The Regulatory Process:Your Role as a Financial Aid

Administrator

November 6, 2007

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Today’s agenda

• Why is the regulatory process important?

• What are the elements of the process?

– Negotiated Rulemaking (Neg Reg)

– Notices of Proposed rulemaking (NPRMs)

– Final Regulations

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Today’s agenda

• What are these?

• How do they work?

• How can you have an impact?

• Welcome to 2008

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Why should you be concerned?

• Best opportunity to have regulations developed that you can live with.– You know what is best for your school and

students.

• Advance knowledge of changes to expect.

• Professional responsibility– Who understands financial aid better than

financial aid administrators?

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The most important reason…

We in America do not have government by the majority. We have government by the majority who participate.

Thomas Jefferson

3rd president of US (1743 - 1826)

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The basics of the process

• ED identifies laws/problems that need regulation

• Public hearing is conducted

• ED negotiates with public groups

• NPRM is developed

• Public responds

• ED reviews responses, issues final reg

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ED Negotiated Rulemaking

• Statutory Authorization

– Section 492 of the Higher Ed Act

– Chapter 1, Code of Federal RegulationsSections 305.82, 4 & 5

– Presidential Memo, Sept 30, 1993

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Negotiated Rulemaking

• Public involvement in developing proposed regulations.

• Opportunity for the community and ED to find consensus on issues of concern.

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Goal of Negotiated Rulemaking

• To develop one or more NPRMs that reflect a final consensus of the negotiators.

• If the negotiators reach consensus, ED will use the consensus language in the NPRMs.

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How it begins

• ED conducts one or more public hearings

• The hearing is important because– Participants … chosen by the Secretary

from individuals nominated by groups participating in the regional meetings …, and shall include both representatives of such groups from Washington, D.C, and industry participants.” { HEA 1992, section 492(b)}

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Participants – Loans Committee• US Department of Education

• Students - US Student Assoc

• Legal Assistance Organizations -National Consumer Law Center

• Institutions of Higher Education– Public 2 year- Laramie Comm College – Public 4 year - Univ of Michigan – Private 4 year - MIT – Proprietary - ECPI College of Technology

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Participants – Loans Committee• HEA Title III & V – UNCF

• FFEL Participants– Guarantee Agencies - Vermont SAC– Lenders - Wachovia– Secondary Markets -Wyoming SLC– Loan Servicers - Sallie Mae– GA Servicers - Great Lakes HEGC

• DL Schools - Stonehill College

• Perkins Schools - U of Illinois

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Protocols

• These establish how the Committee will conduct the negotiations

• Committee members were expected to negotiate not based on their represented constituency, but on their experience with Title IV aid programs

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Protocols - Consensus• “...there must be NO dissent by ANY member in

order for the committee to be considered to have reached agreement.”

– “Members should not block or withhold consensus unless they have serious reservations….”

– “Absence will be equivalent to not dissenting.”

• “All consensus agreements… will be assumed to be tentative… until members… agree to make them final agreements.”

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Protocols - Consensus

• If the committee reaches consensus, ED will use the consensus language in the NPRMs

• Committee members WILL REFRAIN from commenting negatively…unless it has something new to contribute (not previously considered or new information).

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Protocols - Consensus

• The Department will not alter the consensus based language UNLESS it reopens the NegReg process or provides a written explanation to the committee members.

• If there is a change, committee members may comment positively or negatively.

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Carved out sections:

• The department can choose to “carve out” sections of the regulations, either taking sections out of discussion completely or moving them into a separate discussion.

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No consensus?• ED gets to issue an NPRM with language

that it wants

• Generally this will reflect the positions that ED supported during Neg Reg

• Higher education community and public can anticipate what ED’s language and arguments will be

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No consensus?

• In situations of no consensus, public response from the higher education community is especially critical.

• Without public response, ED gets to draft the regulations so they say what it wants.

