NCHER Summer Legal Meeting Washington Update    NCHER Summer Legal Meeting July 22, 2016

Current Landscape - Congress Congress is in recess for its summer break, U.S. House and U.S. Senate reconvene on September 6th When House returns, it will be in session for only 17 legislative days before the November election, and only 16 days in November and December When Senate returns, it will be in session for only 23 days before the election and 20 days in November and December Fall Agenda: Passing a Continuing Resolution, scoring political points, and then sitting down to reach agreement on the federal budget

Current Landscape - Administration Obama Administration has 184 days left in office Urgency to publish and implement final rules before the end of an administration, requires formal rulemaking process to reverse (ED’s NPRM on borrower defense to repayment, FCC’s NPRM on TCPA, CFPB regs on arbitration, etc.) Interest in publishing draft rules before the end of an administration, frames the arguments for the incoming administration if similar party and career employees remain (CFPB’s NPRM on debt collection) Move to make final decisions instead of punting it to next administration (ED’s push to pull accreditation from the Accrediting Council for Independent Colleges and Schools) Rush to cement or protect the administration’s legacy (ED’s single servicing provider procurement is seen as cementing the legacy of the Direct Loans

Current Political Landscape - Prez RCP: Clinton – 209 / Toss-Up – 165 / Trump - 164

Current Political Landscape - Prez RCP: Clinton – 351/ Trump - 187

Aftermath of the Nov Election - Prez New Clinton/Trump Administration New leadership and staff at WH, OMB, ED, Treasury, CFPB, and FCC All new administrations examine recent regulatory actions to put their stamp on higher education policy What does this mean for ED’s Direct Loan procurement, FCC’s rules on TCPA, CFPB’s rules on debt collection?

Current Political Landscape - Senate RCP: Democrats – 47/ Toss-Up – 8 / Republicans - 45

Aftermath of the Nov Election - Senate New Democratic leadership, Reid retiring Murray in leadership / Warren in advisory role New Committee Chairs (Murray to Budget, Sanders to HELP?) New Ranking Members (Enzi to HELP, Session back to Budget?) What does this mean for reauthorization of the Higher Education Act? What priorities will be on the table?

Current Political Landscape - House Republicans - 229 Toss-Up - 18

Aftermath of the Nov Election - House Similar Republican and Democratic leadership, no retirees House Education and the Workforce Committee Chair changes hands - Chairwoman Virginia Foxx, Kline retiring House Appropriations Committee Chair changes hands – Reps. Frelinghuysen or Aderholt, Rogers term-limited What does this mean for reauthorization of the Higher Education Act? What priorities will be on the table?

Current Policy Landscape Major interest from Congress, Administration, think-tanks, trade associations, consumer groups, etc. for higher education reform Growing consensus on the main problems and challenges with the higher education system “How do you promote a highly-educated workforce focused on college access AND completion?” “How do you improve institutional quality and hold institutions accountable?” “How do you make college more affordable?”

Current Policy Landscape But no consensus on the role of the federal government to provide solutions to address these challenges Higher education, including financing, is a high-profile issue More players in higher education policy than in past (ED, CFPB, Treasury, consumer groups, etc.) Financial aid system centered at the federal level, with little to no state role Younger and inexperienced House and Senate members responsible for policy development, many with student loans

Current Policy Landscape - R House and Senate Ed Committee members and staff are bombarded with information on higher education but most do not understand the mechanics of financial aid, including federal and private student loans, or the impact that federal policy has on credit markets (not on House Financial Services or Senate Banking Committees) Most Republicans are reluctant to pare back federal student loans. They remain skittish from the 2010 fights, are concerned about the political backlash from student/consumer groups, and sensitive of budget costs (the feds make money on student loans, but Fair Value Accounting should help) Growing conservative caucus is not happy with the current direction (reluctant to codify 100% Direct Lending / actively looking for private sector participation in the federal student loan program)

Current Policy Landscape - D Most Democrats are focused on interest rates for student loans (proposals to allow borrowers to “refinance” their loans under the Federal Direct Loan Program and wrap-in private loans) Growing progressive caucus is not happy with the current direction and frustrated with the lack of new players in the Federal Direct Loan Program States beginning to pass legislation to address student debt and related issues - puts pressure on the feds or takes pressure off of the feds?

