From: Pauline Abernathy [maltto:pabernathy@ticas.ora] Sent: Sunday, June 30, 2013 6:01 PM To: Howes, Cooper: Economics (NYK) Subject: A closer look at the great rate debate Cooper, We were asked by the press to comment on your report dated June 27, and | wondered if you could tell me on What you base the statement that ED projected less than 6% of repayment volume would come from IBR in 2012 but it turned out to be more than 13%, We have not seen any data to support these figures. We strongly agree with your call for better data on federal student loans and have called for it repeatedly every chance we get, including in our recent white paper. | also wanted to make sure you were aware of our recommendations to better target the benefits of 10%4/20- year IBR. I've attached a one pager on our recommendations as well as a document that shows how it would affect various borrowers. The second document also illustrates that some borrowers will pay more under 110%/20 year IBR than they would under 15%/25-year IBR (because they pay lower monthly payments over a longer period of time). As you note in your paper, your estimate of the budgetary effects of the student loan program are very sensitive to a large range of assumptions. In particular, does the estimate that loans will cost the government more than $100bn over the next 8 years assume adoption this year of market-based rates with no cap on how high interest rates can rise, that all borrowers be eligible for 10%/20-year IBR immediately, and that no changes are made in the targeting of IBR? Best, Pauline Pauline Abernathy Vice President, The Institute for College Access & Success Direct: 202.223.6060 x603 Main: 510.318.7900 www.ticas.org and www.projectonstudentdebt.org ‘This message is for information purposes only, it is not a recommendation, advice, offer or solicitation to buy or sell a product or service nor an official confirmation of any transaction, It is directed at persons who are professionals and is not intended for retail customer use. Intended for recipient only. This message is subject to the terms at: www.barclays.com/emaildisclaimer. For important disclosures, please see: andtradingdisclaimer regarding market commentary from Barclays Sales and/or Trading, who are active market participants; and in respect of Barclays Research, including disclosures relating to specific issuers, please see http://publicresearch.barclO'Bergh, Jon Fror Spector, Stephen Sent: Monday, July 02, 2013 10:35 AM To: Arsenault, Leigh; Appel, Jeff Gast, Sara; Briscoe, Daren Subject: RE: press calls on new Barclay report on IBR and student loan costs Attachments: FW: Media inguiry- student loan program- Fox Business Network Thanks. Fox reached out to the press account on Friday at Spm (attached). At this point, we have not responded to the inquiry. From: Arsenault, Leigh Sent: Monday, July 01, 2013 10:28 AM To: Appel, Jeff; Gast, Sara; Briscoe, Daren; Spector, Stephen Subject: FW: press calls on new Barclay report on IBR and student loan costs, Removing Pauline. Adding Jeff, and Daren and Spector for awareness. From: Pauline Abernathy [mailto:pabernathy@ticas.org] Sent: Monday, July 01, 2013 10:24 AM To: Gast, Sara; Arsenault, Leigh Ce: Shannon Gallegos Subject: press calls on new Barclay report on IBR and student loan costs Sara and Leigh, Fox Business Network has contacted us about the attached new report from Barclays that estimates that federal student loans could cost the government more than $100bn over the next 8 years, in large part because of IBR. Below is my exchange with the author of the Barclays report (please don’t quote from it but | ‘thought the explanation of his methodology and assumptions would be helpful). We have suggested Fox contact the Dept for a response and will send Fox a brief statement along the lines of; ““as the Barclays report states, its budget estimate is “very sensitive to a large range of assumptions,” including assumptions of future loan volumes, family incomes and family sizes, eligibility and enrollment in income- driven repayment plans, and student loan default and collection rates. By contrast, the independent Congressional Budget Office projects that federal student loans will generate $160 billion in revenue for the government over the same time period. With millions of Americans already struggling to pay for college and interest rates at historic lows, Congress needs to act quickly to stop interest rates on subsidized loans from doubling to 6.8% for students this fall. We agree with the report’s author that the Department of Education should make more student loan data publicly available on an ongoing basis to better inform policy makers, researchers, and the public.” From: Pauline Abernathy Sent: Monday, July 01, 2013 9:40 AM To: ‘cooper.howes@barclays.com’ Subject: RE: A closer look at the great rate debate Thanks for your quick and helpful response, What assumptions did you make about future increases in loan volume given the current annual and aggregate loan limits on Stafford loans? On quick glance, | don’t think 1one can extrapolate from the Direct Loan (DL) volumes in the Appendix to the entire portfolio of federal student loans (DL and FFEL) because they differ in a variety of ways. For example, in Jan 2012 the Dept said publicly that at the time 90% of ICR borrowers were in what is referred to as “forced ICR” (i.e., defaulted borrowers who exited default through consolidation and into ICR). Many of these borrowers had been in FFEL and consolidated into DL and ICR to get out of default, which means the IBR/ICR numbers in DL will be much higher than in the FFEL portfolio. And of course, ICR and Pay As You Earn are only available in DL. Based on the FSA Annual Report, FEL loans still account for about half of all outstanding federal loan volume. Did you make any adjustments for differences in FFEL and DL? Pauline ‘cooper howes@barclays.com [mailto:cooper.howes@barclays.com] Sent: Monday, July 01, 2013 8:17 AM To: Pauline Abernathy Subject: RE: A closer look at the great rate debate Hi Pauline, The IBR repayment volume comes from the Department of Education budget appendix. On the right side of p.352 of the attached (under the “grass volumes in millions of dollars” heading}, they show repayment volume by option. | just added up the ICR/IBR lines from the Stafford, unsubsidized Stafford, and consolidated sections and divided by the total amount repaid under those. | compared the forecasted numbers for 2012 from past appendices with the actual numbers from this one in the report. | excluded PLUS loans from this calculation, even though the grad PLUS loans could become eligible through consolidation. With regards to the IBR recommendations, | think that a lot of those make sense. We have avoided giving any specific policy recommendations other than to call for more data, but ultimately | think that some sort of restriction on IBR. eligibility will be put into place. The program appears that it will turn out to be too expensive, and the incentives too distorted. | expect that the first major “scandals” coming out of this program will be from law schools, because they have high debt loads and relatively modest incomes with a large share that work in some sort of public service. It will be {an interesting discussion to follow, and I'm glad that there are other organizations who are also paying close attention. In terms of our assumptions, the majority of the $260bn gap ($460bn profit CBO forecast compared to our $100bn cost) comes from the possiblity that up to half ofall new borrowers would be eligible for IBR (data which we took from a Kansas City Fed study that looked at median incomes of those repaying student loans). We assume that all borrowers would be eligible for the new IBR, but the bulk of the costs come from future borrowers given the large expected increases in loan volume. The remainder comes from assumptions that, in addition to IBR, the credit quality will be overstated and result in higher subsidy rate revisions due to technical factors, That does not assume a necessary shift to ‘a market-based rate system, because trying to quantify the potential risk would require long-term interest rate forecasts, something which we have not found to be a very useful exercise. We were really trying to quantify the largest potential downside risks, which we believe look similar under the current system and a market-rate system even though the expected costs of the two are different. Don’t hesitate to let me know if anything was unclear or if you have any further questions. Thanks, Cooperauline Abernathy [mailto:pabernathy@ticas.ora] Sent: Sunday, June 30, 2013 6:01 PM To: Howes, Cooper: Economics (NYK) Subject: A closer look at the great rate debate Cooper, We were asked by the press to comment on your report dated June 27, and | wondered if you could tell me on what you base the statement that ED projected less than 6% of repayment volume would come from IBR in 2012 but it turned out to be more than 13%. We have not seen any data to support these figures. We strongly agree with your call for better data on federal student loans and have called for it repeatedly every chance we get, including in our recent white paper. | also wanted to make sure you were aware of our recommendations to better target the benefits of 10%/20- year IBR. I've attached a one pager on our recommendations as well as a document that shows how it would affect various borrowers. The second document also illustrates that some borrowers will pay more under 10%/20 year IBR than they would under 15%/25-year IBR (because they pay lower monthly payments over a longer period of time). As you note in your paper, your estimate of the budgetary effects of the student loan program are very sensitive to a large range of assumptions. In particular, does the estimate that loans will cost the government more than $100bn over the next 8 years assume adoption this year of market-based rates with no cap on how high interest rates can rise, that all borrowers be eligible for 10%/20-year IBR immediately, and that no changes are made in the targeting of IBR? Best, Pauline Pauline Abernathy Vice President, The Institute for College Access & Success rect: 202.223.6060 x603 Main: 510.318.7900 www.ticas.org and www.projectonstudentdebt.org This message is for information purposes only, it is not a recommendation, advice, offer or solicitation to buy or sell a product or service nor an official confirmation of any transaction, It is directed at persons who are professionals and is not intended for retail customer use. Intended for recipient only. This message is subject to the terms at: www.barclays.com/emaildisclaimer. For important disclosures, please see: www. barclays.com/salesandtradingdisclaimer regarding market, commentary from Barclays Sales and/or Trading, who are active market participants; and in respect of Barclays Research, including disclosures relating to specific issuers, please see http://publicresearch.barclays.com.O'Bergh, Jon From: Press Sent: Friday, June 28, 2013 5:11 PM To: Glickman, Jane; Spector, Stephen Subject: FW: Media inquiry- student loan program- Fox Business Network : Hall, Sylvia [mailto:Syivia.Hall@foxbusiness.com] Sent: Friday, June 28, 2013 5:04 PM To: Press ‘Subject: Media inquiry- student loan program- Fox Business Network Hello, 'm working on a story about a research note that just came out from Barclays on the federal student loan program and its potential cost. The note suggests that the CBO has underestimated the popularity of Pay As You Earn and IBR, and thus has overestimated the number of students who will pay their loans on time at the loan’s actual rate. ‘The Barclays note estimates that for this reason, the federal student loan program will cost $100B by 2020 instead of bringing in a projected profit of $1608, as projected by CBO. | was wondering if you have a statement/comment on this analysis of the Pay as You Earn/IBR programs, and of the cost of the federal student loan program overall, ‘Thanks so much and | look forward to hearing from you. We are running this story on Monday. Sylvia Hall Fox Business Network Washington, DC 20001 (0) 202-684-4022 (©) 202-412-9217O'Bergh, Jon Appel, Jeff Friday, June 28, 2013 5:34 PM Wilson, James Graham, William Re: payment cales Thanks James! This is very helpful, From: Wilson, James Sent: Friday, June 28, 2013 05:06 PM Eastern Standard Time To: Appel, Jeff Ce: Graham, Wiliam ‘Subject: RE: payment cales Jeff, Go Thanks, James From: Appel, Jeff Sent: Friday, June 28, 2013 10:40 AM To: Wilson, James Subject: payment cales (HEY http://views.ticas.org/?p=1018O'Bergh, Jon Pauline Abernathy Thursday, June 27, 2013 3:28 PM Pauline Abernathy Jessica Thompson TICAS: Congress Should Freeze Student Loan Rates to Avoid Increasing the Cost of College for Millions FYI. The blog post below makes the case for the new Reed/Hagan bill to freeze loan rates for one year and explains why neither income-drive repayment plans nor loan consolidation are substitutes for a cap on how high interest rates can rise. Freezing rates provides time to develop comprehensive reforms that reduce complexity, improve targeting, encourage completion, and ensure affordability and predictability for students now and in the future (our student loan proposal is designed to achieve this). Congress Should Freeze Student Loan Rates to Avoid Increasing the Cost of College for Millions Posted on June 27, 2013 With just three days until interest rates on subsidized Stafford loans are scheduled to double from 3.4% to 6.8%, Congress should not make college more expensive, either by letting rates permanently double or by making permanent changes that leave students worse off than doing nothing at all. Instead, Congress should freeze interest rates to avoid increasing the cost of college for millions of students and families already struggling to cover rising costs, The Reed/Hagan bill (S.1238) introduced today with more than 30 other senators would freeze rates for one year and pay for itself by closing a tax loophole. It’s scheduled for a Senate vote on July 10, By contrast, the bill Senators Manchin, Burr, Coburn, Alexander, and King announced they will introduce today would be worse for students than doing nothing at all. It would let rates for subsidized Stafford loans more than double by 2018 and set no limit on how high rates on all new loans could rise. There has always been a cap on federal student loan interest rates. As we, alongside other organizations that advocate for students and young people, recently wrote to Congress, a rate cap is essential to ensure that student loans remain affordable and that high interest rates don’t deter students from starting or completing college during periods of high and rising rates. Nevertheless, some have objected to maintaining an interest rate cap, suggesting that the availability of income- driven repayment plans eliminates the need for any cap. But that’s simply not the case. Still others have claimed that an interest rate cap isn’t necessary because federal consolidation loans would stil have a maximum rate of 8.25%, However, the potential to consolidate is not a legitimate substitute for eapping how high rates can rise. Consolidation comes with risks, which vary depending on the borrower's specific circumstances, For example, consolidation can increase the total cost of the loan by lengthening the repayment period, and it can make it harder to qualify for Public Service Loan Forgiveness. We described these and other consolidation risks in our last post. A recent alternative Democratic proposal would cap rates and keep subsidized loan rates below 6.8%, but rates on unsubsidized loans would be expected to exceed 7% by 2016. Because 82% of undergraduates with 1subsidized loans also have unsubsidized loans, keeping rates low on one while increasing rates on the other may not reduce costs for low- and moderate-income students, and could even increase them. The table below compares how four recent long-term proposals compare to the current rates and scheduled rates, for undergraduate subsidized Stafford loans over the next decade. Under three of the proposals, rates on subsidized loans would rise sharply—exceeding 7%, more than double the current rate, by 2018. The difference can be substantial, For a student borrowing the maximum allowable in subsidized and unsubsidized loans over four years, the difference in the rates can cost them over $5,000 more if they repay in 10 years, and over $7,000 more if they repay under an income-driven plan (for details, see our recent anallysis here). Projected Rates for Undergraduate Subsidized Stafford Loans (based on CBO fiscal year projections for 10-year Treasury notes) Years Rates Projected Years Rates Projected) Cap on How High to Exceed 7% (2013- to Exceed 8% (2013- Rates Can Rise 2023) 2023) (Yes/No) ‘Scheduled Rate (6.8%) NONE NONE Yes Current Rate (3.4%) NONE NONE Yes Coburn/Burr/Alexander 2016-2023 2018-2023 No | Kline/Foxx 2013-2023* | NONE Yes | Manchin/Burr 2018-2023 | NONE No Alternative Dem NONE NONE Yes **Rate is projected to exceed 7% beginning in 2017 and would apply to all loans taken out after July 1, 2013, because under the Kline/Foxx bill, the rates for all loans vary each year throughout the life of the loans. Both today’s students and tomorrow’s deserve affordable student loans, not so-called solutions that let rates double and rise even higher without any upper limit. Instead, current rates should be temporarily frozen so that Congress and the Administration have time to come up with a plan that makes real sense for both students and taxpayers and helps make college affordable for all. Both the Reed/Harkin bill, supported by a majority of the U.S. Senate and the Administration, and the new Reed/Hagan bill, do just that by extending current rates and fully covering the cost by closing unnecessary tax loopholes. Pauline Abernathy Vice President, The Institute for College Access & Success Direct: 202.223.6060 x603 Main: 510.318.7900 wwwticas.org and www.projectonstudentdebt.orgO'Bergh, Jon Plotkin, Hal Tuesday, June 25, 2013 8:08 PM ‘rshirernan@californiacompetes.org’ Re: Fwd: Duncan indicates support for district waiver, praises Brown's funding reform ~ by Kathryn Baron Great. | asked David Whitman to make sure Arne knew that you went way out of your way to help us get his TP's right. | ‘am happy to know you were appropriately acknowledged. | mean it quite sincerely, Bob - | am/was always grateful for all your patient help and support, | am fortunate that you are part of my village. Hal From: Robert Shireman [mailto:rshireman@californiacompetes.ora] Sent: Tuesday, June 25, 2013 05:43 PM Eastern Standard Time To: Plotkin, Hal ‘Subject: Fwd: Duncan indicates support for district walver, praises Brown’s funding reform - by Kathryn Baron ‘Thanks for prepping Ame. He was nice enough to ask me to come back before his talk, and he pointed me out when he talked about higher ed. Forwarded message From: EdSource Today Date: Tue, Jun 25, 2013 at 11:23 AM Subject: Duncan indicates support for di To: rshireman@californiacompetes.org ict waiver, praises Brown’s funding reform - by Kathryn Baron t wai support for distr by Kathryn Baron r, praises Brov Duncan indicates support for district waiver, praises Brown’s funding reform - by Kathryn Baron Posted: 25 Jun 2013 12:22 AM PDT U.S. Education Secretary Ame Duncan set aside years of acrimony and disagreements with Gov. Jerry Brown and sang the governor's praises during an event Friday night in San Francisco. “I’m really impressed with what the governor is trying to do here. I think he’s showing real vision, real courage,” Duncan told about a hundred educators and education advocates when asked about Brown's... [[ This is @ content summary only. Visit the Edsource Today website for full links, other content, and more! J}You are subscribed to email updates from EdSource Today Email delivery powered by Google To stop receiving these emails, you may unsubsenbe now. {Google Inc. 20 West Kinzie, Chicago IL USA 60810, Rober Sheree, Dietor ‘California Competes: ghar Education fora Song Eoanomy 1201 Marts Luter King . Way, Sure 100 (Oakland, Ch 94612 Assistant Remmert Deter (lke sifamincompsis =) Offic pone: (S10) 44-048 Pax (S10) 38-008O'Bergh, Jon Arsenault, Leigh Monday, June 24, 2013 3:16 PM Talwalker, Ajita RE: Meeting Request for Secretary Arne Duncan- Coalition to Discuss Gainful Employment Rule reached out to her too, From: Talwalker, Ajita [mailto:Ajita R_Talwalker@who.eop.gov Sent: Monday, June 24, 2013 3:15 PM To: Arsenault, Leigh Subject: Re: Meeting Request for Secretary Arne Duncan- Coalition to Discuss Gainful Employment Rule Gu From: Arsenault, Leigh [mailto:Leigh.Arsenault@ed. gov} Sent: Monday, June 24, 2013 03:09 PM To: Talwalker, Ajta Subject: FW: Meeting Request for Secretary Arne Duncan Coalition to Discuss Gainful Employment Rule Gg) Thanks! -Leigh From: Pauline Abernathy [mailto:pabernathy@ticas.ora] Sent: Monday, June 24, 2013 12:29 PM To: Arsenault, Leigh; Ritsch, Massie; Talwalker, Ajita; james R. kvaal@who.eop.cov Ce: Nancy Zirkin (Zitkin@civirights.org); Dianne Piche; David Halperin; Jennifer Webber; Kate Wikelius ‘Subject: FW: Meeting Request for Secretary Arne Duncan- Coalition to Discuss Gainful Employment Rule We are disappointed by Secretary Duncan's office’s response below to the coalition’s request this spring to meet with him From: Jennifer Webber Sent: Monday, June 24, 2013 12:23 PM To: Pauline Abernathy Subject: FW: Meeting Request for Secretary Ame Duncan- Coalition to Discuss Gainful Employment Rule Fv From: Manalo, Alvin {mailto:Alvin.Manalo@ed.cov] Sent: Monday, June 24, 2013 9:21 AM To: wikelius@civirights.ora Ce: Jennifer Webber Subject: Meeting Request for Secretary Ame Duncan- Coalition to Discuss Gainful Employment Rule Ms. Kate Wikelius,I'd like to thank you for your patience as we reviewed your request for a meeting with Secretary Arne Duncan on behalf of Dianne Piche, Leadership Conference on Civil and Human Rights, and a coalition of other civil rights and student groups to discuss the “gainful employment” rule. | regret to inform you that because of the numerous demands on Secretary Duncan's schedule, he is unable to fulfill your request for a meeting. ‘Again, thank you for your patience and your kind request. Best regards, Alvin Manalo Scheduling and Advance Office of the Secretary US. Department of EducationO'Bergh, Jon From: Lauren Asher Sent Friday, June 21, 2013 9:07 PM 1 Pauline Abernathy Subject: TICAS blog: A good short-term solution is better than a bad long-term one I wanted to pass along our new blog post on student loan interest rates. I's pasted below and online at http://views.ticas.org/2p=1100 A Good Short-Term Solution is Better than a Bad Permanent One Posted on June 22, 2013 by admin With just nine days until interest rates on subsidized Stafford loans are scheduled to double from 3.4% to 6.8%, policymakers keep scrambling to come up with a long-term fix. But so far, their long-term proposals — actual and rumored — fall short on the most important measure of all: keeping loans affordable for students, both now and in the future The table below uses CBO projections for 10-Yr T-Note yields (fiscal year) to compare how three recent long-term proposals compare to the current rates and scheduled rates for undergraduate subsidized Stafford loans over the next decade. As you can see, rates would rise sharply under all three proposals, increasing the cost of college for millions of students and families already struggling to pay for college. Projected Rates for Undergraduate Subsidized Stafford Loans (2013-2023) fon Rates Projected to fears Rates Projected to fe ‘on How High Rates (coed 7% (2013-2023) exceed 8% (2013-2023) an Rise (Yes/No) [Scheduled Rate (6.8%) NEVER NEVER Nes [Current Rate (3.4%) NEVER EVER Kes [Coburn/Burr/Alexanderp.016-2023, 1018-2023 No IKline/Foxx po13-2023* EVER hres [Manchin/King/Coburn 018-2023 fever [ncertain?