PUBLIC REGIONAL HEARING FOR NEGOTIATED RULEMAKING

1 U.S DEPARTMENT OF EDUCATION OFFICE OF POSTSECONDARY EDUCATION PUBLIC REGIONAL HEARING FOR NEGOTIATED RULEMAKING U.S Department of Education 10 FB-6 Auditorium 11 400 Maryland Avenue, SW 12 Washington, D.C 20202 13 Wednesday, November 8, 2006 14 9:00 A.M – 4:00 P.M U.S Department of Education Public Hearing Washington, D.C – November 8, 2006 Panelist 7Representing the Office of Postsecondary Education: 9David Bergeron 10Director, Policy and Budget Development Staff 11 12Dan Madzelan 13Director, Forecasting and Policy Analysis Staff 14 15 16Representing the Office of General Counsel: 17 18Lisa Kanter 19General Attorney 20Division of Regulatory Services 21 2 P R O C E E D I N G S1 DAVID BERGERON: Good morning I am 3trying to get these things started, and I always 4start a minute before it is time for us to really 5begin the hearing I that because I know it 6always takes about a minute for folks to get 7organized and ready to start these proceedings This is our fourth in a series of regional 9hearings in preparation for negotiated rulemaking 10We have been fortunate at our hearings at Berkeley 11and Chicago to be hosted by institutions of higher 12education, University of California at Berkeley and 13Loyola University of Chicago Those were very good 14hearings, very productive hearings, and we are very 15pleased that they went as well as they did 16 We had our third hearing in Orlando as part 17of the Federal Student Aid’s Fall Conference, so we 18did have that last week We had a number of 19witnesses at that hearing that had been part of the 20conference, so they brought things that they heard 21and concerns that they had, as a result of what 22they heard, to us, that was also very productive 23One of the things that has been striking as we have 24gone around and had these hearings is the 1remarkable students who have testified for us on 2issues of concern to them, and I am sure, during 3the course of the day, we will hear from more 4students, and I think you will be as impressed as I 5have been their remarks at each of these hearings Let me introduce the people who are sitting 7up here, and, during the course of the day, folks 8may change Lisa Kantor is with our Office of 9General Counsel, and she will be with us, and 10others may join us during the day from the Office 11of General Counsel as their schedules permit 12 Dan Madzelan, you all know, because I think 13anybody who has been around negotiated rulemaking 14knows that he is our federal negotiator par 15excellence, except for one little thing: 16sessions tend to go long His I have a feeling that 17will be an indicator of the day, because we have 18many folks scheduled to speak, which is why I want 19to try to get done with this introductory stuff 20very quickly Dan is the Director of Forecasting 21and Policy Analysis in the Office of Postsecondary 22Education where I am his colleague and peer 23 I am David Bergeron I am Director of 24Policy and Budget Development in the Office of 5 1Postsecondary Education This is, as you all know, the Department’s 3headquarters building, and I don’t work here I 4work across town at K Street, and so I had to go 5exploring because I knew one thing everyone needs 6to know when they come to a building they are not 7familiar with, and that is where the restrooms are, 8and they are that way the men’s room is on the 9right side; the ladies room is on the left and I 10think that is all of those logistical things 11 Let me talk a little about negotiated 12rulemaking and the process we are engaged in 13While doing the public hearings, we are still 14accepting public comment in written form through 15tomorrow At the same time, we are accepting 16nominees for federal negotiators for that process 17Once we get all of the public comments and get the 18nominees, we will two things, we will develop a 19negotiating agenda that takes into account the 20public comment we received and allows us to 21identify issues that we believe we can reach 22agreement on, and negotiate through to notice of 23proposed rulemaking early next year 24 Our plan right now is to begin negotiations 1in mid-December, have about a six-week break 2between the first and second negotiating sessions, 3a little longer than we have typically done, and 4really try to get this process a little bit earlier 5on our schedule than we have had in recent years 6As I said, this process is really going to be 7driven by the public comment that we received, and 8will receive, today and tomorrow So we will be taking very seriously the 10concerns that folks have expressed about our 11regulations and the things we need to change, and 12we will that The only thing, going in, we knew 13we would first be doing for certain and absolutely 14was to negotiate around Academic Competitiveness 15and National SMART Grants, and these we knew that 16those two new programs really did impact and 17influence our change of direction of our programs 18in ways that are fundamentally different from what 19we have done before, and really did warrant 20negotiated rulemaking, even though we will have 21operated the programs first under interim final 22rule, and then a final regulation that we issued 23most recently the final regulation on November s t 24 Is that all of the introductory things that 1I needed to say? DAN MADZELAN: We just have to remind 3them-4 DAVID BERGERON: Danny reminded me that, as you come Yes 6forward, if you could identify yourself and state 7your name and your organization so that the 8recorder can have that information and make sure 9that it is correct in the record 10work from our list She is going to If necessary, if you are 11running too long, we will hold up a stop sign 12 [Laughter.] 