Current Policy Landscape – House HEA Reauthorization Process Completed hearing process in the 113th and 114th Congress, held total of 15 hearings (joint hearing on Federal Student Aid with House Oversight and Government Reform Committee) Introduced a series of narrowly-tailored, bipartisan bills, passed the U.S. House last week (more transparency, more loan counseling, simplifying the FAFSA, etc.) Major work takes place in 115th Congress with new chair and members Wildcard: Will Republicans own Direct Lending?

Current Policy Landscape – Senate HEA Reauthorization Process Largely completed hearing process in the 114th Congress Republicans are focused on simplification and deregulation, including turning the Task Force on Higher Education Regulation recommendations (i.e. preferred lender list requirements) into legislation Democrats have their own wish-lists, Murray to address homeless children, Gillebrand to address campus safety, etc. Wildcard: Will Democrats, including Sen. Elizabeth Warren, fight or work together?

Current Policy Landscape – Action is with Budget and Appropriations Bipartisan Budget Act of 2015 - Amended TCPA to authorize the use of predictive dialer technology to collect a debt owed to or guaranteed by the United States Consolidated Appropriations Act, 2016 - Amended the Higher Education Act to increase from 95 to 100 percent reinsurance payments on default claims paid by guaranty agencies to lenders Consolidated Appropriations Act, 2016 - Amended the Higher Education Act to extend authority for Account Maintenance Fees Consolidated Appropriations Act, 2016 - Allocated loan volume to federal student loan servicers on performance and capacity Senate Labor/HHS/ED Appropriations Act, 2017 - Require the Department of Education to allow all of its federal student loan servicers to offer consolidation loans House Labor/HHS/ED Appropriations Act, 2017 - Require the Department of Education to put in place a plan for how it intends to implement the third-party servicer requirements House Labor/HHS/ED Appropriations Act, 2017 - Require the Department of Education to put in place a plan under which it will give credit for subcontracting with small businesses, including state-based nonprofit organizations with expertise in assisting borrowers

Advocacy Priorities Promoting Student Success Provide pre-college, in-school, and post-college financial education, debt management, and default prevention services to students, borrowers, and families Strengthen existing entrance and exit counseling Promote the use of 529 plans

Advocacy Priorities Simplifying and Improving Federal Student Aid Streamline the myriad of repayment plans to help students and family borrowers Simplify the FAFSA to reduce the number of questions and length of time required to complete the form Support the use of prior-prior year tax information so students have a better idea of their federal financial aid options

Advocacy Priorities Assisting Struggling Borrowers Allow defaulted borrowers to rehab their student loans more than once Allow access to the National Directory of New Hires and the National Student Loan Data System so servicers and guaranty agencies can provide counseling and repayment options to borrowers

Advocacy Priorities Reducing Burdensome Federal Regulations Repeal the preferred lender list restrictions Clarify third-party servicer requirements Allow state grant agencies to have access to the school list order Provide authority to financial aid administrators to limit annual and aggregate student loan levels

Advocacy Priorities Improving Program Administration Promote better loan servicing for students and families Continue oversight over the Department of Education’s development of the FFELP wind-down report to ensure the financial stability of guaranty agencies

Advocacy Priorities Expanding Opportunities/Resources for Students Remove preferred lending list restrictions Mandate that borrowers receive accurate and fully transparent disclosures of the costs of their loans Promote tax-exempt financing of private student loans Permit private lenders to remove the default record upon the rehabilitation of a private loan

Advocacy Priorities Leveraging Technology to Service and Recover Federal Debt Oppose the HANGUP Act, which repeals our Telephone Consumer Protection Act language Urge the Federal Communications Commission to strike a balance between requiring appropriate consumer protections and allowing reasonable and responsible use of dialer technology when reaching struggling borrowers on their cell phones

Thank you! Any Questions?