Notice Inviting Postsecondary Educational Institutions To Participate in Experiments Under the Experimental Sites Initiative; Federal Student Financial Assistance Programs Under Title IV of the Higher Education Act of 1965, as Amended
Federal Register, Volume 81 Issue 157 (Monday, August 15, 2016)
Federal Register Volume 81, Number 157 (Monday, August 15, 2016)
Notices
Pages 54052-54056
From the Federal Register Online via the Government Publishing Office www.gpo.gov
FR Doc No: 2016-19297
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DEPARTMENT OF EDUCATION
Notice Inviting Postsecondary Educational Institutions To Participate in Experiments Under the Experimental Sites Initiative; Federal Student Financial Assistance Programs Under Title IV of the Higher Education Act of 1965, as Amended
AGENCY: Office of Postsecondary Education, Department of Education.
ACTION: Notice.
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SUMMARY: The Secretary invites institutions of higher education (institutions) that participate in the Federal student financial assistance programs authorized under title IV of the Higher Education Act of 1965, as amended (HEA), to apply to participate in a new institutional experiment under the Experimental Sites Initiative (ESI).
Under the ESI, the Secretary has authority to grant waivers of certain title IV, HEA statutory or regulatory requirements to allow a limited number of institutions to participate in experiments to test alternative methods of administering the title IV, HEA programs. The alternative methods of title IV, HEA administration that the Secretary is permitting under this ESI experiment are designed to facilitate efforts by institutions to evaluate certain innovative loan counseling practices that can prepare students to manage their college finances, inform them about their student loan repayment options, and ensure students are well-prepared to repay their loans on time.
Under this experiment, participating institutions will have the flexibility to require additional loan counseling for student borrowers beyond the statutorily required one-time entrance and one-time exit counseling as a condition for the students to receive Direct Loan funds, and to customize counseling based on students' needs.
DATES: Letters of Interest to participate in the experiment described in this notice must be received by the Department no later than September 29, 2016 to ensure that the Department considers the institution for participation in the experiment. Letters received after September 29, 2016 may, at the discretion of the Secretary, be considered for participation.
ADDRESSES: Letters of Interest must be submitted by electronic mail to the following email address: experimentalsites@ed.gov. For format and other required information, see ``Instructions for Submitting Letters of Interest'' under SUPPLEMENTARY INFORMATION.
FOR FURTHER INFORMATION CONTACT: Warren Farr, U.S. Department of Education, Federal Student Aid, 830 First Street NE., Washington, DC 20002. Telephone: (202) 377-4380 or by email at: Warren.Farr@ed.gov.
If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-
800-877-8339.
SUPPLEMENTARY INFORMATION: Instructions for Submitting Letters of Interest: Letters of Interest should be in an Adobe Portable Document Format (PDF) attachment to an email message sent to the email address provided in the ADDRESSES section of this notice. The subject line of the email should read ``ESI 2016--Additional Loan Counseling.'' The text of the email should include the name and address of the institution. The Letter of Interest should be on institutional letterhead and be signed by the institution's financial aid administrator. The Letter of Interest must include the institution's official name and its Office of Postsecondary Education Identification (OPEID) number, and the name of a contact person at the institution, along with a mailing address, email address, FAX number, and telephone number of a person at the institution. The letter should also include the information described in the ``Application and Selection'' section in this notice. Upon receipt of a Letter of Interest, the Department will notify the institution by email that its Letter of Interest was received. This notification should be kept in the institution's records.
Background
Accurate and timely loan information is crucial for students to make informed decisions about borrowing and to understand their repayment obligations
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and options. However, there is limited research on the effectiveness of loan counseling, including which types of content and modes of delivery of loan counseling are most effective in helping students to understand and manage their debt, as well as when and how often counseling should occur to be most effective.
Since the start of his Administration, President Obama has outlined an ambitious agenda to make college more affordable for American families and promote student success. In his June 9, 2014, Presidential Memorandum for the Secretary of Treasury and the Secretary of Education, the President directed the agencies to focus their efforts on providing initiatives that help Federal student loan borrowers manage their debt.
