Final Observations from the 2014 FSA Conference

The final two days of the 2014 Federal Student Aid Conference contained a full slate of training and information sessions hosted by the Department of Education.

On Thursday I attended a breakout session discussing the Department's financial literacy resources. Representatives from the Department shared interesting data regarding the general level of financial knowledge possessed by postsecondary students. For example, the Department's studies indicate that students often borrow more than they expected, and that if they could do things over again they would borrow less and begin making student loan payments while still in school. The speakers emphasized three key concepts that students should understand - budgeting, borrowing and repayment strategies. The Department has a variety of financial awareness counseling tools available to students and schools. These include the Financial Awareness Counseling Tool (FACT), a repayment estimator (www.StudentAid.gov/repayment-estimator), and a Financial Aid Tool Kit (www.financialaidtoolkit.ed.gov).

The Conference included a breakout session explaining the gainful employment program disclosures. The Department representatives reminded attendees that the gainful employment disclosure requirements are already in place. The federal court decision from 2012 that vacated most of the prior gainful employment regulations left intact the program disclosure requirements.

Schools are required to continue making their gainful employment disclosures in accordance with the current regulations until December 31, 2016. The information to be disclosed includes:

•       Occupations

•       Normal time to complete program

•       On-time graduation rate for completers

•       Tuition & fees, books & supplies, room & board

•       Placement rate for completers (as determined by State or Accreditor methodology)

•       Median loan debt

•       Other program information provided by the Secretary

The Department provides a gainful employment template that schools are required to use in making these disclosures. The Department released an updated disclosure template in September 2014.  Schools have until January 31, 2015 to update their gainful employment disclosure statements with information from the 2013-14 award year.

The speakers reminded attendees that the gainful employment program disclosures must be included in all promotional materials about such programs. Promotional materials include invitations, ads, course catalogs, social media, etc. that mention or otherwise refer to a specific gainful employment program. If it is not feasible to include the template, then schools must include a live link or URL to the materials and clearly explain what is available at that Web page.

The Department is working on the transition from the current disclosure requirements to the requirements of the final regulations issued on October 31, 2014. The effective date of the new disclosure requirements is January 1, 2017, which gives the Department time to conduct consumer testing and prepare a new disclosure template.

I next attended a breakout session addressing schools' compliance requirements related to Clery Act reporting. This included a review of the schools' annual security report requirements. The speaker emphasized that  the annual security report is more than just the disclosure of the yearly crime statistics. The report must include three year's of campus crime statistics, include all required campus safety and security policies and procedures, and be distributed annually to all students and current employees.

The speaker also discussed schools' obligations under the Violence Against Women Reauthorization Act of 2013 (VAWA). The new law requires expanded reporting for incidents of sexual assault, dating violence, domestic violence, and stalking (including cyber-stalking). The law also requires that the annual security report include additional information about policies, procedures, and training programs aimed at sexual assault prevention and response. New programmatic and training requirements include awareness campaigns, primary prevention, risk reduction and bystander intervention, and specialized training for adjudication officials. This session ended with a discussion of the requirement for schools to certify that they have developed and implemented a drug and alcohol abuse education and prevention program.

My attendance at the 2014 FSA Conference concluded by attending the Birds of a Feather session for for-profit institutions. This was a question-and-answer session with Department representatives and conference attendees representing for-profit institutions.

As one might expect, most of the conversations centered on the new gainful employment regulations. Some participants asked whether the Department might grant any exceptions or perhaps conduct more program reviews as an alternative to the new regulations. The Department’s response was essentially that the regulations are now final, and schools will be expected to comply under the letter of the regulations. The Department representatives also emphasized the necessity of schools to begin compiling their data as soon as possible to that the student information is timely reported to NSLDS by July 31, 2015.

The Department representatives indicated that additional guidance of interest to for-profit schools will be coming soon. This includes updates to the Clery Act handbook to provide additional information to schools as they work to implement the new disclosure requirements related to VAWA. School representatives suggested that the Department provide additional educational opportunities such as specific Title IX training, and Department representatives seemed receptive to this idea.

In summary, it was a very educational week in Atlanta. It will be interesting to see how many of these issues evolve over the coming weeks and months, particularly as it pertains to gainful employment reporting and compliance.

Notes from Day 2 of the US Department of Education 2014 FSA Conference

Conference Day 2 began for me with a breakout session addressing the process for reporting gainful employment information to the National Student Loan Data System (NSLDS). As mentioned in yesterday's posting, most schools will be required to report six years worth of student gainful employment data to NSLDS by July 31, 2015. Department representatives stated that NSLDS will be open for reporting in early 2015. When questioned if there might be an extension of the July 31, 2015 due date, today's speaker emphasized that the Department believes there is plenty of time for schools to gather and submit the data by this deadline.

Schools are required to only submit data on students enrolled in a gainful employment program, and only data on students who are Title IV aid recipients. Data that schools reported to NSLDS in 2011 pursuant to the prior gainful employment regulations will not be available to reuse. Student financial data to be reported to NSLDS includes private loan amounts, institutional debt, tuition and fees, and allowance for books, supplies and equipment as included in the school's cost of attendance. Schools are not required to submit student Title IV loan information because that information is already in NSLDS. Schools will be able to submit gainful employment data online by either individually entering student data or submitting an Excel spreadsheet template. Schools will also have the option to submit data through batch processing.

