PUBLIC SUBMISSION | As of: November 20, 2009 Tracking No. 80274866 Comments Due: August 13, 2007 |
Docket: ED-2007-OPE-0133
Title IV Loans
Comment On: ED-2007-OPE-0133-0001
Federal Perkins Loan Program, Federal Family Education Loan Program, and William D. Ford Federal Direct Loan Program
Document: ED-2007-OPE-0133-0060
Comment on FR Doc # E7-10826
Pocatello, ID,
Organization: Western Association of Financial Aid Administrators
August 9, 2007 Docket ID: ED-2007-OPE-0133
Ms. Gail McLarnon
U.S. Department of Education
1990 K. Street, NW, Room 8026
Washington, DC 20006-8542
Dear Ms. McLarnon:
The Western Association of Student Financial Aid Administrators (WASFAA) is an
organization that represents financial aid professionals from Alaska, Arizona,
California, Idaho, Nevada, Oregon, Washington, Hawaii, Guam, the Northern
Marianas Islands and the Freely Associated Nations of the Pacific. On behalf of
the more than 1500 members of WASFAA, we would like to submit the following
comments on the Notice of Proposed Rulemaking: Loans-34 CFR Parts 674, 682, and
685.
Loan Discharge for Disability (674.61 (b), 682.401 (c), 685.213)
Comment: The proposed changes that utilize the physician?s certification date
rather than the date of the onset of the total and permanent disability
condition as the trigger for providing loan discharge will effectively deny the
statutory relief authorized in section 437 of the Higher Education Act. The
return of payments from the date of the physician?s certification date will also
deny the recovery of ALL payments made on the loan from the date of onset of the
disability triggering the return of payments off of the date the physician
certifies the Total and Permanent Disability application.
Recommendation: The trigger should be the date of the onset of the disability
and not the date the physician certifies the Total and Permanent Disability
application
Comment: While the proposed 90 days for a borrower to submit a discharge
application to the lender after a physician has certified the borrower?s
application is more generous than the original proposed 30 day time span we feel
that there could be cases where setting a time limit could negatively hurt a
borrower.
Rationale: Because of medical reasons it might be difficult for a borrower to
put together the paperwork necessary. This may not be the top priority of
things to do when a dire medical event occurs and the borrower might be
incapable of managing their financial affairs for some time.
Recommendation: If the Department retains the 90day time limit some leeway
should be made for extenuating circumstances.
NSLDS Reporting (682.401 (b)(20)
Recommendation: Instead of changing the number of days from 60 days to 30 days
for a lender or guaranty agency to report information to NSLDS, 35 days should
be utilized.
Rationale: The timeframe of 35 days would be more reasonable to process and
submit accurate data and still be considered timely for the database
information. The 35 day timeframe would take into account the schools that
report on a monthly basis.
Electronic Signature on MPN (674.19, 674.50, 682.409, 682.414)
Comment: Agree that retaining original of electronic signed MPN for 3 years
after all the loans on the MPN are satisfied is sufficient. Although we believe
the term ?satisfied? should be more clearly defined.
Rationale: The proposed record retention period could be for a longer period
than possible for present reporting technology for retention of electronically
signed Master Promissory Notes.
Comment: The proposed regulation would require Perkins Loan schools to retain
records that show the date and amount of each disbursement for three years after
the date the loan is satisfied would impose new and significant burdens on schools.
Recommendation: Schools should be allowed to just describe the procedures that
a student would use to apply for a loan rather than providing the Department a
copy of each screen that appears for the borrower or other technical evidence to
support the validity or the authenticity of the electronically signed promissory
note.
Loan Counseling for Grad PLUS (682.603, 682.604(f), 682,604(g), 685.301, 685.304(a)
Recommendation: Agree that borrowers should be informed on their eligibility
for Stafford loans along with a comparison of the terms which should include the
differences in interest rates, grace periods and the fact that a credit check is
required for the Grad PLUS program.
Rationale: This is especially important when direct to consumer marketers and
electronic web site can guide students to less beneficial programs or provide
misinformation.
Prohibited Inducements (682.200, 682.401)
Comment: Agree that lenders should continue to be able to offer reduced loan
origination fees, offer reduced borrower interest rates and pay the federal
default fee.
Rationale: Students should not be negatively affected by the regulations on
inducements. The variety of offers by lenders provides borrowers a choice and
the opportunity to reduce the repayment burden. Many needy students are finding
grant resources inadequate and have had to turn to student loan programs more to
cover educational expenses. These needy students need to be encouraged to
continue their education to graduate and professional programs for a higher
skilled workforce by the offering of student loans with favorable terms.
Recommendation: The proposed regulation that would prohibit a lender and
guaranty agency from providing staffing services to a school other than on a
short-term, non?recurring emergency basis? would be more clearer stated that an
emergency ?cannot be an annual or recurring event?. The Department should not
limit an emergency to a declared natural or national disaster that affects a
school.
Rationale: An ?emergency? should encompass more than a declared natural or
national disaster. It could include an unexpected systems breakdown or a
breakdown in the awarding process.
Comment: We believe that lender advisory committees provided beneficial
training and exchange of knowledge for both lenders and school officials.
Schools were able to better understand the lender side of student loans and were
able to communicate which processes or products were or were not working. We
agree that direct compensation for participation should be prohibited, but
reimbursement by the lender for reasonable travel costs of school officials
should be permitted. This is provided for in the Senate reauthorization bill S.