* *Rate is projected to exceed 7% beginning in 2017 and would apply to all loans taken out after July 1, 2013, because under the Kline/Foxx bill, the rates for all loans vary each year throughout the life of the loans. **Media reports on this proposal vary, and the proposal itself has not been made public. ‘The table shows that in five years or less, projected rates under these long-term proposals would exceed 7%, more than double the current rate. Some conservatives have objected to including any cap on how high rates can rise. Others have suggested that the availability of income-driven repayment plans eliminates the need for an interest rate cap. But that's simply not the case. Still others have claimed that an interest rate cap isn’t necessary because federal consolidation loans would still have a maximum rate of 8.259%. They argue that students who borrow when rates are even higher could consolidate into anew loan at 8.25%. However, the potential to consolidate is not a legitimate substitute for capping how high rates can rise. Consolidation comes with risks, which vary depending on the borrower's specific circumstances. Among the risks of consolidation:Consolidation costs you more by extending your repayment period: the longer you stretch out your payments, the more interest you pay. Standard consolidation repayment periods range from 10-30 years depending on your debt level. [Any accrued but unpaid interest is capitalized (added to the loan principal) when you consolidate. Rates on consolidation loans are rounded up to the nearest 1/8” of one percent of the weighted average of the loans or 8.25%, whichever Is lower. This can also add to the cost of your loan. Consolidating prevents you from paying down your highest interest loan first to reduce the average rate and total cost of your remaining debt. The way repayment periods are automaticaly set in consolidation makes it harder to qualify for Public Service Loan Forgiveness (PSLF). The only payments that count towards the 120 required for PSLF are income-driven or “standard” 10-year payments, But “standard” consolidation repayment periods are longer than 10 years if you have at least $7,500 in debt. if you consolidate a Parent PLUS loan with your own student loans, the resulting consolidation loan will not be eligible for Income Based Repayment or Pay As You Earn, Benefits and rights associated with individual loans are lost in consolidation. Both today's students and tomorrow's deserve affordable student loans, not so-called solutions that let rates double and rise even higher without any upper limit. Congress must not rush to make permanent changes that leave students worse off than doing nothing at all. Instead, current rates should be temporarily frozen so that Congress and the ‘Administration have time to come up with a plan that makes real sense for both students and taxpayers. The Reed/Harkin bill, supported by a majority of the U.S. Senate and the Administration, does just that: extending current rates for two years while fully pay ig for itself by closing unnecessary tax loopholes. Lauren Asher President ‘The Institute for College Access & Success (TICAS) 405 14" Street, Suite 1100, Oakland, CA 94612 510-318-7900, x304 Tjashen@tieas org www.tieas.org www projectonstudentdebt.orgO'Bergh, Jon From: Sheth, Tushar Sent: Wednesday, June 19, 2013 3:20 PM To: Appel, Jeff RE:IBR debt rate? /www ticas.org/files/pub/WHITE PAPER FINAL PDF.pdf Tushar J. Sheth Senior Advisor ED-OPEPD 202.870.9664 From: Appel, Jeff Sent: Wednesday, June 19, 2013 3:17 PM To: Sheth, Tushar; Arsenault, Leigh; Muenzer, Melanie Subject: RE: IBR debt rate? You don't have to graduate to be eligible. Basically, your loan payments, on a standard repayment schedule, need to exceed 15% of discretionary income. We chose 15% because that what TICAS at the time was advocating for. We based it on a white paper at the time, which had been developed when Bob Shire man and Ajita were both at TICAS. From: Sheth, Tushar Sent: Wednesday, June 19, 2013 3:05 PM To: Appel, Jeff; Arsenault, Leigh; Muenzer, Melanie Subject: 18R debt rate? ‘Anyone know how congress came up with the 15% number in IBR? Do you have to graduate to get IBR, or is anyone eligibile? Gonna see if they made findings on this. Tushar J. Sheth Senior Advisor Office of Planning, Evaluation & Policy Development USS. Department of Educ e tushar.sheth@ed.gov 0 202.401.0435 © 202.870.9664O'Bergh, Jon —— From: Kanter, Martha Sent: Friday, July 12, 2013 6:29 PM To: Miceli, Julie Subject: Fw. TICAS Letters of Support for Negotiators for Upcoming Gainful Employment Negotiated Rulemaking Sessions Attachments: StudentNegotiatorSupportLetter.FinalJuly11.pdt; LegalAdvocacyOrgNegotiatorSupportLette FINAL July12,pdf; TICAS letter endorsing AG nominations July 12 2013.pdf TICAS BusinessNomineeSupportLetter TedDaywalt Junel2 2013.pdf FY-Martha Sent using BlackBerry From: Pauline Abernathy (mailto:pabernathy@tticas.ora] Sent: Friday, July 12, 2013 06:22 PM Eastern Standard Time To: Kanter, Martha; Arsenault, Leigh; Appel, Jeff; Protopsaltis, Spiros; james R,_kvaal@who.eop.gov ; Talwalker, Ajita ; rrodriquez@who.eop.cov ‘; danielle ¢ lazarowitz@who.eop.cov ; Micel, Julie Ce: Debbie Cochrane ; Joseph Mais ; Jennifer Webber ‘Subject: FW: TICAS Letters of Support for Negotiators for Upcoming Gainful Employment Negotiated Rulemaking Sessions We appreciate the Education Department's inviting nominations from diverse affected constituencies to serve on this fall’s negotiated rulemaking panel on gainful employment regulations, and are delighted that so many strong and diverse candidates have been nominated to serve on the panel. Below is a list of the student, consumer, legal aid, state AG, business and industry, aid administrator, and non-profit college nominations for which TICAS submitted endorsements. ‘As we said! in our written comments, we urge the Department to ensure sufficient representation of the diverse and traditionally underrepresented interests of students, consumers, and taxpayers in negotiated rulemaking. In the 2009-2010 negotiated rulemaking on program integrity issues, more than half of the negotiators were employees and representatives of various types of colleges. While the for-profit college industry claimed they were under-represented, fully one quarter of the negotiators were either employed by for-profit colleges or had for-profit college members, in addition to the representative of national accreditors that accredit for-profit colleges. By contrast, only two of the 16 negotiators represented students and consumers. We encourage the Department to consider the appropriate balance given the diverse student and taxpayer interests at stake, Thank you for your continued work on behalf of students and taxpayers. Best, Pauline Pauline Abernathy Vice President, The Institute for College Access & Success Direct: 202.223.6060 x603 Main: 510.318.7900 wwu.ticas.org and www.projectonstudentdebt.orgFrom: Jennifer Webber Sent: Friday, July 12, 2013 3:18 PM To: wendy.macias@ed.gov ~auline Abernathy; Debbie Cochrane ‘Subject: TICAS Letters of Support for Negotiators for Upcoming Gainful Employment Negotiated Rulemaking Sessions Wendy - ‘Attached please find four letters of support for negotiators for the upcoming gainful employment rulemaking sessions Students: Rory O'Sullivan, Young tnvincibles ‘Tom Tarantino, Iraq and Afghanistan Veterans of America This letter is also signed by the National Association for College Admission Counseling. Legal assistance organizations that represent students: Eileen Connor, New York Legal Assistance Group Whitney Barkley, Mississippi Center for Justice (as alternate) This letter is also signed by the National Association for College Admission Counseling. State attorneys general and other appropriate State officials: Della Justice, Office of the Kentucky Attorney General Samuel Levine, Office of the Illinois Attorney General (as alternate) Olivia (Libby) DeBlasio, Office of the Colorado Attorney General (as alternate) Business and industry: Ted Daywalt, CEO and President, Vetlobs TICAS’ support letters for the following nominees have already been submitted or will be submitted by others: Financial aid administrators at postsecondary institutions: Kevin Jensen, Financial Aid Administrator, College of Western Idaho Private, non-profit institutions of higher education Jenny Rickard, Vice President for Enrollment, University of Puget Sound TICAS will also be listed as a supporter of the following nominations in the nomination letter itself, which you will receive today from the nominating organization: Consumer advocacy organizations: Margaret Reiter, ret. Maura Dundon, Center for Responsible Lending (as alternate) ‘Thartk you so much, and if you have question, please respond to me, along with Pauline and Debbie, c'd on this email, as | will be out of the office the rest of the day. Best, Jennifer Webber Cell: 415-608-6223July 14, 2013 Wendy Macias USS, Department of Education 1990 K Street, NW, Room 8017 Washington, DC 20006 Sent via E-mail: Wendy.Macias@ed.gov Re: Endorsement of Student Representatives for the Negotiated Rulemaking Committee Announced in 6/12/13 Federal Register Dear Ms. Macias: The institute for College Access & Success (TICAS) and the National Association for College ‘Admission Counseling (NACAC) strongly endorse the nominations of Rory O'Sullivan and Tom Tarantino to represent students on the upcoming negotiated rulemaking panel to propose regulations to establish standards for programs that prepare students for gainful employment in a recognized occupation. Both nominees have actively worked on behalf of students in support of a strong and effective gainful employment regulation, and both submitted written comments on gainful employment in response to the April 16 Federal Register notice. Each brings crucial skills and knowledge that will help to ensure diverse student interests and experiences are well represented in this process, Rory O'Sullivan is the Policy and Research Director at Young Invincibles, a leading student and youth advocacy organization. Since 2010, Rory and Young Invincibles have actively worked for a strong and effective gainful employment regulations. Most recently, Rory testified at the May 21 public hearing in DC and submitted comments for the record. Young Invincibles is familiar the negotiated rulemaking process as Jen Mishory from Young Invincibles was a negotiator on the 2011 student loan committee. Rory is an expert in economic, higher education, and health care policy as they relate to young adults, and is the coauthor of multiple reports on student aid issues, including “The Student Perspective on Federal Financial Aid Reform.” His work has appeared in the Wall Street Journal, Business Week, ABC News Online, Yahoo News, the LA Times, and the Christian Science Monitor among others. He graduated from Pomona College in 2006 with a B.A. in Philosophy Politics, and Economics, and he completed a joint J.D./M.P.P. in 2011 at Georgetown University. ‘Tom Tarantino is Chief Policy Officer at Iraq and Afghanistan Veterans of America. He has testified at Congressional hearings and spoken at countless meeting regarding the importanceof strong gainful employment rule to protect veterans who are often the target of particularly aggressive recruitment for programs subject to the gainful employment requirement. As Chief Policy Officer, Tom provides strategic guidance for and leadership of IAVA's Legislative, Research, and Political Departments. He is responsible for ensuring that veterans’ issues remain a priority for policy makers, and that |AVA’s members have a strong voice in DC. Tom is a former Army Captain who left service in 2007 after 10 years. He returned from Iraq in 2006 after one year of deployment with the 11th Armored Cavalry Regiment. Tom served in combat ‘as both a cavalry and mortar platoon leader, and was awarded the Combat Action Badge and Bronze Star. TICAS is an independent, nonprofit organization that works to make higher education more available and affordable for people of all backgrounds. By conducting and supporting, nonpartisan research, analysis, and advocacy, TICAS aims to improve the processes and public policies that can pave the way to successful educational outcomes for students and for society. NACAC is an Arlington, VA-based education association of more than 13,000 secondary school counselors, independent counselors, college admission and financial aid officers, enrollment managers, and organizations that work with students as they make the transition from high school to postsecondary education. The association, founded in 1937, is committed to maintaining high standards that foster ethical and social responsibility among those involved in the transition process, as outlined in the NACAC Statement of Principles of Good Practice. Thank you for your consideration of these highly qualified nominees to represent students in the negotiated rulemaking process. Sincerely, Lauren Asher President ‘The Institute for College Access & Success (TICAS) San David Hawkins Director of Public Policy and Research National Association for College Admission Counseling (NACAC)college access success July 12, 2013 Wendy Macias U.S. Department of Education 1990 K Street, NW Room 8017 Washington, DC 20006 Sent via E-mail: Wendy.Macias@ed.gov Re: Endorsement of nominations to represent state attorneys general in negotiated rulemaking Dear Ms. Maci ‘The Institute for College Access & Success (TICAS) strongly endorses the nominations of Della Justice to be the primary representative of state attorneys general (AGs) and Samuel Levine and Olivia (Libby) DeBlasio to be alternates on the upcoming negotiated rulemaking panel to propose regulations to establish standards for programs that prepare students for gainful employment in a recognized occupation. Della Justice has been nominated by the office the Kentucky AG Jack Conway, Samuel Levine has been nominated by the office of the Illinois AG Lisa Madigan, and Libby DeBlasio has been nominated by the office of the Colorado AG John Suthers With 32 state AGs, including both Democrats and Republicans, jointly investigating the for- profit college industry for practices resulting in students incurring debts they frequently cannot repay, itis essential that state AGs be well represented on the panel. The representatives from the Kentucky and Illinois state AG offices played significant roles on the 2011 student loan rulemaking panel, leading to a much stronger final consensus agreement on proposed regulations ‘on issues such as closed school discharges and forbearance policies. All three of the AG nominations come from offices that recently initiated litigation involving for- profit colleges offering programs subject to the statutory gainful employment requirement, and all three offices submitted thoughtful and constructive oral and written testimony on the gainful employment regulations in response to the April 16 Federal Register notice. TICAS endorses the nomination of the Kentucky AG office to be the primary negotiator because that office leads the national bipartisan working group of AGs examining potential abuses in the for-profit college industry. Della Justice has spent the last several years working exclusively on higher educationissues, has been deeply involved in multiple cases including at least one that required in-depth knowledge of federal regulations, and has had exposure to relevant issues in other states as well. TICAS is an independent, nonprofit organization that works to make higher education more available and affordable for people of all backgrounds. By conducting and supporting nonpartisan research and analysis, TICAS aims to improve the processes and publie policies that can pave the way to suecessfil educational outcomes for students and for society. ‘Thank you for your consideration of these highly qualified nominees to represent state attomeys generai in the upcoming negotiated rulemaking on gainful employment, Sincerely, Zhe Lauren Asher PresidentJuly 11, 2013 Wendy Macias USS. Department of Education 1990 K Street, NW, Room 8017 Washington, DC 20006 Sent via E-mail: Wendy. Macias@ed.gov Re: Endorsement of Legal Assistance Organization Representatives for the Negotiated. Rulemaking Committee Announced in 6/12/13 Federal Register Dear Ms. Macias: The Institute for College Access & Success (TICAS) and the National Association for College ‘Admission Counseling (NACAC) strongly endorse the nominations of Eileen Connor to be the primary representative of legal assistance organizations and Whitney Barkley to be the alternate on the upcoming negotiated rulemaking panel to propose regulations to establish standards for programs that prepare students for gainful employment in a recognized ‘occupation. Both nominees have experience providing legal assistance to low-income students ‘who enrolled in programs required to prepare them for gainful employment, and both submitted thoughtful and detailed comments on the gainful employment regulations in response to the April 16 Federal Register notice. They will bring crucial skills and knowledge and ensure that the important experiences of legal assistance organizations that serve low- income students and families are well represented in this process. The 2011 student loan negotiated rulemaking process underscored the importance of having separate negotiators representing students, legal aid organizations, and consumer advocacy organizations. This will be especially true in this upcoming rulemaking process, where the stakes are so high for students and consumers, and particularly for low-income students and veterans who are disproportionately recruited by programs subject to the gainful employment requirement. Eileen Connor joined the New York Legal Assistance Group (NYLAG) in 2012 and is a senior staff attorney in the Special Litigation Unit where she works on complex litigation in order to bring about systemic reform for the benefit of low-income individuals. She has focused on serving clients who have attended for-profit schools in the greater New York City area and has represented individuals in debt collection actions brought by for-profit schools, counseled numerous clients on student loan issues, and obtained discharges from the Department of Education on behalf of clients. Through NYLAG's consumer projects, she has represented and counseled numerous students who attend or attended for-profit schools and now face high student debts and no prospect of employment. Prior to joining NYLAG, Eileen was a John J. Gibbons Fellow in Public Interest Law at Gibbons P.C. in Newark, New Jersey and was a staffattorney at the Habeas Corpus Resource Center in San Francisco, California for three years pi to becoming a Gibbons Fellow. She has also served as a law clerk to the Honorable Martha Craig Daughtrey of the United States Court of Appeals for the Sixth Circuit. Eileen received her J.D. from New York University School of Law, where she was an Articles Editor for the New York University Law Review, and her B.A. from Brown University. Whitney Barkley serves as a staff attorney in the Jackson office of the Mississippi Center for Justice and focuses her work on protecting Mississippians from predatory for-profit colleges and helping high school students access affordable financial aid. Prior to joining the Center, ‘Whitney spent summers interning at the Equal Rights Center and Lawyers' Committee for Civil Rights Under Law, where she worked on projects involving payday lending, fair housing and election protection. Whitney holds a Bachelor of Arts in political science and communication from the College of Charleston and a Juris Doctorate from the University of Michigan Law School, where she was recognized as the UM Law and the Women’s Lawyers Association 2009 Woman Lawyer of the year. TICAS is an independent, nonprofit organization that works to make higher education more available and affordable for people of all backgrounds. By conducting and supporting nonpartisan research and analysis, TICAS aims to improve the processes and public policies that can pave the way to successful educational outcomes for students and for society. NACACis an Arlington, VA-based education association of more than 13,000 secondary school counselors, independent counselors, college admission and financial aid officers, enrollment ‘managers, and organizations that work with students as they make the transition from high school to postsecondary education. The association, founded in 1937, is committed to maintaining high standards that foster ethical and social responsibility among those involved in the transition process, as outlined in the NACAC Statement of Principles of Good Practice. Thank you for your consideration of these highly qualified nominees to represent legal assistance organizations in the negotiated rulemaking process. Sincerely, — Lauren Asher President ‘The Institute for College Access & Success a $s David Hawkins Director of Public Policy and Research National Association for College Admission Counseling (NACAC)college access’ Success July 12, 2013 Wendy Macias USS. Department of Education 1990 K Street, NW Room 8017 Washington, DC 20006 Sent via E-mail: Wendy.Macias@ed.gov Re: Endorsement of nomination to represent business and industry in negotiated rulemaking Dear Ms. Maci The Institute for College Access & Success (TICAS) endorses the nomin: (Ted) Daywalt to represent business and industry on the upcoming negotiated rulemaking. panel to propose regulations to establish standards for programs that prepare students for gainful employment in a recognized occupation. Mr. Daywalt has been nominated by the Secretary of the Board of VetJobs where he is CEO and President. His nomination is also supported by Giovanni Coratolo, Vice President of Small Business Policy for the U.S. Chamber of Commerce, and by Peter Duffy, Director of Legislation for the National Guard Association of the United States. Mr. Daywalt has extensive background as a businessman in a variety of industries, and he combines the knowledge gained in business with his military experience to work with employers and to assist veterans, their spouses, and dependents find quality jobs with employers worldwide. He is expert in knowing both what employers are looking for in job applicants and in the career education and training needed to secure good jobs, He has been called upon by Congress and the news media to speak in this area, and has direct experience with veterans who enrolled in career ‘education programs that did not led to credentials with value in the marketplace, Based on this experience, VetJobs has signed multiple letters in support of an effective gainful employment regulation that ensures that career education programs receiving taxpayer money do not leave students with worthless degrees and debts they cannot repay, or use up one-time GI Bill benefits.Mr. Daywalt testified at the June 4, 2013 public hearing in Atlanta on issues to be addressed in negotiated rulemaking, and gainful employment was one of the topics he covered. His expertise will be invaluable in the negotiated rulemaking process, TICAS is an independent, nonprofit organization that works to make higher education more available and affordable for people of all backgrounds. By conducting and supporting nonpartisan research and analysis, TICAS aims to improve the processes and public policies that can pave the way to successful educational outcomes for students and for society. ‘Thank you for your consideration of Ted Daywalt’s nomination to represent business and industry in the upcoming negotiated rulemaking on gainful employment. Sincerely, Lauren Asher PresidentO'Bergh, Jon From: Plotkin, Hal Sent: Tuesday, June 18, 2013 10:03 AM T ‘Whitman, David Subj RE: California-specifi TPs for Ame Happy to have helped. Btw, Arne is likely to bump into Bob Shireman and Michael Kirst at this CA meeting and if so, please let Arne know that both of them provided assistance to me over the weekend as I worked to prepare those suggested TP's (in other words, ifhe sees them, a thank you for their help would be appropriate). Just thought he/you might like to know that. Hal Original Message- From: Whitman, David Sent: Monday, June 17, 2013 11:14 PM To: Kanter, Martha; Sargrad, Scott; Weko, Tom; Forte, Denise; Delisle, Deb Cc: Grant, Elizabeth; Jordan, Stacey; Appel, Jeff; Arsenault, Leigh; Phillips, Nia; Rieman, Heather; Jimenez, Laura; Plotkin, Hal Subject: RE: California-specific TPs for Arne Thanks to all--very much appreciated. From: Kanter, Martha Sent: Monday, June 17, 2013 10:21 PM. To: Sargrad, Scott; Weko, Tom; Forte, Denise; Whitman, David; Delisle, Deb Ce: Grant, Elizabeth; Jordan, Stacey; Appel, Jeff; Arsenault, Leigh; Phillips, Nia; Rieman, Heather; Jimenez, Laura; Plotkin, Hal ‘Subject: RE: California-specific TPs for Arne David Hal Plotkin talked with Mike Kirst and prepared these TPs in addition to what Scott provided. Martha From: Sargrad, Scott Sent: Monday, June 17, 2013 7:39 PM To: Weko, Tom; Forte, Denise; Whitman, David; Delisle, Deb; Kanter, Martha Ce: Grant, Elizabeth; Jordan, Stacey; Appel, Jeff; Arsenault, Leigh; Phillips, Nia; Rieman, Heather; Jimenez, Laura Subject: RE: California-specific TPs for Arne David — attached are some updated CORE-related TPs, thanks to Laura. Let us know if you need anything else. Thanks. From: Weko, Tom Sent: Friday, June 14, 2013 3:42 PM To: Forte, Denise; Whitman, David; Delisle, Deb; Kanter, Martha Cc: Grant, Elizabeth; Sargrad, Scott; ordan, Stacey; Appel, Jeff; Arsenault, Leigh; Phillips, Nia; Rieman, Heather 1Subject: RE: Californi specific TPs for Arne Sure. From: Forte, Denise Sent: Friday, June 14, 2013 1:35 PM To: Whitman, David; Delisle, Deb; Kanter, Martha Ce: Grant, Elizabeth; Sargrad, Scott; Jordan, Stacey; Appel, Jeff; Arsenault, Leigh; Phillips, Nia; Weko, To Heather Subject: Re: California-specific TPs for Arne man, Plus nia and tom... Tom - could stephanie help on weighed formulas with heather. Thx From: Whitman, David Sent: Friday, June 14, 2013 01:24 PM Eastern Standard Time To: Delisle, Deb; Forte, Denise; Kanter, Martha Cc: Grant, Elizabeth; Sargrad, Scott; Jordan, Stacey; Appel, Jeff; Arsenault, Leigh Subject: California-specific TPs for Arne Hi all, ‘Ame is doing a conversation and Q&A at the Public Policy Institute of California on June 21, with PPIC’s CEO, Mark Baldassare, moderating. Most of the questions that PPIC has sent us are broad queries about a variety of K-12 issues but | want to make sure that Arne is prepared to talk, if asked, about several California-specific issues. If you all could figure out a way to divvy up responsibilty for preparing some brief TPs on the following subjects that would be very helpful: 1) The California CORE district waiver request. (I already have the 3/26 statement from Arne on CORE’s request that \we put out; if that’s still adequate and current, there is no need to elaborate further). 