13 DAVID BERGERON: We have not had to use the 14stop sign in our other three hearings; I hope and 15expect that we will not today We will keep track 16of time, and we will try to keep the witnesses to 17five minutes Sometimes we run a little long, but 18what we have experienced, particularly when we have 19students testify, or people who are just nervous to 20speak in public like I am, they tend to speak 21faster than normal and they get done more quickly 22One of the benefits of that is that we will bring 23in students throughout the day that maybe were not 24scheduled first thing in the morning because their 1schedules did not allow them to that So we 2will be flexible to accommodate those and try to 3stay on time With that, we will start DAVID BERGERON: Jean Morse, the microphone 6is behind you JEAN MORSE: DAVID BERGERON: JEAN MORSE: Good morning Good morning I am Jean Morse, and I serve 10as President of the Middle States Commission on 11Higher Education, a regional accreditation body 12serving over 500 institutions in the Middle 13Atlantic region of the United States and the 14Caribbean I also appear today as the Vice Chair 15of the Council of Regional Accrediting Commissions, 16know as C-RAC, that is composed of all of the 17regional higher education accrediting commissions 18in the United States 19 My remarks are meant to compliment those of 20my colleagues in C-RAC who have testified at prior 21hearings held in their regions Thank you for the 22opportunity to participate in the consideration of 23new regulations that will affect the seven regional 24accreditors, their 3,000 member institutions, and 1the 17 million students served by those 2institutions C-RAC supports many of the constructive 4suggestions in the report by the Commission on the 5Future of Higher Education convened by the 6Secretary of the U.S Department of Education Our 7position is outlined in responses to the 8Commission’s draft reports, and messages to our 9members, all of which are posted on our Web sites 10 The following additional five comments 11address the new regulations that might affect 12accreditation, and the first relates to timing 13 Although C-RAC welcomes improvements, 14certainly, of the regulations that implement the 15Higher Education Act of 1965, it supports waiting 16to adopt new regulations until Congress has 17completed the required reauthorization of the 18Higher Education Act C-RAC has worked with 19congressional representatives on reauthorization, 20and we will continue to so Reauthorization 21should clarify congressional requirements, and 22those requirements may require different 23regulations from those which might be under 24consideration now 10 As explained in a prior hearing by my 2colleague, Dr Crow, it is really difficult for our 3institutions to implement frequent changes in 4direction It is an evaluation process that is 5continuous that started way in advance, and it is 6very hard to change in midstream The second point has to with transitions 8to new regulations Again, C-RAC promotes 9continuous changes and improvements in practices 10mandated by the Department’s regulations, but we 11support the use of pilot projects to test the 12usefulness of new approaches We also support 13gradual and careful transitions All of the C-RAC 14regional accreditors and their member institutions 15are already in the midst of major initiatives to 16define and assess student learning and, just as 17importantly, to so in a manner that is supported 18by faculty and students and that produces 19information that can be used for continuous 20improvement We recommend that regulatory 21initiatives support shared goals of improving 22student learning without derailing the important 23work of regional accreditors to improve student 24learning that is already under way There is a lot 237 1access to higher education, and we urge you to 2consider ways to reduce student debt burdens, 3increase grant aid, and increase access to higher 4education as you begin negotiated rulemaking The 5newly created ACG and SMART Grants can provide an 6additional 500,000 students with funds necessary to 7pursue a college degree, but existing regulations 8have made the grants confusing to students, and 9difficult to allocate for financial aid 10administrators At a time when it has become more 11difficult to access higher education due to costs 12and opportunity, we should be providing these 13grants for the most needy students in order to 14achieve success in this country 15 In addition, restricting these grants to 16only full-time college students who recently 17graduated high school