Negotiated Rulemaking Update On TEACH Grants – Brian Swenson, MASFAA Government Relations

Negotiated rulemaking (Neg Reg) is a process utilized by federal agencies whereby representatives from the agency and affected interest groups work together in a committee to negotiate the terms of a proposed administrative rule. If consensus is not reached on all topics up for negotiation, then the federal agency is not required to adopt any of the language agreed to by the committee. If consensus is reached, the agency is required to publish, word for word, the draft rule agreed to by the committee. In both scenarios the agency is required to offer the draft language for public comment. Neg Reg gives affected parties a voice in the rule-making process and it is an important mechanism to promote positive changes.

During the first quarter of 2019, the Department of Education (ED) held three rounds of negotiated rulemaking with affected constituencies in an attempt to reach a consensus on proposed rules or rule changes. Specific topics of focus were broken out into subcommittees to discuss issues concerning accreditation and innovation, distance learning and educational innovation, TEACH Grants, and faith-based entities. This method is controversial as it results in the full committee voting on language and policy decisions that not all negotiators were part of the discussion for and lowers the possibility of consensus significantly.

This article updating the MASFAA membership on Neg Reg focuses on TEACH Grants. Other Neg Reg agenda items will be featured in future articles. While the sessions held during these most recent negotiations were not open to the public, it has been reported that many members of the TEACH Neg Reg discussions were concerned with situations where students’ first TEACH Grants would convert to loans as a result of a stop-out before the student had an opportunity to re-enroll and complete their program. In addition, concern over students having insufficient time to complete their service obligations after withdrawing and re-enrolling were also discussed.

The concerns over TEACH Grants being converted to loans seem to be valid, as a recent study showed that 63 percent of TEACH Grant recipients who began their service requirements prior to July 2016 have had their grant converted into unsubsidized loans. In addition, of those students whose grants were converted to loans, 32 percent said they did not understand the service requirements, 20 percent said they were unaware of the annual certification process, and 13 percent indicated they encountered problems with the certification process.

Unlike prior Neg Reg where first round sessions are often used as a brain-storming session with the full committee, ED has already released its proposed regulatory language changes concerning the TEACH Grant. ED’s proposal dramatically simplifies the circumstances under which a student’s grant would be converted to an unsubsidized loan. First, a committee member suggested that a student be allowed to request that his or her grant be converted to a loan because they have no intention of completing the service requirements, a choice not currently available to grantees. And second, conversion could occur when a recipient fails to fulfil their required service within a timeframe that would allow them to complete their required four years within the 8-year limit Currently grantees can also see their grants converted for failure to submit paperwork in a timely manner.

The Department has also proposed updating the regulation to begin an annual notification process to TEACH Grant recipients during the service obligation period, specifying the terms and conditions of their service requirements in order to maintain the ‘grant status’ of the Teach Grant. ED has also proposed to include information to recipients when their grant is being converted to a loan and how students can appeal the conversion if they believe it was performed in error. This last proposal may be the most significant and welcome proposed change as existing rules do not allow a borrower to appeal a grant conversion.

The most recent round of Neg Reg wrapped up during publication of this newsletter, and consensus was reached by the TEACH subcommittee on regulatory language changes targeted at lower grant to loan conversions and improving the administration of the TEACH Grant program overall. The main committee accepted the proposed changes, but spent considerable time discussing how to handle situations where TEACH Grant recipients have already had their grants converted to loans. While the proposal by the TEACH subcommittee included a reconsideration process, it was limited to erroneous loan conversions and would not go into effect until July 1, 2020, leaving students already impacted by grant-to-loan conversions with no relief. Since no consensus was reached on this particular issue surrounding the TEACH Grant, the overall topic has not been agreed upon. Members of the Neg Reg session agreed to pause this discussion until the next session, in hopes of being able to reach consensus. The Department agreed to investigate the possibility of implementing the proposed changes prior to July 1, 2020. ED also agreed to consider whether it could remove one-year post-conversion deadline for students to prove that they are satisfying the required service obligation for students who have already had their grants converted to loans. All of these proposals surrounding the TEACH Grant are positive developments and it appears that consensus is close except for these few sticking points.