In support of the President's agenda, the Secretary, under the Experimental Sites authority in section 487A(b) of the HEA, is offering institutions the opportunity to participate in the experiment described in this notice. The experiment will provide institutions the flexibility to require, as a condition for a student to receive Direct Loan funds, loan counseling that is in addition to the entrance and exit counseling currently required under statute.
Section 485(l)(1)(A) of the HEA requires that each institution ensure that first-time borrowers receive comprehensive information on the terms and conditions of the loan and of the responsibilities the borrower has with respect to the loan. This information must be provided in a simple and understandable format.
The Department's regulations at 34 CFR 685.304(a) require institutions to ensure that entrance counseling is conducted with each Direct Subsidized Loan or Direct Unsubsidized Loan student borrower prior to making the first disbursement of the proceeds of a loan to the borrower, unless the borrower has previously completed entrance counseling at that institution or at another institution, regardless of when that counseling occurred. These regulations do not allow institutions to require counseling as a condition of disbursement beyond the required first-time entrance counseling and required exit counseling, though the institution may offer such counseling to students on a voluntary basis.
The purpose of this experiment is to test the effectiveness of requiring additional loan counseling beyond the counseling that is statutorily required. The additional loan counseling is expected to help borrowers better understand their repayment options and obligations and make more informed decisions about their debt. The experiment may also identify the types of borrowers who have benefitted most from additional loan counseling. The Department hopes to learn if the additional loan counseling:
Positively influences students' decision-making about borrowing;
Promotes successful repayment of student loans, including reducing delinquencies and defaults; and
Has an impact on students' academic performance (e.g., grades and time-to-completion).
We also seek to learn whether different types of content and modes of delivery of loan counseling are more or less effective in promoting the above outcomes. This experiment can inform any future policy changes around loan counseling and efforts to inform borrowers about repayment plans and progress.
Details of this experiment are provided in the section titled ``The Experiment'' below.
The Experiment
Description
Under the experiment, an institution will require all of its eligible Direct Loan borrowers who have previously completed first-time entrance counseling to participate in the experiment (or for some large institutions, a subset of those borrowers), with approximately half of those borrowers randomly assigned by the Department to complete additional required counseling beyond the entrance counseling normally provided to first-time borrowers as a condition of receiving their Direct Loan funds.
Institutions with particularly large numbers of borrowers who would be eligible for the experiment may request to include in the experiment a subset of those borrowers each year. The size of the subset will be determined by the Department in consultation with the institution and will take into consideration the overall number of students needed to estimate impacts for groups of institutions using similar counseling models. Once the size of the subset is determined, students will be randomly selected by the Department from the larger group of borrowers to be included in the subset and to participate in the experiment, either in the treatment group or in the control group.
The Department will assign all borrowers who have been determined to be participants in the experiment to either the treatment group or to the control group. Borrowers assigned to the treatment group will be required to participate in additional loan counseling beyond the entrance counseling they completed as first-time borrowers, as a condition of receiving a Direct Loan. Borrowers assigned to the control group cannot be required to complete, but may do so voluntarily, any additional loan counseling beyond the already-completed entrance counseling and the statutorily required exit counseling.
Under the experiment, institutions cannot require additional counseling more than once for each of the student's Direct Loan loan periods (generally once for each academic year). Therefore, students who are already required to participate in entrance counseling in any year (i.e., a first-time borrower at any institution) will not be included in the experiment for that year. Only students who completed their loan counseling during a prior year (whether for enrollment at the participating institution or at a different institution) will be included in the experiment for subsequent years.
If an institution participating in the experiment currently offers voluntary additional loan counseling to students, it may continue to do so during its participation in the experiment. If an institution does not provide voluntary additional loan counseling, it may not begin to do so during its participation in the experiment. To the extent possible, the Department will require institutions to provide information regarding the students in the control group who utilize the institution's voluntary additional loan counseling.
