FSA Conference Welcome and Federal Updates
Editor's Note: For all NCAG Members who missed the Federal Student Aid Conference in December, this and the next few Blogs are offered.
[Summarized by NCAG Blog Editor, Melissa Brock; firstname.lastname@example.org]
As those of us who work in higher education can attest, we all want to be able to help families navigate the complexities of paying for college.
Richard Cordray, COO of Federal Student Aid in the United States Department of Education, began the FSA Conference welcome by saying that he believes that everything positive in his life can be traced back to his education: his wife and family, close friends, his career opportunities. He said, "None of it would have been possible without the educational keys in my pocket to unlock those doors." He spent years as a teacher himself and much of his service has overlapped with education policy and practice.
As the Ohio attorney general, Cordray represented the state's public colleges and the state department of education. As the first director of the Consumer Financial Protection Bureau (CFPB), he worked on consumer issues involving student loans, such as developing the paying for college scorecard, tackling abuses by pro-profit schools and trying to improve the Public Service Loan Forgiveness (PSLF) program.
He says that Federal Student Aid (FSA) is at the most consequential moment ever for the financing of higher education. Here's why and how we can work together.
Three Unprecedented FSA Challenges
The FSA faces three unprecedented challenges:
- Overhauling student loan servicing: Overhauling student loan servicing means that the FSA must have brand new performance and accountability standards and transfer approximately 15 million accounts between servicers.
- PSLF program changes: The PSLF program will execute on momentous changes in the PSLF program, which will lead to a huge expansion in the number of loans discharged for public service workers.
Return to repayment: The FSA will also navigate the return to repayment for tens of millions of student loan borrowers, whose payments have been suspended during the pandemic for almost two years now.
The Federal Student Aid programs are also facing an array of changes. These range from a constant process of evolution and FSA's own operational approach to new legislative measures.
FSA's modernization efforts:
Updating information technology and front-end systems is essential. Customers and partners need to be able to rely on its infrastructure.
Customer and school partner experience:
On the customer experience side, FSA has unveiled a set of improvements under what it calls the Next Generation Digital and Customer Care, or Next Gen DCC. This started with an overhaul of public-facing products, such as the FAFSA form, the studentaid.gov website and the myStudentAid mobile app. They've introduced improved tools like Loan Simulator, the Aidan virtual assistant, the PSLF Help Tool and the new Federal Student Aid Estimator. These innovations enhance the customer experience to foster greater awareness of financial aid from start to finish.
Rethinking the Customer Experience
In addition to these new and improved resources to improve customer experience, FSA is rethinking its approach to borrower complaints and feedback. FSA is doing it on the front end through a feedback center and through streamlined reporting processes and organizational realignment.
The FSA Ombudsman and her group reports directly to Cordray, which underscores a commitment to resolving concerns that customers bring to FSA's attention. Everyone (including you!) needs to join in these efforts and collaborate to identify customer problems.
Modernizing Digital Platforms
FSA Partner Connect represents a major investment in working closely with you to maintain responsible stewardship of the Title IV programs. It has streamlined disparate websites and features into one website, which provides an integrated modernized digital platform to make your jobs easier so you can focus on serving students.
Partner Connect includes the Knowledge Center, the Federal Student Aid Handbook, personalized dashboards, a studentaid.gov student view and more. The current version of Partner Connect reflects the input from you and other stakeholders to identify pain points and areas of improvement, including through the partner experience council.
The FSA acted on your invaluable feedback and your engagement so far is impressive. More than 600,000 users have logged over 1.7 million sessions on Partner Connect. FSA will continue to deliver new and enhanced features moving forward. FSA welcomes your feedback about how the website is working and how to improve it.
The National Student Loan Data System (NSLDS) website, with its massive repository of Title IV-related data, will move into a secure cloud environment. Among other things, this investment will enable FSA to improve the user interface and leverage real-time data.
FSA is committed to implementing rigorous safeguards to protect student data but FSA needs your help as well.
The hackers, fraudsters and scammers energetically pursue their malicious ends. We need to communicate with one another to outpace them and be better prepared to mitigate future cyber incidents.
In September, Cordray's team presented its most requested conference session, the federal update, as a live webinar and is available on the FSA training site at fsatraining.ed.gov. Other popular topics, such as the return of Title IV and verification, will also be presented this way.
