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HIGHER EDUCATION OPPORTUNITY ACT (P.L. 110-315) (“HEOA”)
NEW REPORTING AND DISCLOSURE REQUIREMENTS

TITLE I

Section 120(a)(2)(B) – Drug and Alcohol Violations Reporting (20 U.S.C. 1011i)  Return to Note
Biennial Review of drug and alcohol program must include determination of the number of drug and alcohol-related violations and fatalities that occur on the institution’s campus or as part of the institution’s activities and of the number and type of sanctions imposed by the institution as a result of drug and alcohol-related violations and fatalities that occur on the institution’s campus or as part of the institution’s activities.

Section 132 – Costs and Consumer Information Disclosures (20 U.S.C. 1015)

Tuition and Costs ( 132(c)-(f))  Return to Note
Beginning July 1, 2011, the Secretary will publish six lists of institutions (broken down by categories according to type of institution[1]) – the 5% of institutions with the highest tuition and fees, the 5% of institutions with the highest net price, the 5% of institutions with the largest increase in tuition and fees over the three most recent academic years, the 5% of institutions with the largest increase in net price over the three most recent academic years,[2] the 10% of institutions with the lowest tuition and fees, and the 10% of institutions with the lowest net price. 

Those institutions included on either the list of largest net increase in tuition and fees or the largest increase in net price must report to the Secretary on (1) the areas in their budget with the greatest cost increases; (2) an explanation of those cost increases; (3) the steps the institution will take to reduce those cost increases; (4) for schools included on one of the two lists for two or more consecutive years, the progress made on the steps reported in the prior year; (5) an identification of the agency within the State government responsible for cost increases and an explanation of how the institution participates in determining those increases (if it does not have the sole ability to increase costs).

Price Calculator ( 132(h)) Return to Note
Institutions that receive Title IV funds will be required to make the price calculator developed by the Secretary available on their website within two years of the calculator’s development.  The Secretary has one year from August 14, 2008 to develop the calculator.

Consumer Information ( 132(i)-(j))  Return to Note
The Secretary is required to make the following information publicly available on the College Navigator website within one year of the date of enactment of the HEOA (August 14, 2008) and the Commissioner of Education is given the authority to “update and improve [IPEDS], including the reporting of information by institutions.”  Thus, it is likely institutions will be required to provide this new information:

1.       Statement of the institution’s mission;

2.       Total number of undergraduate students that applied, were admitted, and enrolled in the institution;

3.       Reading, writing, mathematics, and combined scores on the SAT and ACT for the middle 50%  range of institution’s freshman class;

4.       Number of first-time, full-time, and part-time students enrolled at the undergraduate and graduate levels;

5.       Number of degree- or certificate-seeking undergraduate students who have transferred from another institution;

6.       Percentages of male and female undergraduate students at the institution;

7.       Percentage of first-time, full-time, degree- or certificate-seeking undergraduate students who are from the state in which the institution is located;

8.       Percentage of first-time, full-time, degree- or certificate-seeking undergraduate students who are from other states;

9.       Percentage of first-time, full-time, degree- or certificate-seeking undergraduate students who are international students;

10.  Percentages of first-time, full-time, degree- or certificate-seeking students disaggregated by race and ethnic background;

11.  Percentage of undergraduate students who are formally registered with as students with disabilities if more than 3%;

12.  Percentage of first-time, full-time, degree- or certificate-seeking undergraduate students who obtain a degree or certificate within the normal time for completion or graduation, 150% of the normal time, and 200% of the normal time;

13.  Number of certificates, associate degrees, baccalaureate degrees, master’s degrees, professional degrees and doctoral degrees awarded;

14.  Undergraduate major areas of study with the highest number of degrees awarded;

15.  Student-faculty ratio, the number of full-time and part-time faculty, and the number of graduate assistants with primarily instructional responsibilities;

16.  Cost of attendance for first-time, full-time undergraduate students who live on campus and who live off-campus (and for public institutions, those costs further broken out for in-state and out-of-state residents);

17.  Average annual grant amount awarded to a first-time, full-time undergraduate student;

18.  Average annual amount of federal student loans provided to undergraduate students;

19.  Total annual grant aid awarded to undergraduate students from federal, state, institutional, and other known sources;

20.  Percentage of first-time, full-time, undergraduate students receiving federal, state, and institutional grants, student loans, and any other type of financial assistance the institution knows of that are provided publicly or through the institution (e.g., work study funds);

