Legal Guide by Rick Lasly https://padlet.com/rilasly/l8qeaarfuvsu5o11 en-us 2023-07-17 14:36:15 UTC 2023-07-23 23:48:06 UTC hello@padlet.com Slide 1 rilasly https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646540926 I am pursuing my degree in Student Development & Leadership in Higher Education. I am a career Financial Aid Administrator (FAA) and have served in almost every role within the Financial Aid Office, for more than twenty-five years. I am currently a Financial Aid Counselor. 

I have selected for this guide the Federal Student Loan programs. I selected this topic because these programs are highly debated and with student debt increasing exponentially on an annual basis, it is clear this topic requires additional scrutiny. ]]> 2023-07-17 18:05:01 UTC https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646540926 Slide 2 rilasly https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646541137 This topic is important to FAA because we are on the front lines. We are providing guidance to students, interpreting regulations, and awarding government funding for educational expenses. Additionally, student loan defaults are monitored by the U.S. Department of Education. Sanctions to Federal Student Aid funds are imposed if a schools 3-year Cohort Default rate gets too high.

As the issue of student loan indebtedness develops, as educators we should be considering financial literacy programming on college and university campuses. There has been research that both supports and rejects financial literacy as a way to encourage students to borrow more responsibly. The federal government has not yet imposed this as a requirement to institutions participating in Title IV Financial Aid programs due to the cost associated with it. However, as this issue progresses it seems more likely that such programming will be more heavily considered.  ]]> 2023-07-17 18:05:40 UTC https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646541137 Slide 3 rilasly https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646541339 The federal government has not yet reached a solution to student loan indebtedness, student loan reform recommendations have been made.

(National Association of Student Financial Aid Administrators 2022).

1. Consolidate repayment into 3 plans. Standard repayment, income driven and extended 25 year plan. Currently there are 7 repayment plans & 6 of them are based on annual income tax review.
2. Design a single income repayment plan.
3. Reform the use of interest in the federal student loan programs. Reduce interest charges, restore graduate student eligibility for Subsidized Loan funds, adjust all loans borrowed to the lower rate. Also eliminate loan interest capitalization and negative amortization for all borrowers. 
4. Eliminate Student Loan Origination Fees. 
5. Maintain a single loan program for graduate/professional students. Initial borrowing is available for the highest in state cost of attendance. Additional funds required to be based on credit eligibility and earnings potential within the professional field of study. 
6. Reform the Parent PLUS Loan credit requirements to monitor income to debt ratio. 
7. Reform the Public Service Loan Forgiveness Program, which allows forgiveness for borrowers working in non-profit professions.

https://www.nasfaa.org/uploads/documents/Recommendations_Student_Loan_Repayment.pdf


]]> 2023-07-17 18:06:20 UTC https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646541339 Slide 4 rilasly https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646541421 Student loan relief in the way of reform could positively impact millions of Americans. In a recent article Jaschik (2022) indicates the Federal Student Loan repayment pause has been widely beneficial to borrowers: 


  • Millions of Americans have had their loan repayments paused since March 2020. 
  • Credit scores of borrowers have improved during this pause. 
  • Americans have been using the funds previously ear-marked for student loan repayment to pay down other forms of debt. 

https://www.insidehighered.com/quicktakes/2022/03/23/study-impact-student-loan-pause




]]> 2023-07-17 18:06:37 UTC https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646541421 Slide 5 rilasly https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646541507
  • Student loan borrowers are scheduled to begin repaying September 1, 2023.
  • During the pause interest rates were set to 0%
  • Delinquencies and defaults were not being reported to credit bureaus during the repayment pause.
  • The Education Department has developed a 1 year on-ramp to help borrowers ease back into student loan repayment.
  • As repayment resumes for millions of borrowers, it is projected that spending & saving habits will change dramatically.
  • Borrowers should: 
    • Identify and contact their loan servicer about repayment.
    • Make a budget and reduce expenses. 
    • Look for a Public Service Loan Forgiveness qualified job.
    • Explore Income Driven Repayment options, like the
    • SAVE repayment plan.
    • See if you qualify for forbearance or deferment options upon entering repayment.
    • Find additional income streams.
    • https://www.usnews.com/education/best-colleges/articles/the-student-loan-payment-pause-is-ending-7-things-to-do 


    ]]>     2023-07-17 18:06:59 UTC https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646541507     Slide 6 rilasly https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646541591 Constitutional Law

    While there is not a constitutional amendment concerning financial aid. It is widely accepted that education is delegated to the states through (U.S. Const. amend. X) "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

    This would include public education and by extension higher education. In Texas that means public junior colleges and universities. 