2) Gov. Brown's proposal--and the state’s recent adoption--of a weighted-pupil funding formula. Is this a step toward equity in school finance that Arne should hail at the PPIC event? 3) Higher education issues in CA—are there any big issues that are coming to a simmer? What is happening with respect to restoring funding for higher education? Also, four big districts (San Diego, LA, San Francisco, and Oakland) have, as | understand it, recently lowered some of their graduation requirements, such that high schoo! students must complete all courses in the a-g sequence with grades of D or higher to graduate, whereas the UC and CSU systems have required students to complete all courses in the a-g sequence with a C or higher to be eligible for admission. The district's changes were made in response to concerns expressed by the ACLU and other organizations about wide variations by high school and district in a-g ‘completion rates. Is this something we want Arne to comment on? You all re the experts here—you'll know much better than | if am missing big issues in California that might come up at PPIC event. If can get some short talking points on the issues above by, say, noon on Tuesday, June 18, 'd much appreciate Many thanks. DavidO'Bergh, Jon Fro Tom Butts Sen Monday, June 17, 2013 12:14 PM Te Talwalker Ajita; Arsenault, Leigh Subject: Fuvd: Andrews bill - "Student Loan Forgiveness Verification Act” (H.R. 1992) Attachments: Student Loan Re-Consolidation Extended. pptx; ATTOOOO1 htm; Student Loan Re~ Consolidation Paper.pptx; ATTO0002.htm Hi! Thanks so much for all you did last week! It was very helpful. Texpect you're aware of this latest Andrews bill, but wanted to be sure. Would like to visit with you about it. Tom Begin forwarded message: From: Pauline Abernathy Subject: Andrews bill - "Student Loan Forgiveness Verification Act" (H.R. 1991) Date: June 14, 2013 4:49:56 PM EDT To: Are you all following this bill which was introduced last month? Seems like someone they may try to attach to a July 1 interest rate fix bill. It seems particularly cynical and Orwellian. They clai pro student when it appears to be pro-banker/Wall Street and anti-student. Based on my initial read of the bill and materials: © itcreates unnecessary bureaucratic barriers to borrowers consolidating their loans and becoming cligible for PAYE, ICR and PSLF; * the materials admit that the Secy has already told them that the Dept is authorized by statue to do what it is doing--they just don’t like it; © the materials misrepresent the benefits of FFEL to borrowers by assuming everyone makes ontime payments for 36 consecutive payments when research has shown that most people do not; and ‘© the materials claim the Dept's policy of facilitating DL consolidations costs taxpayers more than FEL because the borrowers will be eligible for PSLF. However, this contradicts their argument that the borrowers are not actually eligible for PSLF. It seems that they are trying to have it both ways--arguing the consolidations should be stopped because the borrowers are not actually eligible for PSLF but then saying the borrowers’ resulting eligibility for forgiveness is going to cost taxpayers more than FFEL! What is your take? Below are the Andrews Dear Colleague letter from this week and an email from one of the industry lobbyists. Our plate is very full so it would be great if one or more of you were interested in digging into this. Thanks! From: e-Dear Colleague To: E-DEARCOLL ISSUES A-F 0000@!s2,house.gov ‘Subject: Education: Dear Colleague: Please Cosponsor the Student Loan Forgiveness Verification Act (H.R. 1991) 1Please Cosponsor the Student Loan Forgiveness Verification Act (H.R. 1991) From: The Honorable Robert E. Andrews Sent By: vincent.sarubbi@mail.house.gov Bill: H.R. 1991 Date: 6/11/2013 Dear Colleague, | am writing to ask you to cosponsor the Student Loan Forgiveness Verification Act (H.R. 1991), a common sense measure that makes sure that those who are receiving consolidation loans through the Department of Education are in fact eligible to participate in the Direct Consolidation Loan program and its debt forgiveness provisions. Direct Consolidation Loans allow borrowers to combine one or more of their federal education loans into a new loan that offers several advantages. Firstly, with only one lender and one monthly bill, it is easier for borrowers to manage their debt. Furthermore, participation in the consolidation loan program makes a student eligible for an array of repayment options, including income based repayment. Qualified students, however, are eligible for loan consolidation only one time. In 2007, Congress passed the College Cost Reduction Act (CCRA) which allowed three narrow exceptions to the prudent and long-held “one time only" consolidation rule, which included: 1) borrowers with defaulted consolidation loans through the Federal Family Education Loan Program (FFELP) who desire to obtain an income- contingent or income-sensitive repayment 2) Public Service Employees who wish to enroll in the Public Service Loan Forgiveness Program and 3) Active Duty Military in order to provide for no accrual of interest. While | applaud these exceptions, the law states that they apply only to the specific set of borrowers enumerated above. ‘The Department of Education currently does not verify that a Direct Consolidation Loan applicant is eligible for a new Direct Consolidation Loan under CCRA prior to issuing the consolidation loan. This is problematic as it places an undue burden on taxpayers who are ultimately liable for the costs of this program. My bill would clarify that the Department of Education is responsible for checking that a borrower is an active duty military personnel, public service employee or other qualified status, prior to issuing a consolidation loan. This verification process should already be in place for those borrowers who are approaching completion of ten years in an eligible public service profession. This process can, therefore, be implemented quickly by the Department during the Direct Consolidation Loan application process. | hope you will support this common sense measure which clarifies current law and which will result in savings for both borrowers and taxpayers. Please contact Vince Sarubbi of my office at Vincent.Sarubbi@mail house gov or 202-225-6501 if you would like to be a co-sponsor of this important bill. Sincerely, Robert E. Andrews Member of Congress Original Message- From: Elizabeth. ladarola (mailto: izabeth.Jadarola@thecormacgroup.com]{As you may recall, the bill is designed to prevent persons (other than those specifically targeted by Congress ice., public service employees) from obtaining debt forgiveness causing an unintended loss to the Federal Government and the taxpayers. 113th CONGRESS Ist Session H.R, 1991 To require the Secretary of Education to verify that individuals have made a commitment to serve in the Armed Forces or in public service, or otherwise are a borrower on an eligible loan which has been submitted to a guaranty agency for default aversion or is already in default, before such individuals obtain a consolidation loan for purposes specified under section 455(o) of the Higher Education Act of 1965. IN THE HOUSE OF REPRESENTATIVES May 15, 2013, Mr. ANDREWS introduced the following bill; which was referred to the Committee on Education and the Workforce ABILL To require the Secretary of Education to verify that individuals have made a commitment to serve in the Armed Forces or in public service, or otherwise are a borrower on an eligible loan which has been submitted to a guaranty agency for default aversion or is already in default, before such individuals obtain a consolidation loan for purposes specified under section 455(0) of the Higher Education Act of 1965. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. REQUIRED VERIFICATION. Section 428C of the Higher Education Act of 1965 (20 U.S.C. 1078-3) is amended (1) in subsection (a)(3)(B)(i)(V)(aa), by inserting before the period at the end the following: “in a case in which the Secretary verifies that the individual is currently eligible for income contingent repayment or income-based repayment and that the loan(s) in question have been submitted to the guaranty agency for default aversion or ifthe loan is already in default’; (2) in subsection (a)(3)(B)(i)(V)(bb), by inserting before the period at the end the following: ‘in a case in which the Secretary verifies with documentation that the individual is, at the time of the application, employed in a public service job, as that term is defined in section 455(m)(3)';(3) in subsection (a)(3)(B)(i)(V)(cc), by inserting before the period at the end the following: ‘in a case in which the Secretary verifies that the individual is a member of a regular or reserve component of the Armed Forces by contacting the Secretary of the military department or the Secretary of Homeland Security, as the case may be, having jurisdiction over the Armed Force in which the individual claims to be a member’; and (4) in subsection (b)(5), by inserting after the second sentence the following: ‘In addition, the Secretary shall not offer any loans offered under this paragraph unless the Secretary has received verification described in subsection (a)(3)(B)(i)(V) (aa)-(cc), as applicable.’ Elizabeth ladarola Senior Advisor The Cormac Group 1730 Rhode Island Avenue, NW Suite 317 Washington, DC 20036 202.467.4700ssaAedxey pue siamoog BUILWeH INOYUM juaju| |eUOISSa18U0D sulUNsUy uol}ep!l|osuoD-ay UeO] JUapN}s“UBO] S1d JO psoyjeys Mau e YIM UOT UO!}epl|OsUOD Bul\sixe Ue BUIUIqUUOD Aqasay} ‘(Buijenpess/Bunesedas Jaye |Ooyds 0} Sujuinjas “3*a) Suyepljosuod 0} Juanbasqns ued] Sid JO pucyers jesapay Mau e pauleyqo Jamoog ay} FI dUWII} puodas e a}eP!|OSUOD 0} JAMO e paMmoj|e sAemye sey Me] BY} YAAZMOH *(ueo7 UolepljosuoD Bulysixa ue a}epl|osuod-a1 pamo}je uaaq Jou aAeY siaModiog “3"!) 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Supinsas ‘us9| uolLep|(osu09 Tayy BuNsm9 po shed YEO} LONep||OsueD y>811G MAN 2) peonpas (sssce'y= ey rsosoru squauted at 0 SE 1948 S500'T Aa pue HOW 546270.A9 )) 561 Jog/T 3easeau o2 én papunos ‘cep Jo sie ySezaLU! eBesone parysiom saunssy LON UeoT jo MT Snug SUNG SjuSUIAeG TEeses SE9'LLZS. vOor'er7s o00‘0STS ozs'sts 060'S8T$ odz'991s. o00‘00T$ Otr’6s svs't6s SETEs$ 000‘0s$ 919'r$ EL7'9S es9'trs 000'sz$ squawihed (@ uonepyosuoy (uopepyjosuoy qed Jemouog ue0} weo1 1343 ueoy quapnis leuonippy | qedIg MeN sunsya wa] juauiAeday 4e3, OF ‘SIIgaNaa YaMOUUO" JO SSOT WOU ONILINS3Y SINAINAVd YAMOUNOS TWNOILIGGY SNVO1 NOILYGIOSNOD 1444 4O 4SOAVd NVOT LOaNIGO'Bergh, Jon Fro Jessica Thompson Sent: Monday, June 17, 2013 10:35 AM To: Jessica Thompson Subject: Coalition Letter to Director Cordray re: School Certification of Private Loans Attachments: 6.17.13 Cordray Letter FINAL docx Importan High Good morning, The attached coalition letter was sent this morning to Director Cordray at the Consumer Financial Protection Bureau (CFPB). It urges the Bureau to use its authority under the Truth in Lending Act (TILA) to require school certification of all private education loans. With federal subsidized student loan interest rates scheduled to double on July 1, the letter expresses concern that without this action by the CFPB, more students will mistakenly turn to costly and risky private loans to pay for higher education, thinking they are more affordable than federal student loans. The letter further points out that, while all the signing organizations strongly support the Know Before You Owe Private Student Loan Act of 2013 (S. 113) to legislatively require school certification, we believe the Bureau has the authority under TILA to require school certification and counseling before private education loans are disbursed and should do so now. The letter was signed by 29 organizations representing students; consumers; higher education institutions, faculty and staff; civil rights groups; and public policy organizations. Requiring school certification means that lenders will not disburse private education loans unless the school has confirmed that the student is enrolled, how much they are eligible to borrow, and that they have been informed of any untapped federal aid eligibility and the important differences between federal and private loans. The most recent available data show that half of all undergraduates who took out private loans could have borrowed more in safer federal loans. Thank you, Joseph Mais Senior Policy Analyst Director, DC Office The Institute for College Access & Success Phone: 202-223-6060 x 602 imais@ticas.org www.ticas.orgJune 17, 2013 ‘The Honorable Richard Cordray Director, Consumer Financial Protection Bureau 1700 G Street, NW Washington, DC 20552 Dear Director Cordray: Thank you for making improving the student loan market and assisting student loan borrowers a priority for the Bureau. We write to urge the Consumer Financial Protection Bureau to promptly use its authority to enforce consumer financial jaws, including the Truth in Lending Act (TILA), to require that private education lenders obtain school certification prior to disbursing private education loans. School certification of private loans is consistent with the Bureau’s simple and sensible goal: that students should know before ‘they owe. If Congress and the Administration fail to act by July 1, 2013, the interest rate on new federal Stafford subsidized loans will double from 3.4% to 6.8%. We are deeply concerned that the doubling of interest rates during a period of record-low market interest rates will lead to a significant increase in students mistakenly turning to costly and risky private loans to pay for higher education. That would increase the cost of college for these students and their families, many of whom are already struggling to afford school, and increase the risks that student debt may pose to the economy and the struggling housing market. Requiring lenders to obtain school certification of private loans—including the notification and counseling of students with any remaining federal aid eligibility —would significantly reduce the risks to students, families and the economy, and help students make more informed borrowing decisions. Last October, Bureau officials noted the “uncanny resemblance” between the challenges faced by struggling homeowners and private education loan borrowers when seeking to renegotiate the payment plans on their loans. We applaud you for addressing this troubling situation for those who have already borrowed, but urge you to also take steps to ensure that more borrowers do not get trapped in these loans. in 2012, Sallie Mae, the largest lender, successfully issued eight offerings of private loan asset-backed securities. With investors eager to find yield in today’s rate environment, we may once again see movement toward pushing private loans on students and families who may not understand the risks of these mostly variable-rate products. ‘As you know, based on the available data, a majority of undergraduate private loan borrowers did not borrow the maximum amount in safer federal student loans first, and therefore may not have needed to take out a private loan. Private loans are one of the riskiest, most expensive ways to pay for college. Like credit cards, they typically have variable interest rates that are higher for those who can least afford them However, private loans are treated much more harshly in bankruptcy than credit cards and other comparable types of debt. Private loans also do not provide the important deferment, income-based repayment, and loan forgiveness options that accompany federal student loans. This leaves most private loan borrowers at the mercy of their lender if they face financial distress due to unemployment, disability, illness, or military deployment, or if their school shuts down before they can finish their certificate or degree. Last year, you and Secretary Duncan issued a report recommending that lenders be required to obtain school certification of private loans. The report found that at the height of the lending boom only 28% ofall private education loans were “school certified.” This means schools did not have the opportunity to confirm whether the student was enrolled, whether the loan exceeded allowable limits, or ifthe student was eligible for safer federal loans to counsel them about their options. Today, the vast majority of lenders voluntarily ask schools to certify their private loans, but lenders are not required to do so. Even when they do, many schools do not take the opportunity to inform or counsel students before certifying the private loan. As the joint report notes, a wide range of stakeholders, including organizations representing lenders, schools, financial aid administrators, and students, have endorsed requiring school certification of all private loans, including notification of the student of any available federal aid, ‘While we strongly support the Know Before You Owe Private Student Loan Act of 2013 (S. 113) to legislatively require school certification, we believe the Bureau has the authority under TILA to require school certification and counseling before private education loans are disbursed and should do so now. The current self-certification procedures do not adequately protect private loan borrowers because there is no mechanism to ensure that the information provided is correct. Any party can fill out the self-certification form, despite the statute’s stating that the cost of attendance and expected family contribution are to be determined by the institution of higher education. The school is not required to confirm the accuracy of the information on the form, to provide any information directly to the student, or to play any role in determining the final loan amount. Indeed, private lenders may pre-populate the self-certification form themselves, which can lead borrowers to enter into loans based on inaccurate or misleading information. In addition, the current self-certification process does not assure that each student receives information about his or her outstanding federal aid eligibility, meaning students are often unaware of how much they can borrow through lower-cost federal financial assistance. Financial aid officers report that students and families seeking private education loans are frequently misinformed about the availability of federal student loans and unaware of the greater risks of private loans, For example, many students and families assume they earn too much to qualify for federal student loans, even though there is no income limit. ‘Accurate and personalized information regarding a student's outstanding federal aid eligibility is critical for borrowers to make informed decisions about private education loans. However, this information, which only an institution of higher education can provide, is not part of the current self-certification process. “There is considerable evidence that making schools part of the certification process better ensures that borrowers are informed before making serious credit decisions and better protected from unfair, deceptive, or abusive lending practices. School-certfied loans have significantly lower default rates than uncertified, or “direct-to-consumer,” loans, which have been found to be two to three times more likely to default. The recent joint report by the Bureau and Education Department notes that some securitized trusts loaded with direct-to-consumer loans have default rates expected to reach 50%. Involving the school in the process also better prevents private lenders from taking unreasonable advantage of a borrower's lack of understanding of the material risks, costs, and conditions of a private education loan compared to federal loans, With private lenders currently marketing loans with variable rates starting as low as 2.25%, more students and families may mistakenly conclude that such loans are more affordable than federal loans with a fixed rate of 6.8%. Requiring school involvement now is also critical to prevent a resurgence of the reckless and deceptive private lending practices common before the recent financial criss. The statutory language demonstrates that Congress intended to create a rigorous scheme to ensure that borrowers of private education loans are provided full information and protected against unfair lending practices, and to delegate to the Bureau the power to require additional lender disclosures if necessary to ensure adequate consumer protection. The statute requires that private education lenders disclose specific 2information at the solicitation, application, approval, and consummation stages to ensure that borrowers are fully informed of the limitations of private loans, as well as the availability of federal student financial assistance, At all four stages, the law requires private lenders to disclose any “other information as the Bureau shall prescribe, by rule, as necessary or appropriate for consumers to make informed borrowing decisions.” Further, Congress clearly envisioned a role for higher education institutions to ensure that borrowers are fully informed, requiring institutions of higher education to provide the self-certification form upon the request of a student and to determine the cost of attendance and the expected family contribution, Thank you for considering our views. We are deeply grateful that you have made assisting student loan borrowers and improving the student loan market a priority for the Bureau. Sincerely, American Association of Collegiate Registrars and Admissions Officers ‘American Association of Community Colleges American Association of State Colleges and Universities ‘American Association of University Women ‘American Federation of Teachers Americans for Financial Reform Association of Community College Trustees Center for Responsible Lending Consumer Action Consumers Union The Education Trust Higher Education Policy Institute Hispanic Association of Colleges and Univer: The Institute for College Access & Success NAACP National Association for College Admission Counseling National Association of Social Workers National Black Law Students Association National Consumer Law Center (on behalf of our low-income clients) National Consumers League National Education Association New Economy Project (formerly NEDAP) New York Public Interest Research Group Public Citizen Rock the Vote United States Public interest Research Group United States Students Association Woodstock Institute Young Invincibles Rohit Chopra, Assistant Director and Student Loan Ombudsman Zixta Martinez, Associate Director for External Affairs 3O'Bergh, Jon Fro Kanter, Martha Sent Sunday, June 