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                     Office of Postsecondary Education (OPE)

                     U.S. Department of Education (ED)




Negotiated Rulemaking for Higher Education 2011


      Transcription of Public Hearing held at
The Sciences Auditorium, Room 129, of the
College of Charleston School of Sciences and
Mathematics Building, 202 Calhoun Street,
Charleston, South Carolina on May 26, 2011.




PANEL MEMBERS PRESENT:

DAN MADZELAN, Department of Education,
      Office of Postsecondary Education

CARNEY McCULLOUGH, Department of Education,
      Office of Postsecondary Education

HAROLD B. JENKINS, ESQ., Office of the General
 Counsel




Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            2

                        C-O-N-T-E-N-T-S

Welcome .................................... 3

Public Comment

 Diane Auer Jones ......................... 10

 Jennie Rakestraw ......................... 23

 Anthony Fragomeni ........................ 32

 Fran Welch ............................... 40

 Carol Lindsey ............................ 47

 Betsy Mayotte ............................ 58

 Chuck Knepfle ............................ 70

 Mary Lyn Hammer .......................... 80

 John Beckford ............................ 97

Closing .................................. 105




Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                                 3


 1                      P-R-O-C-E-E-D-I-N-G-S

 2                                                              9:01 a.m.

 3                     CHAIR      MADZELAN:              Good      morning,

 4   everyone.             Welcome        to     this       hearing        for

 5   regulatory         issues      related        to    the     Title       IV

 6   Student        Financial         Aid      Programs         that       are

 7   administered by the Department of Education.

 8                     The first thing we want to do here

 9   at this end of the room is to thank our hosts,

10   the College of Charleston for providing this

11   venue today and also some additional space for

12   tomorrow's roundtables.

13                     My name is Dan Madzelan from the

14   Office of Postsecondary Education.

15                     I am joined on my right by Carney

16   McCullough also of our Office of Postsecondary

17   Education and on my left, by Harold Jenkins

18   from our Office of General Counsel.

19                     We are here in Charleston for two

20   days or one and a half days at least and these

21   are two separate activities.                     What we are here

22   today about is to get input from you, the

23   community,          the      higher-education               community

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                                 4


 1   around what we ought to do in our next round

 2   of rulemaking.

 3                     What we will be doing tomorrow for

 4   a half day, we have three separate fora or

 5   roundtables where we want to have a more in-

 6   depth       discussion          around         several          of     the

 7   Department's              --         the         administration's

 8   priorities in higher education:                         The First in

 9   the     World,        a     competition           in      our        FIPSE

10   programs, teacher preparation and also some

11   activities             around            improving              college

12   completion.             So,     again,        three      roundtables

13   tomorrow that are really focused on helping us

14   flesh out some of our policy positions.

15                     Today        though,           this      is        about

16   rulemaking          and        in    particular           negotiated

17   rulemaking.             I'm     sure       you    all     know        that

18   agencies        when       they      engage        in     rulemaking

19   activities are governed by the Administrative

20   Procedure Act which provides for a Notice of

21   Proposed Rulemaking, a public comment period

22   and then a final rule in which the agency

23   either      considers         what     they      heard in        public

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                                 5


 1   comment or does not consider it, but either

 2   way, has to inform the public of what they did

 3   agree to or not agree to in terms of producing

 4   the final rule.

 5                      What we have for our Title IV--HEA

 6   Title         IV       Programs--is              an       additional

 7   requirement on the front end of the process

 8   called negotiated rulemaking and that is where

 9   we can convene panels.                  We meet several times

10   over a several month period to actually hammer

11   out the language of the Notice of Proposed

12   Rulemaking.          So, again, the neg reg piece of

13   this is a front-end activity in the rulemaking

14   process.

15                      On the front end of the rulemaking

16   process is why we are here today which again

17   is to get input from the community about what

18   we ought to be considering.

19                      Now, we did publish a notice in

20   the Federal Register.                  I'm sure you all read

21   it.     That's why you're here today.                     Otherwise,

22   you would not have known about this.                           Well, I

23   shouldn't say that.                  I'm sure you all have

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                                 6


 1   friends and colleagues that would have told

 2   you about this.

 3                     But, we did identify a couple of

 4   topic     areas.           We    are    interested         in    taking

 5   another look at the issue around the discharge

 6   of    Federal         student          loans     for      total       and

 7   permanent disability.                   We're also interested

 8   in taking a look at some of our alternate

 9   repayment          plans,         income-based            repayment,

10   income-contingent               repayment       and      we're      also

11   interested in insuring that our regulations in

12   particular with the Direct Loan Program are,

13   you know, independent and free standing.

14                     Now that all Federal student loans

15   are     originated              through      the       Direct       Loan

16   Program, what we have done over the years is

17   that we have regulated Direct Loans in many

18   instances by cross-reference to FFEL Program

19   rules and so, what we're interested in doing

20   is    again     as     I   say     having       our     Direct      Loan

21   regulations independent and free standing.

22                     What my colleagues in the Office

23   of General Counsel say is to have our Direct

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                                 7


 1   Loan    rules      naturally         readable          so    you    don't

 2   have to cross-reference here and there.                                     I

 3   like that term.            Naturally readable.

 4                     So,    again       this     morning         and       this

 5   afternoon, we do have some people who signed

 6   up ahead of time.

 7                     The number of people on this list

 8   is less than the number of people I see in the

 9   room.      If you are not signed up and you become

10   inclined or maybe already are inclined, but if

11   you become inclined to speak, just go out to

12   the back of the room.                 Our colleague Kathleen

13   Smith will be happy to sign you up.

14                     You     know,      there       are        time    slots

15   that we have.            We generally do not keep to a

16   strict schedule.             If a speaker takes a little

17   bit    longer,         that's     kind      of    okay.            If    the

18   speaker uses a little bit less time, then we

19   typically         ask      the     next       speaker         to        come

20   forward.

21                     We    likely       will        get    to    a     point

22   where there is sort of a break where we do not

23   have speakers scheduled or ready to speak and

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                                 8


 1   we will take breaks.                We will take, you know,

 2   a recess until we have another speaker ready

 3   to go.

 4                     We will take a break at noon for

 5   lunch approximately 12:00 to 1:00 p.m.

 6                     Everything         that      we     say     here      is

 7   being      transcribed           and      we     will       make      the

 8   transcriptions of this and our other sessions

 9   available on our website.

10                     I think the last point is again we

11   are looking in this process moving forward.

12   We are interested in what you have to say

13   about, you know, the topics we've identified

14   or maybe some other topics that you think are

15   important.           We're less interested in issues

16   related to regulations that are not yet in

17   effect.

18                     So,     again       with      that,       I'll      ask

19   Carney and Harold if they have something to

20   add or did I miss something?

21                     MR. JENKINS:           I'll just add a word

22   about      the      framework         that      we're       operating

23   under.

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                                 9


 1                     Congress,         of    course,        establishes

 2   the Student Aid Programs by legislation and in

 3   regulating,            we         are      implementing             this

 4   legislation.          Now, for some of the programs or

 5   for some of the provisions of the programs,

 6   Congress         is      very      prescriptive              and     very

 7   specific.         That gives us less latitude.                          In

 8   other cases, we have more latitude, but in all

 9   cases, we're limited in our regulating by the

10   specific        terms        of     the      legislation            which

11   authorizes the programs.

12                     CHAIR      MADZELAN:           Thanks,       Harold,

13   and    so,     we'll        get    started       with      our      first

14   speaker.

15                     Now, we know who you are because

16   we have the list, but when you come up, for

17   the record, please state your name and where

18   you are from, who you represent and our first

19   speaker is Diane Auer Jones.

20                     Yes,      everyone         come       up     to     the

21   podium and the mike is live.

22                     MS. JONES:            Great.       Thanks.         Good

23   to see the three of you.                     Thanks for holding

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            10


 1   this meeting and thanks for providing me with

 2   an opportunity to provide comments.

 3                     Given        the          President's            January

 4   18th,      2011        Executive            Order       on    improving

 5   regulation         and       regulatory          review,       I     would

 6   recommend          that        the          Department's            future

 7   negotiated rulemaking be focused on reducing

 8   regulatory         burden,          eliminating          outdated       or

 9   useless          regulations              and       ensuring          that

10   compliance with the remaining regulations not

11   only meets the intended goals, but that such

12   compliance             does         not         cause        additional

13   unnecessary         harm       to      an     already        struggling

14   economy.

15                     To do this effectively and for the

16   public      to    be     able     to      provide       informed       and

17   relevant         comments,        we      must      first      see     the

18   Congressionally               mandated           report        of     the

19   Advisory         Committee           on       Student         Financial

20   Assistance          regarding          Title        IV       regulatory

21   burden.

22                     It    is    disappointing             that       despite

23   the significant advance notice of the report's

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            11


 1   due date the Advisory Committee has opted to

 2   wait until the last minute to conduct their

 3   research and I use the term research quite

 4   loosely.        They've decided to distribute brief

 5   surveys to university administrators that must

 6   be completed in an expedited fashion during

 7   the busiest time of the academic year.

 8                     It is hard to believe given the

 9   experience we had inside of the Department to

10   look at regulatory burden that a 10 or 20-

11   minute survey will accurately or adequately

12   inform the Committee's findings.                         It is hard

13   to    understand          how      anyone       who      understands

14   rigorous research methodology would consider

15   these surveys to be an adequate way to assess

16   regulatory burden.

17                     It would appear that the interest

18   in determining regulatory burden is less than

19   genuine which is disturbing given that there

20   is unanimous agreement among Congress and the

21   Administration             that        reducing          unnecessary

22   regulatory burden is a top priority if we hope

23   to get our economy back on track.

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
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 1                     A    serious       effort      is      required       on

 2   the    part      of        the    Department        to    fully       and

 3   adequately assess regulatory burden as well as

 4   to     examine         the        efficacy,       usefulness          and

 5   clarity of the current regulations.

 6                     I    do        agree   with     the     Department

 7   that a realignment of lending and servicing

 8   regulations           is    in    order    now     that        the   FFEL

 9   Program has been eliminated and the Department

10   of Education serves as lender, servicer and

11   guarantor.         It is critical that the Department

12   take responsibility for borrower repayment and

13   hold itself to the same standards to which it

14   once      held        lenders        and     guaranty          agencies

15   regarding        borrower          satisfaction          and    reduced

16   default rates.

17                     I must say that if the servicing

18   of loans purchased by the Department through

19   the PUT Program serves as a bellwether for

20   servicing to come under an all-DL Program, I

21   have grave concerns.

22                     I    would       encourage       the    Department

23   to convene an expert panel of experienced loan

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            13


 1   servicers,         guaranty        agencies         and     others      to

 2   develop       regulations          that      clearly      articulate

 3   the Department's roles and responsibilities in

 4   this regard and will define a set of measures

 5   by which the Department's performance in the

 6   areas        of      borrower              servicing,         customer

 7   satisfaction,            ease         of     use      and      default

 8   reduction are rigorously evaluated in keeping

 9   with     the      ways     in     which       FFEL     lenders        and

10   guaranty agencies have been evaluated in the

11   past.

12                     In particular, it is necessary for

13   the Department to explain in its regulations

14   how it will fulfill the provisions of Section

15   422 of the HEA.            This section assigns a number

16   of important borrower education servicing and

17   default           prevention           responsibilities                 to

18   guaranty agencies.

19                     Who     will      provide         these     services

20   when     all      Stafford       Loans       are     Direct      Loans?

21   Included        in    Section         422     are    such      default

22   avoidance and prevention actions as:                           partial

23   loan     cancellation            to        reward     disadvantaged

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            14


 1   borrowers          for      good         repayment        histories,

 2   establishing a financial and debt management

 3   counseling         program        for       high-risk        borrowers

 4   that provides long-term training in budgeting

 5   and debt management, establishing a program of

 6   placement          counseling          to      assist        high-risk

 7   borrowers          in      identifying               employment         or

 8   obtaining         additional          training         and     skills,

 9   developing public service announcements that

10   detail       the        consequences           of     student        loan

11   defaults to the public.