21.  Number of students receiving Pell Grants;

22.  Institution’s cohort default rate;

23.  Information on campus safety required to be collected under Section 485(i) of HEOA;

24.  Link to the institution’s website providing further information on student activities, services for disabled students, career and placement services, and transfer of credit policies;

25.  Link to the appropriate section of the Bureau of Labor Statistic’s website with regional data on starting salaries in all major occupations;

26.  Link to any report on cost increases the institution was required to prepare as a result of being placed on one of the Secretary’s lists related to costs; and

27.  Availability of alternative tuition plans.

Section 133 – Textbooks (20 U.S.C. 1015)  Return to Note
By July 1, 2010, institutions that receive Title IV funds must, “to the maximum extent practicable” disclose on their Internet course schedule the International Standard Book Number (“ISBN”) and retail price information of required and recommended textbooks and supplemental materials for each course listed on the institution’s course schedule.  If the ISBN number is not available, the institution must disclose the author, title, publisher and copyright date instead.  Finally, if the institution determines it is not practicable to disclose either the ISBN number or the alternative information, it must place “To Be Determined” on its Internet course schedule.  ( 133(d).)

Institutions also must, as soon as practical and at the bookstore’s request, provide their bookstore the institution’s course schedule for the subsequent academic period, the number of students enrolled in each course, the maximum student enrollment in each course, and the ISBN numbers and retail price information of all required or recommended textbooks and supplemental materials.   ( 133(e).)

Institutions must also disclose on any written course schedules that textbook information is available on their internet course schedules and provide the web address.   ( 133(d)(2).)

Institutions are encouraged to provide students information on institutional programs for renting textbooks or buying used textbooks, institutional guaranteed textbook buy-back programs, institutional alternative content delivery programs, and other cost-saving strategies.  ( 133(f).)

Section 136(a)(1) – State Reporting Pilot Program (20 U.S.C. 1015)
Creates a pilot program to assist up to five states in developing state-level postsecondary student data systems that presumably would also require reporting from institutions similar to that required by Section 132 of the HEOA.

Sections 152 & 153 – Preferred Lender Disclosures (20 U.S.C. 1001)

The Act requires institutions with preferred lender lists to adopt, implement, and make available on its website a code of conduct.  ( 153(c)(3).)   It also requires institutions to make certain disclosures in accordance with Section 487, described below, and to provide an annual report with a “detailed explanation” of the institution’s reasons for entering into its preferred lender arrangements, including how the terms, conditions, and provisions applicable to loans offered under those arrangements are beneficial to students and their families.  ( 152(a)(1)(A), 153(c)(2).)

The Act requires preferred lenders annually to certify that they are in compliance with the Act’s requirements.  ( 153(a)(2).) Further, that compliance must be reported on and attested in annual compliance audits.   Id.   Lenders must also report to the Secretary annually on permissible reasonable expenses paid to any agent of an institution who is employed in the financial aid office or has responsibilities related to loans or other financial aid as well as permissible reasonable expenses paid to any agent of an institution-affiliated organization involved in recommending, promoting, or endorsing loans.  ( 152(b)(1)(B).)  Each report must include the amount of the expense, the name of the agent to whom the expenses were paid, the dates of the activities that incurred the expenses, and a description of those activities.  Id.

Institution Disclosures to Borrowers ( 152(a)(1)(A).)
Institutions with preferred lender relationships must, on their websites and in any publications, mailings or electronic messages that are distributed to prospective or current students or their families discussing financial aid opportunities, include a statement that the institution must process Federal Family Educational Loans (“FFEL”) documents from any eligible lender the student selects.   Additionally, institutions must make the following specific disclosures:[3] 

1.       The maximum amount of federal grant and loan aid available under Title IV.

2.       Interest rate and terms and conditions of the loan for the next award year;

3.       Information on any charges payable on the loan, including whether charges will be deductible from the proceeds of the loan, paid by the borrower, or paid by the lender;

4.       Annual and aggregate maximum amounts that may be borrowed;

5.       Average amount borrowed by the institution’s students that received similar loans from the lender in the preceding year;

6.       Amount the borrower may pay in interest on the loan based on what students who took out, in the preceding year, subsidized Stafford loans, unsubsidized Stafford loans on which they agreed to pay the interest while in school, and unsubsidized Stafford loans on which they did not agree to pay the interest while in school;

7.       Consequences of defaulting on a loan;

8.       Contact information for the lender; and

9.       Any other information the Secretary determines, after consultation with the required parties, should be provided.