16, 2013 10:28 PM Te Plotkin, Hal Subject: RE: My other “big” idea Write it up in the same way we've drafted the others with pros and cons, etc. From: Plotkin, Hal Sent: Sunday, June 16, 2013 8:37 AM To: Kanter, Martha Subject: My other "big" idea (eysyO'Bergh, Jon From: Pauline Abernathy Sent: Friday, June 14, 2013 9:17 AM To: Arsenault, Leigh Subject: can you give me a call? the vm is full at 260-1488 Thanks. Pauline Pauline Abernathy Vice President, The Institute for College Access & Success Direct: 202.223.6060 x603 Main: 510.318.7900 www. ticas.org and www.projectonstudentdebt.orgO'Bergh, Jon From: Pauline Abernathy Sent Thursday, June 06, 2013 10:01 AM Te Pauline Abernathy Ce: Connie Myers; Jessica Thompson Subject: Urgent: Vote Today For Reed-Harkin (S. 953) and Oppose Cobumn-Burr-Alexander (S. 1003) Attachments: TICAS Stmt on Senate Interest Rate Bills.docx FYI, Sent the statement below early this morning to the press and all Senate offices college access success Statement of LAUREN ASHER CONTACTS: President, The Institute for College Access & Success (TICAS) Gretchen Wright, 202/371-1999 June 6, 2013 Shannon Gallegos, 510/318-7915 TICAS Calls on Congress to Stop Student Loan Interest Rates from Doubling Urges Senators to Vote for Reed-Harkin Bill and Against Coburn-Burr Bill “In just 24 days, the interest rate for subsidized Stafford student loans will double from 3.4% to 6.8% unless Congress acts. Today, we call on the Senate to keep college and federal loans affordable instead of driving students deeper into debt by supporting the Reed-Harkin bill and opposing the Coburn-Burr bill. “The bill sponsored by Senators Coburn, Burr and Alexander (S. 1003) would make things worse for borrowers. It sets rates at levels that are projected to cost students nearly $16 billion more over the next 10 years alone, and it removes any cap on how high rates can go. Under the bill, rates are projected to more than double by 2016. It not only expects students to pay even more to get through college, but also to pay down the government's debt. These harmful and costly changes would be permanent. “In contrast, the bill sponsored by Senators Reed and Harkin (S. 953) would protect students while giving Congress and the Administration time to develop comprehensive reforms that keep federal loans affordable, support sensible borrowing, and better target benefits. Their bill keeps subsidized Stafford loans at the current fixed rate of 3.4% for two years and pays for itself by closing unnecessary tax loopholes.” NOTE: TICAS’ recent white paper includes comprehensive reforms to keep federal student loans affordable, streamline the loan program, and better target benefits. See our recent blog post for analyses and comparisons of student loan interest rate proposals. aHed‘An independent, nonprofit organization, The Institute for College Access & Success (TICAS) works to make higher education more ‘available and affordable for people ofall backgrounds. Our Project on Student Debt works to increase public understanding of rising student debt and the implications for our fomilies, economy, and society. For more information see www.ticas.org and www. projectonstudentdebt.org or follow us on Twitter ot www.twitter.com/TICAS org.college access success Statement of LAUREN ASHER ‘CONTACTS: President, The Institute for College Access & Success (TICAS) Gretchen Wright, 202/371-1999 June 6, 2013 ‘Shannon Gallegos, 510/318-7915 TICAS Calls on Congress to Stop Student Loan Interest Rates from Doubling Urges Senators to Vote for Reed-Harkin Bill and Against Coburn-Burr Bill “In just 24 days, the interest rate for subsidized Stafford student loans will double from 3.4% to 6.8% unless Congress acts. Today, we call on the Senate to keep college and federal loans affordable instead of driving students deeper into debt by supporting the Reed-Harkin bill and opposing the Coburn-Burr bill. “The bill sponsored by Senators Coburn, Burt and Alexander (S. 1003) would make things worse for borrowers. It sets rates at levels that are projected to cost students nearly $16 billion more over the next 10 years alone, and it removes any cap on how high rates can go. Under the bill, rates are projected to more than double by 2016. It not only expects students to pay even more to get through college, but also to pay down the government's debt. These harmful and costly changes would be permanent. “4n contrast, the bill sponsored by Senators Reed and Harkin (S. 953) would protect students while giving Congress and the Administration time to develop comprehensive reforms that keep federal loans affordable, support sensible borrowing, and better target benefits. Their bill keeps subsidized Stafford loans at the current fixed rate of 3.4% for two years and pays for itself by closing unnecessary tax loopholes.” NOTE: TICAS' recent white paper includes comprehensive reforms to keep federal student loans affordable, streamline the loan program, and better target benefits. See our recent blog post for analyses and comparisons of student loan interest rate proposals. ‘An independent, nonprofit organization, The Institute for College Access & Success (TICAS) works to make higher education more oveilable ond affordable for people of all backgrounds. Our Project on Student Debt works to increase public understanding of rising student debt and the implications for our families, economy, and society. For more information see vww.ticas.orq and www. projectonstudentdebt.org or follow us on Twitter at voww.twitter.com/TICAS_ ora.O'Bergh, Jon From: Pauline Abernathy Sent: Wednesday, June 05, 2013 3:32 PM To: Pauline Abernathy ce: Debbie Cochrane; Lauren Asher; Joseph Mais Subject: TICAS comments on topics for negotiated rulemaking ‘Attachments: House letter for 6 4 13 Gainful Employment pdf jelow is a link to official comments TICAS submitted yesterday on topics for the Education Department's \g negotiated rulemaking. TICAS also joined organizations representing students, veterans, ‘consumers, and advocates for college access and civil rights, as well as three state attorneys general, in testifying at the Department's public hearings in support of a strong gainful employment rule. In addition, more than 500 individuals from around the country submitted comments urging the Department to develop both a strong gainful employment rule and rules to prevent the manipulation of cohort default rates and 90/10 rates. Also attached are submitted comments signed by 22 members of the House of Representatives, including 17 tri-caucus members, urging the Department to promptly initiate new gainful employment rulemaking and to take other steps to enforce current laws, Key recommendations in the TICAS comments posted here include: ensuring adequate representation for students and taxpayers on negotiating committees; © moving forward with a strong gainful employment rule to protect students and taxpayers from career education programs that overcharge and under-deliver. In particular, the Department's regulations should: © end funding for the worst career education programs in ways that address the court's ruling and reduce the burden on programs with low borrowing rates; require poorly performing programs to improve to keep receiving federal funds; make the consumer disclosures easier to find, understand and compare; prevent schools from evading accountability under the rule; provide relief to students who were enrolled in programs that lose eligibility for federal funds; and © reconsider changes that weakened the gainful employment definition in light of experience and new data since the final regulation was issued in June 2011. «Strengthening other program integrity rules to prevent the evasion of federal laws on cohort default rates and the 90/10 rule, including: © CDRevasion via abuse of forbearance and deferments; © 90/10 manipulation through disbursements; and © CDR and 90/10 manipulation by combining campuses. e000 Pauline Abernathy Vice President, The Institute for College Access & Success Direct: 202.223.6060 x603 Main: 510.318.7900 www ticas.org and www.projectonstudentdebt.orgCongress of the United Stat Washington, DE 20515 June 4, 2013 ‘The Honorable Barack Obama President of the United States 1600 Pennsylvania Avenue ‘Washington, DC 20500 Dear Mr. President We write today to express our support for your efforts to initiate new pro aimed at def programs, a 1g the statutory “gainful employment” requirement for career education ‘The Higher Education Act of 1965 requires that all career education programs that receive Title IV funds “lead to gainful employment in a recognized occupation.” Yet, there is no official definition of “gainful employment,” making the provision difficult to enforce. Defining this term will help protect student and taxpayer investments in career education programs and enforce current law. More than ever, we need a rule that ends federal financial aid for programs that consistently leave students — our veterans, working parents, and other Americans struggling. to build new lives — without decent incomes and with insurmountable debt. Federal aid should only go to career education programs that effectively train students and help them build careers. Last year a federal district judge upheld the Department of Education's authority to issue regulations to enforce the statutory “gainful employment” requirement. Although the judge vacated the 2011 gainful employment regulation because of defects in two areas, he ultimately confirmed the need for regulation, concluding, “The Department has set out to address a serious policy problem, regulating pursuant to a reasonable interpretation of its statutory authority....Concerned about inadequate programs and unscrupulous instit the Department has gone looking for rats in ratholes — as the statute empowers it to do. The data that the Education Department published under the 201 rule confirm this need. Sixty-five percent of the programs reporting failed at least one of three minimal tests aimed at protecting students, and five percent failed all three tests, Without an effective gainful employment rule, these programs will continue to operate and harm students. We ask for your leadership to promptly initiate a new gainful employment rulemaking and to take other steps to enforce current laws and improve higher education andcareer opportunities for all Am Member of Congress, Mark Takano ‘Member of Congress ins. We are ready and willing to work with your Administration to get this critical job done. Sincerely, Rubén Hinojosa A . CK ‘ = AN | OAV “AN ¢ Jifed Polis femberof Congressguea) ce: Hon, Ame Duncan, Secretary of Education,O'Bergh, Jon Lauren Asher Wednesday, June 05, 2013 1:32 PM Arsenault, Leigh Re: follow-up re PAYE and DL consolidation Ok! Feel free to call [ONE lin case I'm away from my desk Sent via mobile device (On Jun 5, 2013, at 10:27 AM, "Arsenault, Leigh" wrote: I'll do my best to call you at 3pm! From: Lauren Asher [mailto:LAsher@ticas.or] Sent: Wednesday, June 05, 2013 12:00 PM To: Arsenault, Leigh ‘Subject: RE: follow-up re PAYE and DL. consolidation Thanks -- 1-1:30 or 3pm your time today; 12-1, 3-3:30, or 5:30 pm your time tomorrow From: Arsenault, Leigh [mailto:Leigh Arsenault@ed. gov] Sent: Wednesday, June 05, 2013 7:48 AM To: Lauren Asher Subject: RE: follow-up re PAYE and DL consolidation Yes ~is there a good time to call you today or tomorrow? From: Lauren Asher [mailto:LAsher@ticas.ora] Sent: Tuesday, June 04, 2013 4:21 PM To: Arsenault, Leigh Subject: follow-up re PAYE and DL. consolidation Leigh, thanks for updating Diane on the PAYE/DL consolidation situation. Any chance you've got a few minutes available this week for a quick follow-up? Lauren Asher, President ‘The Institute for College Access & Succes 405 14th Street, 11th Floor, Oakland, phone: 510-318-7900, x304 fax: 510-318-7918 email: jasher@ticas org 94612 wwwtleasorg www projectonstudentdebtorg wwwcollege-insightorg. wwbrinfo.orgO'Bergh, Jon From: Arsenault, Leigh Thursday, May 30, 2013 4:45 PM Greene, Chris McGinnis, Colleen; Isett, Christine A RE: Delayed implementation of I8R/PAYE/ICR request form for Direct Consolidation Loans Thanks! From: Greene, Chris Sent: Thursday, May 30, 2013 4:44 PM To: Arsenault, Leigh Ce: McGinnis, Colleen; Tsett, Christine A. Subject: RE: Delayed implementation of IBR/PAYE/ICR request form for Direct Consolidation Loans Understood. | hope to have more details this evening or tomorrow morning. From: Arsenault, Leigh Sent: Thursday, May 30, 2013 4:42 PM To: Greene, Chris Cc: McGinnis, Colleen; Isett, Christine A. ‘Subject: RE: Delayed implementation of IBR/PAYE/ICR request form for Direct Consolidation Loans ‘Thanks — | will want to walk them through that so will hold before reaching back out. But again, need to do so very From: Greene, Chris Sent: Thursday, May 30, 2013 4:38 PM To: Arsenault, Leigh Ce: McGinnis, Colleen; Isett, Christine A ‘Subject: RE: Delayed implementation of IBR/PAYE/ICR request form for Direct Consolidation Loans (ONSy From: Arsenault, Lek Sent: Thursday, May 30, 2013 11:09 AM To: Greene, Chris Ce: McGinnis, Colleen Subject: RE: Delayed implementation of IBR/PAYE/ICR request form for Direct Consolidation Loans The question has been outstanding for quite some time — really need an answer today if possible. Thank you! From: Greene, Chris Sent: Thursday, May 30, 2013 11:09 AM To: Arsenault, LeighCe: McGinnis, Colleen Subject: Re: Delayed implementation of IBR/PAYE/ICR request form for Direct Consolidation Loans Leigh- I'm checking on this and will get back to you, Chris Sent from my BlackBerry Wireless Device From: Arsenault, Leigh Sent: Wednesday, May 29, 2013 07:32 PM Eastern Standard Time To: Greene, Chris Cc: McGinnis, Colleen ‘Subject: Fw: Delayed implementation of IBR/PAYE/ICR request form for Direct Consolidation Loans Hi Chris, do we have a response to each of these issues? | know your team and others have been moving them through. Thanks, Leigh From: Diane Cheng [maitto:DCheng@ticas.org] Sent: Wednesday, May 29, 2013 07:24 PM Eastern Standard Time To: Arsenault, Leigh Cc: Lauren Asher ; Pauline Abernathy Subject: RE: Delayed implementation of IBR/PAYE/ICR request form for Direct Consolidation Loans HiLeigh, We just wanted to follow up to see if you have any new information about this issue, and also to thank you for getting the IBR, ICR, and PAYE calculators updated (to use the 2013 poverty levels). We appreciate your continued work on this! Diane From: Arsenault, Leigh [mailto:Leigh.Arsenault@ed.gov] Sent: Thursday, April 18, 2013 4:39 PM To: Diane Cheng Ce: Lauren Asher; Pauline Abernathy Subject: RE: Delayed implementation of IBR/PAYE/ICR request form for Direct Consolidation Loans Thanks, Diane. | have been playing office hap-scotch so my number did change. The permanent number you can reach me at is 2022601488. | am looking into this issue but am working to answer a few additional questions myself. Chatting next week should be fine. Many thanks, -Leigh From: Diane Cheng [mailto:DChengatticas ora] Sent: Thursday, April 18, 2013 7:36 PMTo: Arsenault, Leigh Cc: Lauren Asher; Pauline Abernathy ‘Subject: RE: Delayed implementation of IBR/PAYE/ICR request form for Direct Consolidation Loans Hi Leigh, I Left you a message yesterday to follow up on this issue, but I’m not sure I left it in the right place. | called (202) 453. 7276 and was forwarded to your mailbox after entering your last name into the directory. Is that the right number? We are wondering if you have any new information about the delayed implementation of the IBR/PAYE/ICR request form for Direct Consolidation Loan applicants and the process through which those borrowers are currently able to apply for income-driven repayment plans. | would be happy to discuss this over the phone (510-318-7900). | am out of the office tomorrow (Friday) but will be in all of next week. Thanks! -Diane Diane Cheng Research Analyst ‘The Institute for College Access & Success 405 14th St., Suite 1100 Oakland, CA'94612 510-318-7900 x311 dchengaticas.org womw.ticas.org, From: Pauline Abernathy Sent: Monday, April O01, 2013 7:30 AM To: Leigh Arsenault (Ieiah.arsenault@ed.gov) Ce: Lauren Asher; Diane Cheng ‘Subject: FW: Delayed implementation of IBR/PAYE/ICR request form for Direct Consolidation Loans: FYI--Below is the IFAP notice | mentioned when we spoke. htto://ifap.ed.gov/eannouncements/0329130perGuidanced GAgenciesDelayedimplemIBRPayAsYouEarniCRRequestFor m.htmi Posted Date: March 29, 2013 Author: William Leith, Service Director, Program Management, Federal Student Aid Subject: Operational Guidance for Guaranty Agencies - Delayed Implementation of IBR/Pay As You Earn/ICR Request Form for Direct Consolidation Loan Purposes In Dear Colleague Letter GEN-12-22, the Department of Education (the Department) provided information about the availability of the Income-Based Repayment (IBR) Plan/Pay As You Earn Plan/Income-Contingent (ICR) Plan Request form for the William D. Ford Federal Direct Loan (Direct Loan) Program and the Federal Family Education Loan (FFEL) Program. In this announcement, weprovide operational guidance to FFEL guaranty agencies that assist borrowers with the preparation of Direct Consolidation Loan applications. For technical reasons, we have delayed implementation of the new IBR/Pay As You Earn/ICR Request form in the Direct Consolidation Loan application process. Therefore, guaranty agencies that assist borrowers who want to obtain a Direct Consolidation Loan should not provide those borrowers with the IBR/Pay As You Earn/ICR Request form. Guaranty agencies should instead provide potential consolidation borrowers who want to request an income-driven repayment plan with the following forms that remain available on the Direct Consolidation Loans Web site: Direct Loan Repayment Plan Selection form Direct Loan ICR Plan & IBR Plan Alternative Documentation of Income form Until we implement the new IBR/Pay As You Earn/ICR Request form in the Direct Consolidation Loan application process, submission of the IBR/Pay As You Earn/ICR Request form with a Direct Consolidation Loan application will delay processing of that application. Note: Our delayed implementation of the new IBR/Pay As You Earn/ICR Request form is limited to the Direct Consolidation Loan application process. Except for the specific case explained in this announcement, FFEL lenders, lender servicers, and guaranty agencies are required to use the new form as directed in GEN-12-22. We will inform guaranty agencies through a subsequent Electronic Announcement when they may begin providing the new IBR/Pay As You Earn/ICR Request form to potential Direct Consolidation Loan borrowers who want to request an income- driven repayment plan. Contact Information If you have questions about this guidance, contact the Direct Loan Consolidation Center at 800/557-7392. You may also e- mail loan_consolidation@mail.eds.com(loan_consolidation@mail.eds.com).O'Bergh, Jon. From: Jessica Thompson Sent: Wednesday, May 22, 2013 12:03 PM To: Arsenault, Leigh Subject: TICAS Submission re: IPEDS Comment Period Ending May 13, 2013 Attachments: TICAS IPEDS Comment - final 05-13-13 pdf Hi Leigh, FYI, I'mattaching the comments we submitted during the recent public comment period re: OMB Clearance for IPEDS (ending May 13). I'm also including a summary below. Thanks! Jessica ‘Summary: TICAS Recommendations for IPEDS (details attached) Cumulative debt at graduation: Immediately start collecting data on cumulative federal and private (non-federal) loan debt at graduation for completers of undergraduate certificates, associate's degrees, and bachelor’s degrees. Graduation rates for Pell recipients: Immediately begin collecting graduation data for Pell Grant recipients. Currently, colleges are required to calculate and disclose this rate, but not report it and [everi when schools are complying it can be difficult to find the disclosure) Annual private (non-federal) loan data for all undergraduates: Immediately begin collecting data on annual federal and private loan borrowing for all undergraduates as is already done for first-time, full-time undergraduates. Number of loan-eligible students (for CDR PRls): To make the data required to derive the Cohort Default Rate (CDR) Participation Rate Index (PRI) publically available, start collecting the number of undergraduate and graduate students receiving federal Direct Loans during the full 12-month award year as well as the number of degree or certficate-seeking students who were enrolled at the institution at least half time during any part of the award year. Committee on Measures of Student Success (CMSS) recommendations: For the first time, the Department is taking steps to collect graduation rate data in IPEDS not only for first-time full-time undergraduates, but also for first-time part- time undergraduates and those who attended more than one institution, either full time or part time. We provide three recommendations relating to how those data should be reported. Better data by/for veterans/service members: Make new data collected by IPEDS on veterans and service members more robust and useful by addressing outcomes and cost. Data integration: Until common school and campus identifiers are used by the National Center for Education Statistics (NCES), Federal Student Aid (FSA), the Office of Postsecondary Education (OPE), and other agencies, the Department should minimally provide a definitive crosswalk and mapping tools to help users integrate FSA data with IPEDS data using OPEID numbers. Marketing/recruiting expenses at for-profit colleges: We recommend that IPEDS should collect data on expenditures for recruiting, advertising, and marketing, Jessica L. ThompsonSenior Policy Analyst The Institute for College Access & Success 1111 16" Street NW, Suite 310 Washington DC, 20036, Phone: (202) 223-6060 x601 ithompson@ticas.orz www.ticas.orgcollege access ‘SUCCESS May 13, 2013 Ms. Kate Mullan Acting Director, Information Collection Clearance Division USS. Department of Education 400 Maryland Avenue SW, LBJ Room 2E117 Washington, DC 20202-4537 ICDocketMgn@ed.gov (submitted electronically via: www.tegulations.cov) Dear Ms. Mullan: We are writing in response to the request for comments on the proposed revision of the Integrated Postsecondary Education Data System (IPEDS), published in the Federal Register on March 14, 2013, docket number ED-2013-ICCD-0029. The Institute for College Access & Success (TICAS) is an independent, nonprofit organization that works to make higher education more available and affordable for people of all backgrounds. By conducting and supporting nonpartisan research and analysis, TICAS aims to improve the processes and public policies that ‘can pave the way to suecessful educational outcomes for students and for society. ‘As TICAS has long recommended, incremental changes to IPEDS could result in substantial improvements in the availability of meaningful data about student borrowing and outcomes. In these comments, we recommend specific changes that will greatly improve the information available to consumers, researchers, and policymakers while minimizing reporting burden for colleges. ‘The recent efforts of the U.S. Department of Education (ED) to make better data available to students and consumers underscore the urgent need for better information on these fronts. Both the College Scorecard and the Financial Aid Shopping Sheet were designed to help students and families make informed decisions about whether and where to attend college and how to pay for it. However, the absence of available good data has led ED to make compromises that may mislead rather than enlighten consumers. For example, without cumulative debt for all colleges, the College Scorecard compares median debt figures that are apples-to-oranges, not distinguishing between colleges where few or all students borrow, or where few or all students graduate. We applaud ED's efforts to expand the collection and reporting of debt and outcome data, and provide detailed comments below Cumulative debt at graduation ‘As noted above, there is an urgent need for better data on cumulative student loan debt for use in the College Scorecard and Financial Aid Shopping Sheet. The best data currently available, from "TICAS. 