1642.
Recommendation: Wording should be changed to allow travel and lodging costs
that are reasonable as to cost, location, and duration to facilitate the
attendance of school staff to participate in the activities of a lender?s
standing official advisory committee.
Comment: The preamble to section 682.200 (b) states the Department believes
that repayment incentive programs do not represent a prohibited inducement if
they are based on the borrower?s timely repayment of the loan and borrower?s
receipt of the benefit is not coincidental to the loan origination process.
This statement has no foundation in statute and the current statute provides the
ability for lenders to provide lower interest rates and origination fees for
borrowers with no reference to or requirement for timely repayment. The statute
also provides for federal loan forgiveness in FFLE, DL, and Perkins based on
service. Private lenders should maintain the right to assist students through
loan forgiveness programs for services such as academic achievement, disaster
assistance or other activities. Some loan providers have worked with the state
legislators to develop programs to assist either students in need or to address
various service shortages in their States.
Recommendation: The Department should clarify in the preamble that prohibited
inducements do not include borrower benefit programs or other loan forgiveness
or assistance programs for students for service, academic achievement, disaster
assistance or other activity not related to specific loan volume.
Capitalization (682.202(b)(3)
Comment: Agree that capitalization of interest on Consolidated Loans should be
limited to quarterly, except that a lender could only capitalize unpaid interest
that accrues during an in-school deferment at the expiration of the deferment.
Rationale: This regulation change would align the FFELP Program with the Direct
Loan Program and provide protection to all borrowers.
Discharge for Identity Theft (682.208, 682.211, 682.300,682.302, 682.411)
Comment: Agree that a lender should be allowed to grant a 120-day
administrative forbearance while it investigates a claim of identity theft but
suggest that the Department follow the provisions of the FACT Act to protect the
borrowers affected by identity theft
Rationale: This additional forbearance deferment would give the borrower a
chance to learn more about the issues and options they have as a victim of
identity theft.
Preferred Lender Lists (682.212, 682.401)
Recommendation: Agree that if the Department is requiring at least three
lenders that the lenders not be affiliated with each other. We understand that
that the Department is not proposing any exemption to the minimum of three
lenders but would recommend an appeal process for schools that might have
special circumstances.
Rationale: This would be similar to the appeal process used by schools that are
unable to meet the community service or reading tutor requirement of the Federal
Work Study program.
Recommendation: The definition of affiliated lender in 682.212 (h)(3) should
include lenders that are under the same ownership or control but not
relationships that involve only post disbursement servicing or secondary market
activity.
Rationale: This would create a burden on schools because they could not
monitor or know about forward purchase agreements.
Comment: The selection of lenders for the preferred lender lists is a very
small part of the heavy work load financial aid administrators perform. Our
day-to-day activities include administering the federal, state and institutional
loans, grants and scholarships and work study programs, assuring audit ready
files with almost no room for human error and keeping up with the trends and
regulation changes in the financial aid arena by reading, attending training
workshops/conferences or talking to our colleagues.
We hope that the regulation changes will not make providing a lender list to
student too burdensome for financial aid administrators or a project too fraught
with controversy that the list is dropped all together. As the Department
states a preferred lender list can help provide a source of useful, unbiased
consumer information that can assist students and their parents in choosing a
FFEL lender from the over 3,000 lenders that participate in the FFEL Program.
Again we may see the unintended consequences of the students being harmed not
helped. If the financial aid office cannot be utilized for knowledgeable and
experienced advice, students and parents will go to web searches or direct to
consumer marketers that may not have the best loan product, technical support or
customer service.
Benefits Must be the Same for All Borrowers (Preamble and 682.212(h)(2)(111)
Comment: The provision that a school recommend only lenders that provide the
same benefits to all borrowers at the school is in direct conflict with 427A(m)
of the HEA and long standing practice. Congress has provided specific benefits
to specific borrowers such as teachers teaching in certain subjects and at
certain schools. The provision is problematic in that there are those providers
that utilize tax exempt funding and are restricted to whom they may lend or
offer benefits to, such as residents of their state or borrowers in their
states. In this circumstance, a provider would not be able to offer the same
benefits to all students at a specific institution. States may allocate certain
funding for targeted programs and/or students in certain fields of study, or who
are at a specific level within their studies, or are from certain income
brackets. By targeting borrower benefit programs, lenders are better able to
serve the specific needs of various borrowers. Further, there are different
needs among students at a particular institution such as undergraduate and
graduate students.
Recommendation: We recommend that 682.212(h)(2)(111) allow an exception in
cases where a state program is providing targeted funding.
WASFAA developed these recommendations and comments with the assistance of the
WASFAA Federal Issues Committee and the input and approval of the WASFAA
Executive Committee. We would also like to state that we support the comments
related to the Perkins Loan Program that have been put forth by NASFAA and
COHEAO. We hope these recommendations and comments will be helpful in
determining the contents of the Final Regulations and appreciate the opportunity
to participate in the process.
Sincerely,
Doug Severs Tami Sato
WASFAA President WASFAA Federal Issues Co-Chair
Idaho State University Southern CA College of Optometry
P.O. Box 8077 2575 Yorba Linda Blvd.
741 South 7th Avenue Fullerton, CA 92831
Pocatello, ID 83209-0001 714/449-7447
208/282-2981 tsato@scco.edu
severdog@isu.edu