Institutional Flexibilities
An institution participating in the experiment will have flexibility in the content and modes of delivery of its additional loan counseling (e.g., online, individual in-person, group in-person, student-to-student). The institution will be allowed to choose the counseling approach it will use for the required additional counseling by choosing one of the following: The Department's Financial Awareness Counseling Tool (FACT); a third-party counseling product or third-party servicer; or institutionally developed alternative counseling.
The additional required counseling provided to borrowers by participating institutions may vary based on the students' expected remaining time to complete their program. That counseling may also vary for different groups of students depending on their prior borrowing.
The institution may include, as part of its additional counseling, a test or other evaluation to assess the student's knowledge of the information presented
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as long as the test or evaluation is presented in a format accessible to students with disabilities, including students with visual or hearing impairments, and is in a language understandable by students with limited English proficiency. This may require the use of interpreters for oral or written communications with such students, as well as translations of written materials provided to such students. However, any such evaluation may not impede a student's ability to borrow, for example, by establishing a passing score for the test or evaluation before the student can receive Direct Loan funds.
Institutional Requirements
Institutions participating in this experiment will be required to:
Work with the Department to establish the number of its Direct Loan borrowers who will be included as participants in the experiment.
Track and provide data to the Department for its borrowers who were assigned by the Department to the treatment group and its borrowers who were assigned to the control group.
Ensure that the additional counseling required of the borrowers in the treatment group is reasonable as to time and effort, and is relevant to the student's borrowing decisions; and that the additional counseling is not biased or restricted based on students' religion, national origin, race, color, sex, socioeconomic status (including income), disability, place of residence, physical location where the student will be enrolled, or educational program.
Ensure that the additional loan counseling does not discourage students from taking on debt needed to successfully complete their studies, while not over-borrowing taking into account anticipated earnings.
Make loan counseling reasonable and not so burdensome that it becomes a barrier to receiving Direct Loan funds.
Ensure that for each particular year, Direct Loan borrowers already required to receive loan entrance counseling at that institution (i.e., first-time borrowers) are not subject to required additional counseling for that year. These students would be eligible to participate in this experiment in subsequent years.
Disclose to all borrowers included in the experiment (both those in the treatment group and those in the control group) that the institution is participating in an experiment related to loan counseling and that some of the students in the experiment may be required to participate in additional loan counseling as a condition of receiving Direct Loan funds.
Inform students who have been selected to receive additional counseling that their Direct Loan disbursements are conditional upon completion of that counseling.
Ensure that the institution's policy for providing counseling under the experiment remains consistent throughout the institution's participation in the experiment. A participating institution is also expected to ensure that its delivery of counseling does not change significantly during the institution's participation in the experiment.
The Department will perform ongoing monitoring during the experiment to ensure that participating institutions meet these requirements throughout their participation in the experiment.
All counseling provided to borrowers must deliver information that, at a minimum, includes the total amount of the borrowers' student loan indebtedness. The institution may customize the counseling based on the borrower's needs. However, the Department encourages participating institutions to include in its additional counseling the following information, where relevant, to assist students in making more informed borrowing decisions:
Comprehensive information on the terms and conditions of Federal student loans, including information about annual and aggregate limits, interest rates, how interest accrues, loan fees for Federal student loans, and the responsibilities the borrower has with respect to such loans.
A reminder that students will be required to repay their loans even if they do not complete the academic program.
Information that indicates that completing an academic program will increase the students' ability to successfully repay their loans.
Information about the requirement to complete additional counseling and to complete exit counseling upon leaving the institution.
A statement that, when determining whether and how much to borrow, students should consider how much they can reasonably expect to earn after leaving their academic program of study. As part of this statement, the institution may provide other relevant information, such as earnings data, Gainful Employment disclosures required under 34 CFR 668.412(a), and cohort default rate, if available and/or applicable.
Comprehensive information about the different terms and features of Direct Loan repayment options and forgiveness benefits, including information about income-driven repayment plans, Public Service Loan Forgiveness, and Teacher Loan Forgiveness, and information about student loan deferments and forbearances.