2013, New College Scorecard: Two Steps Forward, One Step Back. bipuiviews ticas ong/?p-982, qthe Common Data Set (CDS), is grossly insufficient: they are reported voluntarily by only some four-year colleges, and for bachelor degree recipients only. We commend ED for working toward obtaining better data through the National Student Loan Data System (NSLDS), but such data will not be available until late 2014 at the earliest and will only cover federal student loans. Consumers need better data right now. We recommend that IPEDS immediately start collecting data on cumulative debt at graduation for completers of undergraduate certificates, associate's degrees, and bachelor’s degrees. To minimize reporting burden and ensure apples-to-apples comparisons, we suggest applying the ‘Common Data Set (CDS) definitions already established for questions on this topic to certificates and associate’s degrees as well as bachelor’s degrees.” That is, collect data for students who started as first-time undergraduates at the reporting institution and count only student debt accumulated at the reporting institution (excludes transfer-in students and debt accumulated at Specifically, for each award level noted above, IPEDS should collect and report the following data points: + Number of students in graduating class (as defined above) © Number of graduating students with debt © Total debt of the graduating class Collecting those data would allow the National Center for Education Statistics (NCES) or stakeholders to calculate the percent of graduates with debt and the average debt per borrower. Minimally, these data should be collected for all student loans, federal student loans, and non- federal student loans separately. Ideally, non-federal loans should be further divided by source (states, colleges, and banks/lenders). We recommend collecting these data in IPEDS starting in 2013-14. If and when such data are validated through NSLDS calculations, they may be dropped from required IPEDS reporting. Graduation rates for Pell recipients In 2008, the Higher Education Opportunity Act added a requirement that colleges disclose graduation rates for Pell Grant recipients, Subsidized Stafford Loan recipients without Pell Grants, and all other students.’ However, many colleges do not make these data available.’ This hampers the ability of researchers, policymakers, and consumers to understand which colleges not only enroll substantial numbers of low-income Pell Grant recipients, but also graduate them. ‘We commend ED for working toward the collection and reporting of comprehensive data on this topic using NSLDS. However, such data will not be available for several years. Therefore, IPEDS should immediately begin collecting these data, particularly graduation rates for Pell Grant recipients. Minimally, these data should be collected for graduation rates tracking fi ® See: Common Data Set Initiative. h * See 20 U.S.C. 1092(a\ 7A). * Education Sector and American Enterprise Institute. 2011. The Truth Behind Higher Education Disclosure Laws. hitovww educationsector org/sites/defaulvfiles/publications/HisherEdDisclosure RELEASE.pdf. ntp:/swww.commondataset.org/ 2time, full-time students completing within150% of normal time. As colleges are already required to calculate and disclose these numbers, reporting them to IPEDS would not constitute an additional burden on colleges. Ideally, a sub-cohort of Pell recipients should be tracked in all of the required cohorts for 2014- 15 reporting and beyond, currently proposed as follows: jn 150% of normal time for first-time, full-time students © Four, five, and six years after entry for bachelor's degree-seeking first-time, full-time students. © Eight years after entry for first-time full-time, first-time part-time, non-first-time full-time, and non-first-time part-time cohorts Annual private (non-federal) loan data for all undergraduates ‘As student debt levels continue to rise, itis important to note that the type of borrowing as well as the amount of borrowing matters. Private (non-federal) student loans are one of the riskiest ‘ways to pay for college, generally lacking the capped, fixed interest rates, flexible repayment plans, and other borrower protections built into federal loans. Currently, IPEDS collects data on annual federal and private loan borrowing for first-time, full- time undergraduates’, but only collects data on annual federal loan borrowing for all undergraduates. With so many undergraduates following non-traditional pathways through higher education and private student loan volume starting to rise once again, it is erucial that consumers and policymakers have timely data about private student loans for all undergraduates at each school, not just those entering as first-time, full-time students, Ideally, these data should be disaggregated by source (state, colleges, or banks/lenders). We have also long called for ED to track private as well as federal student loans in its student Joan database, which is ultimately the best way to provide accurate and comprehensive data on these loans. But as there are no immediate plans to do so, it is imperative that IPEDS collect these data, Number of loan-eligible students (for CDR PRIs) Colleges facing the loss of eligibility for federal student aid on the basis of persistently high cohort default rates (CDRs) have a number of ways to appeal to ED to avoid sanctions. Colleges with high CDRs but a low share of students borrowing federal loans may appeal using the Participation Rate Index (PRI). As part of this process, the college calculates the number of students eligible for federal student loans, the number receiving such loans, the participation rate (oumber receiving divided by number eligible) and the PRI (participation rate times CDR). The PRI recognizes that CDRs may not be representative indicators of institutional quality at colleges where CDRs — which only deseribe the share of borrowers who default ~ reflect outcomes for only a small share of students. However, the data required to calculate the participation rate and the PRI are not available publicly. This is because IPEDS collects the number of undergraduates receiving federal student loans, but not the total number of students receiving federal student loans. In addition, for most colleges, the cohort for these data is fall enrollees only, not all enrollees during a full 12-month award year. 3We recommend that IPEDS collect and report the following data points to facilitate the calculation of PRIs: ‘© Number of students receiving federal Direct Loans (undergraduates and graduate students, full 12-month award year)” + Number of regular students who were enrolled at the institution on atleast a half-time basis during any part of the award year® With these data points, NCES, ED, or other stakeholders could calculate colleges’ participation rates and PRIs. These data would provide important context for the public and policymakers by distinguishing between schools where CDRs are more and less meaningful indicators of quality. Collecting these figures would also help colleges better understand their risk of sanctions and prevent schools from unnecessarily withdrawing from the student loan program, which cuts, students off from the safest way to borrow if they cannot otherwise afford to stay in school.” Colleges would still be able to appeal CDR sanctions using a different 12-month period from the academic year by submitting the relevant data to ED. Reporting better graduation-rate data ED has taken a number of promising steps to implement the recommendations of the Committee ‘on Measures of Student Success (CMSS). In particular, ED’s proposed changes to IPEDS include a substantial expansion of the graduation rate data collected and reported. For the first ime, data would be collected not only for first-time full-time undergraduates, but also for time part-time, non-first-time full-time, and non-first-time part-time undergraduates. We make three recommendations related to how these data should be reported: = Asnoted in our earlier comments on this topic," we strongly recommend that only “vertical transfer" (e.g., 2-yr to 4-yr institution) be included in success measures. The currently proposed way of capturing transfer is to count students who “subsequently enrolled at another institution,” whieh presumes that subsequent enrollment at any other institution of higher education be considered a successful outcome. However, enrolling at ‘one college after another is not necessarily a sign of student success. Consider a student who moves quickly from one college to another because they were not satisfied with the first one, or a student who realizes after a year of coursework that their eredits will not transfer and subsequently opts to start over elsewhere. Including these types of subsequent enrollments as successes would make the progression and completion measures /ess meaningful, not more so. = Wealso recommend that these graduation rates apply to all institutions, not just degree- granting institutions. Many students choose between certificate programs in a particular field at degree-granting and non-degree-granting institutions. Some colleges are classified 5 As defined in 34 CFR 668.195(b\i) and 34 CFR 668.214(b)(). As defined in 34 CFR 668.195(b)ii) and 34 CER 668.2140). *TICAS, 2011. Still Denied: How Community Colleges Shortchange Students by Not Offering Federal Student Loans. itpliprojectonstudentdeby.oresfiles/pulbstill_denied.pif © TICAS, 2012. Comments in response to the “Report and Suggestions from IPEDS Technical Review Panel #37, Selected Outcomes of Advisory Committee on Measures of Student Success bttpd/wny teas.org/fles/pub/TICAS_ comments on TRP37 CMSS_final_0S-29-12.puf. 4as degree-granting on the basis of a small number of degrees, but are in fact predominantly certificate-granting institutions, - Finally, because the time it takes to complete a degree or certificate matters, IPEDS should collect the outcomes status of each cohort twice: four years and eight years after entry for four-year colleges and three years and six years after entry for two-year ges, This was one of the options originally put forward for consideration by the ical review panel (TRP) on this topic. As currently proposed, all degree-granting institutions would report outcomes data for these cohorts only once, eight years after students” entry, Better data about and for veterans and service members As noted in the IPEDS TRP report on this topic,’ since the Post-9/11 GI Bill went into effect in ‘August 2009, there has been substantial growth in the number of students receiving education benefits for veterans or service members and the total dollars received under these programs, reaching a total of $8 billion in fiscal year 2010. It is critical that veterans and service members, policymakers, and the public have sufficient information about participating colleges to ensure that this investment is not only supporting increased access for this student population, but also that it is helping them to complete meaningful post-secondary credentials without incurring burdensome levels of debt. Specifically, these stakeholders are interested in where these students enroll, what services are offered for them, how successful they are at different institutions, and what the costs are for students and taxpayers. The current proposal includes appropriate changes to IPEDS to collect information on veteran and service member enrollment and access to services. However, these changes do not go far enough, as they neglect crucial questions about outcomes and provide very limited information about costs for these student populations. Specifically: = Itis crucial to track not only where these students enroll but also where they are successfully completing degrees and certificates. Just showing how many veterans and service members have enrolled at a particular school, what services that school provides, and limited information on tuition benefits received at that school will do little to help these students determine how much it will cost them (o attend o their odds of success. Indeed, it could mislead veterans and service members to see the enrollment of a lot of students like them and the availability of certain services as direct indicators of institutional quality and value. To correct for this, we recommend that IPEDS collect data on the number of veterans and service members completing degrees or certificates by award level and field of study (CIP Code). Veterans and service members should be disaggregated in the current retention rates. For graduation rates, minimally these student populations should be disaggregated when tracking first-time, full-time students graduating within 150% of normal time. Ideally, they should be disaggregated in the new graduation rate data RT Intemational. 2012, Report and Suggestions from IPEDS Technical Review Panel #36 Collecting Data on Veterans. hiips-/dedsurveys.tiore/IPEDS. TRP/documents/Repori%20and%20Suguestions*420fiom220TRP36_final.pdf. 5collected under ED’s proposed changes. Given that colleges are already required to identify veterans and service members in some ways (¢.g., the process of benefit certification or self-identification on the FAFSA), tracking their outeomes should not be burdensome. = Information about affordability is also crucial both for veterans and service members and for policymakers. We commend ED for including in the proposed changes data on the number of undergraduates receiving assistance from Post-9/1 GI Bill and Department of Defense (DoD) Tuition Assistance and the total tuition and fee amounts received by these students. This information is already available to institutions, and the collection and dissemination of it will shed important light on where substantial federal investments are being made. ‘We urge ED to continue to work with the Department of Veterans Affairs (VA) to make more comprehensive data available on the number of students receiving benefits under all VA and DoD programs and the total dollar amounts received under these programs. Our previous comments on this topic include additional recommendations, including incorporating military/veterans benefits into net price calculators.” Data integration ‘The lack of a common identifier for colleges across different federal datasets continues to pose substantial challenges to users of ED's data, including consumers, researchers, and policymakers.'' Until common identifiers among NCES, Federal Student Aid (FSA), the Office of Postsecondary Education (OPE), and federal agencies outside the department, such as VA and DoD are established, ED should minimally provide a definitive crosswalk and mapping tools to help users integrate FSA data with IPEDS data using OPEID numbers, Within IPEDS, ED can take the simple step of asking all colleges for all eight-digit OPEID numbers that correspond to each UNITID every year. Including this information in the institutional characteristics data released on the IPEDS Data Center would be a first step toward providing a comprehensive crosswalk. Marketing/recruiting expenses at for-profit colleges ED’s proposed changes to IPEDS include increasing the level of detail in for-profit colleges” reporting of revenues, expenses, assets, and liabilities. While this represents a good first step, IPEDS should also collect data on expenditures for recruiting, advertising, and marketing. In this, we concur with the comments submitted by Senator Tom Harkin, Representatives Elijah °-TICAS, 2012. Commenis in response to the “Report and Suggestions from IPEDS Technical Review Panel #36, Collecting Data on Veterans.” bttps/vw ticas.ore/files/pub/TICAS comments on TRP36_vetetans pdf. T See: TICAS. 2012. Report fiom Education Department Advisory Group Calls for Improvements to Financial Aid Data, hiigillviews.sicas orgy 842Cummings and Rail Grijalva, and the National Association for College Admission Counseling (NACAC) in response the TRP on this topic.” ‘Thank you for the opportunity to share our suggestions and concerns on this important topic. Please feel free to contact me or my colleague Matthew Reed via email at |jasher(@ticas.org or mreed@ticas.org, or by phone at (510) 318-7900, with any questions. Sincerely, Lauren Asher President " For example see: Reps. Cummings and Grijalva. 2012. Comments in response tothe “Report and Suggestions {fiom IPEDS Technical Review Panel 139, Inproving Finance Survey Forms for For-Profit Institutions.” ‘p/demoerats.oversight.house.zov/images/s 07.2620EEC%42010%201PEDS%420Project%620Di IRE%20Comments%2040%420O'Bergh, Jon From: Kanter, Martha Sent: Monday, May 20, 2013 3:31 PM To: Perrotti, Carmine Subject: Fur: TICAS analysis of interest rate proposals Attachments: Impact of Kline-Foxx and C-B-A Rate Proposals on Cost of Borrowing TICAS...pdf Please copy for me. Also can you put all the readings into the same file folder you gave me Friday? One red folder would be ideal and putting additions in each day. Sent using BlackBerry From: Jessica Thompson [mailto:jthompson@tticas.ora] Sent: Monday, May 20, 2013 11:53 AM Eastern Standard Time To: Jessica Thompson Subject: TICAS analysis of interest rate proposals. FYI. Attached is our most recent analysis of the Coburn-Burr-Alexander, Kline-Foxx, Harkin-Reed, and current law alternatives for student loan interest rates. In addition, we also created this chart to keep track of the proposals: http://www.ticas.org/files/pub/TICAS Comparison of interest Rate Proposals 05-17-13 FINAL df Let us know if you have any questions. Thanks, Jessica Jessica L. Thompson Senior Policy Analyst The Institute for College Access & Success 1111 16" Street NW, Suite 310 Washington DC, 20036 Phone: (202) 223-6060 x601 ithompson@ticas.org wawweticas.orgcollege access. success Impact of Federal Student Loan Interest Rate Proposals on Cost of Borrowing Updated 05/17/13 Qverview of Analysis: * Scenario: Student taking out annual maximum in subsidized and unsubsidized Stafford loans, graduating in four years. The student takes out a total of $27,000 in Stafford loans: $19,000 subsidized and $8,000 ‘unsubsidized, For all PAYE calculations, we assume that the borrower enters PAYE as soon as her loans enter repayment, starts with an Adjusted Gross Income (AGI) of $50,000 (increasing 4% a year), and has a child in the eighth year of repayment. Our analysis looks at this student entering college at both the beginning and midpoint of the upcoming 10- year period to show how interest rate proposals would affect students differently based on timing, given {that interest rates are projected to be higher in later years. ‘© Ouranalysis compares the following interest rate options: © Current rate extension: extension of the 2012-13 interest rates to all years; fixed rates. © Scheduled rates: scheduled interest rates for 2013-14 and later years; fixed rates. © Coburn-Burr-Alexander bill S. 682): interest rates set at 10-year T-Note plus 3.00% for both subsidized and unsubsidized Stafford loans; fixed rates. © Kline-Foxx bill (H.R, 1911): interest rates set at 10-year T-Note plus 2.50% for both subsidized and unsubsidized Stafford loans, up to 8.5%; variable rates. ‘+ See the following pages for a comparison of total payments under a 10-year standard repayment plan and the Pay As You Earn plan, as well as detailed tables that break out the borrower's subsidized loans only and interest accrual during different periods. ‘© See additional notes and assumptions on page 4. Page 1 of 8Analysis: If This xr Enters College in 2013: Cost of borrowing under 10-year standard repayment: ‘* Allowing the subsidized Stafford interest rate to double to 6.8% would cost this borrower almost $4,000 more over 10 years than if the 3.4% interest rate were extended, ‘+ Total 10-year payments would be lowest under a current rate extension. Because interest rates are currently low and projected to rise, this finding is unsurprising as the fixed rate proposals allow borrowers in the next few years to lock in those low rates while the variable rate plan allows the student's interest rates to rise each year. + Total 10-year payments are highest under the kline-Foxx proposal, which proposes variable interest rates. See Table 5 for a breakout of this borrower's subsidized Stafford loans only, which drive much of the difference in cost between proposals (e.g., $4,900 of the $5,200 difference between Kline-Foxx and a current rate extension). Example cost of borrowing under Pay As You Earn (assuming $50k AGI, increasing 4% per year w/child in year 8) ‘© The relative size of her total payments under PAYE for each interest rate option, compared to the current rate extension, is about the same as the relative size of total payments under the 10-year repayment plan. ‘+ Total payments under PAYE are highest under the Kline-Foxx bill, while the Coburn-Burr-Alexander bill and scheduled rates would also increase costs for the borrower, compared to a current rate extension. Table 1; Total Payments for This Borrower Entering College in 2013-14, Graduating in 4 Years. ‘Amount Total Total Effective entering payments | payments _| interest rate Proposal _ repayment __| over 10 years_| under PAYE _| under PAVE Current rate extensioi $28,450 $35,500 $35,600 451% | Scheduled rates $28,500 $39,400 $40,750 6.80% Difference from current rate extension (8) $50 $3,900 $5,150 2.29% Difference from current rate extension (%) 0% 11% 14% 51% Coburn-Burr-Alexander bill - $28,250, $37,700 $38,350 6.03% Difference from current rate extension ($) $200 $2,200 $2,750 1.52% Difference from current rate extension (9) 1% 6% 3% 34% ~ 7.36% to Kline-Foxx Bill _ $28,400 $40,700 $42,850 67.0% Difference from current rate extension ($) $50 $5,200 $7,250 na Difference from current rate extension (3) 0% 15% 20% nia * calculations forthe current rate extension were revised on 05-16-13 to relnstate the grace period interest subsidy on subsidized Stafford loans in 2014-15, Page 2 of 8Anal If This Borrower Enters College in 2018-19 (5 Cost of borrowing under 10-year standard repayment: Example cost of borrowing under Pay As You Earn (assur Total payments over 10 years are by far the lowest under the current rate extension. Total 10-year payments are highest under the Coburn-Burr-Alexander proposal, which has a larger add-on for subsidized and unsubsidized Stafford loans compared to the Kline-Foxx bill Because interest rates are projected to Increase, this borrower would pay almost $4,500 more over 10 ‘years under the Coburn-Burr-Alexander bill (market-based fixed rate) if she enters college in 2018 than if she enters college in 2013. See Table 6 for a breakout of this borrower's sub: ed Stafford loans only. jing $50k AGI, increasing 4% per year w/child in year 8) The relative size of her total payments under PAYE for each interest rate option, compared to the current rate extension, Is about the same as the relative size of total payments under the 10-year repayment plan. ‘An extension of current rates would lead to lower total payments under PAYE than any of the market- based proposals, fixed or variable, as well as lower total payments than scheduled rates. Scheduled rates would lead to lower total payments than any of the market-based proposals. Table 2; Total 10-Year Payments for This Borrower Entering College in 2018-19, Graduating in 4 Years. ‘Amount. | Total Total Effective entering payments over | payments interest rate Proposal ___| repayment __| 10 years under PAYE _| under PAYE Current rate extension® $28,400 $35,450 $35,500 451% Scheduled rates $28,400 $39,250 $40,500 6.80% Difference from current rate extension (5) $0 $3,800 $4,900 2.29% Difference from current rate extension (%) 0% 11% 14% 51% Coburn-Burr-Alexander bill $28,700 $42,150 $45,450 8.20% Difference from current rate extension ($) $300 $6,700 $9,950 | 3.69% Difference from current rate extension (8) 1% 19% | ——-28% 82% Kline-Foxx Bill $28,600 $41,100 $43,500 7.20% | Difference from current rate extension ($) $200 $5,650 ‘$8,000 3.19% Difference from current rate extension (%) 1% 16% | 2386, 72% | ? Note tha inthis scenario, there is no effect of variable vs, fixed interest rates because C8O projects the same 10-year T-Note yield from 2018-29 through 2023-24, end that yield was applied to future rates through the end ofthe repayment perlod. 