

institutions must navigate. 

 Currently, several states either have 

passed or are contemplating laws which regulate the 

conduct of Title IV institutions acting within the 

state, or in an interstate commerce, with state 

residents, under the theory that unless explicitly 

preempted, state laws, which are more restrictive 
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than the federal laws, are permissible. 

 Simply put, new regulations should state 

that Title IV programs are, by definition, an area 

of regulation exclusively reserved to the Secretary 

and the Department of Education and that state law 

in this area is totally preempted. In that way, 

each Title IV institution will have one clear set 

of guidelines thus avoiding the problems of an 

uneven application of the federal laws to arise. 

 Next issue is with respect to the Pilot 

PLUS auction program. The Pilot PLUS auction 

program provision in the act raises several issues 

that will need to be promulgated through regulatory 

language. 

 Issues concerning borrower choice, such as 

whether a borrower would be able to borrow from a 

lender other than one of the two winning lenders 

for that particular state. We are also concerned 

about the guarantor’s role in the Pilot auction 

process. The law does not address the guarantee of 

the Parent PLUS Loan made under the auction 

program. 

 We would like for the Department to 

clarify in regulations whether the two winning 
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bidders per state get to choose the guarantor from 

which they will obtain their loan guarantees on the 

PLUS loans. Or, since it is on a state-by-state 

basis, the state designated guarantor will be the 

automatic guarantor for all parent PLUS loans made 

in that state. 

 Economic hardship. Continuation of the 

debt burden test. We would like to advocate for 

the continuation of the debt burden test that the 

Secretary retained in regulations, despite the 

removal of the test in the Higher Education Act put 

forth through the College Cost Reduction and Access 

Act. Indications from the Department are that this 

debt burden test will remain in regulations for the 

time being, and we strongly support that the test 

be retained permanently. 

 In addition, we encourage the Department 

to consider revising other areas in the regulations 

where such income measurements or guidelines could 

be utilized to benefit borrowers. 

 The application of the established debt 

burden test could prove beneficial to a borrower 

who has exhausted all his economic hardship 

deferment eligibility but is still needing to 
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postpone and obtain a forbearance. 

 However, the forbearance provision does 

not incorporate the borrower’s family size, which 

is critical when evaluating a borrower’s debt 

burden relative to his or her income. 

 NASLA appreciates the Department’s 

consideration of this testimony, and offers itself 

as a resource to the Department on these and other 

issues that you may consider. 

 Thank you. 

 MR. BERGERON: Thank you. 

 One question. Well, a comment, and 

whether you want to have any observations. When we 

retained it, our view was that we wanted to retain 

the debt burden test as it currently stands, at 

least until such time as we regulated around 

income-based repayment and that payment plan was 

available. To some extent, there is some potential 

conflict or overlap between those two provisions. 

 Do you think we should still retain that, 

or do you think that we would be more--that it 

would be more appropriate for us to look at it 

holistically in the context of that IBR plan? 

 MS. SAUNDERS: If you’re going to look at 
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it more holistically, then that makes sense, but if 

the gap is going to stay out there, then... 

 MR. BERGERON: Right. Well, our concern 

right now was that if we didn’t retain it in 

regulations, there would be, clearly, a gap. 

 But when we said we were going to look at 

it--we want to look at in the context of the new 

repayment plan, as well as whether or not we should 

just retain or do something different there. 

 MS. SAUNDERS: Yes. 

 MR. BERGERON: Anything else? 

 MR. SIEGEL: Yes, I would like to ask a 

question about the preemption issue. 

 I understood, and our final regulations 

reflect, that we would consider the issue of 

preemption as it relates to preferred lender lists 

and improper inducements. 

 It sounds like NASLA is asking for a much 

broader preemption question that would relate to 

the entire student loan program. Is my 

understanding correct? 

 MS. SAUNDERS: Those are the two main 

issues at hand, that you just discussed, but if we 

could clean it all up at once, that would be nice. 
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 MR. SIEGEL: Okay. 

