Federal Updates

Neg Reg: Two down, one to go

Since our last negotiated rulemaking (Neg Reg) update (see Shoptalk Online edition 493), Teams I and II have completed the second round of meetings on the loan-related topics under discussion this year. Following the first meetings held in late February, ED developed and distributed draft regulatory language to the non-federal negotiators for their review. Much of the second round of meetings was spent discussing those draft regulations in efforts to reach agreement, or consensus, on the language and intent of those regulations.

Team I (Lender/General Loan Issues)
Team I made significant strides toward reaching consensus on its agenda topics. While ED declined to add several agenda items suggested by non-federal negotiators — due to the proposed issues being unrelated to the Higher Education Opportunity Act (HEOA) — it did include a new item intended to address outstanding concerns on determining Partial Financial Hardship for the purpose of the Income-Based Repayment (IBR) plan. Other outstanding issues include FFELP and Direct Loan Teacher Loan Forgiveness, loan discharges based on Total and Permanent Disability, required education loan borrower disclosures by FFELP lenders, and consumer credit reporting after loan rehabilitation and eligibility for loan rehabilitation.

Team II (School-Based Loan Issues)
Team II made progress toward reaching consensus as well, although several important issues remain unresolved, including cohort default rate calculation, institutional eligibility, and default prevention plans; required disclosures for covered entities; and Program Participation Agreements: preferred lender lists. As with Team I, ED declined to add several agenda topics proposed by the non-federal negotiators because they were outside of the scope of the current negotiations.

Team II participants benefited from the insights of two guest speakers during the meeting: ED's Robert Shireman, senior advisor, briefed the group on the afore-mentioned changes to the Perkins loan program; and Brent Lattin, senior attorney with the Federal Reserve System, discussed proposed rules pertaining to the Truth in Lending Act (see Shoptalk Online edition 497) and how they may interact with issues under discussion during Neg Reg.

What's next
Team I and Team II will hold their third and final negotiating meetings May 4-8. Some time after that, proposed rules for both teams will be published in the Federal Register for public comment as a Notice of Proposed Rulemaking. After public comments have been received and reviewed, final rules will be published in the Federal Register. Shoptalk Online will keep you informed as these events occur.

More information
For meeting agendas and proposed regulatory language, please visit ED's HEOA Neg Reg website at www.ed.gov/policy/highered/leg/hea08/index.html#neg-reg. This page also includes information about the activities of Teams III, IV, and V (Accreditation, Discretionary Grants, and General and Non-Loan Programmatic Issues, respectively).

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ED releases Volume 2 of the 2009-10 Federal Student Aid Handbook

ED has published Volume 2: School Eligibility, of the 2009-10 Federal Student Aid Handbook (FSA Handbook). TG will make Volume 2 available on TG Online at www.tgslc.org/resources/fsa_handbook.cfm. Other volumes will be posted as they are released. Once all the volumes of the 2009-10 FSA Handbook have been released, TG will provide a single downloadable file encompassing all of the volumes.

For more information
Watch future editions of Shoptalk Online for details. Volume 2 is also available on the Information for Financial Aid Professionals (IFAP) website at http://ifap.ed.gov/fsahandbook/0910FSAHbkVol2.html.

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New resources provide help in understanding PLUS auction and IBR

TG is pleased to inform its customers about two new resources available for schools, lenders, and servicers that address questions and concerns about the Competitive Loan Auction Pilot Program (PLUS auction) and the Income-Based Repayment Plan (IBR).

PLUS auction Q&As
Although Congress is considering a postponement of the auction program until July 1, 2010 (see Shoptalk Online edition 497), at this time the auction is still scheduled to proceed, with winning bidders to be announced on April 24. To assist the financial aid community in preparing for the program, should it be implemented this year, ED has released an Electronic Announcement (E-ANN) that includes 35 Q&As on the auction program. The Q&As include some information of particular note:

Q&A 4:
Are parent PLUS loans made under the auction program eligible for the Department's 2009-10 loan purchase programs (Loan Purchase Participation Program and Loan Purchase Commitment Program)?

Yes, if the loans are otherwise eligible, they may be part of the Department's 2009-10 Loan Purchase programs.

Q&A 14:
For a dependent student to be eligible for additional unsubsidized Stafford loans for a loan period that begins on or after July 1, 2009, as a result of a new parent PLUS applicant's denial, must the denial come from one of the lenders that has PLUS Auction rights in the State?

Yes, the denial must be from one of those two lenders.

Q&A 17
When determining if a PLUS borrower is a "new" borrower, do lenders need to take into consideration the dependent student for whom the parent is borrowing? For example, if a lender currently has loans for a PLUS borrower with dependent student "A" and that same PLUS borrower applies for a PLUS loan after July 1 for dependent student "B," given that the borrower is not a "new" borrower, would the new loan fall under the PLUS Auction program or under the PLUS program as it exists today?

No, only a new parent borrower in the PLUS program would be a borrower under the PLUS Auction program. A new borrower is one who, prior to July 1, 2009, had not borrowed a parent PLUS loan for any dependent student. The borrower in this example would not be considered a new borrower and would continue to borrow under the current PLUS program.

The E-ANN and complete Q&A document are available online at http://ifap.ed.gov/eannouncements/03309RespQuestParentPLUSAuction.html.

As always, Shoptalk Online will keep readers informed of any changes to the PLUS auction as details become available.

IBR Q&As
The National Council of Higher Education Loan Programs (NCHELP) has published a collection of 54 Q&As about the new Income-Based Repayment (IBR) Plan, which will become available to borrowers on July 1, 2009. The Q&As are based on a recent IBR webinar hosted by NCHELP. The slides for that webinar are also available at the link below. Here is a sample of the topics covered in the Q&As:

Q&A 1
If a married couple without other dependents files separately, would the family size be one or two?

The family size would be two.

Q&A 4
[If a borrower leaves IBR] does the borrower need to pay or be billed for at least one installment of the Expedited-Standard before switching to another payment plan?

Yes.

Q&A 15
If the customer comes out of IBR and we recalculate their payment, can it be higher than the payment amount before IBR?

Yes, especially since the IBR months used will have counted against the maximum repayment months available.

The Q&As are posted to the NCHELP IBR Initiatives page at www.nchelp.org/pages/page.cfm?id=143. While the Q&As include a wealth of information applicable to lenders and servicers, we encourage schools that are interested in learning how to educate students on this new program to register for the upcoming NCHELP Webinar, "An Introduction to IBR for Schools" (scheduled for April 9, 1:30 p.m. - 3 p.m., CDT). Registration for this free webinar is available at http://event.on24.com/r.htm?e=140203&s=1&k=1FF8EB53F071C630D95AF905210B7D53.

More information
For questions about the PLUS auction or IBR, please contact TG customer assistance at (800) 845-6267, or send an message to cust.assist@tgslc.org.

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