2 calculations forthe eurent rate extension were revised on 05-16-13 to reinstate the grace period interest subsidy on subsisize Stators loans in 2014-15, Page 3 of 8Notes and Assumptions: Figures are rounded to the nearest $50 and 1%. Total payment amounts have not been adjusted for inflation. “Current rate extension” is defined as an extension of the 2012-13 rates. For subsidized Stafford loans: 0% interest while in school, 3.4% interest during the grace period for loans taken out in 2013-14 and 0% interest during the grace period for loans taken out in later years, 3.4% interest during repayment. For unsubsidized Stafford loans: 6.8% interest during all periods. “Scheduled rates” are defined as the interest rates for 2013-14 and later years. For subsidized Stafford loans: 0% interest while in school, 6.8% interest during the grace period for loans taken out in 2013-14 and (086 interest during the grace period for loans taken out in later years, 6.8% interest during repayment. For Unsubsidized Stafford loans: 6.8% interest during all periods. All proposals retain the in-school interest subsidy on subsidized Stafford loans and assume that the grace period interest subsidy on subsidized Stafford loans returns in 2014-15, as scheduled For variable interest rates, calculations of in-school interest accrual assume that loan interest rates reset in ‘September of each year, calculations of interest accrual during the grace period assume the loan interest rates reset at graduation (May), and calculations of monthly payments during the repayment period ‘assume the loan interest rates reset in November of each year. ‘The “effective interest rate under PAYE” is the rate used to determine the size of the "permanent standard" amount and the amount of interest accruing on loan balances. For fixed interest rate proposals, the interest rate under PAVE is the weighted interest rate of all loans. For variable interest rate proposals, the interest rate under PAYE is the interest rate each year. 110-Year Treasury Note yields are February 2013 CBO fiscal year projections from "The Budget and Economic Outlook: Fiscal Years 2013-2023,” ttp://www.cbo,gov/sites/default/files/cbofiles/attachments/43902_ EconomicBaselineProjections.xs. For example, T-Note projections for FY2013 are used to set interest rates for the 2013-14 academic year, Projected rates for 2023-24 are used for future years. 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From: Miceli, Julie Sent: Thursday, May 16, 2013 09:12 PM Eastern Standard Time To: Forte, Denise Subject: Fw: Story in the Wall Street Journal FY From: Rosenfelt, Phil Sent: Wednesday, May 15, 2013 09:22 PM To: Weiss, Joanne; Waldo, Eric; Ritsch, Massie; Briscoe, Daren; Gomez, Gabriella; Kanter, Martha; Miceli, Julie Ce: McFadden, Elizabeth Subject: Story in the Wall Street Journal Colleagues: | just saw this story about Bob Shireman in the on-line Wall Street Journal (posted an hour ago or so), and I wanted to make sure that you were aware of i http://online.wsj.com/article/SB100014241278873233982045784854 1 1420518702,html The text of the story is below. Please let me know if'| can be of assistance on this matter. Thanks, PhilFormer Education Official Faces Federal Investigation INS * By BRODY MUL WASHINGTON—Federal investigators are probing whether a former top Education Department official violated the law by allegedly sharing information inappropriately about new regulations with an advocacy group he founded. Newly released court documents show that federal prosecutors believe the Education Department's former deputy undersecretary, Robert Shireman, might have violated executive-branch ethics laws by allegedly discussing sensitive government information with the group, the Institute for College Access & Success, or TICAS. "We have documents showing your involvement or interaction with TICAS in matters pending before the U.S Department of Education in violation of the statute," Justice Department lawyers wrote in a letter to Mr Shireman in April 2012. "Your conduct may render you personally liable," the letter stated. The letter and other legal documents showing the Justice Department's interest in Mr. Shireman were recently disclosed as part of a egal proceeding on the scope of a subpoena request. ‘A lawyer speaking on behalf of Mr. Shireman, who served in the post from February 2009 to July 2010 and then as a departmental consultant, declined to comment. An Education Department spokesman and a TICAS spokeswoman also declined to comment, The investigation is being led by the Education Department's inspector general, along with civil lawyers at the Justice Department, according to the documents. Investigators are currently treating the matter as a potential civil infraction but have warned Mr. Shireman that criminal penalties are possible for the alleged behavior. The federal conflicts-of-interest law is intended to prevent government officials from participating in decisions in which they might have a financial interest. Violations can bring criminal penalties and civil fines of up to $50,000 a violation If Mr. Shireman "continued to serve the interests of TICAS, his former employer, while he was at Education, that would present a clear conflict of interest," said Anne Weismann, the chief counsel for the nonprofit Citizens for Responsibility and Ethics in Washington, which has pushed for an investigation. The inquiry underscores how prosecutors are beginning to clamp down on the way Washington handles sensitive government information. The Securities and Exchange Commission has begun probing whether government officials improperly tipped off investors before announcing a major health-care policy change in April, Itis also looking into whether Food and Drug Administration officials leaked word to investors in 2010 that it planned to reject a diabetes drug. The SEC has declined to comment on the cases, and officials involved in the situations have denied any wrongdoing. Details of Mr. Shireman's communications with TICAS and others were published in a page-one Wall Street Journal article in January 2011 and in other news outlets. Mr. Shireman and other senior department officials shared information with TICAS and other groups that were pushing the Education Department to clamp down on for-profit colleges, according to departmental emails released in recent years. The for-profit firms rely on government-backed student loans for a big chunk of their revenue. In court papers dated April 17, 2013, the department's Office of Inspector General said that for two years beginning February 2009, "there were communications between Mr. Shireman and TICAS through Mr. Shireman's TICAS email and personal email accounts." ‘A few days before the Education Department announced its clampdown in July 2010, officials laid plans to selectively leak news of the policy shifi, according to departmental emails. The emails show officials considered briefing Diane Schulman, who ran an investment-research firm that shared information with Steve Eisman, a short-seller portrayed in "The Big Short," a book about the housing crisis. Mr. Eisman had bearishbets on stocks of for-profit colleges and shared information about the industry with senior Education Department officials, including Mr. Shireman, according to the departmental emails, On July 21, 2010, an Education Department official wrote to a colleague: "Eisman is a short seller anyway you cut it and anything you tell Schulman gets to Eisman." Neither Ms. Schulman not Mr. Eisman were briefed by the department. ‘Ms. Schulman didn't respond to requests for comment. The department made public the final regulations on July 23, 2010. The rules were weaker than expected, and the stocks of some for-profit colleges rose as much as 15% that day.O'Bergh, Jon — From: Loren Stein Sent: ‘Thursday, May 16, 2013 1:31 PM To: Plotkin, Hal Subject: Re: Bob Shireman here! Wow! Very cool, Bob must be a sight for sore eyes. And Amy too! Love, On 5/16/13 12:38 PM, "Plotkin, Hal" wrote: >Bob (and Amy) both at my meeting today! Both send lovel Hal > Original Message >From: Plotkin, Hal >Sent: Monday, May 13, 2013 10:23 AM Eastern Standard Time >To: ‘loren@lorenstein.com’ >Subject: Stuck underground!! >No cell service so not sure you will get this. Presently stuck >underground between stations near Van Ness - red line malfunction - >"moving momentarily" they say. Will call you as soon as | arrive >Friendship Heights. Fingers crossed, HalPauline Abernathy Wednesday, May 15, 2013 12:37 PM Pauline Abernathy Jessica Thompson; Connie Myers TICAS: Senate Bill Freezes Student Loan Rates for Two Years to Provide Time for Comprehensive Reform FYL college access “success STATEMENT OF PAULINE ABERNATHY CONTACTS: Vice President, The institute for College Access & Success (TICAS) Gretchen Wri May 15, 2013 Shannon Gall Senate Bill Freezes Student Loan Rates for Two Years to Provide Time for Comprehensive Reform “New legislation (5. 953) introduced by Senators Jack Reed and Tom Harkin, along with Majority Leader Harry Reid and nine other senators, prevents interest rates on subsidized student loans from doubling as scheduled this luly and pays for itself by closing tax loopholes. Unlike some recent proposals, this bill does not require students to bear much higher rates in the future to pay for low rates this fall. Instead, it’s a smart, short-term solution that keeps subsidized Stafford loans at the current fixed rate of 3.4% for two years. It pays for itself by closing unnecessary tax loopholes, two of which President Obama included in his most recent budget proposal. “Student debt is already at record levels: two-thirds of the Class of 2011 graduated with an average $26,600 in loans. Rising college costs and student debt burdens are serious problems for students, their families, and the economy as a whole. Our nation needs an educated workforce that can still afford to buy homes, start families, create businesses, and save for retirement. “Comprehensive reform is needed to keep federal loans affordable, support sensible borrowing, and provide well- targeted debt relief. With less than seven weeks until student loan rates double to 6.8%, this legislation protects students now while giving Congress and the Administration time to consider and enact permanent changes that make sense for both students and taxpayers. Comprehensive reform should be pursued in the course of reauthorizing the Higher Education Act, which expires this fall, “Americans want to see members of Congress on both sides of the aisle work together to keep college and federal loans affordable instead of driving students deeper into debt. The growing momentum to prevent the immediate dou! interest rates while developing sensible long-term reforms is good news for today’s students and tomorrow's.” NOTE: TICAS' recent white paper includes comprehensive reforms to keep federal student loans affordable, streamline the loan program, and better target benefits. We recommend federal loans have both a hard interest rate cap and auarantee that rates for borrowers in repayment will never be too much higher than the rates being offered to current students. Hee An independent. nonprofit organization, The Institute for College Access & Success (TICAS) works to make higher education more available and affordable for people ofall backgrounds: Our Project on Student Debt works to increase public understanding of rising student debe and the ‘implications for ow families, economy, and society, For more information see ww. ticas.org and ww prolectonstudentdebt avg or jllow ts on Twiter at www awitier com TICAS orgJennifer Webber Tuesday, May 14, 2013 5:54 PM Perrott, Carmine RE: requests for meetings with Secy Duncan and UnderSecy Kanter re GE and related issues Thank you! Please hold the full hour and | will confirm asap. Original Message. From: Perrotti, Carmine [mailto:Carmine.Perrotti@ed.gov] Sent: Tuesday, May 14, 2013 2:50 PM To: Jennifer Webber Subject: RE: requests for meetings with Secy Duncan and UnderSecy Kanter re GE and related issues HiJennifer- Under Secretary Kanter is available from 1 - 1:30 PM on Friday, 5/17. However, we can hold a 60 minute meeting if your group can be available from 12:30 - 1:30 PM. | am holding that time until | hear from you. Best, Carmine Perrotti Confidential Assistant Office of the Under Secretary U.S. Department of Education Email: carmine.perrotti@ed.gov Desk: 202-401-0264 Original Message From: Jennifer Webber [mailto:jwebber@ticas.org] Sent: Tuesday, May 14, 2013 12:28 PM To: Perrotti, Carmine Subject: RE: requests for meetings with Secy Duncan and UnderSecy Kanter re GE and related issues Carmine - Would 1 PM this Friday, 5/17 work for a meeting? Next week is an incredibly busy one, as I'm sure you know, so having the meeting this week and that time would be really nice. Please let me know. Thank you! Jennifer Original Message—- From: Perrotti, Carmine [mailto:Carmine.Perrotti@ed.gov] Sent: Monday, May 13, 2013 8:28 AM. To: Jennifer Webber Subject: RE: requests for meetings with Secy Duncan and UnderSecy Kanter re GE and related issuesHi Jennifer - | wanted to follow up on the below email chain. Please let me know your team’s availability for this meeting this week and next, Please provide as many options as possible. Thank you. Best, Carmine Perrotti Confidential Assistant Office of the Under Secretary US. Department of Education Email: carmine.perrotti@ed.gov Desk: 202-401-0264 -Original Message From: Pauline Abernathy [mailto:pabernathy @ticas.org] Sent: Monday, May 13, 2013 11:05 AM To: Arsenault, Leigh; Talwalker, Ajita Ce: Jennifer Webber; Lauren Asher; Perrotti, Carmine Subject: RE: requests for meetings with Secy Duncan and UnderSecy Kanter re GE and related issues We did not take it as a guarantee, but that it will be reconsidered. Many thanks. Pauline -Original Message- From: Arsenault, Leigh [mailto:Leigh.Arsenault@ed.gov] Sent: Monday, May 13, 2013 10:56 AM To: Pauline Abernathy; Talwalker, Cc: Jennifer Webber; Lauren Asher; Perrotti, Carmine Subject: RE: requests for meetings with Secy Duncan and UnderSecy Kanter re GE and related issues Great - adding Carmine to this chain. | should also clarify that | am unable to ensure a meeting with the Secretary. But we will be happy to pass along additional information that will be informed by the meeting with Martha. Thanks, Leigh Original Message From: Pauline Abernathy (mailto:pabernathy @ticas.org] Sent: Monday, May 13, 2013 10:52 AM To: Arsenault, Leigh; Talwalker, Ajita Ce: Jennifer Webber; Lauren Asher Subject: RE: requests for meetings with Secy Duncan and UnderSecy Kanter re GE and related issues ‘That would be great. Jennifer Webber has the best handle of everyone's schedules. Thank you! Pauline Original Message From: Arsenault, Leigh [mailto:Leigh Arsenault @ed.gov]Sent: Monday, May 13, 2013 10:10 AM. To: Talwalker, Ajta; Pauline Abernathy Cc: Jennifer Webber; Lauren Asher Subject: RE: requests for meetings with Secy Duncan and UnderSecy Kanter re GE and related issues Pauline, we are very interested in meeting with the broad coalition in regards to these issues. Ideally we could schedule the meeting this week with Martha and then follow-up on the meeting with the Secretary if that is amenable to the group. Do you know? ‘Many thanks, -Leigh -—Original Message. From: Talwalker, Ajita [mailto:Ajita_R_Talwalker@who.eop.gov] Sent: Monday, May 13, 2013 10:03 AM To: Pauline Abernathy; Arsenault, Leigh Ce: Jennifer Webber; Lauren Asher Subject: RE: requests for meetings with Secy Duncan and UnderSecy Kanter re GE and related issues ‘Thanks Pauline-Leigh and | can do a little digging on this and follow up with you. Aiita riginal Message- From: Pauline Abernathy [mailto:pabernathy@ticas.org] Sent: Sunday, May 12, 2013 6:34 PM To: Talwalker, Ajita; Leigh Arsenault (leigh arsenault@ed.gov} Cc: Jennifer Webber; Lauren Asher Subject: FW: requests for meetings with Secy Duncan and UnderSecy Kanter re GE and related issues Alta and Leigh, ‘After members of the coalition supporting a strong GE rule met with NEC, DPC and OMB earlier this year, Dianne Piche at the Leadership Conference on Civil Rights submitted a request for the broad coalition to meet with Secretary Duncan, similar to the meeting the coalition had with him last fall. She also requested a smaller meeting with Undersecretary Kanter with a subset of coalition members, similar to the meeting at the WH. As you can see below, the request to meet with the Secy has been denied and the meeting with US Kanter has not yet been scheduled. | do not mean to be critical of the Dept for this-there seems to have been a fair amount of confusion and miscommunication regarding the requests (eg, it sounds like it may not have initially been clear that it was a request on behalf of the broad coalition, including veterans, students and many others, so it was initially referred to OCR). If there is anything you can do to ensure both meeting requests receive all due consideration, we would appreciate it. | have attached the OUS meeting request for reference. We and many members of the coalition have registered to testify at the public hearings and/or submit written comments for the record, and we understand that comments must be officially submitted for the Department to consider them for the neg reg. These meeting requests are in now way a substitute for submitting comments but a continuation of the conversation with the Secretary and UnderSecretary from last year, and a reflection of our desire to have the same conversation with the Dept that we had with the WH. On behalf of the entire coalition, thank you in advance for any assistance you can provide. Best, PaulineOriginal Message~— From: Perrotti, Carmine [mailto:Carmine.Perrotti@ed.gov] Sent: Thursday, May 09, 2013 4:13 PM To: Dianne Piche Ce: Kate Wikelius Subject: RE: [action requested] Your invitation to Under Secretary Martha Kanter Hi Dianne - Unfortunately, Secretary Duncan is unable to accept a meeting at this time. However, Under Secretary Kanter is happy ‘to meet with you and the other requested participants. Can you please identify several dates and times when you can be available for this meeting? please provide as many options as possible, ‘Thank you. We look forward to hearing from you. Best, Carmine Perrott Confidential Assistant Office of the Under Secretary U.S. Department of Education Email: carmine.perrotti@ed.gov Desk: 202-401-0264 inal Message From: Dianne Piche {mailto:Piche@civilrights.org] Sent: Monday, May 06, 2013 10:45 AM To: Perrotti, Carmine Cc: Kate Wikelius ‘Subject: RE: [action requested] Your invitation to Under Secretary Martha Kanter Thank you, Carmine. We'll look forward to hearing back from you on dates. Dianne Dianne Piché ‘The Leadership Conference on Civil and Human Rights 202-466-3311 - reception 202-466-0087 - direct 202-841-7622 - cell Original Message— From: Perrotti, Carmine [mailto:Carmine.Perrotti@ed.gov] Sent: Sunday, May 05, 2013 2:16 PM To: Dianne Piche Cc: Kate Wikelius Subject: RE: [action requested] Your invitation to Under Secretary Martha Kanter Dear Dianne -| wanted to follow up on the request you submitted to the Office of the Under Secretary on April 29th. We are working with the Office of the Secretary to see if Secretary Duncan may have any availabilty in the coming weeks for your meeting. if he is not available, | will work with you to schedule a meeting with Under Secretary Martha Kanter. Thank you. | look forward to being in touch with you. Confidential Assistant Office of the Under Secretary US. Department of Education Email: carmine,perrotti@ed.gov Desk: 202-401-0264O'Bergh, Jon Debbie Cochrane Wednesday, May 28, 2014 11:56 AM Studley, Jamie Subject: RE: TICAS comments on gainful employment NPRM You're very welcome! From: Studley, Jamie [mailto:Jamie, Studley@ed.ov] Sent: Tuesday, May 27, 2014 7:58 PM To: Debbie Cochrane Cc: Pauline Abernathy; Jennifer Webber; Joseph Mais ‘Subject: RE: TICAS comments on gainful employment NPRM Thank you for sending me your comments. Best regards, Jamie Sent from my Windows Phone From: Debbie Cochrane Sent: 5/27/2014 10:36 PM To: Debbie Cochrane Ce: Pauline Abernathy; Jennifer Webber; Joseph Mais Subject: TICAS comments on gainful employment NPRM FYI~TICAS submitted the attached comments on the Department's draft gainful employment rule moments ago. In our comments, we applaud the Administration for moving forward with enforcing the statutory requirement that all career education programs prepare students for gainful employment in a recognized occupation and highlight many ways that the rule needs to be strengthened. Debbie Cochrane Research Director The Institute for College Access & Success 405 14th Street, Suite 1100 Oakland, California 94612 office: (510) 318-7900 // fax: (510) 318-7918 dcochrane@ticas.org www.ticas.org, www, projectonstudentdebt.org www.college-insight.orgcollege access “success May 27, 2014 Attn: Ashley Higgins U.S. Department of Education 1990 K Street NW, Room 8037 Washington, DC 20006-8502 Dear Ms. Higgins: ‘These comments are in response to the March 25, 2014 Notice of Proposed Rulemaking (Docket 1D ED-2014-OPE-0039) soliciting comments on the Department’s draft gainful employment rule.! The Institute for College Access & Success (TICAS) is an independent, nonprofit organization that works to make higher education more available and affordable for people of all backgrounds. Through nonpartisan research, analysis, and advocacy, we aim to improve the processes and public policies that ean pave the way to successful educational outcomes for students and for society. The need for a strong gainful employment rule has never been clearer. Since the Department last issued a gainful employment rule: © At least 32 state attorneys general (AGs) are now jointly investigating the industry? and several have filed suits against companies,’ the Department of Justice is suing the second largest for-profit college and Stevens-Henager College Inc. for violating the False Claims ‘Act,’ and the Consumer Financial Protection Bureau (CFPB) has sued ITT Educational Services for predatory lending.’ Settlements have been reached between some companies Unless otherwise noted, page numbers cited in these comments refer tothe Notice of Proposed Rulemaking, as ublshed in the March 25, 2014 Federal Register, htp//Luss.gow/LkcINuP. Pentucky Office ofthe Attorney General, March 15, 2013. Press Release. “Attorney General Convay Announces Support of Federal Bill to Curb For-Profit College Reeriting Abuses.” Intpu/migraion Kentucky gov/newsroon/ag/foproftecruiting hm ’attomey General of Massachusetts. April 3, 2014, Press Release. For-Profit School Sued for Deceiving Students and Facilitating Unfair Loans.” htp:/.usa.g0v/1RP9H3. California Office ofthe Attorney General. October 10, 3013. Press Release. “Attorney General Kamala D. Haris Files Suit in Alleged For-Profit College Predatory Scheme.” hip lity InsMK Sx. Kentucky Offiee of the Attorney General. January 16,2013. Press Release. Attorney General Conway Files Suit against Spencerian College.” hii usa gov/Ird Vl ‘Minos Attorney General. January 18, 2012, Press Release “Madigan Sues National For-Profit College." Inaps/biut TOK, U.S, Depariment of Justice, May 8, 2014, Press Release. “United States Files Complaint Against Stevens-Henager College, ine. Alleging False Claims Aet Violations for Illegal Recruiting.” iyp/usa gov/immsI2L. U.S. Department of Justice. August 8, 2011, Press Release. “US. Files Complaint Against Education Management Corp Alleging False Claims Act Violations.” hip/www,justioe-govlopa/p/201/AugusV/civ=1026.huml SULS. Consumer Financial Protection Bureau, February 26, 2014, Press Release. “CFPB Sues For-Profit College Chain ITT For Predatory Lending.” hgp/wovw.consumerfinance govinewsroonvefpb-suesfor-profi-collxe-chain: inefor-predatorylendingand state AGs® and the Department of Justice,’ while other investigations started since June 2011 continue,’ including the CFPB's investigation of Corinthian Colleges,” the Securities and Exchange Commission’s investigations of ITT!” and Educational ‘Management Corporation, '' and the Federal Trade Commission’s investigation of DeVry’s activities over the last five years." ‘+ While there are some responsible companies providing quality programs, recent events, data and investigations, including the 2012 report from the Senate Health, Education, Labor and Pensions Committee's two-year investigation of the for-profit college industry, show that the problems are widespread, and not limited to a handful of bad actors."