 Just as NASLA and others prepare for this 

discussion, negotiated rulemaking, I just ask you 

to keep in mind that the standard for federal 

preemption of any state law is relatively narrow. 

 And that it--the state laws generally have 

to frustrate the federal purpose. It is not just 

that they may in some instances conflict. 

 MS. SAUNDERS: I understand. 

 MR. SIEGEL: So, there will have to be 

some evidence from NASLA and others that those 

conflicts exist, and that they would frustrate the 

federal purpose-- 

 MS. SAUNDERS: Okay. 

 MR. SPIEGEL: --before we would have any 

authority to preempt. 

 MS. SAUNDERS: Understood. 

 Thank you. 

 MR. BERGERON: Thank you. 

 Andrew Friedson. 

 Is Andrew in the room? 

 AUDIENCE MEMBER: I think he is running a 

little late. 

 MR. BERGERON: Yes. We apologize for 
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confusion about location and difficulty finding us. 

 We will just hang out for a minute and 

give Andrew an opportunity to get here, because 

we’re not going anywhere. 

 And if anyone else wants to sign up to 

give testimony, see my colleagues outside at the 

table. 

 Thank you. 

 [Recess.] 

 MR. BERGERON: We’re going to reconvene. 

 Andrew Friedson is joining us. 

 Andrew. 

 MR. FRIEDSON: How are you? I feel like 

we are too close to use the microphone. 

 MR. BERGERON: The court reporter does 

need you to use the microphone. 

 MR. FRIEDSON: I’ll use it anyway. 

 Good morning. My name is Andrew Friedson. 

I currently serve as the Student Body President at 

the University of Maryland. I stand before you 

this morning to represent the 25,000 undergraduates 

at College Park, and also to advocate for millions 

of college students across the Nation. Thank you 

for allowing me the opportunity to testify. 
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 Last November, I testified during the 

negotiated rulemaking process. Although we weren’t 

able to use that process to make significant 

changes, it was an important starting-off point to 

passing some of the most significant federal 

legislation for students in a half-century. 

 This morning, I stand before you, one year 

later, to discuss some concerns that I have and to 

express my hope that you make these programs as 

student-friendly as possible in implementation. 

 I truly appreciate your initiative in 

moving this process forward so hastily, and I’m 

looking forward to having them done. 

 The College Cost Reduction and Access Act 

of 2007 will literally transform the number and 

demographics of students who will be able to attend 

college, and will drastically improve their 

opportunities once they graduate. It promotes 

desperately needed public sector jobs, increases 

access for the neediest students, supports underrepresented communities, and appropriately links 

repayment to income. 

 Students face serious hardship in terms of 

the cost of college and the burden of debt, and 
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this legislation makes crucial strides to improve 

both. It is absolutely critical that this 

negotiated rulemaking process ensures that the 

legislation does what was originally intended: to 

help students better afford college both during 

their time as a student and once they graduate. 

 I have a few recommendations for this 

Committee to consider when it implements the 

legislation. 

 First, I hope the Department of Education 

works to ensure that all students have access to 

student loan programs. We must ensure that all 

students have access to income-based repayment. 

 Secretary Spelling should provide clear 

guidance to lenders, servicers, and guarantors of 

their responsibility to assist borrowers in 

identifying the best option for their individual 

circumstances. Borrowers who face duplicity from 

lenders should be able to consolidate, or 

reconsolidate, into a direct loan in order to 

provide them with all available options. 

 Additionally, the maximum repayment for 

income-based repayment and income-contingent 

repayment should be capped at 20 years. The 
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Secretary of Education has discretionary power to 

limit repayment from the current 25-year statutory 

limit. It is important to note that the vast 

majority of borrowers who will have paid their loan 

before 20 years; however, this will alleviate the 

small number of students who have struggled with 

their repayment from the burden of debt and will 

allow them to be productive society members for 

their future years. 

 And lastly, I recommend that the 

Department of Education clarify the rules of what 

periods of repayment count towards cancellation 

following the duration of repayment. 