12                     Clearly,           Congress           saw         these

13   services as critical to meeting borrower needs

14   and    to    the     integrity        of       the    Stafford       Loan

15   Program.            So,      it     is      necessary         for     the

16   Department         to     explain        how    it     will    provide

17   these services in an all-DL Program.

18                     At a time when the Federal Reserve

19   has set interest rates at near 0 percent, the

20   high     interest         rates       and       fees     charged        to

21   student       borrowers           should        provide       adequate

22   resources         to     support         the     development          and

23   implement of a robust Department-led or GA-led

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            15


 1   and       Department-funded                default           reduction

 2   program.

 3                     Along       those      lines,        I    urge      the

 4   Department          of        Education          to        align      its

 5   regulations          regarding          the       calculation           of

 6   cohort default rates to the language found in

 7   the statute.           For example, Section 462 of HEA

 8   states       that      CDRs       should        not     include         as

 9   defaulted loans those on which the borrower

10   has made six consecutive payments, voluntarily

11   caught up on past-due payments, repaid in full

12   the amount due on the loan, received deferment

13   or forbearance based on a condition that began

14   prior to the default period or if the loan has

15   been otherwise rehabilitated or cancelled.

16                     Meanwhile,              the          Department's

17   regulations as articulated in the Handbook are

18   contrary to statute in that the Department's

19   calculation of CDR includes as defaults loans

20   in    which       the      borrower         has       entered       into

21   repayment          and        subsequently             obtained             a

22   deferment or forbearance, loans that have been

23   consolidated             as        part         of         the      Loan

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            16


 1   Rehabilitation           Program         and    loans      that     have

 2   been paid in full without rehabilitation but

 3   within the cohort default period.

 4                     These        inconsistencies              must        be

 5   resolved so that loans that have been paid in

 6   full      or     are      back      in     lawful        repayment--

 7   including          through         consolidation              programs

 8   authorized by Congress required of borrowers

 9   who want to benefit from the programs created

10   by     CCRAA       and       frankly           promoted       by      the

11   Department--are not counted in the numerator.

12                     Statute         requires         as      much       and

13   rightly so given the significant consequences

14   that     the    Department's           artificially           inflated

15   CDRs have on institutions and students.

16                     The Department's lifetime default

17   estimates should similarly take the percentage

18   of loans that are ultimately rehabilitated out

19   of the equation.              It is disingenuous to cite

20   statistics         that       focus       on     the      number        of

21   borrowers        who     default         since     the    uninformed

22   media and public assume that those loans are

23   never repaid.           Lifetime default numbers should

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            17


 1   exclude from the calculation defaulted loans

 2   that are rehabilitated.

 3                     By    the      way,       it    would      also       be

 4   helpful if the Department's website included

 5   on each page where loans or debt management

 6   programs       are     discussed        a    button      that      would

 7   link the student to the loan calculator.                                So

 8   that, at every step of the way, they could

 9   accurately learn exactly how much borrowing,

10   consolidation and debt management will cost

11   them.        Right      now     the     calculator         is    buried

12   several levels in and the student almost has

13   to be in the debt management and repayment

14   page before they find the calculator.

15                     Similarly,                the        Department's

16   website should include ample warnings that few

17   students       will      actually        benefit       from      public

18   service loan forgiveness or Teach Grants given

19   the small print conditions that are embedded

20   in those programs.

21                     Perhaps             the         most           tragic

22   misrepresentation in higher education is the

23   language used on the Department's own website

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            18


 1   including on college.gov.                       These websites make

 2   loans      seem     like        a    simple       way    to   pay     for

 3   college and they imply that consolidation, IBR

 4   or public service loan forgiveness will make

 5   repayment a snap.

 6                      By     the       way,    it     would      also      be

 7   helpful       if     in    the       student        guide,     Funding

 8   Education Beyond High School, you accurately

 9   cited the Department of Labor's projections

10   about future job growth.                        It isn't the first

11   table      from     the     Occupational            Outlook      Report

12   that matters.             The number one field -- that

13   table cites data about job rate -- growth in

14   job rate.          The number one field on that table

15   is biomedical engineering and while the rate

16   of growth approximates 70 percent, the field

17   is    so      small       that        a     70     percent       growth

18   translates to only 11,000 new jobs over ten

19   years.        So, clearly, it's not the rate of

20   growth that matters.

21                      Instead,         it     is    the    second     table

22   that shows where most Americans will work over

23   the next ten years.                   This is the table that

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            19


 1   shows where the largest numerical growth will

 2   take     place      and      this     table         shows     that    the

 3   majority of new jobs over the next ten years

 4   will not require a college degree.                            Instead,

 5   they       will          require          a         certificate         or

 6   apprenticeship-like training.

 7                     Finally, since there seems to be

 8   unanimous          agreement           that          student's        are

 9   overborrowing           and       frequently         for    activities

10   and purchases that are not related to higher

11   education enrollment, institutions of higher

12   education must be given the tools necessary to

13   limit student borrowing to reasonable levels

14   based on the cost of tuition, fees and books.

15                     One        way     to        do     this      is      by

16   interpreting the statutory definition of cost

17   of attendance, as a ceiling rather than as a

18   floor.             Just           because          Congress      allows

19   institutions            to    include          a     long     list      of

20   indirect        costs        in    the    cost        of    attendance

21   calculation           should          not          mean      that       an

22   institution         is       required         to    include     all     of

23   these costs if it determines that inflated COA

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            20


 1   numbers are leading to overborrowing.                          This is

 2   especially         the    case      for     institutions           whose

 3   students are demographically at high risk for

 4   default.

 5                     Similarly,          the    Department           should

 6   support the strategy proposed or employed by

 7   many community colleges that disallow students

 8   to borrow through the Stafford Loan Program.

 9   It    is     inappropriate            to     hold      institutions

10   responsible for borrower behaviors when, in

11   fact, these institutions have no ability to

12   influence or determine who borrows or how much

13   they borrow.

14                     The Department cannot continue to

15   encourage students to overborrow while then

16   placing      the       blame    for     overborrowing           on    the

17   institutions these students attend.

18                     In     closing,       I   want      to    reiterate

19   that the focus of future negotiated rulemaking

20   should be on compliance with President Obama's

21   Executive Order 12866 on improving regulation

22   and regulatory review.

23                     It       is       imperative             that       the

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            21


 1   Department improve the way its regulations are

 2   written and I think, Dan, you used the term

 3   naturally readable.

 4                     The         public           as         well          as

 5   administrators and students and frankly, the

 6   Department's           own    staff       should       be     able      to

 7   easily read and agree upon the interpretation

 8   of these regulations.                   I know all too well

 9   that even within the Department there's often

10   times      disagreement           on    how      to    interpret            a

11   regulation.

12                     I also know that it is a strategy

13   employed        sometimes          to     intentionally            write

14   regulations           that    are      vague     and     subject        to

15   changing        interpretation.                  This       must      end

16   because it violates both the language and the

17   spirit of the Executive Order.

18                     I     encourage        you      to     follow       the

19   President's Directive to base regulations not

20   in    speculation            or     personal          opinion,        but

21   instead in scientifically collected data.                               It

22   is important for the Department to consider

23   the     academic        literature          about      the     lengths

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            22


 1   between       student        demographics,            student       risk

 2   factors and various higher education outcomes

 3   such as graduation rates, retention rates and

 4   loan repayment.             We all know what those data

 5   say and it's time to develop policies that are

 6   based on and respond to reality rather than

 7   our    outdated        vision       of     a    higher      education

 8   system that once exclusively served advantage-

 9   dependent students.

10                     Finally, it is absolutely critical

11   that the Department facilitate a full review

12   of     existing           regulations,            including           the

13   supporting          data       to     determine          which        are

14   ineffective            in      meeting          the       regulatory

15   objectives they were written to achieve.                                It

16   is time to look at the regulations we have

17   before      embarking         on     yet       another      round       of

18   actions         that         will        potentially             expand

19   regulatory          burden,          potentially            with        no

20   positive results.

21                     I thank you for this opportunity

22   to provide public comment.

23                     CHAIR      MADZELAN:           Thank      you     very

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            23


 1   much.      Jennie Rakestraw.

 2                      MS. RAKESTRAW:            Good morning.              My

 3   name is Jennie Rakestraw and I'm Dean of the

 4   Richard       W.       Riley     College       of     Education         at

 5   Winthrop University and I serve as President

 6   of the South Carolina Association for Colleges

 7   of Teacher Education, the state affiliate of

 8   AACTE.

 9                      I    appreciate        the       opportunity         to

10   comment at this hearing and my comments are

11   mainly going to be about teacher preparation.

12                      There       seems    to    be     agreement        and

13   ample research attests to the fact that in

14   order      for         student      achievement           levels        to

15   improve, highly effective teachers are needed

16   and     their          schools      need      highly         effective

17   leaders.           These teachers and school leaders

18   need to be fully prepared for the challenges

19   faced by our country's schools.

20                      In South Carolina, 53 percent of

21   children are from low-income families and in

22   half of South Carolina's schools, more than 70

23   percent      of        their    students      live      in    poverty.

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            24


 1   Kids Count 2010 reports a 54 percent increase

 2   in    children       from     migrant        families          in   South

 3   Carolina and school data continue to reflect

 4   20 to 30 percent gaps in the achievement of

 5   white students and that of minority and poor

 6   students.

 7                     High     poverty,         high        need    schools

 8   are    less      likely       to    have      a    shared       vision,

 9   commitment          to     problem         solving,         effective

10   leadership or ongoing professional development

11   and this inferior work environment leads in

12   turn to higher rates of teacher and principal

13   attrition,         which      compounds           the    problem        of

14   providing         quality          teaching         and        learning

15   environments in high poverty schools and it

16   reduces their ability to recruit good teachers

17   and leaders.

18                     Currently, in South Carolina, most

19   of our core academic courses are taught by

20   teachers who are certified and qualified to

21   teach in those fields.                  However, we have over

22   5,000 core classes that are taught by teachers

23   not certified to teach those subjects and of

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            25


 1   those, twice as many core classes are taught

 2   by     non-qualified          teachers         in     high      poverty

 3   schools than in low poverty schools.

 4                     When you look at the test scores

 5   by racial ethnic groups, socioeconomic status

 6   and English proficiency, there is consistently

 7   a serious achievement gap.

 8                     For    example,        in    South      Carolina's

 9   Palmetto Assessment of State Standards, the

10   PASS     examination          of     students        in     grades          3

11   through 8, I looked at the 2008/2009 data, but

12   if   you     look       at   most     tests      given       in    South

13   Carolina and nationally, there's at least a 20

14   point       gap        between       achievement           of      white

15   students       and      African       American        students        and

16   Hispanic       students        and     between        students        who

17   fully pay for their school meals and those on

18   free and reduced meal plans.

19                     In     addition,          between        1990       and

20   2006, there's been an increase of over 700

21   percent in the Latino population alone in the

22   up-state        region        of     South        Carolina         which

23   includes        the     counties        surrounding           Winthrop

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            26


 1   University in Rock Hill and according to our

 2   State Department of Education, there's been an

 3   increase of almost 1,000 percent in the number

 4   of English language learners enrolled in South

 5   Carolina's          public         schools      since       1990      and

 6   that's using 2010 data.

 7                     In      our        local        area,        English

 8   language learners are clearly under served and

 9   disparities among districts are evident when

10   it comes to trained and certified teachers to

11   work with those students and typically, you'll

12   see     at    least       a     10-point        achievement           gap

13   between       English         proficient         and     non-English

14   proficient students.