A reminder that information and assistance with Federal student loans, such as loan consolidation, rehabilitation, and participation in income-driven repayment plans, are provided by the Department at no charge and that the borrower does not need to pay someone for help.
Information about establishing a relationship with a loan servicer, including, among other things, keeping address and contact information up-to-date and learning who to contact and how to ask questions.
Information about the Department's Federal Student Aid Ombudsman Group, including a description of the services it provides and contact information.
Information about the Department's Federal Student Aid Feedback System (see Electronic Announcement published July 1, 2016, ``Federal Student Aid Launches Online Feedback System,'' located on the Information for Financial Aid Professionals (IFAP) Web site).
Waivers
Institutions selected for this experiment will be granted flexibility in implementing their Direct Loan counseling program. Section 485(l)(1)(A) of the HEA and 34 CFR 685.304(a)(1) and (a)(2) provide that an institution must ensure that entrance counseling is conducted with each Direct Loan student borrower prior to making the first disbursement of the loan, unless the borrower has received a prior Direct Loan or a Federal Family Education Loan.
However, institutions participating in this experiment will require additional counseling for their Direct Loan borrowers included in the treatment group. The additional counseling approaches to be used (i.e., the Department's FACT product; a third-party counseling product or third-party servicer; or institutionally developed alternative counseling) must be identified by the institution in its Letter of Interest. If the institution enters into an agreement with a third party to provide the additional counseling, that agreement is subject to the third-party servicer requirements of the regulations in 34 CFR 668.25. As is required for all third-party servicers, such third parties must protect all student information they receive from the institution.
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All other provisions and regulations of the title IV, HEA student assistance programs will remain in effect.
Reporting and Evaluation
The Department is interested in assessing the impact of requiring additional loan counseling for students attending different types of institutions. The evaluation will allow the Department to examine the effectiveness of requiring additional counseling across all of the institutions and students participating in the experiment, as well as for groups of institutions using similar types of content and modes of delivery of loan counseling for groups of borrowers.
To support an evaluation of the impact of a policy change similar to the one tested in this experiment, the design of the evaluation requires data from both a treatment group of students required to participate in additional loan counseling and a control group of students who received their student aid under existing rules.
Participating institutions will, on a regular basis, provide to the Department a list containing identifying information for each of the institution's Direct Loan student borrowers who had previously received entrance counseling from the institution or from a different institution. Those borrowers will be considered for inclusion in the experiment for the subsequent year.
The Department will assign each eligible borrower to either the treatment group, which will receive the additional loan counseling, or to the control group, for which the institution may not require any additional loan counseling.
Once a borrower is placed into the treatment or control group, the borrower must remain in that group throughout the borrower's enrollment at the institution during the institution's participation in the experiment.
To obtain some key outcome measures (e.g., receipt and amount of loan funds, academic progression, completion or withdrawal), the Department will draw on information contained in the Department's systems.
In addition, each institution will be required to provide to the Department existing school records for all students participating in the experiment (whether assigned to the treatment or control group) for the purpose of assessing the impacts of the additional loan counseling intervention. The records will likely include the borrower's academic information (e.g., credits taken, credits earned, grade point average, completion information, and credentials earned) as well as financial information (e.g., cost of attendance, State and institutional aid received, non-Federal loans received, and other information relating to financial aid received by the borrower).
Finally, on an annual basis, institutions participating in the experiment will be required to provide information about the method and content of the loan counseling and of their experiences with the experiment. The Department will collect from each participating institution the details and components of the additional counseling that the institution requires, including the content and method of delivery (e.g., individual in-person counseling, group counseling, Web-
based counseling) for each cohort of students. Institutions will receive more specific information about evaluation and reporting requirements prior to the start of the experiment.
Institutions participating in this experiment will be required to submit a narrative description and self-assessment of their implementation of the experiment. At a minimum, the narrative should include any unforeseen challenges and unexpected benefits.
