August 6, Docket No. ED-2015-ICCD-0028 OMB Control Number: Agency Information Collection Activities

Transcription

1 Coalition of Higher Education Assistance Organizations 1101 Vermont Avenue N.W., Suite 400 Washington, D.C (202) Fax (202) August 6, 2015 Re: To: Re: Docket No. ED-2015-ICCD-0028 OMB Control Number: Agency Information Collection Activities Director of the Information Collection Clearance Division US Department of Education 400 Maryland Ave SW LBJ, Mailstop L-OM-2-2E319, Room 2E103 Washington, DC OMB Approved Forms for Perkins Student Loans To Whom It May Concern: The Coalition of Higher Education Assistance Organizations (COHEAO) would like to submit comments in response to the request for response to proposed changes to the OMB approved deferment forbearance forms which will now include Perkins loans. COHEAO is a diverse association whose members include institutions of higher education and their service providers from around the country with a shared interest in fostering access to postsecondary education for students from low-income backgrounds. Listed below, please find general comments related to the standardization of deferment forms related to the William D. Ford Federal Direct Loan Program, Federal Family Education Loan Program and the Federal Perkins Loan Program. Form Submission: As the forms now reference all three loan programs, it is critical that these forms specifically address that the borrower is required to send the form to all of their lenders and servicers. While streamlining the form is a positive for borrowers, institutions may experience an increase in past due accounts, collections and loan defaults as well as increased borrower confusion if this information is not clearly explained. We strongly recommend that the Department consider making these forms available online and able to be pre-filled without relying on the various servicers and schools to do this themselves. Having one central place for these soon to be required forms would be beneficial to students, lenders, servicers and the Department.

2 We recommend that you expand Section 4 to include this bolded language: You are required to send the form to all of your servicers. Borrowers should also be instructed to check the National Student Loan Data System (NSLDS) for a current list of their servicers. References on the forms to capitalized interest should include a bolded disclaimer that reflects that Perkins Loans do not accrue capitalized interest. It is our understanding with the new forms that the servicers and lenders may continue to process deferments based on information found in NSLDS under the simplified deferment procedures. This is only allowed if a borrower requests the deferment verbally or in writing. Additionally, once the benefit is granted, the school must notify the borrower the benefit has been granted and inform the borrower they have the option to cancel the deferment. Form Completion: While COHEAO understands the objective of combining and standardizing the deferment forms to include Perkins Loans, the proposed forms must specifically address provisions which do not apply to the Perkins Loan Program (i.e. references to interest capitalization and making interest payments during Perkins deferments). COHEAO recommends that the Department expand the benefit eligibility chart on the studentaid.ed.gov website to provide additional eligibility guidance which may assist borrowers when completing these forms. Institutions participating in the Perkins Loan Program use either a loan servicer or an internal billing system, and many host these forms on their websites. It is a concern that borrowers may have deferments denied if they complete an incorrect form. Institutions and servicers should be allowed to accept deferment requests which may not be on the OMB form as long as all information required by regulation is included with the documentation. Additionally, institutions and servicers should be allowed to use their professional judgment in determining deferment eligibility based on the information provided by the borrower. It is in the best interest of the borrower and the institution to work collaboratively to ensure the most accurate deferment is granted and done in a timely manner. Form Clarity: The following points are related to specific deferment forms: Educational Deferment Form: The Educational Deferment Form does not ask for seal or letterhead. We realize an institution or servicer can request additional supporting documentation but feel it is important to require this information to streamline the process of approving the deferment. Unemployment Deferment Form: It is our understanding that the Department will be adding the following items into the Unemployment Deferment Form: Description of part-time (less than 30 hours) versus full-time (30 hours or more) Names of places where borrower has applied for employment Verification of unemployment benefits 2

3 We understand the Department has no plans to combine these forms but we would like to go on record stating we would like to see the Unemployment, Mandatory Forbearance, and Unemployment Deferment forms combined. Members of the COHEAO board of Directors and several representatives of other institutions were invited to discuss the proposed forms with the Department of Education. We have provided for further comment an appendix of questions and answers that are the result of that meeting. COHEAO appreciates the opportunity to share these comments on behalf of our member institutions and commercial members. As an organization made up of professionals who are on the front lines in working with students, we appreciate the opportunity to work in collaboration on this initiative with the Department. Sincerely, Harrison M. Wadsworth III Executive Director On Behalf of the COHEAO Board of Directors 3