15                     To address these serious issues in

16   schools, teachers and school leaders must be

17   sufficiently prepared.                  I believe that it is

18   critical         for      the        Federal       Government           to

19   continue       to      play    a     key   role     in    supporting

20   educator preparation reform.

21                     At      Winthrop          University,            we're

22   transforming           how      we    prepare        teachers         and

23   school leaders through our U.S. Department of

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            27


 1   Education         Teacher      Quality        Partnership          Grant

 2   and School Leadership Grant.                     Initiatives like

 3   these propel institutions to rethink how we

 4   are preparing teachers and school leaders and

 5   to do so in close collaboration with high-

 6   needs     schools        and    school       districts.            Those

 7   that     can      benefit       most      from      this      type      of

 8   partnership.

 9                     Although         alternative             routes       to

10   teaching and school leadership are touted and

11   there       are      certainly          viable        programs          in

12   existence that prepare teachers and leaders

13   well and provide them with a more streamlined

14   path into school careers, more than 70 percent

15   of today's teachers are prepared by colleges

16   and     universities             through         standards-based,

17   traditional             undergraduate             programs,           MAT

18   graduate programs and their own alternative

19   programs.

20                     The    U.S.      Department         of    Education

21   needs to continue to promote innovation and

22   clinical preparation of teachers and school

23   leaders        in     university-based               programs         and

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            28


 1   invest      in    partnerships           between       universities

 2   and      P-12         schools,        especially          high-needs

 3   schools.

 4                     Strong       accountability            systems        do

 5   need      to     be      in      place         for     all      teacher

 6   preparation                   programs,                traditional,

 7   transformative, public, private, alternative,

 8   all of them.

 9                     Who       are         producing         the       good

10   teachers,        the     ones      who     can       impact     student

11   learning?

12                     From my perspective, universities

13   have     been         anxious      to     see     statewide         data

14   systems in place that will allow us to receive

15   good feedback on how well teachers and school

16   leaders we graduate are performing on the job.

17    We    also      want     to    see      our    graduate        student

18   learning data used in accountability systems

19   that will allow us to continue to get better

20   at what we do and guide ways in which we work

21   with schools to improve teaching and learning

22   in those settings.

23                     I    believe      that       many    universities

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                              29


 1   are     doing       an     excellent          job       in    preparing

 2   effective teachers and leaders, but the data

 3   we have access to for the most part is self-

 4   generated although based on state and national

 5   standards which is not a bad thing, but they

 6   do not provide the level of objectivity and

 7   transparency          that's         needed        to    ensure          the

 8   public       and    the    Federal       Government               that   the

 9   educators we're producing are doing a good job

10   and    are     having      a    strong       impact          on    student

11   learning.

12                      There       are    many,    many          university-

13   based     programs         in    this     country        and        in   the

14   state of South Carolina that are not mediocre

15   and    that     are      contributing         to    the       solutions

16   that we seek in P-12 schools today.                               The only

17   way     to    acknowledge            that     is    with          credible

18   statewide data systems.

19                      The    U.S.       Department         of    Education

20   should       invest       in    the     development            of    these

21   types of student learning-based systems.

22                      And finally, I would like to lend

23   my support for the notion that states should

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            30


 1   be empowered and required to recognize good

 2   teacher preparation programs and identify and

 3   close      low       performing           teacher       and      school

 4   leadership preparation programs as well as any

 5   alternative          program           that     is   getting        weak

 6   results        in     terms       of     teacher        quality       and

 7   resultant student learning.

 8                       Just         as      we      feel      a       moral

 9   responsibility              to        produce    highly-effective

10   teachers who are well equipped for the diverse

11   needs     of    learners          in     schools     today,      states

12   should also recognize a moral responsibility

13   to make those decisions through a fair minded

14   and informed process so that our schools will

15   employ      truly      good       teachers       who    can     make        a

16   difference in the success of their students.

17                       Thank you.

18                       CHAIR        MADZELAN:              Thank       you.

19   Anthony Fragomeni.

20                       MR. FRAGOMENI:              Morning.       How are

21   you doing, Dan, Carney?

22                       My name's Anthony Fragomeni.                    I am

23   the Chairman of the Government Relations Team

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            31


 1   from the American Association of Cosmetology

 2   Schools, better known as AACS.

 3                     I    appreciate         the       opportunity         to

 4   come here today and speak to you about some

 5   loan issues on behalf of the association.

 6                     We've long been a supporter of the

 7   Federal      Direct         Loan    Program       and      we   believe

 8   that    among         the    many    strengths,         perhaps       the

 9   greatest strength of the Direct Loan Program,

10   was      the      direct           connection         between         the

11   institutions and the singular highly effective

12   servicer       who      served       as    the      sole    point       of

13   contact        for     the    borrower         as    well       as    the

14   institution.

15                     We understand that as a result of

16   the     congressional              actions       under      both      the

17   ECASLA and the HEOA that the Department needed

18   to expand beyond just one contractor in order

19   to have the resources necessary to administer

20   the    loan     program       and     the     rapidly       expanding

21   portfolio.

22                     Unfortunately, we believe that the

23   addition of four of the contracted entities as

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            32


 1   well as the lingering role of outside entities

 2   who    still      service        portions        of    the     overall

 3   portfolio           has        blurred         the        lines         of

 4   communications and made access to clear and

 5   accurate information for both the borrowers

 6   and    the      institutions           less      transparent          and

 7   accessible.

 8                     As a result, it has weakened the

 9   level and the quality of the customer service,

10   possibly the overall effectiveness, of this

11   vital, important program.

12                     As a result of these concerns and

13   in    response          to     the    Assistant          Secretary's

14   request for comments and recommendations, AACS

15   submits       the       following        testimony          which       is

16   broken down into four categories:                        Direct Loan

17   simplification,              FFEL      conversion,            borrower

18   benefits and institutional necessities.

19                     So,     we    thank      the     Department         for

20   the opportunity and we offer some suggestions

21   publicly today and we welcome the opportunity

22   to work with the staff and Assistant Secretary

23   and the rest of the higher ed community on the

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            33


 1   development and revisions and modifications to

 2   the regulations.

 3                     When       appropriate,            we       will      be

 4   submitting for consideration experts familiar

 5   with    the     minutiae          of   the      loan    programs        as

 6   nominees for participation in the negotiated

 7   rulemaking process.

 8                     Little technical difficulty here.

 9                     CHAIR MADZELAN:               That's why I use

10   paper.

11                     MR.       FRAGOMENI:           You      know,      it's

12   always a good idea to have it, Dan, and I know

13   we just can't get away from it.

14                     Having more technical difficulties

15   than we thought.              Yes, I know we've got time.

16    I appreciate the fact that they said that

17   from the beginning that, if we need extra time

18   we're going to take it, and I apologize to the

19   folks      here       for    the       disappearance          of     this

20   document        all     of    a    sudden.             Here     we    go.

21   Apologize.         Thank you.

22                     Okay.         First      of    all,      under      the

23   Direct      Student         Loan   Program        and     the      Direct

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            34


 1   Loan simplification, single point of contact,

 2   we urge the Department to modify the Direct

 3   Loan     Program       so      that,     at    a    minimum,         each

 4   institution has a single servicer responsible

 5   for all the students.                    One institution, one

 6   servicer.

 7                     Among            large             groups             of

 8   institutions,             we       would           encourage          the

 9   Department           to        consider         broadening            the

10   institution/servicer               relationship          to    include

11   all    institutions            under     common       ownership         or

12   control and we further request the Department

13   to permit institutions to choose which of the

14   servicers is responsible for the servicing of

15   the    portfolios         based       upon     the     Department's

16   assessment          of       the        various        contractors'

17   effectiveness          in      achieving       the     requirements

18   detailed in their contracts.                       Emphasis should

19   be     placed        on     the       effectiveness            of     the

20   contractor in preventing student loan defaults

21   and providing quality customer service.

22                     Moreover,        if    the       servicer      has        a

23   portfolio        reduced        for     failure        to     meet      or

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            35


 1   exceed        its      contractual            obligations,            the

 2   Department should be required to take these

 3   findings       into       consideration          as    part     of    the

 4   review         of         any        negative          or      adverse

 5   institutional eligibility determinations, for

 6   example, cohort default rate eligibility, and

 7   make accommodations as necessary if the reason

 8   for potential noncompliance is based upon the

 9   actions        of      the       servicer          and       not      the

10   institution.

11                     Real       time       access         to     borrower

12   information          is     key.         It      compromises          the

13   default management efforts of the institutions

14   and the students.               We urge the Department to

15   consider ways in which both the borrowers and

16   the institution can have access to real time

17   information maintained by the servicers.                             That

18   would include information to both held within

19   the     Department,             as     well       as        access      to

20   information contained by external servicers,

21   who continue to participate in the program.

22                     Uniform       terms      and     definitions          in

23   application to the regulations.                             We support

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            36


 1   the    Department's           goal     of     developing          clear,

 2   understandable               regulations          governing           the

 3   Direct Loan Program and we urge the Department

 4   in the development of these regulations that

 5   they eliminate redundant or conflicting terms

 6   and definitions; establish a single clear and

 7   easily       understandable            term       and      definition

 8   which is applied unilaterally and ensure that

 9   the terms and definitions can and are equally

10   applied throughout the regulations.

11                     Under       the     FFELP       Education         Loan

12   Program       conversion,           given     the     complications

13   that have arisen during the transitional loans

14   under      both        the    ECASLA        and     HEOA     and      the

15   prospect of still more outstanding FFELP loan

16   portfolios          being         transitioned             into       the

17   Department              under         various            legislative

18   proposals, we urge the Department to develop a

19   single interface between students, schools and

20   servicers.

21                     We         believe          that          such            a

22   clearinghouse could have helped prevent many

23   of the frustrations experienced by borrowers

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            37


 1   and institutions throughout the transition and

 2   it would help avoid some of the confusion that

 3   now exists when the schools attempt to counsel

 4   students.

 5                     The     role      of    external         servicers.

 6   We support the role of external servicers and

 7   their connectivity to the local community.                              As

 8   an emerging role, these entities appear to be

 9   financial         literacy,            default       aversion         and

10   default       management.                We    hope     that       these

11   servicers will support the following practices

12   which will seek to clarify the construction of

13   the new regulations:                Institutional and third-

14   party access to student borrower information,

15   possible        expansion         of      loan       counseling         to

16   include       counseling         at      the    midpoint        of    the

17   program        as       well      as      entrance         and       exit

18   counseling and understanding and communicating

19   with     institutions          to      better      understand         the

20   impact of entrance, exit and loan repayment.

21                     Customer          service          and      borrower

22   information           transparency             and     consistency.

23   Customer       service,        AACS      recognizes         that      the

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            38


 1   Department            has      and        continues         to       work

 2   vigilantly to ensure the Direct Loan Program

 3   maintain a high level of quality of customer

 4   service,        but     the       transition,         as    with      all

 5   transitions, has not been without some growing

 6   pains.

 7                     We    look       forward       to   working        with

 8   the Department and we welcome any comments.

 9                     CHAIR MADZELAN:                Thank you.          Fran

10   Welch.

11                     MS. WELCH:              Good morning.            I am

12   Fran     Welch.             I'm    Dean     of    the      School       of

13   Education, Health and Human Performance here

14   at the College of Charleston and welcome to

15   Charleston, for those of you who aren't from

16   here.      We're glad to have you and I appreciate

17   this opportunity to discuss the issues that we

18   have in front of us today.

19                     I     also         represent          the        South

20   Carolina        Education          Deans     Alliance         here      in

21   South Carolina and several of my colleagues

22   are here.

23                     I'd       like     to    ditto       what      Jennie

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            39


 1   Rakestraw has said already.                         Don't need to

 2   repeat any of that.                Very good comments about

 3   our needs and what we face.