excludes many non-traditional 18students and part-time students As our 19organization represents millions of students across 20the country, these grants clearly not create 21access for them Furthermore, students who are 22eligible for the Pell Grant, but are not 23recipients, should be allowed to receive these 24grants The current regulations only allow Pell 238 1Grant recipients to benefit from this award While 2we applaud the Department for creating these new 3grants, we hope that you will consider amending the 4regulations to ensure that more students have the 5opportunity to receive them An additional concern for students include 7the need to make college more affordable, of 8course, by limiting student loan repayments to a 9reasonable percentage of a borrower’s income 10Recent graduates who pursue careers as teachers or 11in the non-profit sector will have the ability to 12successfully manage their student loan repayments 13We would also like the Department to recognize that 14borrowers with children have less income available 15for student loan payments Family status should be 16taken into account when determining their loan 17repayments 18 Finally, we urge the Department to protect 19student borrowers from high interest charges when 20they face hardship situations Due to the recent 21cuts in the student loan program, students are 22facing much higher burdens, and we must ensure that 23students are protected from unmanageable levels of 24debt It is important for students to not only be 239 1able to afford the repayments of their loans, but 2there should be safeguards in place to help them in 3times of financial instability Research shows that 40 percent of students 5do not pursue graduate school because of their 6student loan debt Each year, millions of 7graduates delay some of life’s most important 8decisions, as you may know, including purchasing a 9home, getting married, and starting a family simply 10because they are burdened with student loan debt 11 As college costs continue to skyrocket, the 12average family is continually finding it harder to 13afford college Just yesterday, while I was in the 14state of Michigan, they passed an extremely harmful 15ballot initiative, similar to a proposition in 16California ten years ago, which has dramatically 17affected the higher education system, which will 18eliminate Affirmative Action programs, not only in 19education, but the job market, as well 20Unfortunately, this will target many first 21generation, low-income students of color, and will 22close the doors of higher education for many 23qualified individuals We must provide for the 24success of today’s students, and for future 240 1students, in order for our country to succeed in a 2global economy, especially for those that have the 3most potential The Spellings Commission Report concluded 5that 90 percent of the fastest-growing jobs in the 6new information and service economy would require a 7postsecondary degree If our nation intends to 8compete in this changing global economy, we need an 9educated workforce, and, sadly, many of those 10students who are shut out from pursuing a higher 11education are low-income and minority students 12 We urge for the Department to provide a 13higher educational system that is affordable and 14accessible to all Twenty years ago, anyone who 15wanted to pursue a college degree was granted that 16opportunity Unfortunately, students today not 17have that luxury Millions of students are working 18full-time, raising families, and drowning in 19unmanageable debt, just to put themselves through 20school 21 Increasing grant aid and making loans more 22manageable will allow more students an opportunity 23to access the doors of higher education While we 24know that it is not within the Department’s 241 1jurisdiction to increase appropriations for these 2federal programs, we ask that you whatever you 3can to make college a reality for students across 4the country, and not simply a dream We are eager to work with the Department, 6and truly represent students from across the 7country throughout the negotiated rulemaking 8process and the table, as we have in the past So, 9look forward to our nominations, not only for 10myself and the Vice President, but our Legislative 11Director And we hope through all the testimonies 12for the Commission on the Future of Higher 13Education, as well as these public hearings for the 14Department, that you take these testimonials to 15heart, because they are true stories of what is 16going on in today’s higher educational system 17 Thank you for the time and the opportunity, 18and we look forward to talking to you again soon 19 DAVID BERGERON: 20 I would note, as I said earlier, we can’t Thank you, Jennifer 21change statute; full-time is a requirement of the 22statute for Academic Competitiveness Grants and 23National SMART Grants We did make a change in the 24final rule to address one of your issues related to 242 1Pell recipients DAVID BERGERON: JESSE C FENNER: DAVID BERGERON: JESSE C FENNER: Jesse Fenner Good afternoon Good afternoon My name is Jesse Fenner, 6and I am an alumnus of the Upward Bound Program 7from the University of