4 APPENDIX PROPOSED COMBINED DIRECT LOAN/FFEL/PERKINS LOAN DEFERMENT AND FORBEARANCE FORMS QUESTIONS AND ANSWERS 7/30/15 1. Will the borrower have to complete the form and submit it separately to each required entity, or will there be a central processor who will receive the forms and send it out to the appropriate servicers/schools? RESPONSE: Since the same form will be used for Direct Loan, FFEL, and Perkins, the borrower will only need to complete one version of the form. However, the borrower will need to submit a copy of the deferment form to each of the borrower s loan holders/loan servicers. There will be no central processor that receives the form and sends it out to the appropriate servicer/loan holder. 2. How will the Department and the Direct Loan and FFEL loan servicers ensure that Perkins schools/servicers receive the forms, and vice versa? RESPONSE: Direct Loan and FFEL loan servicers will not be required to notify Perkins schools that a borrower has submitted a deferment request. Likewise, Perkins schools will not be required to notify Direct Loan and FFEL servicers of receipt of a deferment request. 3. Once the new forms are in use if one of the loan servicers is omitted, and the Servicer can confirm the other federal loans have received deferment benefits, is there any reason why the Servicer can t go ahead and process the benefits based on what is seen on NSLDS? RESPONSE: Perkins Loan servicers may still process deferments based on information in NSLDS under the simplified deferment procedures. However, a school may only grant a Perkins borrower a deferment under the simplified deferment procedures if the borrower requests the deferment, either verbally or in writing. In addition, after granting the request, the school must notify the borrower that the deferment has been granted, and inform the borrower that the borrower has the option to cancel the deferment. 4. Can the instructions be expanded to include a bolded section with directions to borrowers that they are required to send the form to ALL SERVICERS and to check NSLDS for a current

5 list of their servicers and include a link or web address? (This is of course assuming that they don t come up with a central processor.) RESPONSE: The instructions on the forms can be expanded to include such directions. Recommendations for specific language and formatting should be submitted formally as a public comment, through Regulations.gov 5. Is it possible to create a benefit eligibility chart by loan type to help borrowers navigate what they are eligible for on which loan? The way these forms currently read is too confusing. Take the borrowers through the eligibility chart first, to ensure the proper form is completed the first time. RESPONSE: A chart of this type is already available on our studentaid.ed.gov website at the following link: The chart does not go into great detail on the eligibility criteria for each deferment. The Department has no plans to expand the chart. 6. Is it possible to have the form available to complete online so the borrower doesn t have to print and manually complete? We believe the students of today find having to manually complete items to be too time consuming and daunting that they avoid it altogether. RESPONSE: The Department strongly encourages schools and their respective Perkins servicers to go ahead and develop this technology to make it easier for students to complete the forms and submit them to the Perkins schools/servicers. 7. Would you consider having the students provide documentation for the worst case scenario? Whichever loan program requires the most stringent documentation to get the benefit is what all loans will defer to using for their supporting documentation for the benefit. RESPONSE: We cannot impose Direct Loan/FFEL documentation requirements on Perkins schools that aren t supported by the Perkins regulations. In addition, in the Perkins program, a borrower applying for a deferment is required to provide all information and documents required by the institution [34 CFR (a)(1)]. Different Perkins schools may have different documentation requirements for granting deferments. Defaulting to the school that has the most stringent documentation requirements would, in effect, be imposing non-regulatory documentation requirements on the other Perkins schools. 8. If the borrower completes the wrong form, or does not qualify for one type of deferment, but it is apparent they qualify for another type of deferment, can the Servicer apply the deferment with the form they received or must they have the borrower complete the proper deferment