Institution Disclosures to Borrowers Specific to Private Loans ( 152(a)(1)(B).)
Institutions that provide information on private loans to students, even if they do not have a preferred lender relationship, must disclose in a manner that makes clear that these loans and this information are distinct from Title IV loans:

1.       The information required to be disclosed under Title X (see below);

2.       That the borrower may qualify for Title IV financial assistance; and

3.       That the terms of Title IV loans may be more favorable than the terms of a private loan.

Direct Loan Disclosures ( 154(a), (b).)
The Act requires the Secretary to develop a model disclosure form within 180 days of developing the model disclosure form for FFEL loans for institutions to provide borrowers seeking loans under the William D. Ford Direct Loan Program.  Institutions are required to provide this form to students at the same time as they provide students information about private loans.

TITLE II

Section 205 – Teacher Preparation Programs (20 U.S.C. 1021)

Teacher Preparation Program Reporting ( 205(a)(1).)  Return to Note
Every institution that offers teacher preparation programs or alternative certification programs must report to the Secretary of Education annually:

1.       Whether it satisfied its annual goal for increasing the number of teachers in areas designated by the Secretary as ones of shortage, the steps it is taking to achieve those goals, and steps it is taking to improve its performance in meeting those goals.

2.       A description of the activities undertaken to assure the Secretary that the institution is providing prospective teachers training that responds to identified local needs, the instructional decisions teachers will have to make in the classroom, diverse populations, urban and rural environments, and for special education teachers to core academic subjects.

3.       The percentage of students who have finished all nonclinical coursework and taken and passed the state teacher licensing examination in the previous year.

4.       The percentage of all students who have passed the state teacher licensing examination during the previous year.

5.       The percentage of students who completed the traditional teacher preparation program versus an alternative certification process that took and passed the licensing examination during the previous year.

6.       The average scaled score for all students who took the state teacher licensing examination during the previous year.

7.       A comparison of the program’s pass rate on the teacher licensing examination with the average pass rate for other programs in the state.

8.       A comparison of the program’s average scaled scores on the teacher licensing examination with the average scaled scores for programs in the state.

9.       A description of the criteria for admission into the institution’s teacher preparation program, the number of students in the program disaggregated by race, ethnicity and gender, the average number of hours of supervised clinical experience required, the number of full-time equivalent faculty and students in the clinical experience, and the total number of students from the program that have been certified as teachers disaggregated by subject and area of certification.

10.  If state approval or accreditation of the teacher preparation program is required, a statement that the program is appropriately approved or accredited.

11.  Whether the program has been designated low-performing by the state based on criteria such as the program’s ability to increase the percentage of highly qualified teachers in the state, the academic achievement of elementary and secondary students, and the standards for entry into the teaching profession.

12.  A description of the activities undertaken to assist teachers with integrating technology into their curricula and instruction.

13.  A description of the activities aimed at preparing general education and special education teachers to teach students with disabilities effectively.  

Teacher Quality Partnership Grant Reporting ( 205(a)(2).)  Return to Note
Any institution receiving a Teacher Quality Partnership Grant will also be required to report annually on the progress of the partnership toward meeting the objectives of its evaluation plan (as described in Section 204 of the HEOA).

State Report Card on the Quality of Teacher Preparation ( 205(b).)
Every state that receives HEOA funds shall provide an annual report on both traditional teacher preparation programs and alternative certification programs that describes the reliability of the state’s various licensure processes and assessments, its standards for licensure, how its licensing process and standards are aligned with the state’s “challenging academic content,” its method for assessing teacher preparation programs, the number of teachers prepared in the state during the previous year, and the extent to which the state’s teacher preparation programs are addressing critical shortages as well as preparing teachers to teach students with disabilities.

TITLE III

Section 324(h)(2) – Institutional Aid (20 U.S.C. 1063(d))

Institutions that receive aid under Title III, Part B (e.g., historically black colleges and universities and predominantly black institutions) must report to the Secretary the number of Pell Grant recipients enrolled during the preceding academic year, the number of students who earned an associate or baccalaureate degree in the preceding academic year, and the percentage of students who during the previous academic year (and within five years from graduating from the institution) were enrolled in graduate or professional degree programs in areas in which Blacks were underrepresented.

TITLE IV

Section 419N(e) – Child Care Access Means Parents in Schools (20 U.S.C. 1070e(e))

Institutions that receive grants under the Child Care Access Means Parents in Schools program must now report annually rather than 18 months and 36 months after receiving their grants.