FUTURE Act and FAFSA Simplification Act
The 2019 FUTURE Act and FAFSA Simplification Act represent a complete overhaul of how everyone delivers federal student aid and how the process works for the approximately 19 million students and families who fill out the FAFSA form each year. The scope of the changes and scale of the work means that activating these new laws is quite complex.
The FUTURE Act authorizes FSA to engage in data matching with the IRS to streamline the process of FAFSA verification, which we know is challenging for many families and many school officials. During the pandemic, the FSA has been rethinking how it handles the verification process and this remains a work in progress. There's value in automated data sharing that will reduce the burdens of manual verification at the level of individual schools to help ensure that FAFSA forms are filed correctly. It's important to root out the potential for fraud without making the process so oppressive that it reduces student participation and burdens school officials who could be doing other useful things.
FAFSA Simplification Act
The FAFSA Simplification Act is an overlapping challenge. The process by which the federal government delivers more than $115 billion in federal student aid each year is due for a refresh. Congress recognized that in passing this new legislation. Most notably, it will reduce the complexity of the form, dramatically reducing the number of data fields that must be completed. FSA needs to replace a computer mainframe system that is 45 years old that runs on antiquated processing and uses the COBOL computer language. People have "nursed" the old system along for many years, but it's time for a change. They're committed to moving as quickly as possible but not at the expense of thorough and successful implementation.
FSA has started the process to repeal the Subsidized Usage Limit Applied at calculation, known as SULA, which has the effect of expanding access to subsidized loans and relieving some administrative burden on you and your schools.
In addition, FSA has provided guidance for removing consequences associated with drug convictions or failure to register with the Selective Service System on the FAFSA. Changes of this magnitude take time, and they will be careful to get them right. The top priority is making sure students and their families have reliable and uninterrupted access to the financial aid they need to achieve their higher education goals. They will keep everyone apprised of their progress, such as the transition from the expected family contribution (EFC) to the Student Aid Index.
One last point of concern about the FAFSA process: Thousands of schools have noted the negative effects of the pandemic on enrollment. The U.S. saw a slight decline in 2020, which was understandable enough given the novel challenges everyone was confronting. But now the early data from this year on FAFSA completion suggests that the downward trend is continuing and it is significant.
FSA has also seen a decline in federal Pell Grant disbursements and widespread enrollment declines at many colleges and universities nationwide, especially at two-year institutions.
Cordray said, "This is a serious problem for all of us. We cannot afford more cohorts of high school graduates who are somehow failing to move into the next stages of higher education. Our population has a certain amount of potential and education is a key means of realizing that potential and building a stronger America. The issues here are complicated and there are no easy answers to dealing with broader societal phenomena."
He added, "We will be monitoring the data closely to call out the trends we see unfolding in the months and years ahead but we also need your help. If you have ideas about what we at FSA can do to address this problem of declining enrollment, or what you can do, or what is causing the declining numbers, please reach out to us at FSAFeedback@ed.gov. Push your state officials to change state law so that it mandates FAFSA completion as a requirement for high school graduation. Seven states have done this already. Don't let the young people in your state fall behind. We've developed a how-to kit that you can use to advocate for this change in state law, and we urge you to make it happen."
The relationship between institutions and the FSA is a two-way street.
"I've talked a lot about how we can support all the many schools under our purview, whether they are public or private, for-profit or nonprofit, community colleges, vocational programs and the like with substantial federal aid funding. We intend to be careful stewards of taxpayer money. Our support for schools must be balanced by our responsibility to engage in effective oversight," Cordray added.
FSA has strengthened accountability and performance expectations for student loan servicers, which will benefit students, borrowers and their families. The new servicer contracts include metrics and penalties to make sure that calls are answered in a timely manner and other basic performance standards are met. The same goes also for the schools financed through Federal Student Aid.
FSA will not tolerate schools that pose risks to students and taxpayers including infractions such as borrower defense to repayment, false certification discharge and closed school discharge. To accomplish this, FSA will work closely with colleagues in the department, with partners such as the Federal Trade Commission, the CFPB, the Department of Justice and Treasury and with state partners.