    This constitutional provision while paving the way for educational opportunity at the state level, paves the way for later legislation such as the Higher Education Act of 1969 that provides for Federal Student Aid programs, to include among other things student loans.

    https://constitution.congress.gov/browse/essay/amdt10-3-4/ALDE_00013624/



    ]]>     2023-07-17 18:07:13 UTC https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646541591     Slide 8 rilasly https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646541802 Statutory Law

    Under the Higher Education Act 1968, is where President Biden established his loan cancellation plan in 2022. He did so under the general powers provision of (20 USC § 1082) item 6, allows The Secretary to "enforce, pay, compromise, waive or release any right, title , claim, lien or demand..." This section of statutory law also covers: 


    • General Powers.
    • Financial operations and responsibilities.
    • Data collection.
    • Sanctions upon lenders involved with federal student loans.
    • Review of Sanctions on Eligible Institutions.
    • Program of assistance for borrowers. 

    Rather one agrees or disagrees with President Biden's attempt to cancel student loans with limitations to the amount. It is clear something must be done at the government level to help struggling borrowers. Presently inflation is being felt across the nation while wages are frequently stagnant. With repayment soon upon borrowers, is recession on the horizon as well? 

    https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1082&num=0&edition=prelim




    ]]>     2023-07-17 18:07:40 UTC https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646541802     Slide 9 rilasly https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646542019 Judicial Law 

    On June 30, 2023, the Supreme Court of the U.S. struck down President Biden's loan cancellation in Biden v. Nebraska. In their ruling the SCOTUS outlined the secretary cannot: 


    • States The Secretary cannot draft new provisions to the Higher Education Act. 
    • The Secretary cannot create a different loan forgiveness program through the waiver process.
    • The authority to modify should be more modest than this cancellation attempt.
    • Finally, the HEROES Act does not allow the Secretary’s plan without clear congressional authorization.

    https://www.supremecourt.gov/opinions/22pdf/22-506_nmip.pdf

    ]]>     2023-07-17 18:08:30 UTC https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646542019     Slide 7 rilasly https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646542295 Administrative Law

    This administrative law provides for eligibility with the William D. Ford Federal Direct Loan Program. At this time this is the only valid federal student loan program.

    • Student Borrower Eligibility.
    • Need Eligibility for Subsidized Loans.
    • Eligibility for Unsubsidized Loans.
    • Internship/Residencies Eligibility.
    • Eligibility after Disability Cancellation.
    • Default, excess borrowing and overpayment.
    • Parent PLUS Borrower Eligibility.
    • Eligibility after bankruptcy.
    • Refusal to originate a loan by the FAA.
    • Institutional Eligibility/Program Participation Agreement.

    Provisions like these within the administrative law provide a more defined road map to students ability to qualify for loans and other aid programs. When digging deeper into the administrative law set out by the U.S. Department of Education, we find annual limits, program limits and how colleges and universities are required to offer loan eligibility within cost of attendance projections. For example a student living on or off campus is allowed to borrow for living expenses such as rent and food. While this is reasonable, students living with family members like parents and grandparents can also borrow, regardless of gift aid like grants or scholarships.

    https://fsapartners.ed.gov/knowledge-center/library/handbooks-manuals-or-guides/1998-07-22/william-d-ford-federal-direct-loan-program-eligibility 
    ]]>     2023-07-17 18:09:30 UTC https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646542295     Slide 10 rilasly https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646542458 Local Administrative Law 

    Angelo State University utilizes the attached policy and procedure for the William D. Ford Federal Direct Student Loan Program. The policy outlines: 


    • Program Authorization & Purpose as outlined by legislation.
    • Program specific elements of student loan eligibility.
    • Need eligibility restrictions for Subsidized Student Loans. 
    • Annual and aggregate loan limits by program of study for both undergraduate and graduate borrowers. 
    • Limitations for both the federal direct subsidized and unsubsidized loan programs and their aggregate limits. 
    • Entrance Counseling procedures for new borrowers. 
    • Exit Counseling procedures for graduating students. 
    • Eligibility for dependent undergraduate students to be eligible for additional unsubsidized awards, due to Parent PLUS credit denial. 
    • Exemption allowances for GI Bill veteran recipients and the exemption of funding in consideration of loan eligibility. 

