February 21, 2008
2007-2008 Negotiated Rulemaking Update
As reported in the January 31, 2008 Legislative Update, negotiated rulemaking is underway for both the Teacher Education Assistance for College and Higher Education (TEACH) Grant program and Student Loan (other Federal student aid programs authorized by Title IV of the Higher Education Act) teams.
Department of Education (ED) officials expect to issue a Notice of Proposed Rulemaking (NPRM) - reflecting the regulatory language negotiators agree to - in the Federal Register by mid-March. The second round of negotiated rulemaking for the Student Loan team concluded on February 6. The final round of negotiations is scheduled for March 4-6.
Highlighted below are some issues discussed in the second round of the negotiated rulemaking session:
Income-Based Repayment Plan (IBR) - Determining if a zero calculated payment qualifies as a payment toward loan forgiveness after 25 years is a significant issue. ED's position is that a zero calculated payment would be allowed, but would not qualify for loan forgiveness after 25 years. ED contends that a zero calculation is a suspension of payments and not a payment. Some non-federal negotiators believe that a zero calculated payment is a payment and should count, because such a payment is counted in the Direct Loan Program's Income-Contingent Repayment (ICR) plan.
Economic Hardship Deferment - Discussions focused on how the loan holder would verify a borrower's family size, since the exemptions listed on a federal income tax return may not be an accurate reflection of the filer's situation. ED's position is that validation of family size should mirror the verification process; the loan holder should require borrowers requesting an economic hardship deferment to complete a worksheet certifying their family size. Negotiators reached a tentative consensus on this issue.
Public Service Loan Forgiveness Program - ED proposed that "full-time" be defined as a minimum of 36 hours per week in qualifying employment and is seeking suggestions for other hour-based standards. ED also proposes that a zero payment does not count toward the 120-payment requirement as suggested in the IBR discussions. ED noted during discussions that most borrowers, unless they are under an extended repayment plan, IBR, or ICR, will not significantly benefit from this program.
Higher Education Relief Opportunities for Students Act of 2003 (HEROES) - ED originally intended to use the negotiated rulemaking process to draft regulations that coordinate all HEROES waiver benefits, so borrowers would have the best options available to them. The proposed draft regulations do not incorporate the waivers authorized by HEROES since a notice was published in the Federal Register extending the HEROES waivers for five years. ED intends to wait for the outcome of the Higher Education Act reauthorization before codifying HEROES waivers, because additional changes to legislation have been included.
Federal Preemption - ED has yet to provide draft regulations on federal preemption, which was listed on the original Student Loan team agenda.
For more information about negotiated rulemaking, click here.