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Joint Trades Letter re ED De-Regulation Effort
September 20, 2017
Ms. Hilary Malawer
U.S. Department of Education
400 Maryland Avenue, SW Room 6E231
Washington, DC 20202
RE: Docket ID ED-2017-OS-0074
Dear Ms. Malawer:
As the national trade associations representing the majority of student loan providers in the higher education finance industry, including those loan holders, servicers, and guaranty agencies in the Federal Family Education Loan (FFEL) program, we thank you for the opportunity to provide public comment and participate in accordance with Executive Order 13777, Enforcing the Regulatory Reform Agenda, in identifying regulations that may be appropriate for repeal, replacement, or modification. We applaud the Department for undertaking this important initiative. Our members understand the complexity of the federal student loan programs and the impact that they have on the ability of borrowers to successfully repay their student loans, as well as the importance of upholding the Department’s mission of protecting the federal fiscal interest. We hope that our attached recommendations can help on both fronts and are put forth in the interest of student borrowers.
Our detailed comments include several recommendations to improve and simplify benefits for eligible military servicemembers, improvements to the loan rehabilitation process to better ensure successful repayment post-loan rehabilitation, changes to certain Income-Driven Repayment provisions, and several policy clarifications and technical corrections. Five of the items (N. 1-5) were previously submitted earlier this summer by both the National Council of Higher Education Resources and the Student Loan Servicing Alliance as recommendations for additional agenda items to include in the upcoming negotiated rulemaking on Borrower Defense to Repayment.
The Department’s Regulatory Reform Task Force has been charged with providing recommendations on which federal regulations might be repealed or modified to give institutions of higher education greater flexibility while still protecting students. To this end, we continually hear that institutions would like to be able to provide more counseling to their students about available options to finance their postsecondary education, in regard to both federal and private education loans. Under the Higher Education Opportunity Act enacted in 2008, colleges and universities choosing to maintain a list of preferred lenders for private education loans must comply with a set of complicated disclosure and reporting requirements. These statutory requirements are set forth in regulation. Because of the rules, many schools have shied away from having preferred lender lists and largely ended counseling students and parents on various sources of educational loans, with the result being that students and parents do not learn about the availability of private education loans that may be less costly than federal student loans, particularly Grad PLUS and Parent PLUS loans. We recognize that the rules and regulations are largely reflected in the statute, however there are some areas where we believe the Department may have the flexibility to provide guidance to schools. We also look forward to working with the Department on the preferred lender list statutory issues as part of the reauthorization of the Higher Education Act.
Thank you again for the opportunity to provide public comment on the Department of Education’s regulatory reform agenda. We look forward to discussing the recommendations in greater detail with the relevant staff. If you have any questions, please feel free to contact any of the signatories to this letter.
Consumer Bankers Association (CBA)
Education Finance Council (EFC)
National Council of Higher Education Resources (NCHER)
Student Loan Servicing Alliance (SLSA)