 I would suggest including the following: 

periods while on income-based repayment, periods 

while on income-contingent repayment, periods of 

economic hardship deferment, payments under a 

standard 10-year repayment plan, and payments that 

are at least equal to the standard repayment plan, 

regardless of which plan the borrower is using. 

 Inevitably, other issues will arise 

throughout this process. It is my sincere hope 

that the Department of Education will act in the 

best interest of students in each decision it makes 
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when implementing these changes to student 

borrowing programs. 

 In closing, please continue to keep in 

mind that the purpose of education and the backbone 

of America is the idea of increasing opportunities 

through one’s hard work and through his or her 

dedication. With the passage of this landmark 

legislation and the tireless work of this 

Committee, we have an opportunity to offer college 

graduates the chance to make decisions based on 

their interests and not on their income. Having a 

workforce that is actually passionate about their 

jobs is in the public’s best interests both today 

and long into our future. 

 Again, thank you for your time, and for 

moving so quickly to make college more affordable 

for students throughout this country. I appreciate 

it. 

 MR. BERGERON: Thank you, Andrew. 

 Andre is the last person we have signed up 

to testify this morning. 

 If you are interested in testifying and 

didn’t sign up as you came in, I would encourage 

you to go and see my colleagues outside the door 
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and get on the list of people to testify. 

 Otherwise, we will just hang out here 

until about lunchtime. 

 Thanks. 

 [Recess.] 

 MR. BERGERON: Good morning. We are going 

to reconvene. 

 So, if there are conversations, they can 

go out in the hallway. That would be great. Also, 

if anybody wants to sign up to testify, go ahead 

and visit with our colleagues outside at the table. 

But right now, we do have somebody who is here to 

testify, and that is Phil Schrags 

 Could you come forward, Phil. 

 MR. SCHRAG: Thank you. I’m Philip, with 

one “l,” Schrag, S-C-H-R-A-G. 

 I am a professor of law at Georgetown 

University, and I’m speaking on behalf of the 

Association of American Law Schools. 

 Thank you for allowing me to appear at 

this hearing and discuss the agenda for negotiated 

rulemaking, to take account of the changes made by 

the College Cost Reduction and Access Act. 

 I agree with the observation of Senator 
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Edward Kennedy that this law is the most important 

boost to the financing of higher education since 

the GI Bill, from the point of view of graduate and 

professional students, especially those who will 

incur high educational debt in relationship to 

their expected incomes. 

 The most important feature of this new law 

is the creation of the income-based repayment plan. 

Sections 2.03 and 4.01 of the new law, creating 

income-based repayment and a public service loan 

forgiveness program, were necessary because of the 

income-contingent repayment option, which had 

failed to achieve one of its principle goals--

principle goals of the Congress that had created it 

in 1993, and that was to enable students who wanted 

lower-paying public service careers to obtain the 

costly advanced education necessary to be able to 

work in those careers. 

19 In a book I wrote in 2002, Repay as You 

Earn, I documented the lack of interest in the ICR 

plan among students with very high educational debt 

and among financial aid advisors who counsel them. 

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 The main reasons why students do not 

voluntarily elect ICR is the long 25-year period 
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before any forgiveness can occur. The IBR plan in 

Section 2.03 lowers monthly repayments compared 

with ICR or any other repayment plan for those with 

high debt-to-income rations. 

 But just as important, for idealistic 

students with high educational debt, Section 4.01 

provides for forgiveness of remaining balances at 

the end of 10 years for borrowers who have made 120 

payments under IBR, ICR, or standard repayment 

while working full-time during that period in 

public interest jobs. 

 I have written an article describing the 

operation and great importance of these provisions. 

14 It will be published next month in the Hofstra Law 

Review and is available on the Web in draft form on 

the Georgetown University website, and on the 

Social Science Research Network website. 

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 The new law leaves open several questions, 

however. These are among the most important issues 

for negotiated rulemaking. 