Section 433 – Student Loan Information by Eligible Lenders (20 U.S.C. 1083)

Institutions that qualify as eligible lenders for Title IV purposes must make the following disclosures to borrowers, either in written or by electronic means, before disbursing a loan ( 433(a)):

1.       A prominently displayed statement that the loan must be repaid.

2.       The eligible lender’s name and address.

3.       Principal amount of the loan.

4.       Amount of any charges and whether the charges will be collected by the lender prior to disbursal, deducted from the proceeds of the loan, paid by the borrower, or paid by the lender.

5.       Interest rate on the loan.

6.       For unsubsidized Stafford loans or student PLUS loans, a statement indicating that the borrower can pay interest while in school and that if the borrower decides not to pay the interest while in school, when and how often the interest will be capitalized.

7.       For parent PLUS borrowers, a statement that the parent may defer payment on the loan while his or her child is enrolled at least half-time, that if the parent does defer payment, when and how often the interest will be capitalized, and that if the parent is enrolled at least half-time in school he or she may be eligible for a deferment on the loan.

8.       Yearly and cumulative maximum amounts that may be borrowed.

9.       Total cumulative balance owed to the lender and an estimate of the monthly payment.

10.  When repayment will be required and when the borrower will be required to pay the accrued interest.

11.  A description of the types of repayment plans available.

12.  A statement of the minimum and maximum repayment terms that the lender may impose and the minimum annual payment required by law.

13.  Any loan consolidation or refinancing options the borrower may have.

14.  A statement that the borrower has the right to prepay the loan without penalty.

15.  A summary of the circumstances in which repayment may be deferred, when the borrower may receive forbearance, and options for loan forgiveness.

16.  A definition of default and the consequences for defaulting on the loan.

17.  Any fees or costs the borrower may incur during repayment or in the collection of the loan.

Not less than 30 days or more than 150 days before the borrower’s first loan payment is due, institutions that qualify as eligible lenders for Title IV purposes must make the following disclosures, either in written or by electronic means ( 433(b)):

1.       The eligible institutional lender’s or servicer’s name and address.

2.       Date on which repayment period begins or the PLUS loan deferment period ends.

3.       Estimated balance owed on the loan.

4.       Interest rate on the loan or the combined interest rate if the borrower has loans with different rates.

5.       Information on whether the institutional lender offers any benefits contingent on the borrower’s repayment behavior such as reducing the interest rate if the borrower uses automatic payroll or checking account deduction or makes a certain number of on-time payments.  If the institutional lender does offer such benefits, it must also disclose any limits on those benefits, reasons why a borrower may lose them, how a borrower can regain the benefits, and examples of the impact of an interest rate reduction on the length of a borrower’s repayment period and amount of repayment.  

6.       Description of the repayment plans available to the borrower.

7.       Repayment schedule that includes the date of the first payment, the number, amount and frequency of required payments (PLUS loans and unsubsidized Stafford loans will not be subject to this disclosure if the institutional lender provides the borrower with sample monthly projections) ( 433(d)).

8.       Explanation of borrower’s loan consolidation and refinancing options.

9.       Projected total interest charges borrower will pay and the amount of any interest already paid.

10.  Any fees which may be charged to the borrower during the repayment period.

11.  Statement of borrower’s right to prepay the loan without penalty.

12.  Description of the ways in which a borrower may be removed from default, including any fees for such removal.

13.  Additional resources where the borrower may receive advice on loan repayment of which the institutional lender is aware.

Further, when an institution that qualifies as an eligible lender notifies a borrower that a loan has been approved, it must also provide separate notification summarizing – in simple, understandable terms – the rights and responsibilities of the borrower and the consequences of default, including that the default will be reported to a consumer reporting agency.  ( 433(c).)

Disclosures During Repayment ( 433(e)(1).)
Beginning July 1, 2009, institutions that qualify as eligible lenders must provide each borrower with a bill for each loan payment that details the original principal of the loan, the current balance, the interest rate on the loan, the total amount the borrower has paid in interest, the aggregate amount the borrower has paid on the loan, a description of each fee the borrower was charged during the preceding payment period, the loan payment due date, the lender’s or servicer’s address and toll-free phone number, and a reminder that the borrower has the option of changing repayment plans.

