November 5, 2009

Final HEOA Regulations Released

Final rules for changes required per the Higher Education Opportunity Act (HEOA) were published in the several editions of the Federal Register in the last week of October.

Perkins Loan, FFEL and Direct Loan Programs, among other topics, were addressed in Part III of the Oct. 29 Federal Register:

• The definition of totally and permanently disabled and substantial and gainful activity.
• Revision of the process for discharging a borrower’s Title IV loans due to total and permanent disability (TPD).
• Establishment of changes to conform to the borrower eligibility regulations needed to effectively implement the new TPD loan discharge process.
• Provisions regarding loan consolidation for FFEL loan borrowers who are active duty military service members.
• Information that must be disclosed to FFEL borrowers applying for a consolidation loan.
• Provisions regarding parent PLUS loan borrowers and deferments.
• Provision regarding capitalized PLUS loan interest.
• Provision that any FFEL or Direct Loan program loans held by military service members that were incurred before the service member entered military service are subject to the Service members Civil Relief Act (SCRA), which limits the interest rate on a loan to 6 percent during periods of active duty.
• Provision regarding in-school deferments based on confirmation of the borrower’s enrollment status through NSLDS.
• Information lenders must disclose to borrowers of unsubsidized loans at or before the time a deferment is granted.
• Revision of the definition of partial financial hardship.
• Eligibility specifications for teacher loan forgiveness (TLF).
• Provision that a borrower may not rehabilitate a defaulted FFEL or Direct Loan more than once.
• Addition of new prohibited and permissible activities by lenders and guaranty agencies.
• Addition of new disclosure requirements for FFEL lenders and reorganization of existing disclosures to accommodate new requirements.
• Information lenders are required to disclose at the time a borrower is granted a forbearance.
• Requirement that a FFEL school lender or eligible lender trustee (ELT) originating loans on behalf of a school must submit an annual compliance audit to the Secretary, regardless of the dollar volume of loans originated.
• Requirements for guaranty agencies to develop debt management information for rehabilitated borrowers and educational materials that provide budgeting and financial management information.
• Expansion of the information that a guaranty agency must provide to a borrower who is in default.
• Modification of the definition of estimated financial assistance.
• Modification of the list of prohibited activities to reinstate FFEL lenders and guaranty agencies’ eligibility to provide in-person entrance and exit counseling to borrowers.

Institutional and lender requirements relating to educational loans and other topics were addressed in the Oct. 28 Federal Register:

• Increase in the period used to calculate the cohort default rate (CDR).
• Expansion of exit counseling requirements in the Title IV, HEA loan programs.
• Expansion of entrance counseling requirements in the FFEL and Direct Loan programs.
• Addition to the conditions to which an institution must agree in its program participation agreement with ED.
• Required disclosures for education loan borrower by institutions of higher education and institution-affiliated organizations.
• Addition of reporting requirements for covered institutions and institution-affiliated organizations.
• Addition of information dissemination requirements for prospective and enrolled students regarding the terms and conditions of Title IV, HEA loans.
• Addition of disclosure to the Secretary of any reimbursements made to employees of an institution of higher education for service on advisory boards.
• Expansion of cancellation benefits for Perkins Loan borrowers.

Institutional eligibility and other related topics were addressed in the Oct. 27 Federal Register:

• Definitions of distance education, correspondence education, direct assessment program, teach-out plan and recognition.
• Implementation of several new requirements pertaining to distance education and correspondence education.
• Expansion of due process requirements for accrediting agencies.
• Requirement of accrediting agencies to confirm that institutions they accredit have transfer of credit policies.
• Requirements for accreditation team members regarding distance education.
• Requirement that accrediting agencies monitor enrollment growth at institutions they accredit.
• Expansion of accrediting agency disclosure requirements.
• Modification of record-keeping and confidentiality requirements.
• Establishment of the senior Department of Education (ED) official as the deciding official with appeal to the Secretary; provision of a list of various laws regarding public requests for information with which the Secretary must comply.
• Clarification of existing requirements related to substantive change and addition of flexibility to accrediting agencies in granting prior approval of additional locations under specified circumstances.

General Title IV and non-loan programmatic issues were addressed in Part II of the Oct. 29 Federal Register:

• Conditions under which students may receive up to two Federal Pell Grant Scheduled Awards during a single award year.
• Circumstances under which a TEACH Grant recipient may be excused from fulfilling all or part of his or her service obligation.
• Provision for institutions located in major disaster areas to make Federal Work Study payments to disaster-affected students.
• Revised definitions and terms relating to work colleges.
• Provision regarding on-campus housing facility requirements.
• Expansion of the list of hate crimes that institutions report to ED.
• Establishment of requirements under which an institution must readmit service members to the same academic status held when they last attended the institution.
• Inclusion of the definition of proprietary institution of higher education.
• Required plans institutions must develop to combat unauthorized distribution of copyrighted material and intellectual property.

Regulations in all four editions of the Federal Register are effective July 1, 2010. However, for regulations in the Oct. 28, Oct. 29 Part II and Oct. 29 Part III editions, the Secretary has determined that lenders, guaranty agencies or servicers may, at their discretion, choose to implement some new and amended provisions as appropriate. See the “Implementation Date of These Regulations” section in the Federal Register for further information.

OGSLP will continue to keep you informed about HEOA and other legislative activity. We encourage you to visit our Legislation Page often to view important updates and access more detailed information. If you have questions, please contact our Policy, Compliance and Training department at 405.234.4432 or pct@ogslp.org. We’re here to help!