 4                     But I'd like to just comment on

 5   the four areas that we're discussing, relative

 6   to     our     future         in      education        and        teacher

 7   preparation.

 8                     First,        the    Presidential           Teaching

 9   Fellows Program.               We have a Teaching Fellows

10   Program       here       in    South      Carolina          and    other

11   states do as well and many of my colleagues

12   here have those Teaching Fellows Programs at

13   their institutions and they're very effective

14   and we have a recent report that demonstrates

15   how    very      effective         they       are    in      terms      of

16   persistence         in    the      profession,         in    terms      of

17   success in student achievement, and we also

18   have     Project         TEACH.         And    if     I     understand

19   what's planned here, is that there would be no

20   new    money       for        these    Presidential           Teaching

21   Fellows, but we would actually divert funding

22   to Project TEACH for the Presidential Teaching

23   Fellows.

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            40


 1                     I'm totally against that and the

 2   reason is, we need those funds and many of our

 3   current       students         are     already         accessing      the

 4   Project TEACH funds, and they're particularly

 5   effective for students who come to us from

 6   outside      of       our    own     state,      for       example,     to

 7   study and become effective teachers.

 8                     So, I would encourage you to look

 9   at what states are already doing with their

10   Teaching       Fellows        Programs          and    then    to    plan

11   accordingly at the Federal level.

12                     We need many pathways to teaching

13   and lots of different pathways to teaching.

14   We   certainly          need      to     make    sure       that    every

15   pathway       is       resulting         in     effectiveness           of

16   teachers as they promote learning, but those

17   multiple       pathways           need    lots        of   alternative

18   forms of funding.

19                     I     do     agree       with        Diane       Howard

20   Johnson.              We     do    need       some         deregulation

21   relative to how we approach all of this, but

22   certainly,            multiple         forms      of       funding      to

23   encourage folks to consider teaching.

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            41


 1                      The second thing I want to talk

 2   about is our need for minority teachers and I

 3   think      there's        a     proposal        for     the    Hawkins

 4   Centers       of    Excellence          and     we    also      have        a

 5   program to encourage individuals who are from

 6   underrepresented groups to go into teaching

 7   here in South Carolina.                  The program is called

 8   the Call Me Mister Program, and again, many of

 9   my   colleagues          sitting       here     in     the    audience

10   have those programs at their institutions.                              We

11   have one here at the College of Charleston.

12   It's designed to get African-American males

13   into teaching.

14                      And    I     think      we     all     know      that

15   approximately            less     than      1    percent       of     our

16   teachers currently are African-American males.

17    Because we wanted to fundraise around this

18   issue, we actually developed a case to learn

19   that young African-American males in grades K-

20   8 who have at least one African-American male

21   teacher       are        three     times        more      likely        to

22   graduate from high school.                      So, we obviously

23   need more African-American male teachers.

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            42


 1                     There      are     a    number       of     programs

 2   designed to encourage underrepresented groups

 3   to go into teaching and this Call Me Mister

 4   Program        here        in      South        Carolina          is        a

 5   collaborative.              It's a partnership program.

 6   It's not one institution.                   We have many of our

 7   HBCUs      who       have       this      program,          but     then

 8   obviously,           the    College        of     Charleston           and

 9   Clemson University are not HBCUs.                             We also

10   have the program and this type of partnership

11   is   what      really       brings       about        excellence        in

12   teaching, I think.               And so, if we go down the

13   path of working to get more minorities into

14   teaching,        I    would     encourage         us    to    look      at

15   partnership programs.

16                     You      know,     when       you    think       about

17   streamlining institutional reporting, but also

18   identifying                 low-performing                    educator

19   preparation programs, those things are in kind

20   of a competition if you think about it.                             They

21   don't really fit together too nicely.

22                     So, I think one of the things, as

23   we think about streamlining our institutional

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            43


 1   reporting requirements, we certainly need to

 2   make     sure     that       all    teacher         preparation         or

 3   educator           preparation              programs           report.

 4   Alternative           programs,           as        well      as      the

 5   traditional            programs           in        colleges          and

 6   universities.            So, let's make sure that that

 7   happens.

 8                     Don Stowe is here from our South

 9   Carolina Department of Education and I think

10   we've already streamlined to some degree.                                   I

11   would have to look at my colleagues to see,

12   but, I mean, we have a pretty good system here

13   in South Carolina.                 It's not -- we've been

14   doing this reporting for some time.

15                     But, I think the real question is:

16   are we collecting the right data?                          Second: now

17   that we have that data, are we using it and

18   are we using it in a meaningful way and are we

19   using     it     in    a     meaningful         way    to     identify

20   institutions or programs?

21                     Many of these programs -- in fact,

22   Don,     I'd      have       to    look        to     you,     but      my

23   understanding           is    that      our      largest       teacher

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            44


 1   education        program       in    South      Carolina        is,     in

 2   fact, not housed in any institution of higher

 3   education, but it's our alternative program.

 4                     So, I think, as we look at those

 5   programs and we collect the data and we use

 6   the data, and then to identify those programs

 7   that    are     performing.             There's       some      way     of

 8   identifying these programs that are not doing

 9   what they need to do.

10                     But then I think the real question

11   is: so then what do you do?

12                     Don told me this morning that the

13   last     time       we     identified          a    low-performing

14   program in South Carolina was in 2003.                                So,

15   what's the consequence once we identify them?

16                     Well,       I     think       the      consequence

17   should be, so we identify what they need to do

18   to improve and again, we work in partnership,

19   and work in partnership to help all teacher

20   education programs be what they can be and we

21   all can improve.              I mean, there's no question

22   about that.

23                     So, I do think what Jennie said,

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            45


 1   and    I'll     ditto      again,         having     some     type      of

 2   statewide data system to help us answer these

 3   important questions, help us show what we are

 4   or are not doing, do the things that will help

 5   us improve.           We pretty much know what those

 6   things are.          I don't think we need to spend a

 7   whole lot of time trying to figure that out,

 8   but to then have our programs at the Federal

 9   level help us to do this work.

10                     Thank you for the opportunity to

11   speak.

12                     CHAIR      MADZELAN:           Thank      you      very

13   much.      Carol Lindsey.

14                     MS. LINDSEY:              Good morning.               My

15   name is Carol Lindsey.                 I'm the Vice President

16   of     Policy        and      Compliance           at     the      Texas

17   Guaranteed        Student        Loan      Corporation          or    TG.

18   I'm speaking today on behalf of TG and other

19   guaranty agencies in the National Association

20   of Student Loan Administrators or NASLA.

21                     NASLA       is      a     private         nonprofit

22   voluntary           membership             organization              that

23   represents        the      interests        of     FFELP      guaranty

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            46


 1   agencies.            NASLA         is   organized         to     ensure

 2   consistent and reliable delivery of student

 3   loan services to Americas' students, parents

 4   and postsecondary institutions.                       NASLA members

 5   are committed to working cooperatively with

 6   all          postsecondary                participants                and

 7   organizations          in     fulfilling         the     promise        of

 8   successful student loan repayment.

 9                     First, I want to talk a bit about

10   participation in negotiated rulemaking.                                 We

11   are    all     aware        that    postsecondary           education

12   loan debt continues to grow and, in fact, now

13   exceeds       consumer         credit       card       debt.          For

14   several years, we have seen the effects of our

15   current economic condition in the increase of

16   national default rates.

17                     A recent study shows that at least

18   41 percent of borrowers become delinquent at

19   some point during the loan repayment period.

20   These factors underscore the need to review

21   several      areas       in   our       program     for     potential

22   improvement            to      insure         successful            loan

23   repayment          and        equitable           treatment           for

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            47


 1   borrowers.

 2                     A core focus of guaranty agencies

 3   is education loan debt management services to

 4   help     maximize        the     success        of    borrowers         in

 5   repaying        their       loans        and     also      to    be     an

 6   advocate for borrowers.

 7                     As     administrators               of     the      384

 8   billion       FFELP       portfolio,           guaranty         agencies

 9   work closely with the Department, students,

10   families, schools, lenders and loan servicers

11   throughout         the     life     of     the    loan       providing

12   education            debt         management               assistance.

13   Inclusion of a guaranty agency voice in the

14   upcoming negotiations will promote broad-based

15   well-informed            discussions             as        rules      are

16   developed,          amended         or     removed          from      the

17   regulations as appropriate.

18                     In        terms          of         issues          for

19   negotiation, NASLA believes there are a number

20   of     important         issues      the       Department          should

21   address during the upcoming process.                            Many of

22   these focus on a single overarching principal.

23    Changes to the regulations should be made to

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            48


 1   enhance       default       aversion        success        and      offer

 2   comparable         repayment         options        and       tools     to

 3   Federal student loan borrowers regardless of

 4   the program or programs from which they obtain

 5   their loans.

 6                     Accordingly,           NASLA       proposes         the

 7   following list of issues for negotiation in

 8   both the FFEL and Direct Loan Programs.

 9                     The      first       focuses        on       extended

10   repayment and the minimum repayment amount.

11   Under     current        FFEL     regulations,            a    borrower

12   must    have      more     than     $30,000        outstanding          in

13   FFEL loans to be eligible to repay through the

14   extended repayment plan.

15                     The same holds true for a Direct

16   Loan borrower.            He or she must have more than

17   30,000        outstanding           in      order         to        extend

18   repayment from the standard 10-year plan to 25

19   years.

20                     In     today's         environment           of     many

21   split borrowers, those who have both FFEL and

22   Direct Loans, these rules place a potential

23   burden       on     receiving         an     important          program

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            49


 1   benefit.          Some      borrowers         do     not     meet     the

 2   minimum balance requirement in either program

 3   separately,         but     would      qualify         for    extended

 4   repayment         if      their        loan        balances         were

 5   considered on an aggregate basis.

 6                     NASLA        believes          the       Department

 7   should address this situation and revise the

 8   regulations         to    permit       a    borrower         with   both

 9   FFEL and Direct Loans to combine their total

10   loan balances for both programs to determine

11   eligibility         for      extended        repayment.             This

12   change would allow split borrowers to have the

13   same repayment options as borrowers who have

14   more than 30,000 outstanding in just one loan

15   program which promotes greater fairness and

16   consistency of treatment.

17                     This      split          borrowing         situation

18   should not harm borrowers who meet the minimum

19   aggregate        balance       threshold         across       the     two

20   loan programs.

21                     Similarly,         FFEL      and     Direct       Loan

22   regulations specify that a borrower must pay

23   at least $600 each year under the standard

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            50


 1   repayment plan.             As with the requirements for

 2   extended       repayment,          the     regulations          do    not

 3   account for borrowers who have loans in both

 4   programs.

 5                     Therefore,         NASLA       recommends          that

 6   the     Department          change       the      regulations           to

 7   permit a borrower with both FFEL and Direct

 8   Loans to pay $600 each year between the two

 9   loan programs.              So, that the total minimum

10   payment per year is 600.

11                     I'd like to also address total and

12   permanent        disability          loan      discharge.             The

13   process itself, as you have invited comments

14   on specifically.

15                     While the statute and regulations

16   generally embrace the electronic exchange of

17   information, the requirements as they relate

18   to a guaranty agency's processing of total and

19   permanent disability applications have remain

20   archaic and cumbersome.                    Currently, guaranty

21   agencies        are     required         to     print       and      mail

22   collateral          documents          for      each      individual

23   applicant including hard copies of promissory

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                                51


 1   notes, indemnification agreements in lieu of

 2   the backside of promissory notes, supporting

 3   data for electronic signature and paper forms

 4   noting       any     applicable             non-zero          refundable

 5   payments       to     be     made      to    the       borrower          upon

 6   approval.

 7                     Most,         if      not        all         of        this

 8   information,              is         stored           electronically.

 9   However       for     total       and       permanent          discharge

10   processing, guaranty agencies must reproduce

11   the documentation in hard copy format to be

12   mailed      to      the      Department's             contractor           for

13   processing.