Disclosures for Borrowers Having Difficulty Making Payments ( 433(e)(2).)
Beginning July 1, 2009, institutions that qualify as eligible lenders must provide borrowers that have notified the institution that they are having difficulty making their loan payments of the repayment plans available, the requirements for obtaining a forbearance, and other options available to avoid default.

Disclosures Required During Delinquency ( 433(e)(3).)
Beginning July 1, 2009, institutions that qualify as eligible lenders must provide borrowers that are 60 days or more delinquent on their loans the date on which the loan will default, the minimum payment the borrower must make to avoid default, options available to avoid default, discharge options, and additional resources where the borrower may receive assistance.

Section 435(d)(8) – School As Lender Audit (20 U.S.C. 1085(d))

Institutions serving as eligible lenders or trustees must annually submit a compliance audit to the Secretary to determine whether the institution is using all special allowance payments and interest subsidies from the Department, interest payments from borrowers, and proceeds from the sale of loans for need-based grant programs; whether a reasonable portion of these proceeds are  being used for administrative expenses; and whether the institution is supplementing rather than supplanting other funds it receives for need-based aid.

Section 485 – Institutional and Financial Assistance Information For Students (20 U.S.C. 1092)

In addition to the information institutions that receive HEOA funds must already provide students, they must now also provide information on ( 485(a)(1)): Return to Note

1.       The institution’s plans for improving the academic program of the institution.

2.       The terms and conditions of the FFEL, Direct and Perkins loans students receive.

3.       The institution’s policies and sanctions regarding copyright infringement, including (a) an annual disclosure informing students that the unauthorized distribution of copyrighted material, including peer-to-peer file sharing, may subject the students to criminal or civil penalties; (b) a summary of the penalties for violations of copyright laws; and (c) a description of the institution’s policy, including sanctions, on unauthorized peer-to-peer file sharing.

4.       Student body diversity including the percentage of enrolled, full-time men, women, recipients of Pell Grants, and self-identified racial or ethnic minorities.

5.       Placement information for the graduates of the institution’s degree or certificate programs.

6.       Graduate and professional programs in which graduates of the institution’s four-year programs have enrolled.

7.       The institution’s fire safety report.

8.       Retention rate of certificate or degree seeking first-time, full-time undergraduate students at the institution.

9.       The institution’s policy on vaccinations.

Completion and Graduation Rates ( 485(a)(4).)  Return to Note
In terms of graduation rates, which institution’s were already required to provide information on, the Act allows institutions to exclude the period that students who leave school to serve in the Armed Forces, to go on official church missions, or to serve with a  foreign aid service of the federal government are away from the institution from its calculations, if this subset of students encompasses 20 or more percent of the institution’s full-time certificate or degree seeking undergraduate student body.

Further, institutions must now provide their completion and graduation rate information to students and their student athlete reporting to the Department disaggregated by gender, racial and ethnic subgroup, recipients of Pell Grants, recipients of FFEL or Direct loans who did not receive Pell Grants, students who received neither Pell Grants nor FFEL or Direct loans.  ( 485(a)(7)(A)(i).)  If the number of students in any group is not large enough to be statistically reliable or to protect the privacy of the members of the group, the institution shall note that it enrolled too few students in the group to report.  Two-year institutions do not become subject to this requirement until the 2011-2012 academic year.  ( 485(a)(7)(A)(ii).)

Exit Counseling ( 485(b).)
Institutions continue to be required to provide exit counseling to students with FFEL, Direct, or Perkins loans, but now also requires that it be provided to borrowers of Graduate PLUS loans.  Specifically, the requires that counseling include the following:

1.       Information on available repayment plans, including a description of the differences of each plan and sample average anticipated monthly payments.

2.       Debt management strategies.

3.       Explanation that borrower may prepay the loan or pay on a shorter schedule or change repayment plans.

4.       Description of the terms and conditions of each loan forgiveness or cancellation plan.

5.       Description of the terms and conditions under which borrower may receive a forbearance.

6.       Consequences of defaulting on a loan.

7.       Information on loan consolidation, including effect on total interest and fees and length of repayment, on underlying loan benefits, on the borrower’s prepayment option, and on the borrower benefits of the consolidated loan.

8.       Tax benefits that may be available to the borrower.

9.       How to use the National Student Loan Data System to obtain information on the status of the borrower’s loan.

Criminal Offenses ( 485(f)(1).)  Return to Note
The Act reorganizes the reporting required related to campus security personnel, but still requires reporting on their law enforcement authority, working relationship with state and local law enforcement, and the institution’s policy to encourage prompt and accurate reporting of all crimes. 