FSA is sharing information to team up on the supervision of student loan servicers and schools. This joint oversight is intended to eliminate practices that do not serve students or abuse the trust of taxpayers. The FSA will tailor its oversight of schools to focus on areas of heightened risk, such as situations of rapid growth, financial irregularities, high cohort default rates or spikes in student complaints.
When FSA suspects that measures are being taken to thwart oversight, such as the conversion of schools from for-profit to nonprofit status or some changes in ownership, FSA will scrutinize these actions very carefully. It will also take pains to share information with you publicly about oversight activities and will make it a point to let all the other schools know what they need to avoid if they're to remain in compliance with the law.
Student Loan Forgiveness
Student loan forgiveness falls into three different but related topics: general loan forgiveness, targeted loan forgiveness programs and return to repayment.
"Many people have a great deal to say [about general loan forgiveness], but as the chief of FSA, I do not. Instead, it is a decision for the White House to make. Whatever they decide, FSA will faithfully implement," Cordray said.
Target Loan Forgiveness Programs
Targeted loan forgiveness programs are a different matter altogether.
"We are deeply involved in several areas here. During the summer, the department announced more than $5.8 billion of total and permanent disability discharges would be granted to several hundred thousand borrowers with a data match with the Social Security Administration. We are working to make that happen. The department has also announced multiple rounds of borrower defense discharges for students who have been victimized by failed for-profit schools and we're executing on those discharges as well. Recently, the department announced dramatic changes to the Public Service Loan Forgiveness program. As you know, PSLF has been a hot topic in recent years and a source of frustration for many borrowers," said Cordray.
PSLF will reach a broader audience of qualified borrowers, most notably, Federal Family Education Loan (FFEL) program borrowers who had previously not received any credit for years of payments made on these loans. The goal is to deliver on the core promise of full loan forgiveness to public servants, service members, teachers, nurses, police officers, firefighters and others. More people will see their loans move forward to that magic 10-year mark to discharge their loans.
FSA is hard at work to carry all this out. With all of these opportunities for student loan relief, FSA asks for your help in spreading the word. Visit studentaid.gov/announcements for the latest news.
Return to Repayment
"This is the most pressing issue we face right now. Tens of millions of student loan borrowers have had their loan payments suspended by the pandemic. Most have made no payments since March 2020," said Cordray.
After multiple extensions of the payment pause, the final date to return to repayment has been reset for May 1, 2022. FSA plans to support borrowers and their families with clear communication with an emphasis on execution by student loan borrowers.
FSA will:Execute a communications campaign that includes a series of email communications that will go directly to borrowers.
Offer general awareness messaging on various forms of social media.
Send out paid search ads, which will advertise federal student loan resources and information within the results of internet search engines and work with groups of all kinds, community groups, alumni associations, labor unions, professional organizations.
FSA is informing borrowers about their options, such as signing up or renewing their enrollment in our auto-debit program which is the easiest way to make their monthly payments. FSA is also encouraging borrowers to apply for income-driven repayment plans if they need help making their monthly payments more affordable.
The FSA cannot do this alone, Cordray said. "We need strong partners like you to be effective. You did not want to see your cohort default rates spike because borrowers are confused or reluctant to start repaying the loans again, some of them for the first time ever. It is not a positive for any borrower to slip into delinquency and then default, regardless of the reasons. We need all of you to help people get this right."
Finally, he added that there's nothing abstract about the challenges we face.
"We share the goal of helping more young people seize the same opportunities to learn and grow and flourish. We can change the trajectory of their lives by helping them realize fulfilling and productive careers. If we can do that, we also will strengthen the capacity of American society to meet the global challenges that we face today and in the coming years. As each student succeeds, we all succeed. This idea is ingrained in the mission of FSA, which is at its core to enable the American dream, so that is what we must aim to do together."
The federal update as part of the 2021 FSA Conference included several "legs," including negotiated rulemaking topics, policy updates, statutory changes, distance education and innovation regulations, COVID-19 relief for student borrowers and operational updates and reminders.