6 form? i.e. borrower completes Unemployment Deferment, but does not qualify, can Servicer grant the borrower Forbearance or must the borrower complete the forbearance form first? RESPONSE: In the case of a deferment, the borrower would have to complete the appropriate deferment form. In the case of a forbearance, the school could grant a forbearance based on information provided with the deferment form if the borrower provides the appropriate information for the forbearance request. 9. We feel it is very difficult to create standard forms to be used for such different loan programs. Some information will not apply to all programs and will confuse borrowers, prompting unnecessary calls to schools and servicers. For example: capitalized interest is not applicable to Perkins and the attention paid to it on the forms will create concern for Perkins borrowers. RESPONSE: Most Perkins borrowers also have either Direct Loans or FFEL loans, so we don t believe using the combined forms will be confusing for most Perkins borrowers. Perkins borrowers who have applied for Direct Loan/FFEL deferments or forbearances in the past will be familiar with the types of forms that are used for these programs. With regard to language on the form that does not apply to Perkins, we will add language clarifying that capitalization does not apply to Perkins. We recommend that Perkins stakeholders review the forms in public comment closely, and submit any additional suggestions for revised language in a formal public comment through Regulations.gov 10. In some cases, the borrower may be given incorrect information. For example, many of the forms ask if the borrower wishes to make interest payments during deferment. But interest is not due during Perkins deferments. This question is very misleading to Perkins borrowers. They have to read the entire form and determine, first, that interest doesn t accrue on subsidized accounts and, second, that the Perkins loan is considered subsidized. The Chart suggestion might help to lessen this confusion. RESPONSE: As noted in the response to Question 9 above, we recommend that Perkins stakeholders provide recommendations for clarifying language through formal public comment submitted through Regulations.gov 11. The Public Service Deferment Request would have borrowers believe that military deferment applies only to loans made prior to July 1, But the Department already has a form for MILITARY SERVICE AND POST-ACTIVE DUTY STUDENT DEFERMENT REQUEST. Instead of combining Armed Forces, Public Health, NOAA, Peace Corps, etc. on one form, ED should consider putting all the Military Service deferment benefits on one form. RESPONSE: The active duty military service deferment is not the same as the current military service deferment. It s one of the old, pre-july 1, 1993 deferments. We plan on eliminating the Public Service Deferment request form, due to the low number of borrowers who may still qualify for these deferments.

7 12. Even if the Unemployment, Mandatory Forbearance, and Unemployment Deferment forms are combined, this doesn t address forbearance at the discretion of the school for borrowers experiencing financial difficulties but not falling into one of the prescribed categories. We touched on a combination form in the call today, but I don t think this additional concern was raised. RESPONSE: As a point of clarification: there are no plans to combine the Unemployment, Mandatory Forbearance and Unemployment Deferment forms. There is a forbearance comparable to the other acceptable reasons forbearance in DL/FFEL. However, that form is not included in this clearance package. When this DL/FFEL form is scheduled to go through clearance, Perkins will be added and we will include other acceptable reasons on that form. 13. Several servicers use a combination deferment form, or maybe two: one for financial information and one for other types of deferments. This allows servicers to include the nonfinancial deferment form in our exit materials. While many borrowers have adopted electronic exit counseling, not all have and paper documents still are sent. RESPONSE: After the OMB-approved deferment forms have been phased in, schools will no longer be able to use their combined, institutional deferment forms. The Department will not be developing such forms. 14. Educational Related Deferment Request: -Doesn t ask for seal or letterhead RESPONSE: If an authorized official completes and signs the certification section of this form, the seal or letterhead of the institution is not required. However, a school or loan holder may request additional supporting documentation to process the borrower s deferment request. The borrower will certify, by signing the form, that he/she will provide additional documentation as required. 15. In-School Deferment Request: Does not ask for school seal or letterhead Would be nice if somewhere on the form (in the back section), the automated Clearinghouse process would be addressed RESPONSE: As with the EDU form, if an authorized official completes and signs the certification section of the In-School Deferment request form the seal or letterhead of the institution is not required. We will add language discussing the process by which a school may grant a borrower an in-school deferment based on enrollment information from another source. However, the language won t specifically address the Clearinghouse. As noted in the response to Question 14,, a school or loan holder may request additional supporting documentation to process the borrower s deferment request. The borrower will certify, by signing the form, that he/she will provide additional documentation as required.