The Act adds to the list of crimes that must be reported as hate crimes (according to type of prejudice) the following crimes: larceny-theft, simple assault, intimidation, and destruction, damage or vandalism of property.  ( 485(f)(1)(F).)

The Act also requires that institutions provide in their annual security report a statement of current campus policies regarding immediate emergency response and evacuation procedures, including procedures to immediately notify the campus community once a significant emergency or dangerous situation involving an immediate threat to the health or safety of students or staff has been confirmed as occurring on campus (unless such notification would compromise efforts to contain the emergency), publicize emergency response and evacuation procedures on an annual basis, and test emergency response and evacuation procedures on an annual basis. ( 485(f)(1)(J).)   Return to Note

Transfer of Credit
Any institution that participates in a Title IV program must publicly disclose, in a readable, comprehensible format, its transfer of credit policy, including at a minimum criteria the institution uses to determine whether to transfer credits from another institution and a list of the schools with which the institution has articulation agreements. ( 485(h).)

Fire Safety ( 485(i).)  Return to Note
Any institution that participates in a Title IV program and maintains on-campus student housing must, on an annual basis, publish a fire safety report containing information on the campus’ fire safety practices and standards, including the items identified below.  In addition, institutions must keep an annual log in which they record all fires in on-campus student housing, including the nature of the fire, date, time and general location.  The fires documented in this log must be identified in an annual report to the campus community that also includes:

1.       Statistics from the most recently available years on the number of fires and causes, number of injuries from the fires that had to be treated at a medical facility, number of fire-related deaths, and value of property damaged by fire.  These statistics must be provided to the Secretary in a separate annual report as well.

2.       Description of each on-campus housing fire safety system.

3.       The number of regular mandatory supervised fire drills.

4.       Institution’s policies on portable electrical appliances, smoking and open flames as well as evacuation procedures and fire safety education training programs for students and faculty.

5.       Institution’s plans for future improvement of fire safety.

Missing Students ( 485(j).)  Return to Note
Any institution that participates in a Title IV program and maintains on-campus student housing must establish a missing student notification policy and procedures for on-campus residents.  

The policy must require that the institution inform each student that they may identify a confidential contact to be notified not more than 24 hours after the student is determined missing and provide a means for students to register those confidential contacts.   The policy must also require the institution to notify students under 18 years of age that are not emancipated that the institution must notify their parents not later than 24 hours after the student is determined missing.  Also, policy must advise students that it will notify law enforcement no later than 24 hours after a student is determined missing.  Finally, the policy must require campus security to initiate the emergency contact procedures once a student, for whom a missing persons report has been filed, has been missing for 24 hours.

The notification procedures must include procedures for (1) official notification of appropriate individuals at the university; (2) forwarding any missing persons report to campus security as soon as it is filed; (3) notification of the student’s confidential contact if a missing persons report has been filed and the student has been missing for 24 hours; (4) notification of the students parent if he or she is under 18 and not emancipated, a missing persons report has been filed, and the student has been missing for 24 hours; and (5) notification of the appropriate law enforcement authorities if a missing persons report is filed, the student has been missing for more than 24 hours, and the student neither has a confidential contact on file nor is under 18 years of age.

Penalties for Drug Violations ( 485(k).) Return to Note
Any institution of higher education must provide to students, upon enrollment, a notice of the penalties for a drug conviction on the student’s federal financial aid.  If a student subsequently loses eligibility for federal financial aid as a result of a drug conviction, the institution must notify the student of his or her loss of eligibility and how he or she may regain it.

Entrance Counseling ( 485(l).)
Institutions continue to be required to provide entrance counseling to students with FFEL, Direct, or Perkins loans, but now the requirement is statutory rather than regulatory.  The counseling can be conducted in-person, online, or through written, materials acknowledged by the borrower. Specifically, the Act requires that counseling include the following:

1.       Information on the effect of accepting the loan on the student’s eligibility for other financial assistance.

2.       Explanation of the master promissory note.

3.       Information on how interest accrues and is capitalized during periods when the student is not required to pay the interest.

4.       The student’s option, for certain loans, to pay the interest while in school.

5.       The institution’s definition of half-time and the consequences of not maintaining half-time enrollment.

6.       Information on the importance of contacting the appropriate offices within the institution if the student withdraws.

7.       Sample monthly repayment amounts.

8.       Obligation of the borrower to repay the full amount of the law regardless of whether he or she completes the program of study.