14                     Additionally,             if    the        application

15   is   rejected        for       any    reason,          the    hard       copy

16   documentation           is     returned          by     mail        to    the

17   guaranty       agency        even      though         the     submitting

18   entity        has         no      need           for         the         paper

19   documentation.

20                     This continuous exchange of paper

21   documents via snail mail has lead to frequent

22   mix-ups,         unnecessary            information                security

23   risks and unacceptable processing delays for

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                             52


 1   disabled borrowers needing relief.

 2                      So,        NASLA        suggests            that     the

 3   Department          allow           and      encourage          guaranty

 4   agencies         to          file      total          and      permanent

 5   disability claims electronically in the manner

 6   currently utilized by the Title IV Additional

 7   Servicers,         or     TIVAS,       and      further        into    this

 8   concept and the efficiency, consistency and

 9   improved        service           to      borrowers          that     would

10   result,       we        advocate       for       the      addition      of

11   explicit permissive or supportive language in

12   the regulations.

13                      And       finally,           on     the     topic     of

14   teacher loan forgiveness, permissible breaks

15   in    service,          as    a     consequence           of   continual

16   nationwide budget shortfalls, many elementary

17   and    secondary          schools         and        school    districts

18   that serve low-income families have laid off

19   qualified teachers and some of these schools

20   are closing also.

21                      To    qualify          for    forgiveness          under

22   the     Teacher          Loan        Forgiveness             Program,       a

23   borrower        must         be     employed         as   a    full-time

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            53


 1   teacher in an eligible Title I school for at

 2   least        five        consecutive        complete            academic

 3   years.       However, Federal regulations permit a

 4   break in qualifying teaching service if the

 5   teacher returned to postsecondary education in

 6   some cases, had a condition covered under the

 7   Family       Medical       Leave     Act        or   was     called     or

 8   ordered to active duty military service.

 9                       Like     some          of        these       current

10   exceptions, a permissible break in service for

11   teacher layoffs would address a circumstance

12   that     may        be     beyond      a    teacher's           control.

13   Without         a        permitted         exception            to    the

14   consecutive                complete              academic            year

15   requirement, teachers whose qualifying service

16   is interrupted by a layoff, including a layoff

17   due     to     school       closure,            must    start        their

18   qualifying          service       all      over        again.        They

19   receive no credit for their years of service

20   prior to being laid off.

21                       The    combined        challenges         of     being

22   laid off coupled with losing already completed

23   teaching         service         for       purposes          of      loan

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            54


 1   forgiveness           may   greatly        weaken        a    teacher's

 2   incentive        to    return       to    the      profession         thus

 3   undermining the objective of this provision

 4   and     denying         the     teacher         the          anticipated

 5   relief.

 6                     There       has     been      a       long-standing

 7   sense     of     a    low     compensation           and       high    job

 8   security trade off in the teaching profession

 9   that will be in question going forward because

10   of economic challenges.

11                     Having       a     sufficient              number     of

12   qualified teachers will always be critical to

13   the     nation's           interest.            Becoming         a     TLF

14   eligible Title I school teacher is an arduous

15   undertaking in itself.                    Perspective teachers

16   generally             understand              the            associated

17   challenges,          but    are     willing        to    follow       that

18   path to achieve meaningful rewards including

19   teacher loan forgiveness relief.

20                     This proposed change would better

21   fulfill        the     intent        of      the        Teacher       Loan

22   Forgiveness           Program       which       is      to    encourage

23   individuals           to    enter      and      continue        in    the

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            55


 1   teaching profession.

 2                     Therefore,         NASLA       recommends         that

 3   the Department create a new permissible break

 4   in teacher loan forgiveness qualifying service

 5   requirements to accommodate qualified teachers

 6   who    are     laid      off,     but        subsequently        resume

 7   teaching        at     a     Title       I     school       within          a

 8   reasonable period of time.

 9                     In    conclusion,           NASLA      appreciates

10   the      Department's             consideration             of      this

11   testimony and offers itself as a resource to

12   the Department on these and other issues that

13   the Department may consider in the upcoming

14   negotiated rulemaking process.

15                     Thank you.

16                     CHAIR MADZELAN:              Thank you.          Betsy

17   Mayotte.

18                     MS. MAYOTTE:               Good morning.              My

19   name is Betsy Mayotte and I am the Director of

20   Regulatory Compliance and Privacy at American

21   Student Assistance.

22                     I speak to you today on behalf of

23   ASA and to show our support of our fellow

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                             56


 1   guaranty agencies at NASLA and the testimony

 2   that Carol just recently provided.

 3                     American        Student       Assistance         is       a

 4   private       nonprofit         organization          whose      public

 5   purpose mission is to help college students

 6   and    their      families         fulfill       the     promise        of

 7   higher       education          by    successfully            managing

 8   their higher education debt.

 9                     We     encourage         the       Department         to

10   include an education debt management voice at

11   the negotiated rulemaking table to promote a

12   broad-based             well-informed             discussion            as

13   student loan rules are developed.

14                     Just     like      NASLA,       ASA's       comments

15   focus      on    changes        to     the     regulations          that

16   should      be    made     to    enhance        default       aversion

17   success and offer comparable repayment options

18   and tools to Federal student loan borrowers

19   regardless         of    the     program        or    programs        for

20   which they obtain their loans.

21                     Accordingly,            ASA        proposes         the

22   following list of issues for negotiation for

23   both the FFELP and the Direct Loan Program.

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                             57


 1                     The     first      is    in       regards       to   the

 2   deadline          for       deferment               processing         and

 3   delinquent loan repurchases.

 4                     The    Higher       Education            Act    defines

 5   default      for     both      the    Direct         Loan      and     FFEL

 6   Programs       as     the      failure         of    a     borrower     or

 7   endorser to make installment payments for 270

 8   days.        While       the      regulations            reflect       this

 9   definition,         operationally,              borrowers         in   the

10   FFEL Program are treated very differently from

11   those in the Direct Loan Program.

12                     Based      on      our       experience,           FFELP

13   borrowers         are       unable        to        have      deferments

14   processed on loans that are 270 days or more

15   past due.           While Direct Loan borrowers are

16   able to have deferments processed up to the

17   delinquency         day      of    359      days         in    order    to

18   prevent default.

19                     Our     ombudsmen         have         had     numerous

20   cases where borrowers who began school or were

21   deployed in the military after becoming 270

22   days delinquent but before a default claim was

23   filed with or paid by the guarantor had their

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            58


 1   loans       default        or      received          denials        from

 2   servicers        when      repurchases             were     requested.

 3   This     situation          causes          much    confusion         for

 4   borrowers        with      loans       in    both     programs        and

 5   certainly creates an inequitable situation for

 6   those borrowers within the FFELP.

 7                     It      is       a        request         that      the

 8   regulations            specifically           require         eligible

 9   deferments to be processed on a FFELP and/or a

10   Direct Loan borrower's account if eligibility

11   begins prior to the date a default claim was

12   paid in the FFEL Program or by day 359 in the

13   Direct Loan Program.                   This would also align

14   the process of default with the current cohort

15   default rate calculations and help standardize

16   industry            requirements               for           mandatory

17   repurchases         of    defaulted          loans     in    cases      of

18   military deployment.

19                     On a related issue, borrowers who

20   requested         discretionary              forbearance           after

21   their loans have become 270 days or more past

22   due are also treated very differently between

23   the     two     loan     programs.             The        Direct    Loan

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                             59


 1   Program will process a verbal forbearance for

 2   any eligible borrower not more than 359 days

 3   past     due.          While    the       FFELP    borrower        in       a

 4   similar      situation         will       be    denied     that     same

 5   forbearance request.

 6                     Recently, the Department provided

 7   guidance to its servicers saying that a FFELP

 8   borrower whose loan has been put and is in a

 9   Department held asset is allowed to receive a

10   verbal      forbearance             after      reaching     270     days

11   delinquent.             This    default         aversion      tool      is

12   already      in     place      for     Direct      Loans      and     the

13   Department agreed to extend it to FFELP loans

14   that are held by the Department to allow for

15   consistent treatment of borrowers.

16                     In     contrast,             FFELP     regulations

17   require that a written agreement between the

18   lender and the borrower be in place in order

19   for     forbearance            to    be     granted       after       the

20   borrower          becomes           more        than      270       days

21   delinquent.          Having such a requirement creates

22   delays       that       worsen        an       already      difficult

23   situation for late stage delinquent borrowers

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            60


 1   who are taking steps to avoid default.

 2                     We    believe       the     FFELP      regulations

 3   should be revised to provide the same benefit

 4   to FFELP borrowers as is available to Direct

 5   Loan    borrowers         in    regards       to    granting        such

 6   verbal      forbearances          after      the     270th      day     of

 7   delinquency.           The holder of one's loan should

 8   not dictate the action that can be taken to

 9   assist      them       with     averting         default.           This

10   default prevention tool needs to be applied

11   consistently across the loan programs not just

12   among Department held loans.

13                     It becomes particularly important

14   for borrowers who have loans in both the FFEL

15   and Direct Loan Programs.                    Such a borrower is

16   required to obtain a written agreement on his

17   FFELP loans held by a commercial lender while

18   simply requesting forbearance over the phone

19   with      the      Department           on      his      Direct         or

20   Department held FFELP loans.                        ASA urges the

21   Department         to      include        this      item       on     the

22   negotiated rulemaking agenda to resolve the

23   disparate treatment of borrowers.

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            61


 1                     My remaining comments surround the

 2   Income Based Repayment Program which I believe

 3   was the topic that you had requested comments

 4   on.

 5                     The Income Based Repayment Option

 6   is     a    power        tool      for      helping         borrowers

 7   successfully repay their loans.                          It is well

 8   designed       to     assist      borrowers         managing        loan

 9   debt in good and bad economic situations.                             ASA

10   applauds        Congress         and     the      Department          for

11   creating and structuring the program in such a

12   way that it can assist the greatest number of

13   at-risk borrowers.

14                     However,             there            are           two

15   clarifications that should be added to current

16   regulations to improve borrower utilization of

17   this       benefit.            These       clarifications             are

18   designed to insure that a borrower with both

19   FFEL and Direct Loans will experience a common

20   set of requirements and procedures for both

21   types of loans.

22                     The first clarification deals with

23   documentation          that      is    required        to    verify         a

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            62


 1   borrower with income if he did not file a tax

 2   return and therefore, has no reported adjusted

 3   gross income or AGI.                 The current regulations

 4   provide       latitude        for      each      loan     holder        to

 5   determine the documentation that a borrower

 6   must      submit        to      verify        income         in     this

 7   situation.         This has resulted in inconsistent

 8   instructions to borrowers and often a delay in

 9   determining eligibility for IBR.

10                     Anecdotal          information            indicates

11   that a borrower with loans being serviced by

12   the Department servicers is only required to

13   provide a self-certifying statement to show

14   that he or she does not have any income when

15   applying for IBR.               However, a FFELP servicer

16   may require the same borrower to wait until he

17   or she has filed that year's income tax return

18   before determining the borrower's eligibility

19   for IBR.

20                     Clarifying            in       the               FFELP

21   regulations that a self-certifying statement

22   from a borrower is sufficient to show that he

23   or she does not have any income when applying

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                              63


 1   for the program would align the process for

 2   making       IBR       eligibility         determinations             and

 3   assist borrowers who have loans with more than

 4   one holder, particularly those with loans in

 5   both programs.

 6                     A         second         clarification                 is

 7   requested because of confusion surrounding the

 8   repayment options for a borrower that leaves

 9   IBR.       When       a     borrower     leaves       IBR,     current

10   regulations               require        the        borrower             be

11   automatically placed in a standard repayment

12   plan calculated based on the term remaining in

13   the 10-year repayment schedule.