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Keeping abreast of what’s happening

• NASFAA “Today’s News”

• Committee members and their Associations

• Chronicle of Higher Education, Inside Higher Ed, and other media sources

• US Department of Education

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How can you have input?

• Attend a Regional ED Meeting

• Volunteer to be a negotiator

• Provide input to your associations

• Respond to NPRMs when published

Reading and Responding to NPRMS

A cure for insomnia,

or a hair raising thriller?

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What is an NPRM?

• Notice of Proposed Rule Making

• A formal notice to the public by a government agency that they intend to create new regulations or modify already existing regulations.

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First section – The introduction

• Summary - What the Department intends to regulate

• Dates - Deadline for responding

• Addresses - Where to send your response

• Further Information - Who to contact

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Next – Supplementary Info

• This is the most important part

• Recap of the NegReg process and participants

• Explanation of each major proposal, and reasons for it.

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Supplementary information also includes

• Special requests for information

• Costs and benefits

• Clarity of regulations

• Regulatory flexibility

• Paperwork reduction act

• Invitation to comment

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Next - The proposed regulation

• The specific language being proposed

• Review to be sure – Actual language conforms to the

explanation in the Supplementary Information, and

– Proposal is clearly written and easily understood

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Master calendar effective dates

• New regulations are effective July 1

• Final regs must be published by November 1 to be effective July 1

• If not published by Nov 1, not effective until the following year

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Master calendar effective dates

• 45 day implementation permitted on occasion (i.e. emergencies)

• Implementation before effective date is permitted IF it is deemed to be to the advantage of schools AND the Secretary designates the reg as such

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General rules for responding• Keep it short

• Refer to the section you are commenting on

• Explain who you are, and why you are responding

• Submit by the deadline

• Constructive criticism

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General rules for responding

• Numbers count– Associations are only one response, no

matter how big

• Content– A good, logical argument, backed up with

data, can make your point

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Your response

• If you agree, say so. – If others disagree, you want your view to

prevail

• If you disagree, explain why.

• Is their reason for doing something valid?

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Your response

• Because something add to your workload is generally not a good reason to oppose a regulation, unless it is especially burdensome.

• It is appropriate to bring workload issues to the attention of your school. They may wish to respond directly, or through Presidential Associations.

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Your response• If the proposal isn’t clear, tell them

• Use examples to explain how your students will be impacted

• Are there unintended consequences?

• Are there alternatives that will accomplish the same goal with less burden?

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Sending your response

• Send comments to government web address

• www.regulations.gov– Department of Education– Docket ID Number

• Loans – ED-2007-OPE-0133– Can view other comments that have been

submitted

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Sending your response

• If you believe the regulations create a burden, send a copy to OMB

• Send copies to:– NJASFAA, EASFAA, and NASFAA – your institution’s government relations

office – your supervisor

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Handling responses

• ED staff read every comment

• Comments are broken down by the section of the regulation that they apply to, and each is reviewed

• A response is drafted for each comment or group of comments– The names of responders are not included

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Final regulation

• Almost always issued by November 1

• Remember what we said earlier -

– HEA Master Calendar requirement

– Rule can be suspended in “emergency”

– Early implementation may be allowed

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Final regulation

• What should you look for?• Supplementary Information

– Implementation Date

– Analysis of Comments and Changes

– Format will be comments, discussion, and changes

– Discussion will explain ED’s rationale for what they have done

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2008 Regulatory Process

• CCRAA has several initiatives that will probably require negotiated rulemaking.

– TEACH grants– Loan Cancellation for public employees– Emancipated minor– Displaced worker

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2008 Regulatory Process

• ED has announced 3 public hearings in November– New Orleans– Washington– San Diego

• Neg Reg teams will meet in early 2008

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What about HEA Reauthorization?

• Will probably create additional opportunities for negotiated rulemaking– HEPI index– Sunshine legislation– Other new initiatives

• You’re prepared now to take part in the regulatory process.

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Questions?