9.       Likely consequences of default.

10.  How the borrower can use the National Student Loan Database to access his or her records.

11.  Name and contact information for a person that can answer any questions the borrower has about his or her rights and responsibilities or the terms and conditions of the loan.

Reimbursements for Service on Advisory Boards ( 485(m).)
Any institution that receives Title IV program funds shall provide the Secretary an annual report indicating any reasonable expenses that were paid to institution personnel for service on a lender advisory board.  The report shall contain: (a) the amount of the expenses paid; (b) the name of the financial aid official or other employee that received the payment; (c) the dates of the activity for which payment was received; and (d) a description of the activity for which payment was received.

Section 487 – Program Participation Agreements (20 U.S.C. 1094)

Code of Conduct ( 487(a)(25), 487(e).)
Any institution that participates in a Title IV program must develop a code of conduct with respect to those loans that includes, at a minimum the provisions below.   Further, the institution’s eligibility to participate in the Title IV programs will be conditioned on its development of and compliance with this code of conducts. The institution must publish the code on its website and annually inform those with responsibilities related to Title IV loans of the code’s provisions.

1.       Prohibits conflicts of interest with respect to the loans.

2.       Prohibits revenue sharing arrangements with any lender.

3.       Prohibits the solicitation or acceptance of gifts from a lender, guarantor or servicer by anyone with responsibilities with respect to education loans at the institution.  Gifts include any “gratuity, favor, discount, entertainment, hospitality, loan, or other item having a monetary value of more than a de minimus amount,” including services, transportation, lodging, and meals.  A gift does not include standard materials, activities or programs related to a loan being provided; food, refreshments, training or informational materials provided as part of a training session conducted by the lender in order for the institution to improve services; favorable terms, conditions or borrower benefits provided to a student employed by the institution if comparable terms are provided to all students of the institution; entrance and exit counseling services provided to borrowers as long as a covered institution’s staff is in control of the counseling and the counseling does not promote one specific lender; philanthropic contributions to an institution unrelated to education loans; or state education grants, scholarships or financial aid funds.

4.       Prohibits receipt of any fees, payments or other financial benefits for consulting services by anyone with responsibilities with respect to education loans.  Those not serving in the financial aid office and having no connections to the institution’s educational loans may serve on the board or directors of a lender.   And, service on the board of directors of a lender permissible even for those with some responsibility regarding loans (but not that work in the financial aid office) if the institution sets forth, in its conflict of interest policy, that the employee must recuse himself or herself from transactions related to loans. 

5.       Prohibits the assignment of a first-time borrower’s loan to a particular lender and requires the institution to certify and not delay certification of any loan regardless of the lender or guaranty agency the borrower selects.

6.       Prohibits the acceptance of any funds to be used for private education loans in exchange for the institution providing concessions to the private lender.

7.       Prohibits the institution from accepting assistance with call center staffing or financial aid office staffing from any lender. The institution, may however, accept professional development training for its financial aid administrators, counseling, financial literacy, and debt management materials from lenders as well as short-term, non-recurring staffing assistance during an emergency.

8.       Any employee with responsibilities with respect to financial assistance at the institution who serves on an advisory board or commission of a lender or guarantor may not accept anything of value from the lender or guarantor expect reimbursement for the reasonable expenses of serving on the board or commission.

Crime Victims ( 485(a)(26).)
The Act makes it a condition of eligibility to participate in the Title IV programs (through the institution’s program participation agreement) that the institution, upon written request, disclose to any alleged victim of a crime of violence or nonforcible sex act the report of the results of the institution’s disciplinary proceeding against the alleged perpetrator. 

Preferred Lender List ( 487(h).)
The Act makes it a condition of eligibility to participate in the Title IV programs (through the institution’s program participation agreement) that the institution compile and make available on an annual basis a list of the lenders and loans, including private loans, that the institution endorses or recommends through its preferred lender arrangements. 

This list also must disclose all the information required by Section 153(a)(2)(A) above and must explain why the institution entered into each preferred lender arrangement.  Specifically, the list must disclose the method and criteria used to select its preferred lenders, including (a) payment of origination or other fees for borrowers; (b) highly competitive terms and conditions, including interest rates; (c) high-quality servicing; and (d) benefits beyond the standard terms.  It also must clearly state that students do not have to borrow from a lender on the list.  Further, the list must contain at least 3 FFEL lenders that are not affiliates of each other and if the institution endorses private loans the list must include at least 2 lenders that are not affiliates of one another.  For each lender, the list must disclose whether and to which other lender it is an affiliate and if it is an affiliate of another lender, describe the affiliation.