 First, what types of work qualify as 

public service jobs? Some of the qualifying 

occupations are clear from the statute, including 

those in government and those in an employment by 
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non-profit organizations that are described in 

Section 501C3 of the federal income tax law. 

 But Section 4.01 appears to encompass 

employment in other jobs, well. For example, 

Section 4.01 appears to cover, “public service for 

individuals with disabilities, and jobs in 

‘emergency management,’ even if those employees are 

not working for the government or for 501C3.” 

 Those two types of employment are 

specifically covered in the catch-all clause at the 

end of 4.01, but all the other specific occupations 

in--listed in Section 4.01 must be dealt with by 

the regulators as well. 

 Similarly, prosecutors are specifically 

covered by Section 4.01 even if they do not work 

for the government. Does this mean that 

prosecutors, for example, who are working for an 

international criminal court or are employed by an 

international body are entitled to the benefits of 

this section? 

 Second, how many hours per week or in a 

month constitute full-time employment within the 

meaning of Section 4.01? 

 Third, if a borrower who wants to use the 
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public service forgiveness program consolidates an 

FFEL loan before beginning repayment into a federal 

direct consolidation loan, will the regulations 

characterize the federal direct consolidation loan 

as one that is made by the United States to assist 

the individual in attending an educational 

organization? 

 This is important because, if it is 

characterized that way, then Section 1.08(f) of the 

internal revenue code appears to exempt the amount 

of forgiveness for public service at the end of 10 

years from the gross income of the borrower. 

 Conversely, if such a consolidation loan 

is not regarded as fitting that category, only 

forgiveness on loans that were federal direct loans 

from the start will be tax exempt under section 

1.08(f) 

 That would provide a significant 

competitive advantage to loans under the federal 

direct loan program. There is no indication that 

enacting the College Cost Reduction and Access Act 

Congress intended such a distinction between the 

tax treatment of forgiveness--between FFEL loans 

that were consolidated into federal loans and loans 
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that originated as federal direct loans. 

 Fourth, are all lenders required to offer 

IBR repayment plans? If they are not, what must 

they do to disclose to potential borrowers that 

they will not be able to repay through this plan. 

 Fifth, if, as expected, Congress permits a 

married borrower to file a separate tax return and 

base IBR repayment on the borrower’s own income and 

debt, should married borrowers who use incomecontingent repayment and whose spouses are not also 

using income-contingent repayment, have the same 

opportunity to avoid a marriage penalty. The 

Higher Education Act only requires imputation of 

spousal income to borrowers who file joint tax 

returns, although the regulations that are 

currently in effect go beyond the necessary 

requirements of the ACT. 

 And finally, now should FFEL borrowers be 

notified of their right to consolidate their loans 

into a federal direct consolidation loan for the 

purpose of using the public interest loan 

forgiveness program? Can the procedure of 

consolidating be made as simple as possible? 

 Since months of employment in public 
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service already qualify for the 10-year period 

after which forgiveness will occur, an event that 

started on--a status that started on October 1s t , 

should the Department quickly adopt interim 

measures to facilitate consolidation with ICR 

repayment for those who are now in public service, 

and who want to begin repaying under the ICR 

formula immediately while waiting for IBR to take 

effect in 2009. 

 Thank you. 

 MR. BERGERON: Thank you. I don’t think 

we have questions. 

 I think we’ll go ahead and adjourn until 

1:00, when we will reconvene. 

 [Recess.] 

 MR. BERGERON: Good afternoon. 

 We’re going to reconvene the public 

hearing on negotiated rulemaking. 

 At the moment, we have no one who has 

requested time to speak. So, we are going to wait 

and provide opportunities for people to sign up, 

and then reconvene when there is speaker available. 

 Otherwise, we will just recess for a 

little while. 
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 [Recess.] 

 MR. BERGERON: At this time, I will close 

this hearing with respect to negotiated rulemaking 

and reopen, or meet again, on November 29t h in San 

Diego. 

 Thank you. 

 [Whereupon, at 4:01 p.m., the hearing was 

adjourned.]