14                     However, these regulations do not

15   clarify       that        after    leaving        IBR    a    borrower

16   retains the ability to change the selection of

17   a repayment plan to anything other than the

18   standard 10-year repayment plan.

19                     In        presentations           at       the      FSA

20   conference            and    in      private       guidance,          the

21   Department         has      clarified       the    process         for      a

22   borrower choosing a new repayment plan after

23   leaving        IBR.            ASA      requests         that       this

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            64


 1   clarification            also       be      codified          in      the

 2   regulations so that all loan administrators

 3   will clearly understand that a borrower may

 4   choose any repayment plan for which he or she

 5   is   eligible         upon     leaving        the     Income       Based

 6   Repayment Option.

 7                     My final comment is in regards to

 8   Income        Contingent         Repayment.             Similar         to

 9   Income Based Repayment, we believe that the

10   Income        Contingent         Repayment          Option       is     an

11   important tool for assisting some borrowers in

12   managing        their      Federal        student        loan      debt.

13   With      a      modification            to      current         rules,

14   borrowers in need of this type of relief will

15   more easily be able to utilize this option.

16   To the extent allowed by statute, we believe

17   the regulations that align the IBR and ICR

18   Repayment Options for married borrowers who

19   file separate Federal tax returns.

20                     Unlike IBR, ICR generally requires

21   married couples to include both spouses' tax

22   information when applying for this repayment

23   option even if the individuals filed separate

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            65


 1   tax returns.            The only exception to the rule

 2   is for a borrower who is separated from his or

 3   her spouse.

 4                     Aligning        ICR     with      IBR       regarding

 5   how    the       rules      address       spousal        income       for

 6   married       borrowers        who      file     separately         will

 7   assist borrowers who may not qualify for IBR,

 8   but are still in need of a repayment option to

 9   address this current economic challenge.

10                     As    a    personal       aside,        I    recently

11   counseled         a      borrower          who      was       strongly

12   considering going through a divorce with her

13   husband in order to be eligible for ICR.                                It

14   was becoming the difference between whether

15   they were going to be able to afford their

16   mortgage payment.             But, having to include both

17   incomes would not have provided them enough

18   relief      to     afford       both      their       student       loan

19   payment       and      their       mortgage.              They      were

20   considering divorce.

21                     That concludes my comment.                     Again,

22   I thank you for the time and I thank you for

23   providing        this       forum.        We     look     forward       to

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            66


 1   assisting the Department with these and other

 2   issues.

 3                     Thank you.

 4                     CHAIR MADZELAN:                Thank you.             We

 5   have come to at the moment the last of our

 6   speakers this morning.                   We'll take a minute

 7   here    to     check up front to see if we have

 8   anyone else in the queue.                     So, hold on for a

 9   minute please.

10                     First, a reminder.               If you do have

11   or did have written testimony that you wanted

12   to submit, you can provide that up front at

13   the     desk      or    if,      you     know,       you      have      it

14   electronically and you want to send it to us

15   via email, again see Kathleen up front and

16   she'll give you the email address.

17                     At this time, we have no one in

18   the queue to speak.                 So, we'll take a break

19   until we have someone who wants to speak or it

20   becomes the lunch hour whichever comes first.

21                     (Whereupon,            the        above-entitled

22   matter went off the record at 10:11 a.m. and

23   resumed at 10:59 a.m.)

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            67


 1                     CHAIR       MADZELAN:              Good      morning

 2   again.         We'll      reconvene         at     this      time    with

 3   Chuck Knepfle and again, when you come to the

 4   podium, if you could again identify yourself

 5   and who you represent, where you're from.

 6                     MR.      KNEPFLE:                So,    I    dragged

 7   everyone       back     from      Starbucks.             I    feel    bad

 8   about that.         I'm sorry.

 9                     I'm     actually        on       the    agenda      for

10   later     this      afternoon         and      I    appreciate        you

11   taking me early.

12                     Good morning.              My name is Chuck

13   Knepfle.        I am the Director of Financial Aid

14   at Clemson University and Chair-elect for the

15   National Direct Student Loan Coalition.

16                     I bring you my greetings to South

17   Carolina from the upstate.

18                     I speak to you today on behalf of

19   the National Direct Student Loan Coalition a

20   grassroots organization comprised of schools

21   dedicated to the continuous improvement and

22   strengthening of the Direct Loan Program.                             Its

23   members         are        practicing              financial          aid

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            68


 1   professionals              working          at        participating

 2   institutions.

 3                     I'd    like      to    thank       the    Secretary

 4   for the opportunity to provide the Department

 5   of Education with comments on Federal student

 6   loan programs that may be addressed in the

 7   negotiated rulemaking process later this year.

 8                     First and foremost, the Coalition

 9   wants to extend its thanks and congratulations

10   to the staff at the Department of Education

11   and especially at Federal Student Aid for the

12   tremendous success in moving all 5,000-plus

13   schools      to    the     Direct       Lending       Program       this

14   year.

15                     While        some        in        our      industry

16   predicted        that     this     would        be   an    impossible

17   task, the fact is that there has not been a

18   report      of    even     one     student        who      was   denied

19   access to Stafford Loan funds this year as a

20   result      of    schools       making       the     transition         to

21   Direct      Lending.          This      transition          could     not

22   have been more successful for schools or for

23   students.

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            69


 1                     To insure that the Federal Direct

 2   Loan    Program        continues        to     be    a   strong       and

 3   viable source of funding for students, I wish

 4   to address regulatory issues in four different

 5   areas.

 6                     First,         the       simplification               of

 7   origination regulations.                     The Healthcare and

 8   Education Affordability Reconciliation Act of

 9   2010, HR 4872, requires that all new Federal

10   loans beginning with 2010/2011 academic year

11   be originated in the Direct Loan Program.                             The

12   Direct      Loan      regulations          continue        to    cross-

13   reference regulations with the Federal Family

14   Education Loan Program, FFEL, which Congress

15   ended with HR 4872.

16                     With so many new administrators in

17   the Direct Loan Program needing quick, easy to

18   read regulatory language to insure compliance

19   with the origination regulations for Direct

20   Loans, it is important to simplify the Federal

21   Loan     regulations           by      negotiating          a    clear,

22   concise,         standalone          set       of     Direct        Loan

23   regulations that eliminate any cross-reference

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            70


 1   to the FFEL Program.

 2                     Second is servicing.                    One of the

 3   trademarks and richest features of the Direct

 4   Loan Program prior to this year was that all

 5   Direct       Loans       were      serviced          by     the     same

 6   servicer.           Every      Direct       Loan      borrower        and

 7   school      staff       member       knew      exactly        where         a

 8   student's loans were held and knew who to call

 9   with questions.

10                     The    National        Direct       Student       Loan

11   Coalition recognizes that the Department of

12   Education now uses multiple contractors for

13   the servicing of Federal student loans, but we

14   encourage new regulatory language to address

15   the following issues that are inherent when

16   multiple         servicers         compete          for     servicing

17   contracts.

18                     First, a single interface between

19   students       and      schools       and     all     servicers         to

20   avoid      the     confusion         that      now     occurs       when

21   schools attempt to counsel students with loans

22   held by multiple servicers.

23                     Next,       transparency           of     borrowers

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            71


 1   and their families about the contractor that

 2   is serving their loans and repayment.

 3                     Third, the Department's vigilance

 4   in    monitoring          the      servicing         contracts          to

 5   insure       accurate        data      is     provided         by     the

 6   servicer to the Department for the calculation

 7   of cohort default rates.

 8                     Next,         loan        terms         that        are

 9   consistent        for     all      borrowers        regardless          of

10   their      servicer.               Currently,         issues        like

11   capitalization of interest for borrowers and

12   the date income-based repayment is calculated

13   are     not      always       the      same       with      different

14   servicers.          Terms need to be consistent with

15   the historical Direct Loan methodology that is

16   favorable to most borrowers.

17                     And       lastly,           exit        counseling

18   requirements          that      insure       the     providing          of

19   helpful         information             about         consolidation

20   options that benefit borrowers with multiple

21   loan types.

22                     Further, we urge the Department to

23   retain      the      role     of     assigning         students         to

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                             72


 1   servicers.          A topic we've heard on more than

 2   one occasion that there could be a change that

 3   would allow either the students or the schools

 4   to choose their servicer.                       Even though the

 5   current servicers do not profit in nearly the

 6   same     way      as     lenders         did    under       the     FFEL

 7   Program,       there       would      still      be    a     financial

 8   incentive to encourage schools to recommend an

 9   individual servicer.

10                     This     would      inevitably           lead    to       a

11   situation        that     we    finally        left     behind      this

12   year, inducements and incentives to steer loan

13   volume to particular companies.

14                     The Department is the only entity

15   that       should        be       making         those        servicer

16   assignments.

17                     Third, on the topic of total and

18   permanent disability, the Coalition requests

19   that     the     Department         of    Education          negotiate

20   rules with a final result that is fair to both

21   permanently         disabled         borrowers         and     Federal

22   taxpayers.          Currently, students are required

23   to     submit       multiple        applications            for     loan

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
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 1   discharge and are monitored for up to three

 2   years      after         being        granted        the        permanent

 3   disabled status.

 4                      We     encourage          the     Department         to

 5   develop        a       less        intrusive       and      simplified

 6   process        that      retains       the     integrity          of   the

 7   current one.

 8                      And              lastly,                operations.

 9   Regulations             for    the     Direct           Loan     Program

10   encompass          both       the    policy        and     operational

11   aspects      of        the    program.         With       all    Federal

12   loans and grants processed through one system,

13   the      Common          Origination           and        Disbursement

14   System,        COD,          student     aid       processing          and

15   delivery        have         now    focused        on     the    student

16   rather than on each individual aid program as

17   it was in the past.

18                      It is absolutely critical that the

19   Department insure that regulations address the

20   need     for       a    system      concept        like    COD.        Any

21   solution that does not retain the ease of use

22   and understanding of our current COD process

23   will       set          students         and         schools           back

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
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 1   significantly.

 2                     This standardization of the common

 3   record file formatting in such a system is

 4   essential           for       the        following            reasons.

 5   Standardization of the common record format

 6   streamlines         student         eligibility         changes       for

 7   funds and insures students receive their funds

 8   on time.        Standardization of the common record

 9   format         simplifies             and        enables           quick

10   programming          that      is     required         by     software

11   vendors to deliver funds for new programs that

12   Congress develops.

13                     For each program in COD, a school

14   or third party servicer is assigned the same

15   customer         service         representative             team        to

16   facilitate         origination          of     the     disbursement

17   process and issue resolution thus providing

18   more time for financial aid professionals to

19   counsel students about all aspects of their

20   financial aid.

21                     Before COD, schools did not have

22   any online capability to make corrections or

23   changes,        process       emergency          requests,         check

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
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 1   processing status to help resolve issues for

 2   students quicker or to get their aid disbursed

 3   immediately.

 4                     The          COD          system            provides

 5   accountability because funds for all programs

 6   are processed through one system: G5.                             Monthly

 7   and annual reconciliation processes decrease

 8   fraud and abuse by insuring that all funds are

 9   accounted         for    in     a    timely       basis.           Every

10   disbursement record for a student's funds is

11   recorded          in        the         system          to         insure

12   accountability.

13                     The      COD       system         now       contains

14   information          about        the     servicer           to    which

15   student's loans have been assigned under our

16   current multiple servicer format.

17                     And         finally,           over         multiple

18   academic years and institutional enrollments,

19   a student's record remains in a single record

20   within      COD     to    insure        greater       ease        in   the

21   school's compliance with Federal regulations.

22                     In closing, I want to thank you

23   again     for     the     opportunity          to     present          this

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
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 1   testimony        on     behalf     of    the     National        Direct

 2   Student Loan Coalition.                   Many of our members

 3   were the first schools to implement the Direct

 4   Loan Program over 15 years ago and have years

 5   of expertise in operational and policy issues

 6   as well as compliance with the regulations.