* * Media coverage of and editorials on for-profit college practices, abuses, and investigations have proliferated since June 201 1. More than 65 papers have editorialized about the need for greater scrutiny of the for-profit college industry. A sampling of the editorials and news coverage is attached as Appendix A. ‘The career education program-level data and related analyses in the NPRM provide further evidence of the need to regulate. According to the Department’s analysis, just eight percent of institutions (defined by OPEID) are responsible for 90 percent of the enrollment in failing and zone programs (Table 28, p. 16600). Yet, without a gainful employment rule, there are few if any incentives in place for these colleges to improve their programs. Virtually all of the worst performing programs are at for-profit colleges, which heavily recruit — and therefore isproportionately enroll - low-income students and veterans (Table 3, p. 16534). As the NPRM makes clear, a gainful employment rule will expand affordable, high-quality career education program enrollment (Tables 39 and 40). Far from being harmed, students enrolled in failing or zone programs are expected to experience aggregate net income gains of $10 billion to $29 billion under the rule as schools improve their programs and students transfer to better programs (Table 53, p. 16633). * Towa Office of the Attorney General, May 16, 2014. Press Release, “Ashford University and Parent Company Bridgepoint Education Agree to $7.25 Million Payment and Major Changes after Miller Alleges Consumer Fraud.” hntps/wrwn.state a.us/governmenvag/latest_news/releases/may_2014/AU_BE.himl. Colorado Attorney General's Office. December 5, 2013. Press Release, “Attorney General Suihers Announces Consumer Protection Settlement with Argosy University.” htpy/bity/LhvDmod, MeDonough, Molly. August 19, 2013. “For-profit school strikes SIOM settlement deal over charges it inflated job-placement rates.” ABA Journal huipimww abajournal.com/news/article/for-profit school strikes_10_setlement deali "US. Department of Justice. August 22, 2013. Press Release. “Texas-Based School Chain to Pay Government $3.7 Million for Submitting False Claims for Federal Student Financial Aid.” nips ww justice gov/opalpr/2013/August/13-civ-953, hum. Fora list of public state attorney general investigations, see Blumenstyk, Goldie. February 28, 2014. “Government Investigations and Suites Against For-Profit Colleges: the Grid.” The Chronicle of Higher Education. ‘hp J/chronicle.com/blogs/battomline/zovernment-investigations-and-suits-against-for-psolit-calleges-the-srdl * inside Higher Ed. May 23, 2012. “Investigation of For-Profits Expands to ITT.” btto/vwinsidehighered,com/quicktakes/2012/0S/23Vinvestigation-profits-expands-ittinzz2V 48nWXi8. " Reuters. February 25, 2013, “ITT says being investigated by SEC over student foan programs.” ntpswwww.reuters.comyartiele/2013/02/25/us-itteducationalservices-sce-idUSBRE91000C20130225. Boselovie, Len and Teresa F. Lindeman, March 23, 2013. “EDMC target of SEC investigation.” Pittsburgh Post- Gazette. hipsbitWv/1b1BYay. " DeSantis, Nick. February 5, 2014. “DeVry Faces Inquiry From Federal Trade Commission.” The Chronicle of | Higher Education. bitp:lehronicle.com/blogsiticker/devry-faces-inquiry=from-federal-trnde-commission/72269. U.S, Senate HELP Committee. 2012. For-Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success. iip:l!ww.help senate gov/imo/media/for profit reporyContents.pdt.While the gainful employment rule would rightly apply to career education programs across all types of colleges, there is clearly a problem in the for-profit college industry in particular. According to the repayment rate data released by the Department in August 2013, just 33 percent of students who borrowed to attend for-profit college undergraduate certificate programs were paying down their loans, compared to 51 percent of borrowers who attended such programs at community colleges." (See further analysis of repayment rate data on page 8). Indeed, it is clear from the program-level data (the 2012 GE. informational rates released in conjunction with the NPRM) that many programs leave more students worse off than better off. Our analysis found 114 programs —all at for-profit colleges — where there were mote defaulters in a single cohort year of defaults than there were graduates in a two-year period.'* In other ‘words, students receiving federal aid to attend these programs are more likely to default than they are to complete the credential they sought. There are seven programs ~all at the University of Phoenix — where the number of defaulters exceeded the number of completers by more than. 1,000. These 114 parasitic programs consume resources to the detriment of students and taxpayers, yet 20 percent of them pass the tests proposed in the NPRM. As a New York Times editorial about our analysis concluded, “What’s needed is a new rule that more quickly and directly disqualifies such programs for aid or puts pressure on them to improve.”"° ‘Thus, while we applaud the Administration for moving forward with enforcing the statutory requirement that all career education programs prepare students for gainful employment in a recognized occupation, the proposed regulation needs to be strengthened in many ways. We join ‘more than 50 organizations in calling for the following modifications to the rule:!” 1. Provide financial relief for students in programs that lose eligibility. Schools with ineffective programs that lose eligibility for federal aid should be required to make whole the students who enrolled in the program. Providing full relief to all such students is not only fair, it also creates a greater incentive for schools to quickly improve their programs. For further discussion of this recommendation, see p. 24 of these comments (Student Relief) 2. Limit enrollment in poorly performing programs until they improve. Under the draft regulation, poorly performing programs can inctease the number of students they enroll, without limit, right up until the day the programs lose eligibility. The rule should, instead, impose enrollment caps until a program improves. See related comments on p.13 (Importance of a Time-Limited Zone) and p. 21 (Enrollment Limits for Poorly Performing Programs) 3. Close loopholes and raise standards. The proposed regulation is too easy to game, and its standards are too low. For example, programs can pass the standards even when 99 US, Department of Education, August 29, 2013, “Repayment Rate Calculations.” hutpsvww2,cd.gov/poliey/highered/reg/hearulemaking/2012/2013-repayment-rate-data.xs STICAS. May 15, 2014, Blog post. “Where More Default Than Graduate: Career Education Program Parasites.” hnupz/views.ticas org/?p=1301 "The New York Times. May 18, 2014. “Do Better on Predatory Colleges.” hhitp//w-ww.zvtimes,com/20 14/05/1 9/apinion/do-better-on-presatory-colleges. him} "May 27, 2014 coalition comments on this NPRM. hitp://ww.igas.org/pub_viewphp2idpercent of their students drop out with heavy debts that they cannot pay down. Unscrupulous schools can easily manipulate job placement rates or evade accountability by limiting program size. They can exclude the debt of graduates who enroll in a program just one day and can enroll students in online programs that lack the accreditation needed to be hired in the states where the students live. These types of loopholes need to be closed and the standards raised. ‘See related comments on p. 6 (Other Metrics), p. 11 (Debt to Earnings Thresholds), p. 18 (Exclusions from D/E Cohorts), p. 19 (Minimum Number of Students for D/E Calculations), p. 25 (Restrictions on New “Substantially Similar" Programs), p. 31 (Certification Requirements for GE Programs), and p. 35 (Changes in School Ownership) 4, Protect low-cost programs where most graduates don’t borrow. Low-cost programs where most graduates do not borrow at all should automatically meet the standards because, by definition, these programs do not consistently leave students with unaffordable debts. Burdening these programs with a complicated appeals process could prompt more schools to leave the federal student loan program and lead to the closure of effective, low-cost programs. ‘See related comments on p. 5 (Exceptional Performers) and p. 6 (Other Metrics) We also provide comments on a number of specific issues on which the Department requested comment, and others where it did not. In all, this document includes comments on the following topics (listed by regulatory section): Definition of Prospective Student (Sec. 668.402)... Exceptional Programs (Sec. 668.403). Other Metrics: Borrowing Rate and a Repayment Rate (Sec. 668.403) Importance of Two Independent Tests (Sec. 668.403(a)(2))... Debt to Barings (D: Importance of a Time-Limited Zone (See. 668,403(c)(1}iv)(B)).. Use of the Higher of the Mean or Median Annual Earnings in D/E Rates (Sec. 668.404(a)(1) and ‘Thresholds (See. 668.403(c)).. 668.404(a)(2)).. oe Amortization Periods (Sec. 668.404(b)(2)) AS Interest Rates Used in D/E Rates (See. 668.404(b)(2)(i)) .. 16 Inclusion of Non-Completers in D/E Rates (Sec. 668.404(c)) 7 Exclusions from D/E Cohorts (Seo, 668.404(€)(1) and 668.404(¢)(3)).... . 18 Minimum Number of Students for D/E Calculations (Sec. 668.404(f)(1)).. 19 ‘Treatment of Low-Borrowing Rate Programs (Sec. 668.406(b)).. 20Preventing Manipulation of pCDRs and Repayment Rates (Sec. 668.407 and 668.413) .. Enrollment Limits for Poorly Performing Programs (Sec. 668.410). ‘Student Warnings (Sec. 668.410) Student Relief (Sec. 668.410)... Restrictions on New “Substantially Similar” Programs (Sec. 668.410(b)(2)). Job Placement Rate Disclosures (See. 668.412).. Disclosures for GE Programs, including Completion Rates (Sec. 668.412) Certification Requirements for GE Programs (Sec. 668.414) Changes in School Ownership (Sec. 668.507).. PCDR Appeals (Sec. 668.508)... Definition of Prospective Student (Sec. 668.402) ‘The definition of prospective student should clearly include students, family members, counselors and others inquiring about enrollment, whether itis for themselves or for someone else. Parents, older siblings, aunts, uncles, grandparents, mentors or counselors may also contact, or be contacted by, a school about enrollment and deserve the same information about cost, debt, completion ete. as potential students. We therefore strongly recommend the preamble make this clear and the definition be revised as follows: Prospective student. An individual who has contacted an eligible institution for the purpose of requesting information about enrollment ensolting in a GE program or who has been contacted directly by the institution or indirectly through advertising about enrollment exeotting in a GE program. Exceptional Programs (Sec, 668.403) ‘The NPRM (p. 16437) invites comment on how exceptional career education programs could be recognized and rewarded in the rule framework. We believe that it is quite appropriate for a rule that seeks to shape institutional behavior to recognize and reward programs that model certain behaviors. Such recognition would serve to not only reward schools for exceptional program performance, but would incent other schools to follow in their footsteps and could also provide important information to consumers selecting a program. With a primary concern being whether programs are “leaving students with unaffordable levels of loan debt in relation to their earnings, o leading to default” (p. 16426), we urge theDepartment to reward those programs where most program completers do not have any loan debt, (While we believe this to be enough justification to identify and acknowledge programs as exceptional, the Department could also consider limiting this recognition to low-borrowing, programs with required tuition and fee charges less than the maximum Pell Grant.) The Department could determine which programs meet this standard using existing NSLDS and IPEDS reporting requirements, or it could alternatively ask colleges to apply for exceptional program recognition by documenting the share of program completers with debt (for further details see the discussion on page 20). Those meeting this standard should be rewarded by being determined to pass the gainful employment tests, rather than base program passage on a small, unrepresentative share of students, Instead of providing upfront recognition for such programs, the NPRM would force them to go through a burdensome appeals process to avoid being sanctioned. Recognizing these programs upfront is critical to ensuring that colleges retain and build them. Without upfront recognition, colleges may close high-quality, low-debt programs preemptively to spare themselves from Jaborious appeals and the negative attention that having failing programs would bring, Foreing programs in which most graduates do not borrow to go through a difficult and resouree-intensive appeals process is unnecessarily burdensome and a waste of resources that could be better spent, especially when such programs can easily be identified beforehand. Three out of four (75%) students completing undergraduate career education programs in 2011-12 had debt, '* so programs where most do not have debt truly are exceptional. ‘Such a provision would apply equally to programs at all colleges and mirrors a similar provision in the gainful employment rule finalized in 2011. The provision in the 2011 Prior Rule stated that programs where a minority of students borrowed would automatically pass the gainful employment test based on a “logical extension of the debt measures,” since programs Where most graduates have not borrowed have a median debt of zero. Importantly, this portion of the regulations was upheld by the Court that objected to other provisions in the 2011 Prior Rule. Other Metrics: Borrowing Rate and a Repayment Rate (Sec. 668.403) ‘The NPRM (p. 16447) seeks comment on whether there are other measures that should be included in the GE framework to further the Department's stated policy goals. As stated in our comments on exceptional programs and the treatment of low-borrowing programs (pages 5 and 20 of these comments), we believe the rule must account for the share of students borrowing, Toans to reward exceptional performers, target oversight, and avoid unintended consequences. We also strongly believe a repayment rate metric should be included, and that it should be an independent test that programs must meet in addition to any other measures. ‘The Department states in the NPRM that it continues to consider the loan repayment performance of a GE program's former students to be relevant evidence of whether a program ‘meets the gainful employment requirement. The Department states it did not include a repayment °® Calculations by TICAS on data from the U.S. Department of Education, National Postsecondary Student Aid ‘study (NPSAS), 2011-12.rate metric because it had not yet identified a sufficiently compelling rationale for a repayment rate threshold. Basis for the repayment rate threshold: However, there are a number of ways in which the Department could still move forward with a repayment rate measure: 1. There are numerous studies, regulations, and laws on which an appropriate, higher repayment rate could be based. For instance: a. The repayment rate has a solid basis in the lending industry. It is widely accepted in consumer finance that negative amortization loans, where loan principal does not dectease, are risky. The Office of the Comptroller of the Currency (OCC) in 2009 recommended a prohibition on negative amortization mortgages where borrowers “dig deeper into debt with each monthly payment,” and in fact these types of mortgages have been banned in California since 2010.'” The OCC makes clear that such loans “do not reduce the borrower's outstanding liability or the bank's credit exposure...” and “...benefit neither of the parties involved in the Joan.” As a measure of a program’s former students’ loan debt that is not negative amortization, the repayment rate assesses the risk to students and taxpayers of making further investments in a program.” This provides a clear, reasoned basis for making ineligible career education programs in which a majority of the loans taken out by former students are in negative amortization. In fact, the Department proposed such an approach during the negotiations but later abandoned it because it was unable to draw conclusions from the data at that time. b. Congress has determined that colleges where 30 percent or more of borrowers default on their loans may lose access to aid. This suggests Congress presumes an institutional repayment rate of 70 percent, and could justify sanctions for programs with repayment rates below 70 percent. 2. Alternatively, the negotiator working group on repayment rates recommended that a panel of experts set the repayment rate thresholds. This, foo, would ensure that the repayment rate thresholds are rational and defensible. 3. In addition, the Center for Responsible Lending notes in its public comments on the NPRM that as the issuer of all federal Direct student loans with access to extensive data U.S, Department of the Treasury, Office ofthe Comptroller of the Currency. November 18, 2009. Press Release. “ Clearly, these programs are bad for both students — being more likely to end up in default than with a degree — as well as for taxpayers, since borrowers’ debt is not being repaid. Yet these programs would not fail the proposed D/E and pCDR tests. A repayment rate or similar measure is needed to address these programs” poor outcomes. Other data released by the Department further illustrate the importance of a repayment rate in assessing program outcomes, After comparing the repayment rate calculations released in August 2013 in advance of the first negotiating session to the data released in conjunction with the ‘NPRM, it appears that three large certificate programs at Education America Inc.’s Remington College have a collective repayment rate of 12 percent, and yet none of them would fail the proposed GE metrics. There were more than 500 students who entered repayment from each of these programs in a single year. Remington College is a formerly for-profit college chain that began operating as a nonprofit in 2011.7 2 TICAS. May 15, 2014. Blog post. “Where More Default Than Graduate: Career Education Program Parasites.” hup/iviews.ieas.ore/2p=1301 ® Caleulations by TICAS on data from the U.S. Department of Education, “2012 GE Informational Rates, Dnip:/Lusagow/rdwItd and "2011 GE Informational Rates,” hipy/1usa,gow/lpg8UY # Because the repayment rate data released in August 2013 do not include schoo! names, only the Department can confirm tat these are the same three Remington College proprams listed inthe files released withthe NPRM. However te following explains why they likely are the same programs. Of the repayment rates released in August 2013, which do not include college names, the three largest nonprofit programs, are medicalfcinical assistant Undergraduate certificate programs (CIP Code $10801, Credential Level O1). These three programs ate the only nonprofit programs listed with more than 1,000 borrowers who entered repayment during a two-year period (Y2007 and FY2008). Inthe data released in conjunction withthe GE. NPRM (the 2012 GE informations rates data file, the three nonprofit programs with the largest numbers of students entering repayment are medicaléinical assistant undergraduate certificate programs atthe Texas, Oho, and Alabama campuses of Remington College (OPEIDs 030265, 07777, and 026055 respetively). These tree programs are the only three nonprofit programsIn addition, the aggregate pCDR for these three programs is just 14 percent, while only 12 percent of their borrowers were able to pay down any debt at all, highly suggestive of CDR. manipulation, Indeed, a Remington College executive said as much in 2009: “[W]e've known all along what ED finally figured out—that most of the borrowers who receive payment postponements (forbearance, deferment) during the cohort period ultimately default after the postponement ends. That's the primary reason ED made the change to 3-yr CDR—they decided we were getting off too easy."”* Indeed, the evidence is clear that some colleges are manipulating their CDRs by putting former students in forbearance during the window when default rates are being measured regardless of whether it is in the borrowers” best interest to do so.”* While avoiding default is always in students” best interest, itis not in their interest to increase their loan balance and leave them to default on a higher balance. Loans always accrue interest while in forbearance, and unsubsidized loans accrue interest during both forbearances and deferments, The additional interest accrued is added to the principal loan balance at the end of the forbearance or deferment, with the result that, interest then begins accruing on an even larger balance. In most cases, students struggling to ‘make loan payments are better served with counseling on how to repay their loans and the availability of income-driven repayment (IDR) plans. A repayment rate cannot be manipulated as easily as a CDR, and a repayment rate metric would also help curb the abuse of deferments and forbearance to manipulate CDRs. The repayment rate provides a disincentive for colleges to put former students in forbearance unnecessarily because, while doing so will lower CDRs, it will also lower program repayment rates. The Department has appropriately expressed concern about CDR manipulation, ” but to our knowledge has taken no action to address it to date. Inclusion of a repayment rate metric would be an important step. ‘We ask the Department to address both the risk and reality of CDR manipulation, as well as the need to incorporate a measure of borrowers’ well-being as opposed to just their distress, by including a repayment rate in the final rule.** See additional comments on curbing the manipulation of both pCDRs and repayment rates on page 21. ‘with more than 500 borrowers who entered repayment during a single year (FY2009), in Line with the numbers of uudets from the largest thee programs inthe repayment rat ile BUSS. Senate HELP Committee. 2012. For-Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Succes. P. 153, footnote 706: Remington, December 2009, RE:RE: Cohort Default Rates Three Year Calculation Publication (Remington 22-000144). bnps/yw. help senate gov/ima/media/for_profit_repor¥Parl pdf ® Senate HELP Committe 2012. Executive Summary and pp. 151-158. htpu/onew.help senate gow/imo/media/for_proft report/ParI-Paril-SelectedAppendises ps 7 See page 16447 ofthe NPRM and Secretary Duncan's leter1o 8 Senators (Letter from Secretary of Education ‘Ame Duncan to Senator Tom Harkin, February 27, 2013, htip//ity/19X6200). = Imation, we join the eight US. Senators, the California Student Aid Commission, and multiple negotiators on the gainful employment negotiating committe in urging that that current rules on cohort default rates be strengthened to prohibit colleges from evading the law. Senator Frank R. Lautenberg. December 13,2012. Press Release. "Senators Lautenberg, Harkin, Colleagues Call for Crackdown on Manipulation of Student Loan Default Rates.” tip /bit y/191INPO, “California Seeks More Federal Regulation of Loan-Default ‘Manipulation’,Importance of Two Independent Tests (Sec. 668.403(a)(2)) ‘The NPRM appropriately measures whether programs are failing to prepare students for gainful employment in multiple ways. The D/E ratios measure whether graduates’ debt burdens are reasonable given their post-graduation earnings. The pCDR measures whether students who borrowed to attend the program — including those who did not complete ~ are making payments on those loans. These two tests acknowledge that there are multiple ways that programs can fail to adequately prepare students, and would appropriately fail programs that fail either test. ‘The fact that these tests measure different students and assess different aspects of the program is bome out in Table 9a in the NPRM. Of the 1,300 failing GE programs in Table 9a, only 7 percent (94 programs) fail both the D/E and the pCDR tests; the rest fail one but not the other. ‘The lack of overlap is evidence that the tests measure different aspects of program performance and that each independent test is needed to assess career education programs. Many programs that clearly fail to prepare students for gainfuul employment would remain eligible for funds if programs had to meet the D/E or the pCDR test, rather than both tests. For example, if programs only needed to pass one of these measures, programs in which 99 percent of students borrowed and dropped out quickly could pass the metrics with flying colors, so long as the debt burden of the 1 percent of completers was deemed manageable. In fact, as discussed further above, we believe the rule should go further because the pCDR does not sufficiently protect against programs with high borrowing and dropout rates. The pCDR measures only the most extreme borrower distress — capturing only those borrowers who failed to make a single payment over a 360-day period soon after entering repayment ~ a pCDR is not sufficient to protect against programs with high borrowing and dropout rates. Programs where 99 percent of the students drop out with heavy debts they cannot pay down can still pass the pCDR so long as fewer than 30 percent of borrowers default. ‘The recent Senate HELP Committee investigation revealed the extent to which some companies are willing to ignore the debt burdens of students who do not complete because such students ‘were not included in the 2011 Prior Rule’s D/E rates. The Senate report cites a confidential presentation to ITT's board of directors prepared in response to the 2010 proposed gainful ‘employment regulation that noted that “the overwhelming majority of our programs do NOT. comply with the proposed “GE bright line™ but that ITT “could comply with the proposed rule by reducing tuition levels by an average of 11 percent.” (Emphases in the original]” The Senate report explains that ITT executives did not recommend this approach: Essentially reducing tuition and thus debt for students who dropped out was deemed inefficient because they were, at that point, not captured in the regulation, The board presentation went on to state that the “most economically efficient” solution would be to provide selective financial awards to students likely to graduate. By focusing on graduating students, these awards “effects only revenue from program completers,” but February 6, 2014, The Chronicle of Higher Education. http//chronicle.com/atticle/CalifomiacAgensy-Seeks- More/14453 TTT Educational Services. April 19, 2009, Board of Directors Meeting. Cited in Senate HELP Committee 2012. Pp. 524-525 of ITT Educational Services profile, hntpulwww help senate gov/ima/media/for profit reporvPartILITT pdf. 10‘would still “result in a reduction of the median loan debt balance of graduates in each program of study.”