8 16. Economic Hardship Deferment Request: The Peace Corps service should be under a cancellation; we could start the deferment with this form. Would be ideal if form asked for copies of two most recent pay stubs Doesn t specify we need copy of taxes for ongoing economic deferment (not that we ever use it, although it s in the Regs) If they choose to make interest payments during deferment (forbearance?), we will not bill that monthly. RESPONSE: Service in the Peace Corps is a category of eligibility for an economic hardship deferment. A Perkins borrower serving in the Peace Corps can receive either an economic hardship deferment or a Peace Corps cancellation. See comments above on documentation requirements. Interest does not accrue on Perkins Loans during deferment periods. 17. If a borrower doesn t make interest payments during a 12 month forbearance, they are only required to make the minimum payment (unless other charges are due) when the account goes back into repayment. Only when all charges and accrued interest have been met do payments start to be applied to principal again. Can you help us better understand your thoughts on this? RESPONSE: A borrower may make payments of interest during a forbearance. This is preferable to not making any payments at all, because it prevents interest from accruing. Accrued interest needs to be repaid when the borrower returns to regular repayment. The borrower can pay the accrued interest in one lump sum, or the accrued interest can be spread out over the remainder of the borrower s repayment period. 18. Unemployment Deferment Request: Does not specify working less 30 hours/week is part-time. Working 30 hours/week or more is full-time Does not require the detail of places applied for employment to Does not ask for verification of unemployment benefits RESPONSE: The Department will add these items into Section 2 of the Form to promote understanding and clarity of what is required. 19. Mandatory Forbearance Request (top of form includes Perkins): It does look like this form would work although why not have it with the Economic Hardship deferment form, using only one form? RESPONSE: The Department will not be combining this form with the Economic Hardship Deferment form.

9 20. Public Service Deferment Request: Form is vague on the criteria that need to be met for Military deferment. #4 if answered yes sends them back to #3 or #4 and then I think they get caught in a loop Once again, the Peace Corps service should be under cancellation; we could start the deferment with this form RESPONSE: This form is no longer needed and is being eliminated. 21. Mandatory Forbearance Request: (Residency, National Guard etc...) NOT A PERKINS FORM/BENEFIT I am not familiar with this one I didn t realize we had mandatory forbearance for Perkins The top of the form does not include Perkins whew! Is this where full-time active military personnel would fall? Not serving in a hostile area? Same with National Guard? RESPONSE: This form is not applicable to Perkins. 22. Parent Plus Borrower Deferment Request: DOES NOT APPLY TO PERKINS Perkins loans would not use this form RESPONSE: This form is not applicable to Perkins and the form is being eliminated. 23. Parental Leave / Working Mother Deferment Request: For all practical purposes we would no longer use this form as it would have to be on Perkins advance before 07/01/93. RESPONSE: This form is also being eliminated. 24. Temporary Total Disability Deferment Request: PERKINS HAS SEPARATE FORM/PROCESS We don t use this form for Temp TTL Disability for Perkins (has to be advanced before 07/01/93). We do at times use it for granting economic hardship deferment on Perkins We also sometimes use it for Institutional loans. RESPONSE: Because the eligibility criteria are so different, the Department is not adding Perkins to the FFEL/DL form. The Department will determine whether it s necessary to create a separate TTD form for Perkins at a later time NEW QUESTIONS SINCE 7/17/15: 25. Will we ever be able to use an enrollment verification from a school versus this form? Or MUST any student deferment be ONLY on this form and nothing else? RESPONSE: Schools may still grant in-school deferments based on enrollment information from another source, without requiring the borrower to complete the in-school deferment form. The school would still be required to notify the borrower that the school has granted the deferment.

10 26. We have a suggestion for additional language to be added to OMB No In-School Deferment Request. Based upon the experience of our loan representatives and the questions and feedback they receive, we respectfully request that DOE incorporate language directly from Perkins regs. to include the phrase in attendance Deferment of repayment (i) Enrolled and in attendance as a regular student in at least a half-time course of study at an institution; We are proposing that questions #1, 2, and 3 on the form read as follows: Are you enrolled full time and in attendance at an eligible school? Are you enrolled and in attendance at least half-time at an eligible school? The student is/was enrolled and in attendance at the school below: Apparently we have had borrowers argue the point that they are enrolled in June to attend in August, therefore they should be eligible for deferment prior to ever actually attending. Because the regulations clearly state enrolled and in attendance, so should the form. RESPONSE: We ll take this recommendation under consideration.