 7   The Coalition looks forward to participating

 8   in   the     negotiating          rulemaking          process       that

 9   will occur later this year.

10                     Thank you.

11                     CHAIR MADZELAN:             Thank you.          We do

12   have word that we'll have another speaker this

13   morning, but at this point, we again will take

14   a short break.

15                     (Whereupon,            the        above-entitled

16   matter went off the record at 11:08 a.m. and

17   resumed at 11:13 a.m.)

18                     CHAIR MADZELAN:               We will continue

19   at this point with Mary Lyn Hammer and again,

20   Mary Lyn, if you can identify yourself and who

21   you represent, where you're from.

22                     MS.    HAMMER:           Morning,       everybody.

23   My name is Mary Lyn Hammer.                    I'm the President

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 1   and CEO of Champion College Services and we

 2   have been in business 22 years doing default

 3   prevention.

 4                     And      going      back      to     give      you        a

 5   background, I used to handle foreclosures for

 6   a bank in Texas when the oil market crashed

 7   and    prior      to     that,      I     was     in   the     student

 8   lending part of the bank back in the old days

 9   when it was easy and, you know, $30,000 a year

10   and you got a loan.

11                     So,    I    got    to     the      point    where         I

12   just couldn't do any more foreclosures.                                 It

13   was     really       sad      because        they      weren't         bad

14   people.       They just had bad circumstances.

15                     Moved to Arizona and there was an

16   ad in the paper.              It said default manager.                      I

17   thought what is that and it was when they

18   first made defaults an issue.                        So, I answered

19   the ad in the paper and they said well, you

20   have the right background.                   Our default rate's

21   35 percent.          Here's an office and a computer.

22    Get our default rate down.                       So, that was as

23   much direction as I had.

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 1                     I was the first full-time default

 2   manager in the history of the country that we

 3   know    of.        Got the default rate down to 9

 4   percent       within      two     years.         I    helped       write

 5   Appendix D which was the original regulatory

 6   criteria for default prevention from 1989 to

 7   1996.        It's still in the regulations under

 8   Subpart M.

 9                     Been a negotiator three times with

10   the     Department.              Most      recently         rewriting

11   Subpart M and Subpart N a couple of years ago.

12                     And     we've       been      in     business         22

13   years and on average, our default rates we cut

14   in half for our clients.

15                     So, to go back a little further

16   than that, I grew up in an abusive home in

17   Montana and I knew that education was the way

18   that I was going to change my circumstances.

19   So, I went to a proprietary school, graduated

20   when I was 19 and it was that education and

21   the support from those people that changed my

22   life and that's why I go to Washington and do

23   what I do because I'm actually one of your

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 1   high-risk students.

 2                     So, that's my background and some

 3   of the subjects that I'm going to talk about,

 4   some      of     the      Department          people        are       very

 5   familiar with.             I've been trying to get some

 6   of this for 18 years.

 7                     The first point that I wanted to

 8   make     was     about      sharing        of     information          for

 9   student        loans.         As     a    third-party          default

10   management servicer, we don't have access to

11   student        loan     information          that's       needed        to

12   properly educate the borrowers and it's been

13   an issue for quite some time.

14                     Congress            thinks            that           the

15   Department         already         has      the      authority          to

16   regulate          it.              The       Department            wants

17   Congressional input on it and we've had our

18   language in three bills so far, but it's never

19   made it all the way through.

20                     But,        with        the        emphasis           on

21   financial        literacy        from     other      parts       of   the

22   Government and also within the student loan

23   industry,         it's        becoming          more       and        more

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 1   important.          It has a great effect on default

 2   rates.         You      can    only     do    so     much     borrower

 3   education        with      general          facts.         What     they

 4   really need is the exact details.

 5                     And the student loan industry has

 6   become more complicated than the transition.

 7   The loans are being transferred.                            You know,

 8   things have gone wrong and I won't get into

 9   all of that right now.                   Most of us know what

10   those things are.              We need to be able to have

11   the detailed information necessary to properly

12   counsel the borrowers.

13                     And     as     I    said,        we've     cut      our

14   default rates in half, but I want to give you

15   a true picture of the effectiveness when you

16   do it right and we've been doing it 22 years.

17                     With     the       most    recent      information

18   that was released by the Department with the

19   increases in default rates from the official

20   2008 to the draft 2009 data, our clients went

21   up .06 percent.               The national average went up

22   27 percent and the proprietary schools which

23   are our main client base went up 31 percent

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
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 1   compared to our .06.                So, basically, a half a

 2   percent increase.

 3                     At the same time last summer when

 4   they released the data for gainful employment,

 5   our average tenured client was at 45 percent

 6   repayment rate.

 7                     So, we have those statistics and

 8   our students are paying and we need access to

 9   the    information           to    keep      that      trend       going

10   because I think it could only improve if we

11   have the right information to give them.

12                     So,     I've      provided         some      written

13   materials and I'll also email them out to the

14   Department people.              Kathleen has the copies of

15   where I've quoted all of the laws, Gramm Leach

16   Blieay, FERPA.             There's many, many laws that

17   have     sections        that      require       the     sharing        of

18   information and gives authority to do so.                             So,

19   we just need to outline how that happens.

20                     The next point I'd like to make is

21   giving the schools authority to limit student

22   loan debt.         This is a very frustrating part of

23   what we deal with everyday because we have a

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 1   couple of generations of kids that have grown

 2   up     in       an      unaccountable            --      where        the

 3   accountability             is    not    really     there      and     the

 4   entitlement           is     there      and     what's      confusing

 5   about     the     Federal          programs     is    that     they're

 6   called an entitlement and entitlement in the

 7   kids' minds these days means they get it for

 8   free.       So, just by the name of the program,

 9   it's    confusing           to     those      people.        So,    they

10   think     it's       entitlement         and    they     forget       the

11   accountability              piece       and      it's      not      just

12   something that's happening in student loans.

13                     It's something that's happening in

14   our country and with all of the electronic

15   processes         that          are     in     place,        it     made

16   everybody's life easy.                       Paperwork Reduction

17   Act.     But, out of sight, out of mind.                       They're

18   not signing checks like they use to.                           They're

19   not filling out deferment forms like they used

20   to.      It just all magically happens and it's

21   taken the ownership away.

22                     So,       they      don't    really     understand

23   the     debt         that       they     have.          They       don't

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 1   understand         how     much       interest          accrues       when

 2   they're       in     school          and     they       don't     really

 3   understand the long-term ramifications of all

 4   the money that they take out until they're

 5   paying it.

 6                      So,         I      think         we      have            a

 7   responsibility to help them make decisions,

 8   make good decisions when you know that taking

 9   out that extra $4,000 or $6,000 is going to

10   put them over what is an appropriate income-

11   to-debt ratio.

12                      So, we ask that you give some type

13   of established regulatory language to allow

14   schools to do this.

15                      One of the other things that we

16   run    into     a lot and I think it's going to

17   become       more        and        more        prevalent        is     in

18   rehabilitating loans.                     Because as our economy

19   recovers, more and more of these students who

20   have     gone       into       default          because     of     their

21   circumstances            are       going    to    want     to     repair

22   their     credit         and       many    of    them    need     to    be

23   retrained because the job that they had before

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
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 1   is simply not available.

 2                      The   way     they     can      do    this      is    in

 3   rehabilitating their loans, but there's a gap

 4   in the definition between six months that it

 5   takes of on-time payments to get a new loan

 6   and     nine        months        of     payments             to   fully

 7   rehabilitate the loan and what that does is it

 8   promotes bad behavior.                 They can take out more

 9   debt; before they've taken care of their old

10   debt as far as their own credit reports and as

11   far as cohort default rates and all of the

12   other criteria.

13                      So, what we are suggesting is that

14   the    Department          recognizes         0    as     a    payment.

15   Because when they go into school and have a

16   deferment          or    they're         on       an     Income-Based

17   Repayment Program or whatever the circumstance

18   is,    there       are    many,        many     people        that      are

19   qualifying for 0 as a payment and that would

20   take them through the other three months while

21   they're       in     school       or     you       can    align         the

22   definition to be the same number of months.

23   One or the other.              It just -- it should be the

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 1   same.      It's better than it used to be when it

 2   was 12 months, but there's still a gap.

 3                     And we have to remember that once

 4   they're in default, they have little incentive

 5   to keep the next one out of default.                             So, if

 6   we can't get them rehabilitated and they're

 7   already      in     default,        they     may     say     well,      my

 8   credit's already messed up.                     So, I don't care

 9   and I think that promotes bad behavior.

10                     I know one of the subjects on your

11   agenda is IBR and ICR Programs and I have a

12   few suggestions for it, but, you know, really

13   it's something that should be worked out in

14   the negotiated rulemaking process.                          But, it's

15   very difficult for the students to get out of

16   that program once they're in it.                         My personal

17   opinion in how we cancel borrowers, it's the

18   Standard Repayment Program is the best program

19   for the student.

20                     And that goes to another one of my

21   points.       The Graduated Repayment Program is an

22   entitlement.           The students can qualify for it

23   and ask for it and it is the worst repayment

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
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 1   program that there is.

 2                     If you look at it in comparison to

 3   what's happened in the mortgage loan business,

 4   you see that all of the people on the ARM

 5   loans,       they       were      the      same       ones      I     was

 6   foreclosing on 25 years ago in Texas.                               They

 7   are the same ones that are foreclosed on now.

 8                     It doesn't show up in the cohort

 9   default rates.           It shows up in the life of the

10   loan     default       rates       and     the     reason       why     is

11   because when the loan payment goes up, they

12   can't afford it and they go into default and

13   it costs them a ton more money in interest.

14                     So, it's in the best interest of

15   the students to not have options for them that

16   set them up for failure and, you know, anybody

17   or most kids are going to say oh, it's cheaper

18   payment.        I'll choose this one and they don't

19   think about, you know, it goes up $200 in

20   three years.            So, it's detrimental to their

21   future.

22                     So, those are a couple of things.

23    The payment programs that I believe should be

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 1   taken a look at and then there's a few appeal

 2   benefits that I feel are appropriate.                          Some of

 3   them having to do with economic times.

 4                     I    did       some       research         and      the

 5   average unemployment rate in the country was 5

 6   percent for the ten years leading up to this

 7   most recent recession and now, it's in the 9

 8   percent range.           It definitely has an effect on

 9   the    default        rates     and     I    believe       that     that

10   should be taken into consideration and I find

11   it    pretty      appalling         that     it    is    taken      into

12   consideration           for      mortgage         loans      and      for

13   credit cards and for all other credit debt,

14   but in student loans, there's absolutely no

15   regard given to it and that's not realistic.

16   It's not realistic for the students.                          It's not

17   realistic for the schools.

18                     And as a taxpayer, I can tell you

19   that I would rather pay a defaulted loan and

20   have somebody in the workforce than to just

21   eliminate a possibility for education because

22   I truly believe that education is a means for

23   making dreams come true and we need to have

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 1   some dreams out there in order to turn our

 2   country around.

 3                     So,     that's         one    of     the        appeals

 4   options I believe is fair.

 5                     Another is that if a school has an

 6   approved        default       management          plan       and    it's

 7   documented that they have followed that plan,

 8   that      there        should       be     some       consideration

 9   instead of a strict threshold for three years

10   over 30 percent or 25 percent or whatever the

11   criteria is going to be in the future.

12                     If    they're       doing      everything         they

13   can, many of the intercity schools are serving

14   a     high-risk        population         and     most       of     those

15   programs that the high-risk population enter

16   are    lower      tuition        programs.            So,     we    have

17   schools that have moved from the city out into

18   the country because they don't want to serve

19   the high-risk people and those are the people

20   the program is written for.                      In 1965, it was

21   written for people to get an education who

22   wouldn't otherwise be able to do so.

