Federal Agency Student Loan News
Department of Education
The Department announced a number of important new changes and programs in November, including:
1. Another round of negotiated rulemaking. The Department announced its intention to establish a negotiated rulemaking committee to address federal aid program integrity and improvement issues. Nominations for negotiators are due December 20, 2013 and the meetings are scheduled to begin in February. Tentative topics include: Cash management of federal aid funds (see NCLC comments and PIRG report on this topic); State authorization for programs offered through distance or correspondence education and for foreign locations (see NCLC report on state regulation of for-profit schools); clock to credit hour conversion; and the definition of “adverse credit” for PLUS loan borrowers (see our prior post on this topic).
2. Outreach on Income-Driven Repayment Plans. The Department announced that it has started contacting borrowers to inform them about the income-driven repayment plans.
3. Information about New Direct Consolidation Loan Process. The Department has terminated its contract with ACS (Xerox) and is in the process of transferring services previously performed by ACS, including the Direct Loan consolidation process. The Department has created a new direct consolidation loan system that will be phased in starting in January 2014. The new system will include an electronic five-step application. Stay tuned!
Consumer Financial Protection Bureau
2. CFPB Assistant Director and Student Loan Ombudsman Rohit Chopra’s Presentation at Federal Reserve Bank of St. Louis. The presentation includes updated numbers on student debt levels. The Bureau estimates that there is about $ 1,200,000,000,000 in student loan debt owed by around 40,000,000 Americans. Mr. Chopra focused on the wide ranging impact on rising student loan debt levels in other areas of the economy and also highlighted parallels to the mortgage market. In addition, he noted problems with student loan servicing in both the federal and private student loan markets. (The CFPB released its annual ombudsman report in October).
We will post new developments in future posts. You can also stay up to date by checking out the Department’s Information for Financial Aid Professionals web site and the CFPB’s Students and Young Americans web site.