    While the policy is in need of update due to the dissolution of the Family Federal Education Loan (FFEL) program. The language within is sufficient to be transferrable to the William D. Ford Direct Student Loan Program. Policy through local administrative law provides guidance to Financial Aid Administrators in determining award eligibility for students needing to borrow for their education expenses. It would also be beneficial for this policy to refer staff members engaged in counseling students about loan eligibility to the College of Business's new iGrad program which has digital instruction, videos and knowledge quizzes on various student loan topics.




    https://docs.google.com/document/d/1ScR7fZQoKYYULdNdMQ2GsUAeVbBw4D4A/edit

    ]]>     2023-07-17 18:10:02 UTC https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646542458     Slide 11 rilasly https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646542920 Ethical Principles 

    There are several code of conduct items that deal with student borrowing from the National Association of Financial Aid Administrators (NASFAA). However, those speaking directly to lending are pointed toward private student loans and not those available through the U.S. Department of Education. 

    In my opinion the most important item in this ethical principals area is with regard to consumer information. FAA are responsible for publishing information on the institutions web site outlining Direct Loan eligibility for undergraduate and graduate borrowers. The information must be clearly labeled and prominent on the web site. However, frequently this information gets inadvertently buried with web design changes. Institutions must disclose cost of attendance information as well as information on the maximum loan eligibility students can receive at both the undergraduate and graduate or professional level. 

    This means offering loans at less than the maximum available to students for their program of study, when combined with cost of attendance would be an ethical compromise. Especially if the institution is failing to provide information to the student clearly outlining their right to request an increase based on cost of attendance and their program level.





    https://www.nasfaa.org/Code_of_Conduct

    ]]>     2023-07-17 18:11:42 UTC https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646542920     Slide 12 rilasly https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646543118 In this article Baum outlines that mass debt forgiveness proposed by President Biden's loan cancellation provisions are not the answer. Due in part to the restrictions imposed by the federal student loan programs for undergraduate students she postulates that much of the debt is carried by those with high earning potential and should not be subject to the same provisions as the needy who struggle the most with repayment of their student loans.

    It is clear with student loan indebtedness being a hot topic item, that something needs to be done. For starters NASFAA has made some recommendations for student loan reforms that if enacted could provide substantial relief to borrowers. As a career financial aid administrator it is my hope that the government does something soon to reform student loans, interest, capitalization and origination fees to provide borrower relief. Otherwise I fear we will see the next bail out being in the student loan programs much as it was in the housing market in 2007-2008.

    Baum, S., and Akers, B. (2021). The fallacy of forgiveness: If the feds wipe out student debt, who will benefit the most? Education Next, 21(1), 80-85.



    https://www.educationnext.org/mass-debt-forgiveness-not-progressive-idea-fallacy-of-forgiveness-forum/

    ]]>     2023-07-17 18:12:28 UTC https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646543118     Slide 13 rilasly https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646545218 Recommendations/Best Practices

    It is imperative that colleges and universities are proactive in educating students about their student loans. This however, means including it in curriculum and developing educational opportunities outside of the classroom such as student sessions about their loans, borrowing responsibly and how to keep interest at bay while they are enrolled. 

    As a Financial Aid Administrator and working with students in a counseling role. It is becoming unusual for traditional college students, those between the ages of 18 and 24 to work while pursuing their degree. While there are still  students that do, it is not as common as it once was. While I understand the desire of students to not divide their attention between employment and education. I also know that paying interest on unsubsidized loans is the best way to develop a practice of paying student loans back, building credit while still in college and keeping interest low so there is not as much risk of capitalization. Student loan interest capitalization is when the interest accruing on the loans while they are enrolled becomes part of the interest baring principle once they graduate and enter repayment. 

    It is pretty clear that the government will take some time to sort out student loan relief. Repayment programs are difficult to navigate and hard for students to know which one to pursue. Change is desperately needed, but the simple fact is FAA cannot wait around for the government to make those changes before acting to help students before they enter repayment.    ]]>     2023-07-17 18:19:26 UTC https://padlet.com/rilasly/l8qeaarfuvsu5o11/wish/2646545218