23                     So, we ask that if the right thing

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
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 1   is being done and the school has crossed all

 2   their t's and dotted all of their i's and the

 3   Secretary has approved the default management

 4   plan that's used to do so, that it be taken

 5   into consideration.

 6                     And lastly, I can't be here for

 7   the roundtables tomorrow.                    So, I've also put

 8   my ideas about something -- an idea that I've

 9   had for many years actually and that is in

10   rewarding good behavior.                     To have a program

11   like that.

12                     So, in our budget, they're talking

13   about getting rid of the interest subsidies

14   and also, they're talking about funding a lot

15   of money to completion programs and retention

16   and, you know, a lot of the programs like that

17   and    I    feel      that     we     should       be    using      this

18   opportunity to create a program that teaches

19   our kids the accountability that they haven't

20   learned for the last couple of decades so that

21   they can have success long term.

22                     So, some of my ideas are to reward

23   them for good behavior by paying 10 percent of

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            90


 1   the interest that's accrued on the loan for 95

 2   percent       attendance.             Reward       them      for    good

 3   grades.        Fifteen percent accrued interest is

 4   paid     when     you     have      a    C    average.             Twenty

 5   percent when you have a B average.                               Twenty-

 6   five percent when you have an A average and

 7   the    rest      of     the     interest         70     percent       for

 8   completing         your       program.             It      gives    them

 9   incentive to stay in school.                          It gives them

10   incentives to get good grades.

11                     The    other       part     of      it    is     during

12   approved         deferment          times       which        are      not

13   enrollment because that's covered with those

14   incentives, I believe that the money would be

15   well spent if we are rewarding them for making

16   interest       payments.            Instead        of      paying     the

17   whole interest on half of the loan that they

18   have, do an interest payment match.                              If they

19   pay $50 in interest, the Government matches

20   it.     It will get them in the habit of making

21   payments.          It will reduce their debt burden

22   and I believe that it would be about the same

23   budgetary cost to the Government.

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 1                     And then the last idea on that is

 2   again rewarding good behavior and I have two

 3   ideas about it and again, this is all, you

 4   know, for negotiation, but you're getting my

 5   theme of rewarding good behavior.                        It would be

 6   something        like      if    they've       made      11    on-time

 7   payments, the Government makes the 12th or if

 8   they make 12 on-time payments, the Government

 9   makes the equivalent of a payment and it would

10   be the average of what their payments were for

11   that year.         That gives an incentive to pay and

12   to pay on time.                 So, it once again rewards

13   good behavior.

14                     So, instead of paying the interest

15   for them during deferments or different things

16   like that, you're taking it to reward good

17   behavior which is going to benefit everybody.

18    It'll benefit the schools.                    It'll benefit the

19   students        and     it'll      benefit        the     Government

20   because your default rates will come down.                                  I

21   guarantee it.

22                     Because       the     difference         between          a

23   high default rate and a lower default rate are

     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
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 1   those      students        that      just      don't      understand

 2   things and need a little bit of help.                          Because

 3   you're going to have students that will always

 4   pay.     You're going to have students that will

 5   never pay and the difference between the rates

 6   are those in between that just need a little

 7   bit of help.

 8                     So, those are my ideas and I look

 9   forward to the negotiations.                      I hope that the

10   Department is open minded and, you know, it's

11   for our kids.           It's for our future and I think

12   we can use the opportunity to leverage what we

13   have and we can do because education goes way

14   beyond the classroom.                Thank you.

15                     CHAIR MADZELAN:                Thank you.             We

16   have no more speakers scheduled this morning.

17    So, what we will do is break for lunch now

18   and we'll reconvene at 1:00 p.m.                       Thank you.

19                     (Whereupon            the         above-entitled

20   matter went off the record at 11:32 a.m. and

21   resumed at 1:00 p.m.)

22




     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011
                                                                            93


 1             A-F-T-E-R-N-O-O-N               S-E-S-S-I-O-N

 2                                                             1:00 p.m.

 3                     CHAIR      MADZELAN:           Good      afternoon.

 4   We are ready to resume with John Beckford and

 5   again, for the record, please state your name,

 6   where you're from and who you represent.

 7                     MR. BECKFORD:            Good afternoon.              My

 8   name is John Beckford.                   I'm Vice President for

 9   Academic Affairs and Dean at Furman University

10   in Greenville, South Carolina.

11                     Furman      is    a     185-year-old          private

12   liberal       arts      college          originally       affiliated

13   with the Southern Baptist, but for the last 20

14   years has been an independent college.

15                     This     is    my      35th    year      at    Furman

16   having started my career in the Department of

17   Music     and     for     the      past     four     years,      as     an

18   administrator.

19                     Today,      I'm     not     only     representing

20   Furman      University,            but    the      South      Carolina

21   Independent Colleges and Universities and by

22   extension,          the         National         Association            of

23   Independent Colleges and Universities.

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 1                     I        appreciate               having            the

 2   opportunity to appear here today to suggest

 3   additional         issues       that      the     next      round       of

 4   negotiated rulemaking should address.

 5                     Specifically, I'd like to address

 6   the        regulations             dealing             with        state

 7   authorization, 34 CFR 600.9 and the Federal

 8   definition of credit hour, 34 CFR 600.2, that

 9   are scheduled to take effect on July 1 of this

10   year.         These      portions         of     the     October        29

11   Program        Integrity          regulations           are      highly

12   problematic.

13                     First, with respect to the state

14   authorization and in particular the distance

15   education          component,           generally             speaking,

16   institutions like Furman have been delivering

17   exceptional            postsecondary              education           for

18   decades within long-standing arrangements with

19   our respective states.                 It seems inappropriate

20   and unnecessary for the Federal Government to

21   require states to second guess the explicit

22   decisions        that      have      already        been      made      in

23   meetings       with      the     authorizations            and     their

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 1   responsibilities.

 2                     Also,      the     ambiguity         of     the     new

 3   regulations           raises         concerns          that        state

 4   officials           may        overreach            by        imposing

 5   requirements on private nonprofit institutions

 6   that    go     well     beyond       the     objectives         of    the

 7   regulations.           This is particularly of concern

 8   to institutions with religious affiliations.

 9                     But, with regards to the distance

10   education         component         of     the      regulation,             I

11   personally find this to be onerous for both

12   states and institutions, stifling toward the

13   development of innovative models in education

14   and    an     unnecessary          Federal        involvement           in

15   state law.

16                     Because of the long valued teacher

17   to student relationships embraced by small,

18   private liberal arts colleges, we are probably

19   among the last to explore the possibilities of

20   distance education, but with the advancement

21   of technology in this area, we're seeing these

22   institutions          implement          effective        models        of

23   distance education that parallel the quality

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 1   educational outcomes found on our traditional

 2   campuses.

 3                     The state authorization provisions

 4   will layer a bureaucratic obstacle that will

 5   smother       the      creativity         required       to     develop

 6   quality distance education programs.

 7                     For    the      United      States       to    remain

 8   competitive in higher education, we should be

 9   adopting policies that unleash the innovation

10   in     the       delivery         of      quality         education.

11   Otherwise, our foreign competitors will seize

12   the upper hand in distance education if we

13   lose our agility and become mired in needless

14   state authorization regulations.

15                     With respect to the credit hour,

16   it is this issue that I have most closely

17   followed       for      this    last      year.         For     me,     it

18   represents the most glaring intrusion on the

19   academy        during        my      35      years       in      higher

20   education.          It is the primary reason I am here

21   today.

22                     If    I   might       draw     though       from      an

23   April 26 letter that was sent to Senators Hart

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 1   and Enzi from Molly Corbett Broad, who is the

 2   President          of        the         American       Council          of

 3   Education, and was endorsed by 70 other higher

 4   education            associations                and     accrediting

 5   organizations.

 6                     She says, and I quote, "A credit

 7   hour is the most basic building block of any

 8   academic program.                  By establishing a Federal

 9   definition of a credit hour, the regulation

10   opens      the       door          to     inappropriate        Federal

11   interference in the core academic decisions

12   surrounding          curriculum.              The      very   kind       of

13   interference            expressly           prohibited         in        the

14   Department's enabling legislation.

15                     "Consistent             with    our   support          are

16   the    principles            and        limitations     outlined          in

17   this     and     other        Federal        laws.       It     is       our

18   position        that         no    Federal       definition         of      a

19   credit      hour     is       ever       appropriate      because         it

20   becomes        the      basis        of    perpetual      regulatory

21   intervention            in        multiple       institutional           and

22   accreditation           decisions           associated        with       the

23   credit hour."

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 1                     She     goes     on    to     say     that      "As       a

 2   secondary, but practical matter, the ambiguity

 3   of the particular definition at issue and the

 4   insufficiency of the guidance about it pose

 5   serious challenges for institutions as they

 6   review      tens     of    thousands          of    courses       in    an

 7   effort      to    insure       consistency          with      the      new

 8   Federal       definition.             Accreditors          will     face

 9   similar burdens as they attempt to develop or

10   revise policies and practices to review credit

11   policies of these institutions.

12                     "The        definition            and        related

13   guidance         also      place        accreditors            in      the

14   unprecedented position of being required to

15   force institutions to meet a Federal standard

16   in    an     academic         area       as     a     condition         of

17   accreditation."

18                     Let me add to her remarks though

19   by     saying        at     my     institution,            I'm      also

20   confident that it is the same as what we find

21   at all of the other National Association of

22   Independent             Colleges            and        Universities

23   institutions, that determining course credit

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 1   is     one     of       the     most    carefully             considered

 2   decisions we make.

 3                     Numerous         variables             and     factors

 4   play         into        assigning         credit.                   Course

 5   experiences             ranging        from        the     traditional

 6   lecture       to        private       weekly        music       lessons,

 7   service learning projects in the community,

 8   spending 15 weeks in a foreign country or a

 9   summer       in     a    biology        lab.         The       range    of

10   educational          experiences          recognize            the    rich

11   diversity         of     pedagogues           we     bring      to     our

12   students.           But, that diversity which is the

13   key    to     a     successful         approach          to    education

14   defies any simple formula that might define

15   earned credit.

16                     The         level      of        engagement          and

17   measurement of student outcomes are complex

18   and    truly        beyond      any    Federal       regulation         of

19   credit       hours       that     could       have       any    kind    of

20   meaningful application to all institutions.

21                     Let me conclude by saying that I

22   believe I understand what has prompted these

23   regulations,            but     the     Federal          intrusion      in

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 1   areas fundamental to core academic decision

 2   making is inappropriate and contrary to our

 3   shared       commitment          to     strengthening            higher

 4   education in the United States.

 5                     These         regulations              are        both

 6   ambiguous        and     inappropriate            and     should        be

 7   rescinded.

 8                     Thank you for your time.

 9                     CHAIR MADZELAN:                Thank you.             At

10   this time, we'll take another break and when

11   we have another speaker, we will convene.

12                     If you care to speak, again, we

13   ask that you go out to the table and sign up

14   with Kathleen.

15                     Thank you.

16                     (Whereupon            the         above-entitled

17   matter went off the record at 1:09 p.m. and

18   resumed at         3:32 p.m.)

19                     CHAIR      MADZELAN:            This      concludes

20   this afternoon's hearing or today's hearing I

21   should say and we want to thank all of our

22   speakers       today      and     we    also     want      to    remind

23   everyone that transcripts from this hearing as

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 1   well     as     our      other      two      hearings        will       be

 2   available on the Department's website in the

 3   near future.

 4                     Again, thanks to everyone who came

 5   today.      Bye.

 6                     (Whereupon,           at     3:32       p.m.,       the

 7   above-entitled matter went off the record.)

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     Negotiated Rulemaking Higher Education 2011 – Public Hearing May 26, 2011

				
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