Chicago, and I am here today 8to voice my support for Upward Bound, and to ask 9that the Department ensure that its proposed 10priorities take into account, reflect upon, three 11things that I think make the Upward Bound Program 12that I participated in a successful program 13 Those three things are: establishing 14trust, a partnership, and a safe haven Many 15Upward Bound participants or potential Upward Bound 16participants have, at some point in their life-17they have been failed, either by schools that did 18not adequately prepare them for high school and 19college, by family that did not adequately support 20them in their endeavors, or by their community that 21failed to provide them with safe schools or safe 22neighborhoods 23 These things create barriers to reaching 24out to students I don’t think that the Upward 243 1Bound Program needs any more barriers I would ask 2that the Department make sure that its proposed 3priorities give the Upward Bound Program the 4flexibility not only to reach out to the students 5who fall within the four corners of your proposed 6priorities, but those students who come to Upward 7Bound I was one of the students 9student, I was just poor I wasn’t a poor There were a lot of 10factors pulling at me, and pulling at my family 11Among my brothers and sisters, there are six of us 12All of us were excellent students up through the 13eighth grade, but three dropped out of high school, 14two graduated from high school with no college, and 15then myself With partnership with Upward Bound, I 16was able to go to Harvard University, and am now an 17attorney today 18 So I think that Upward Bound in the 19program that I participated in, it has to engage in 20a trust-building process with the participants, and 21it needs the flexibility to that I think, 22because of that, that the students or the 23participants who come to the program won’t 24necessarily fit in the four corners of the proposed 244 1priorities, and I would ask for flexibility in 2that The second thing is partnership I was 4able to achieve the things that I was able to 5achieve in partnership with Upward Bound, and I 6would ask that the proposed priorities enable all 7participants, all students enrolled in Upward 8Bound, to be full partners with Upward Bound in 9mapping their educational achievement I don’t 10know what I would have done if I were in a control 11group I don’t think I would be standing here 12today, but I would ask that the Department include 13some flexibility that, if a student wants to be a 14full partner with Upward Bound, that they are not 15rejected, and that they are able to get the 16resources that they request 17 And the last thing, a safe haven 18my neighborhood was not safe I know I spent as much time 19as I could at Upward Bound and, at times, I brought 20people with me who were there, and none of them got 21rejected; none of them were asked what their grade 22point average was, what their test scores were, 23they were just provided with help I would ask 24that the Department, in its proposed priorities for 245 1Upward Bound, ensure that the program remains 2inclusive, that it is not restrictive or exclusive, 3and that the students who come to seek help from 4the program can actually get it Thank you DAVID BERGERON: Thank you DAVID BERGERON: Alys Cohen ALYS COHEN: How are you? I am great, and I am impressed 9that you pronounced my name correctly 10 DAVID BERGERON: It’s been one of those 11days that I have had good success and bad success 12with pronouncing names, but thank you 13last scheduled witness You are our There may be others that 14may want to say something, but they are not on our 15list 16 DAN MADZELAN: 17 DAVID BERGERON: So take your time Take your time You have 18half an hour 19 ALYS COHEN: I am Alys Cohen I am a staff 20attorney at the National Consumer Law Center 21 Twenty years ago, I was a member of NYPIRG 22and USSA, so I would like to associate myself with 23all those students who made wonderful remarks 24today 246 As a public interest lawyer, I will be 2paying back my student debt until my three and 3four-year-old are starting to enter college, and I 4am the sister of a social worker But today, I am here on behalf of members 6of the legal assistance community who represent 7low-income students and borrowers We support the 8lawyers and the borrowers directly in their effort 9to deal with their student loan problems, and we 10get calls every week from lawyers, and not all 11borrowers have lawyers, trying to parse through the 12situations that their clients have Most of the 13time the answer is, “The regulations don’t go far 14enough for your client.” 