*° Consistent with this presentation, ITT subsequently created “Opportunity Scholarships” that are given retroactively to students after they complete a given quarter. ITT reserved the right to “at any time in its sole discretion, terminate the [Opportunity Scholarships], which termination will be effective as of the start of the next quarter.” In this way, ITT reduced the debt loads of graduates, without “inefficiently” reducing debt for students not expected to graduate. Since this Lime, other companies have followed TTT’s lead in offering grant aid selectively o those students ‘who are deemed likely to complete.” This underscores the need for at least one of the gainful employment metrics to include non-completers, and the need for the regulations to prevent and anticipate gaming by companies that leave students with debts they cannot repay. Given this evidence, as well as the extensive new data and research cited in the NPRM that became available since the 2011 Prior Rule was finalized, it is clear that the D/E and pCDR tests should operate independently, rather than as alternative measures. Debt to Earnings (D/E) Thresholds (Sec. 668.403(c)) ‘The NPRM (p. 16445) seeks comment on the appropriateness of the proposed D/E rate thresholds. It is very clear that the proposed debt thresholds should not be weakened. In fact, as the NPRM notes, the eight and 20 percent passing thresholds are the maximum or even higher than existing research recommends. Moreover, under the NPRM, programs still would not be considered failing unless they exceeded both 12 percent and 30 percent. The Institute for College Access & Success’ Project on Student Debt commissioned with the College Board the 2006 paper by Sandy Baum and Saul Schwartz on which the Department heavily bases its thresholds.”’ Baum and Schwartz examined the historical basis for the eight- percent rule of thumb for student loan debt and found that it was initially intended to include all forms of non-morigage debt, such as credit card payments and car loans. Even if eight percent were an appropriate student debt threshold for traditionally aged college students who may have little debt outside of student loans, itis decidedly less so for eater education programs, whose students are more likely to be working adults with families and significant financial obligations. As for discretionary income, Baum and Schwartz. concluded, “Our suggestion is not that 20 percent of income is a reasonable debt-service ratio for typical borrowers. Rather, it is that there Ibid SUTTT “Opportunity Scholarship” fact sheet, posted on company web site in April 2013. Attached as Appendix D in TICAS June 2013 public comments availabie at huss sicus.org/fles/pub/TICAS June 2013 neg reg comments.pdf. * Pot example, the University of Phoenix's Scholarship Reward! Program provides a per-credit tuition reduction to students once they completo a year's worth of courses at full price (hutpd//bitly/J IGTFRV). Strayer's Graduation Fund gives students one free couse for every three they complete, but the free courses can only be redeemed in the final year of a BA program (http://www strayer.edu/gradfund). See Appendix B. "Baum, Sandy and Saul Schwartz. 2006. How Much Debt ls Too Much? Defining Benchmarks for Manageable ‘Student Debi. hitp:icas.ong/iles/puh/Manageable Debt FINAL, 4,20.06.pdfare virtually no circumstances under which higher debt-service ratios would be reasonable.” [Emphasis in the original] Ina September 8, 2010 post for The Chronicle of Higher Education, Sandy Baum reiterated that the Baum-Schwartz paper supports using a debt-to-discretionary-income threshold of 20 percent or less* She and Michael McPherson write that the paper “concluded that manageable payment- to-income ratios increase with incomes, but that no former student should have to pay more than 20 percent of their discretionary income for all student loans from all sources.” Note that they believe no former students should have to pay more than 20 percent of their income on student loans; for a program to have a median debt-to-discretionary income above 20 percent, a majority of its graduates would be paying more than 20 percent of their discretionary income for student loans. Some industry advocates have pointed to an NCES analysis of debt-to-earnings to argue that a 12 percent ratio is not uncommon for private nonprofit college graduates in particular. However, as ‘New America senior policy analyst Ben Miller has thoroughly documented, there are insurmountable road blocks to comparison” between this analysis and the gainful employment rule which render the NCES study “incapable of informing the gainful employment debate as much as for-profit college advocates would like.”** Further, the NCES report merely describes graduates’ debt ratios, and does not attempt to justify what a reasonable debt burden might be. ‘Thus, and as the NPRM acknowledges (e.g., p. 16443), 8 and 20 percent are the maximum levels that applicable research considers reasonable. Nevertheless the NPRM allows programs to have higher ratios in a number of scenarios: «The NPRM only requires programs to meet the research-based standards for one of the DIE ratios, not both, so passing programs will still regularly exceed accepted debt thresholds. In fact, based on the 2012 GE informational rates, there are 1,267 programs that meet the annual D/E threshold (Le., have a ratio of 8% or less) but have a discretionary D/E of 100 percent or more.”” + The NPRM also allows programs to exceed both of the research-based D/E thresholds. Programs would not lose eligibility unless they moderately exceed the 8 and 20 percent thresholds for four consecutive years (in the zone), or greatly exceed (fail) those thresholds for two years in a three year period, + The ratios defined in the NPRM are not comprehensive measures of student debt or ‘earnings. For example: > Baum, Sandy and Michael MePherson. September 8, 2010. “Gainfal Employment." Chronicle of Higher Education, bitplichroniele,conv/blogPost/Gainful-Employment/26770/, Ben Miller, New America Foundation, December 6, 2013, Blog post. “Beware this Gainful Employment Comparison.” http:/wyrw,edeentral.org/heware-gainful-employment-comparison * Calculations by TICAS on data from the U.S. Department of Education, “2012 GE informational Rates.” ht(pl/Lsa.eov/ rdw,© The debt figures used include only debt up to the tuition, fees, books, and supplies that students are charged, and ignore debt students ineur to cover other legitimate costs of attending college. © The discretionary D/E assumes all students have a family size of one, despite the fact that half (50 percent) of all for-profit college students have dependent children, and 30 percent have at least two.” co The D/E measures exclude the program graduates with the highest debt levels when the earings of some graduates cannot be found, Essentially, the rule presumes that the graduates whose earnings data are missing have the highest debt loads and removes them from the calculation of median debt. However, there is nothing to indicate that the graduates with the highest debt loads are the most likely to have missing data. © The D/E measures use the higher of the mean and median earnings of program graduates. As became clear with the release of the 2012 informational GE data, calculating ratios using both mean and median earnings, using different ones when calculating individual program D/E rates, renders the data useless for comparison purposes. Neither consumers, researchers, schools nor policymakers can compare the resulting ratios because some are means and some are medians, and there is no way to tell which is which. This led to confusion and accusations that the Department had erred in calculating the ratios. (See our recommendations ‘on this issue on p. 15.) Each of these measurement choices result in D/E calculations that understate students’ debt burdens and are overly generous to colleges. 03 (c) (1) Civ) (B)) In addition to supporting the passing D/E thresholds in the NPRM, we also strongly support the inclusion of a ‘zone’ for programs that exceed these thresholds by up to 50 percent (j.e., 12% for annual D/E and 30% for discretionary D/E). The use of a zone allows the rule to more quickly cut off the worst performing programs (since failing programs lose eligibility after two failures) and allows poor performers closer to acceptable standards time to improve. Critically, zone programs that fail to improve across four years will also lose eligibility. That these programs should eventually lose eligibility is important because their program outcomes are unacceptable - just not as unacceptable as the worst performers which lose eligibility more quickly. As the NPRM notes, 8 percent annual D/E and 20 percent for discretionary D/E are what experts and industry practice deem to be the outside limit of acceptable debt burden. Importance of a Time-Limited Zone (Sec. 668. ited in TICAS and a broad coalition of organizations have long called for a zone that is time. nature, so that programs that do not meet acceptable standards are required to improve to Calculations by TICAS on data from the U.S. Department of Education, National Postsecondary Student Aid ‘Study (NPSAS), 2011-12.continue receiving aid.*® Taxpayers should not be forced to subsidize low performance and high profits, and certainly not indefinitely. This is particularly important since the proposed rule allows programs in the zone to continue to enroll unlimited numbers of students receiving federal Title IV and non-Title IV aid, such as GI Bill benefits. (Indeed, we strongly recommend including enrollment limits for poorly performing programs, as discussed further on page 21.) ‘As the NPRM notes, a time-limited zone is particularly appropriate given that gainful employment rulemaking has been underway for more than four years, during which time colleges have made improvements to their program offerings. Colleges eliminated some of their ‘worst programs, froze or reduced their tuition costs, and made reforms like giving students trial periods before banking their tuition checks. Even after the 2011 Prior Rule was vacated, industry analysts made clear that companies were maintaining these reforms with the expectation of further rulemaking on gainful employment. For example, immediately after the 2012 court ruling, an analyst wrote, “We would not expect any of the public companies to change their strategic thinking regarding GE preparation and reporting as a result of this decision, pending the ‘outcome of an appeal.”*” Another analyst wrote, “We don’t think the decision is definitive enough to cause these companies to roll-back ongoing efforts to phase out or modify programs that do not comply with the most recent version of the GE regulation.”™? Clearly, the steps colleges have taken to improve student outcomes for the 2011 Prior Rule will also benefit them under the NPRM. Notably, these improvements are not reflected in the 2012 GE informational rates, which assess outcomes of students who completed their programs in 2008 or 2009. In contrast, official D/E calculations used under a final rule would not begin before 2014-15, at which point the measurement would include students who completed in 2010- 11 and 2011-12 — afier many of the reforms were put into place." For these reasons, it is highly appropriate that the rule include a time-limited zone, and one that further includes enrollment limits. Use of the Higher of the Mean or Median Annual Earnings in D/E Rates (Sec. 668.404(a)(1) and 668.404{a)(2)) ‘The NPRM uses the higher of the mean or median annual earnings, but invites comment (p. 16452) on whether the calculation should use only the mean annual earnings or only the median annual earnings instead. We strongly recommend the Department use either mean or median > For example, see the August 2010 Coalition Letter Urging Strengthened Rules for Gainful Employment, hutpuvwww protectstudeptsandtaxpayers.ore/vp-content/uploads/2011/06/Coalition-ttr-on-GE-NPRM-September= pdt 1 Nicolaus. July 2, 2012. Postsecondary Education Industry Update “ Credit Suisse Education Services Catalyst Report. July 2, 2012. Judge Overturns Much Of GE; Saga Continues. “© Barclays U.S, Education Services, "Another Challenging Quarter in the Books,” Aug. 15, 2012. This Barclay report states: “Over the past eighteen months, many of our covered companies have made substantial changes to their offerings in an attempt to position better for the changing regulatory environment. This has included teaching out programs, introducing new program offerings, changing tuition, reducing the duration of programs, and even ‘more dramatic steps including the closure of poorly performing campuses.” “4earnings in all cases, and not the higher of the two, and we recommend using the mean as under the 2010 GE NPRM. As discussed in the NPRM, one of the two ptimary goals of the proposed regulation is to provide “acourate and comparable” data to help stuclents make better informed decisions about where to invest their time and money, to help the public, taxpayers, and the government better safeguard the federal investment in these programs, and to help institutions improve student outcomes in these programs. However, calculating ratios using both mean and median and using different ‘measures for each program and ratio renders the data useless for comparison purposes. Neither consumers, researchers, schools nor policy makers can compare the resulting ratios because some are means and some are medians, and there is no way to tell which is which. As first became clear with the informational data release in 2010, using both means and medians contributes to confusion and has led to accusations that the Department had erred in calculating the ratios. Using the higher of the mean or median makes it impossible to compare data for different programs, or even the same program over time. There is no reasoned policy basis for using the higher of the mean or median. If the Department insists on using the more generous of the measures in assessing program performance, we strongly recommend that the same measure at least be used across all programs for the purpose of disclosure. Amortization Periods (Sec. 668.404(b)(2)) The NPRM (p. 16452) invites comments on the proposed amortization provision as well as on a 10-year amortization period for all credential levels. For multiple reasons, we support the use of ‘a 10-year amortization period in the calculation of all D/E ratios. 1. Longer repayment plans are a benefit to borrowers and should not be the ‘expectation or standard. All of the proposals the Department presented to the 2013 negotiated rulemaking panel used a 10-year amortization period. The Department hegotiator made a persuasive argument that just because students may repay loans over a long period of time does not mean they should or that a longer period should be the expectation or standard. For example, 15 years after graduating with a BA, many will have children in or looking towards college and should be saving for their own retirement, ‘The proposed amortization periods do not reflect the repayment plans borrowers currently use. According to the NPRM, the vast majority of borrowers entering repayment in 2012 are in 10-year payment plans. ‘The Department's data show that a substantial majority of borrowers entering repayment in 2012, regardless of credential level, are in the standard repayment option of 10 years. Between 80 percent and 90 percent of students who attended two-year and four-year institutions are in 10-year plans; even 63 percent of graduate students are in 10-year plans. 3. The proposed amortization periods do not even reflect the actual repayment periods over a broad period of time and economic cycles. When the Department looked at 15actual repayment periods, rather than the plans current borrowers are in, the data showed that a majority of borrowers (54 percent) who entered repayment between 1993 and 2002 had repaid their loans in full within 10 years upon entering repayment, and about 65 percent had repaid their loans within 12 years. The data in the NPRM suggest that the amortization period used has a significant impact on the D/E rates. Extending the amortization period reduces the number of programs that fail the DIE rates measure. According to Tables 57 and 58, when 10-year and 20-year amortization periods are applied, the D/E failure rates for bachelor’s degree programs drop from 45.5 percent (for 10- year amortization) to 25.8 percent (for 20-year amortization). Some of these programs are clearly problematic. For example, Grand Canyon’s BA program in elementary education and teaching has more than four times as many defaulters as graduates.” Using a 10-year amortization period, this program fails the GE metrics; using the proposed 15-year amortization period for BA programs, this program is in the zone rather than failing Interest Rates Used in D/E Rates (Sec. 668.404(b)(2)(Ii)) As the NPRM notes, the interest rate used in the D/E calculations greatly affects the resulting, ratios and would greatly affect the number of passing, zone, and failing programs in the 2012 informational sample. The NPRM requests comment (p.16453) on the proposed method for determining the interest rate in the D/E rate calculations, including whether rates should be averaged over a time period other than six years, vary based on the length of the program, or whether a weighted average of the actual interest rates associated with the loans included in the median loan debt calculation should be used. We recommend that the regulation use the weighted average of the actual interest rates associated with the loans included in the calculation because this will most closely measure the debt burdens of program graduates, The ‘NPRM acknowledges that it is possible to do this while expressing concern about the complexity involved in doing so. However, the complexity will be invisible to schools and students and presumably can be managed by computer. If this is not possible, the Department should use an alternative approach that comes as close as possible to approximating graduates’ actual debt burden. ‘The average interest rate over the same fixed number of years should definitely nor be used for all programs given that the time from disbursement of the loan to entering repayment will vary significantly from program to program, based on the specific program, credential, and the school’s control. For example, the data on page 16453 indicate that for all two-year or less institutions, the median time to enter repayment is two years or less, and for all four-year institutions the median time is four years or less. Although these data appear to be for all loans by loan origination year and not just the loans of GE program graduates, an analysis of the loans of GE program graduates would likely also show significant differences. Certainly, it makes no sense to use a six-year average interest rate to calculate the median debt of completers of a one- year certificate program. It is therefore not appropriate to use a six-year average interest rate for all programs. 114 GE programs have more students who default than graduate, TICAS. May 15, 2014. Blog post. “Where More Default Than Graduate: Career Education Program Parasites.” http//views tcas.org/2p= 1301. 16If the actual rates associated with the loans included in the calculation are not used, the next ‘closest approximation of the actual interest rates would be to use the rates associated with the median length of time it took those graduates to complete the program. After this, the next best would be to use interest rates associated with loans entering repayment in the median length of time for programs at the same credential level and institutional control (c.g,, the median time to repayment for graduates who borrowed to attend certificate programs at community colleges). That is, it should vary based on the program length, not based on the highest credential awarded by that institution, and it should vary based on the institution’s control. The data on page 16453 suggest that the time to repayment of GE program completers may vary significantly by control. “The average rates over a longer period of time should not be used just because they would be more predictable. The purpose of the calculation is to assess actual debt burdens, which may vary from year to year, and the ratios should reflect this. Given the recent reduction in interest rates, in the short-term, using interest rates over a shorter period of time will be both more accurate and result in lower D/E rates. Inclusion of Non-Completer: in D/E Rates (Sec. 668,404(c))} ‘The NPRM requests comment (p. 16443) on whether D/E rates should include the outeomes of students who do not complete the program being assessed. They should not. As crucial as itis that the rule assess outcomes of both program completers and noncompleters, it would be inappropriate to include noncompleters in program D/E rates. While it is important to recognize that many noncompleters have debt and often struggle to repay that debt without a degree, comparisons of debt levels must be made at the same point in student's academic trajectory. Otherwise, programs with high drop-out rates may have low D/E rates simply because most students do not stay enrolled long enough to accumulate large amounts of debt. ‘This phenomenon is very clear on the current College Scorecard, which includes the median amount of debt at the point at which students enter repayment, regardless of whether the student graduated or dropped out after a semester or two. For example, the Scorecard shows that the median federal debt of borrowers entering repayment at Occidental University in Los Angeles and Westwood College - Los Angeles (which both primarily grant bachelor’s degrees) is very similar: $19,000 at Oceidental and $18,926 at Westwood." However, other federal data suggest that these figures represent very different student ‘outcomes. Because 54 percent of entering first-time, full-time students at Westwood didn’t return for a second year, the low median debt for borrowers entering repayment reflects just one year of loans in many cases. Indeed, the average federal loan amount for undergraduate borrowers at Westwood in 201 1-12 — what they borrowed in just that one year — is $11,682. In © YS, Department of Edueation, College Scorecard, hitp:icollexecost.ed.gov/scorecard) “Calculations by TICAS on data from the U.S. Department of Education, College Navigator, htputinces.ed vov/collegenavigator.