Negotiated Rulemaking Topics
Generally, negotiated rulemaking topics include affordability of postsecondary education, institutional accountability and federal student loans, with the following topics:
Changes of institutional ownership
Certification procedures for participation in Title IV programs
Ability to benefit
Total and Permanent Disability (TPD) loan discharge
Closed school loan discharges
Loan repayment plans
Loan discharges for false certification of student eligibility
Public Service Loan Forgiveness (PSLF)
Mandatory pre-dispute arbitration and prohibition of class-action lawsuits provisions in institutions' enrollment agreements and associated counseling
Pell Grant eligibility for prison education programs
Policy updates include:
GEN-21-02: Professional Judgment Guidelines: Provides financial aid administrators with the authority to use professional judgment on a case-by-case basis to adjust the cost of attendance or the values of the data elements used in calculating the expected family contribution (EFC) to reflect a student's special circumstances.
GEN-21-07: Audit Supplemental Schedule: Must include a Financial Responsibility Supplemental Schedule as part of any audited financial statements submitted to the Department of Education on or after July 1, 2020.
GEN-21-08: Name, Image and Likeness: The National Collegiate Athletic Association (NCAA) announced an interim policy effective July 1, 2021 that allows student athletes to receive remuneration for the use of their name, image and likeness.
GEN-21-05: Verification Waiver: Relief from all verification requirements for the 2021-22 award year, except for Identity/Statement of Educational Purpose and High School Completion Status under Verification Tracking Groups V4 and V5.
GEN-21-05: Verification Changes: Removed high school completion status as a verification item under the V4 and V5 tracking groups starting with the 2022-2023 FAFSA processing year.
Statutory changes include the following:
Fostering Undergraduate Talent and Unlocking Resources for Education (FUTURE) Act: The FUTURE Act authorizes direct data exchange with the IRS through the FAFSA, income-driven loan repayment plans and total and permanent disability (TPD) loan discharges.
Consolidated Appropriations Act: This act included the FAFSA Simplification Act, which will significantly alter the need analysis formula and full implementation requires a broad redesign and overhaul of department's systems.
Distance Education and Innovation Regulations
Allowed students at eligible foreign institutions to complete up to 25% of an eligible program at an eligible U.S. institution and added additional flexibility in demonstrating a reasonable relationship between length of the program and licensure requirements.
COVID-19 Relief for Student Borrowers
Limited Public Service Loan Forgiveness (PSLF) Waiver: For a limited period of time, borrowers can receive credit for past payments made on loans that would not otherwise qualify for Public Service Loan Forgiveness (PSLF). Past payments on any repayment plan (not just income-driven repayment plans) will count toward loan forgiveness. Past ineligible loan payments (due to incorrect repayment plans or ineligible loans) may count toward 120 total payments.
Return to repayment four-part plan: To achieve a smooth transition that minimizes errors or borrower impacts due to confusion, lack of awareness or a change in life circumstances, FSA plans to provide outreach and support to borrowers to ensure that they have information and resources necessary to help them manage their repayment obligations. The goal is to minimize borrower delinquency and maximize a successful repayment experience.
Communications will be proactive, continuous and targeted and ongoing effort combines FSA and loan servicer resources to reach borrowers with the right message at the right time.
Reducing delinquency: Enterprise approach to reducing delinquency.
Meet customer service expectations: Continue proactive communications to drive early engagement and establish call center performance levels.
Monitoring and oversight: Multiple layers of monitoring, oversight and inspection: Robust reporting requirements along with operational monitoring/analysis and risk analysis.
Operational Updates and Reminders
The federal update ended with specific operational updates and reminders, including the following information:
Title IV Program Appropriations Difference from 2020:
Federal Pell Grant: +$2.1 billion
Maximum Pell Grant: +$150
FSEOG: +$15 million
Federal work-study: +$10 million
Operational updates also included federal loan origination fee changes, unemployment benefits under the American Rescue Plan, possible inaccurate reporting of AGI for some applicants and parents who used the IRS Data Retrieval Tool (DRT), reporting an AGI of $1.
In addition, designated entities were also discussed that could use FAFSA data for a specific non-Title IV purpose: U.S. Department of Agriculture for the Supplemental Nutrition Assistance Program, Federal Communication Commission for the Emergency Broadband Benefit program, the U.S. Department of Health and Human Services for individuals to purchase health insurance through the Marketplace, the U.S. Department of Labor for the Pandemic Unemployment Assistance (PUA) program and the U.S. Department of the Treasury for the Child Tax Credit (CTC) and economic impact payments.