The Department is still working on a number of details connected with this data collection process. Attendees were told to expect an updated NSLDS Gainful Employment User Guide and an updated Gainful Employment Instruction Guide and Submittal Template in early 2015. The Department also indicated that they will be hosting webinars in 2015 to assist schools in complying with this data submission.

Next I attended the breakout session regarding the cohort default rate (CDR) challenge and appeal process. After an overview of the CDR process and reports available to schools through NSLDS, the Department representatives described the process for filing CDR challenges, adjustments and appeals. These include incorrect data challenges, uncorrected data adjustments, loan servicing appeals and erroneous data appeals. The Department representatives emphasized the need for schools to understand the timing deadlines for submitting challenges or appeals. If the challenges or appeals are not submitted within the established timelines then the Department will not consider the merits of the school's claim.

Today's speakers also addressed the issue of loan servicer appeals. In general, schools can challenge the inclusion of a student in its CDR if the student's loan was improperly serviced. However, the minimum loan servicing standards for CDR appeals purposes is very low. In general, a loan will be considered improperly serviced only if the borrower made no payments on the loan and the servicer failed to attempt one phone call, failed to send a final demand letter, and failed to perform skip tracing. Today's speaker emphasized that it is very unlikely that a federal loan servicer did not meet these minimum servicing requirements.

This afternoon’s breakout sessions included a big-picture overview of the various federal student aid systems. The major federal student aid systems include the Central Processing System (CPS), Common Originating and Disbursement (COD), the National Student Loan Data System (NSLDS), Grant Management System (G5), the Student Aid Internet Gateway (SAIG) and the Postsecondary Education Participants System, among others. Today’s presentation offered a general overview of these systems and how they relate to each other. The presentation materials would be a valuable tool for schools to use for purposes of introducing new financial aid administrators to the various financial aid systems.

Today’s sessions ended with an open forum. The purpose of the open forum is to allow participants at the conference to ask specific questions to a panel of Department officials. During today's session, Department officials indicated that they are working on guidance to provide schools with additional flexibility in the loan counseling process. While it is important to note that this guidance is not finalized, the proposal discussed would allow schools to require that students prepare a personal financial budget as part of the entrance counseling process. Schools could not use these budgets to make determinations that would limit loan disbursements.  However, schools could use the budgets as a tool to counsel the students in an effort to educate them as to an appropriate amount of debt for their education. Another interesting development mentioned by Department officials was the creation of a multi-regional team to work with corporate owned school systems with schools located in different regions of the country. The Department’s goal with this new multi-regional team is to promote consistent treatment of all schools within the same ownership group regardless of their location.

The Department’s PowerPoint presentations for all the sessions from the 2014 FSA Conference, including the sessions described above, can be downloaded from the FSA Conference website.

Notes from US Department of Education 2014 FSA Conference - Day 1

I am in Atlanta this week to attend the U.S. Department of Education's annual Federal Student Aid Conference. The conference offers over 50 educational training and information sessions hosted by the Department.

The Conference traditionally begins with a welcome and federal update presented by top Department officials. Today's session included general remarks from Ted Mitchell, the Under Secretary of Education. Dr. Mitchell discussed the Department's general goals as it relates to the accessibility and affordability of higher education. This included an overview of President Obama's higher education initiatives of paying for performance, promoting innovation and competition, and ensuring that student debt remains affordable.

The federal update session included a general overview of the new gainful employment regulations that affect nearly all proprietary schools and non-degree programs at public and non-profit institutions. The Conference will include more detailed information and training during various breakout sessions. However, one point emphasized during today's general session was that schools will need to submit six years worth of student gainful employment data to the Department by July 31, 2015. Even though the gainful employment regulations do not go into effect until July 1, 2015, the Department official today made it clear that schools should be working now to collect and assemble this information so that they can meet this reporting deadline.

After the opening remarks and general update I attended the breakout session regarding consumer disclosure requirements. Of particular interest was the Department's list of the most commonly cited findings related to consumer disclosures. These included:

• Annual Notice of Consumer Information
• Drug and Alcohol Abuse Prevention
• Annual Notification of FERPA Rights
• Voter Registration Information
• Copyright Infringement
• Gainful Employment Disclosures
• Clery Act Disclosures

While this is not comprehensive list of all required consumer disclosures, it is a good starting point for schools to review their current policies and ensure that they are making these required disclosures.

The breakout session with respect to reporting changes affecting institutional eligibility was a refresher on the requirements for reporting institutional changes to the Department. The speakers highlighted the distinction between changes that need prior Department approval and those changes that require only notice to the Department. The speakers cautioned that if a school notifies the Department of a change without waiting for approval, but it is subsequently determined that the change did in fact require approval, then the school can be liable for all federal student aid funds improperly disbursed. The speakers suggested that to minimize the risk of improperly distributing federal student aid funds, a school could seek Department approval concurrent with providing notification of the change.

The final breakout session that I attended today addressed the state authorization requirements of the Higher Education Act and related regulations. A key point emphasized by today's speakers was the requirement that a state must have a process to review and appropriately act on complaints concerning schools. The speakers also emphasized that schools must provide students or prospective students with contact information for filing complaints with its accreditor and state approving or licensing entity.

That is all to report from Day 1 of this year's Conference. I will offer additional observations later this week.