Regs 101 The Sport of Student Loans

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Regs 101- The Sport of Student Loans
2001 NCHELP Fall Training Conference Salt Lake
City, Utah Mike Hawkes Educational Credit
Management Corporation
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The regs process is like
the Winter Olympic sport of curling.
there are only a few people in the United States
that understand the rules.
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What You Will Learn

• The hierarchy of the different types of rules
• A little bit about reauthorization
• The regulatory process
• How to read a Federal Register and regulations
• Sub-regulatory guidance

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Hierarchy

• Some rules take precedence over others
• Laws
• Regs
• Dear Colleague/Dear Partner Letters
• Private letters
• Verbal guidance

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HEA Reauthorization

• Primary law is Higher Education Act
• Reauthorization is required each 5-6 years
• Most recent reauthorization October 7, 1998
• Next reauthorization? 2003-2004

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Other Laws

• HEA can change as a result of other laws.
• Labor-HHS-Education appropriations bills
• Work Incentives Improvement Act of 1999
• Laws not directly related to FFELP can cause big
  changes.
• E-sign law
• Gramm-Leach-Bliley

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The Regulatory Process

• The bill is signed into law
• Negotiated rulemaking begins
• Representatives from many organizations hammer
  out regulatory language
• Consensus means unanimity

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The Process

• Notice of Proposed Rulemaking (NPRM)
• Public Comment
• Final Rule Published

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Identifying an NPRM
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NPRM Elements

• Preamble
• List of regs in NPRM
• Brief summary statement (why)
• Public comment deadline
• Where to send comments (email or snail mail)
• Further information contact
• Supplementary information
• Detail
• Rationale
• Proposed Language

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NPRM Sample
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The Comment Process

• Generally 30 60 days
• Contact Trade Organizations
• determine coordinate issues
• ask for a copy of comments
• Submit Institutional Comments
• to ED
• to Trade Organizations
• ED Counts Comments!

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The Comment Process

• How to Comment
• enlist participation of all appropriate segments
  of your organization
• cite section and paragraph
• organize by section
• describe issue
• be brief and to the point
• use an analytical tone
• suggest alternatives
• identify aspects you support
• provide rationale

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Identifying a Final Rule
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Final Rules Usual Contents

• Preamble
• list of all parts changed
• brief summary of changes
• effective date
• may contain several
• master calendar (November 1 rule)
• individual to contact for further info
• supplementary information

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Supplementary Information

• Background historical discussion of process
  NPRM though final

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Supplementary Information

• Substantive Revisions optional section
  identifying final regulations which are
  significantly different from proposed

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Supplementary Information

• Analysis of comments and changes
• Summarizes comment
• Discussion EDs agreement or disagreement
• Change, if any, from the proposed rule

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Final Rules Usual Contents

• Actual regulatory language
• complete text including context

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Final Rules Usual Contents

• Actual regulatory language
• change only

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A Word About Preambles

• Indicator of intent
• Expanded guidance
• Vanishes when regulation is re-printed

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Examining the Final Rules

• Industry groups examine the final regulations
• NCHELP Program Regulations Committee has a major
  role

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Side-By-Side
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Integrated Regulations
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Topical Index
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Reading A Regulation

• C.F.R. 34
• Part 682
• Section .201
• Subsection (a)
• Paragraph (1)
• Subparagraph (i)
• Division (A)
• Clause (1)

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Reading a Reg

• 34 CFR 682.207(b)(1)(v)(B)(2) Requires
  co-payable PLUS disbursements for checks
• Read all Lead-Ins!

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Reading a Reg

• 682.207 Due Diligence in Disbursing a Loan
• (b)(1) In disbursing a loan, a lender
• (v) shall disburse
• (B) in the case of a Federal PLUS Loan
• (2) By a check from the lender that is made
  co-payable to the institution and the parent
  borrower directly to the institution.

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Pitfalls

• Be Sure To Read
• all lead ins
• entire section and
• cross references
• Pay Attention
• May vs. Shall
• And vs. Or
• Notwithstanding

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Subregulatory Guidance

• DCLs
• provide operational guidance
• summarize law changes
• provide interim guidance
• DCLs formally distributed to community
• Private Letter issued to individual or entity

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You Can Stay AFLOAT!