Application and Selection
Institutions are invited to apply to participate in the experiment described in this notice. The Department is interested in information such as: (1) An estimate of the number of the institution's Direct Loan borrowers who, for an award year, have previously completed entrance counseling and, if the institution believes it does not have the capacity to include all of those borrowers in the experiment, an estimate of the number of borrowers it wishes to include in the experiment (both in the control and treatment groups) for each award year; (2) how the additional counseling will be provided, e.g., through the Department's FACT product, a third-party counseling product or a third-party servicer, or an institutionally developed alternative; (3) a brief description of the additional counseling that the institution proposes to use in the experiment, including its content and mode of delivery; and (4) how the institution's proposed approach to additional loan counseling is supported by relevant and available research or evidence (if applicable) and the source of such research or evidence.
We understand that the actual number of students who will be included in the experiment may be different than the estimate provided in the Letter of Interest, as may the proposed counseling method.
From the institutions that apply, the Secretary will select a limited number that represent a diverse cross-section of title IV participating institutions to participate in this experiment. In choosing participants, the Secretary will consider, among other institutional characteristics, the institution's history of compliance with the Department's regulatory and statutory requirements for participation in the title IV, HEA programs; the institution's administrative capability and financial responsibility; and whether the institution has adequately described in its Letter of Interest how it will comply with the requirements of the experiment outlined in this notice.
In addition to the above items, when selecting institutions to participate in the experiment, the Secretary will consider all available information, including, but not limited to: Institutional type and control, the institution's geographic location, the institution's cohort default rate, the median amount of Direct Loan funds borrowed by the institution's students, student outcomes (e.g., retention and completion rates and loan repayment rates), and the type of counseling the institution intends to offer (i.e., FACT, third-party product or third-party servicer, or institutionally developed counseling).
The Secretary's selection of institutions will be guided by the purpose of the experiment, which is to evaluate alternative delivery modes, content, and timing to current counseling requirements, and to inform policymakers about any recommended changes to those requirements. The ESI does not provide broad regulatory relief or general exceptions to the Department's statutory and regulatory requirements.
If a selected institution consists of more than one location (e.g., campus), the Secretary may limit the experiment to a single location, unless the institution provides the Secretary with a rationale for expanding the experiment to one or more of the institution's other locations.
The Secretary will consult with those institutions that have been invited to participate in the experiment on the final design of the experiment through Webinars or other outreach activities.
Institutions selected for participation in an experiment will have their Program Participation Agreement (PPA) with the Secretary amended to reflect the specific statutory or regulatory provisions that the Secretary has waived for participants in the experiment at the institution. The institution must acknowledge its commitment to adequately establish the procedures necessary to successfully administer the experiment. The amended PPA will also
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document the agreement between the Secretary and the institution about how the experiment will be conducted and will specify the evaluation and reporting requirements for the experiment.
Accessible Format: Individuals with disabilities can obtain this document in an accessible format (e.g., braille, large print, audiotape, or compact disc) on request to the contact person listed under FOR FURTHER INFORMATION CONTACT.
Electronic Access to This Document: The official version of this document is the document published in the Federal Register. Free Internet access to the official edition of the Federal Register and the Code of Federal Regulations is available via the Federal Digital System at: www.gpo.gov/fdsys. At this site you can view this document, as well as all other documents of this Department published in the Federal Register, in text or PDF. To use PDF, you must have Adobe Acrobat Reader, which is available free at the site.
You may also access documents of the Department published in the Federal Register by using the article search feature at: www.federalregister.gov. Specifically, through the advanced search feature at this site, you can limit your search to documents published by the Department.
Program Authority: 20 U.S.C. 1094a(b).
Dated: August 9, 2016.
Lynn Mahaffie,
Deputy Assistant Secretary for Policy, Planning and Innovation, Delegated the Duties of Assistant Secretary for Postsecondary Education.
FR Doc. 2016-19297 Filed 8-12-16; 8:45 am
BILLING CODE 4000-01-P