15 Let me talk about some of those regulatory 16issues We urge you to address the issue of 17student loan repayment burdens in the negotiated 18rulemaking Debt has become a primary way that 19Americans pay for college Borrowers are 20increasingly, through no fault of their own, faced 21with payments that are simply unaffordable It is 22important for students to understand the importance 23of fulfilling their obligations; however, these 24obligations must be balanced against other 247 1important interests, including encouraging access 2to education and providing relief for vulnerable 3borrowers and victims of fraud Unfortunately, the current federal 5protections are poorly designed, and fail to 6provide a functional safety net for student loan 7borrowers Fortunately, you have the legal 8authority to improve their safety through the 9upcoming rulemaking We ask you to adopt the five- 10point plan, about which you know very much, and we 11especially ask you to give special consideration to 12some additional recommendations that particularly 13affect the lowest income borrowers 14 Number one, we ask you to expand the 15availability of income-contingent repayment plans 16by offering these plans through rehabilitation, in 17addition to consolidation, and by allowing 18borrowers in default to reconsolidate defaulted, 19Direct, and FFEL consolidation loans in order to 20access the ICRP 21 Number two, we ask you to strengthen the 22safety net for the most vulnerable borrowers by 23tying the definition of disability for purposes of 24canceling loans to the standards set by the Social 248 1Security Administration, by restoring the seven2year grounds for discharging student loans in 3bankruptcy, and by repealing the bankruptcy non4dischargability provisions that apply to private 5loans Number three, we ask you to develop and 7support programs that can provide objective, in8depth assistance to borrowers experiencing problems 9with student loan debt 10 Number four, improve monitoring of private 11collection agency activity, and relieve other 12collection burdens by only charging collection fees 13that are bona fide and reasonable by re-imposing a 14statute of limitations for student loan 15collections, and by creating a rigorous training 16program for collectors that includes regular 17oversight and an accessible system to handle 18borrower complaints 19 And number five, since it is a companion to 20the five-point plan, ensure that borrowers can 21enforce their rights by creating an explicit 22private right of action to enforce key provisions 23of the Higher Education Act As a former 24government lawyer myself, I appreciate the power of 249 1government enforcement, but there is nothing like a 2private cause of action to get actors to the 3right thing One other thing that is not on here that I 5would like to add Right now, in Congress, they 6are looking at FHA modernization What they are 7trying to is make the FHA program for low-income 8homeowners be relevant The biggest challenge to 9that is the abuse in the private loan market As 10the private loans expand in the student loan 11market, I don’t want to see the same thing happen 12because of the heaviness, and the complexity, and 13the limitations of the government student loan 14programs 15 On the subject of who participates in the 16rulemaking, we nominate Deanne Loonin, staff 17attorney with NCLC, and Bob Shireman, Executive 18Director of the Project on Student Debt, to 19represent legal aid organizations and their low20income clients in the upcoming negotiated 21rulemaking process We appreciate the 22consideration of our nomination 23 When I was coming in here today, I came to 24the first building with the little red school house 250 1and it said, “Door closed Try the next entrance.” 2And I came to the next door and it said, “Door 3closed Try the next entrance.” I hope that we 4won’t have a lot of doors closed for those that are 5trying to better themselves Thank you DAVID BERGERON: That is the last witness we have scheduled Thank you 9We will stay here for the next 25 minutes if there 10are other people who want to say something 11 But while there is no one here at the 12microphone to that, let me just say I have said 13my thanks to students at various times during the 14day As we have gone around the country, we have 15been tremendously impressed by our students They 16have provided, in every case, something unique and 17special associated with that particular student, 18but also, they have spoken for their friends and 19colleagues on the campuses, and we have appreciated 20that I appreciate everybody’s patience who stayed 21all day today, and there have been a number of you 22listening with us as we have listened to testimony 23 So, with that, we are just going to sit 24here and hang out for the next 24 minutes, unless 251 1there are others If there are others that are 2here that want to speak, they can that DAN MADZELAN: We are considering this open 4mike time [Open microphone from 3:38 to 4:00 p.m.] [Whereupon, at 4:00 p.m., the hearing was 7adjourned.] 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 ... these proceedings This is our fourth in a series of regional 9hearings in preparation for negotiated rulemaking 10We have been fortunate at our hearings at Berkeley 11and Chicago to be hosted by... reforms to the student loan programs 20 Tomorrow, the public comment period will 21end for this rulemaking, but, by then, 150 students 22from 14 states will have testified before public 23hearings,... me talk a little about negotiated 1 2rulemaking and the process we are engaged in 13While doing the public hearings, we are still 14accepting public comment in written form through 15tomorrow