Finally, an institution must not deny or impede a borrower’s loan certification if he or she chooses a lender that is not on the institution’s preferred lender list.

Title VI

Section 638(a)-(b) – Reporting of Foreign Donations

Institutions that receive funds under Title VI will be required to comply with the foreign gift reporting requirements that already exist in Section 117 of the Higher Education Act.  Specifically, programs or centers within an institution that receive Title IV funds must report any contribution from a foreign entity – whether a foreign government or private sector corporation or foundation – if  the amount of that contribution (including cash and the fair market value of any property) in any fiscal year exceeds $250,000 in the aggregate and all or a significant portion of the contribution will be used by the program or center.

Title VII

Section 777(a)(4)(E) – National Technical Assistance Center

Section 777 creates a National Center for Information and Technical Support for Postsecondary Students with Disabilities. Part of the new center’s mandate is to create a database for the general public on the availability of support services for students with disabilities.  No immediate reporting requirement is made of institutions, but it is likely that they will be asked to provide documentation of their available support services to build the national database the center is tasked with creating.

Title X

Section 128(e) of the Truth in Lending Act (15 U.S.C. 1638)

Disclosures Required in Private Loan Applications and Solicitations (Section 128(e)(1))
Beginning 18 months after enactment of the HEOA (February 2010),[4] the following items must be clearly and conspicuously disclosed to a borrower in any private loan application:

1.       Potential range of rates of interest applicable.

 

2.       Whether the rate of interest is fixed or variable.

 

3.       Limitations on interest rate adjustments, both in terms of frequency and amount or lack thereof.

 

4.       Requirements for a co-borrower, including any changes in the applicable interest rates without a co-borrower.

 

5.       All potential finance charges, late fees, penalties, and adjustments to principal, based on transgressions of the borrower.

 

6.       Fees or range of fees (along with basis for variations in fees) applicable to the private student loan.

 

7.       Terms of the loan.

 

8.       Whether interest will accrue while the student is enrolled in school.

 

9.       Payment deferral options, including whether deferment would apply to interest or principal or both.

 

10.  Any eligibility criteria for the private student loan. 

 

11.  An example of the total cost of the private student loan over the life of the loan – (i) which can be calculated using the principal amount and the maximum rate of interest actually offered by the creditor and (ii) calculated both with and without capitalization of interest.

 

12.  Statement that an institution may have school-specific educational loan benefits and terms not detailed on the disclosure form.

 

13.  That the borrower may qualify for federal financial assistance through a program under Title IV of HEOA instead of private loan.

 

14.  Interest rates available with respect to Title IV financial assistance.

 

15.  A statement that the borrower has the right to accept the terms of the loan any time within 30 calendar days following the date on which the application is approved and the borrower receives the required disclosure documents and that the rates, terms and conditions of the loan may not change during that 30 day time period.

 

16.  A statement that the borrower must obtain and complete a self-certification form from its institution.

 

17.  A statement that the borrower may obtain additional information concerning federal financial assistance from his or her institution or the Department of Education website.

 

18.  Any other information the Board of Governors of the Federal Reserve System prescribes by rule.

 

Disclosures When Private Loan is Approved (Section 128(e)(2))
Beginning 18 months after enactment of the HEOA (February 2010), the following items must be disclosed clearly and conspicuously to the borrower at the time a private loan application is approved, but before the loan is consummated:

1.       Applicable rate of interest on the date of approval.

2.       Whether the rate of interest is fixed or variable.

3.       Any limitations on adjustments to the interest rate.

4.       The initial approved principal amount.

5.       Applicable finance charges, late fees, penalties and adjustments to principal based on borrower defaults or late payments.

6.       Fees applicable to the loan.

7.       Maximum term under the loan program.

8.       An estimate of the total amount for repayment at the interest rate in effect on the date of approval and the maximum interest rate possible.

9.       Any principal and interest payments required while the borrower is in school as well as any unpaid interest that will accrue during that time period.

10.  Payment deferral options.

11.  Whether monthly payments are graduated.

12.  A statement that the borrower has the right to accept the terms of the loan any time within 30 calendar days following the date on which the application is approved and the borrower receives the required disclosure documents and that the rates, terms and conditions of the loan may not change during that 30 day time period.  

13.  That the borrower may qualify for Title IV federal financial assistance and may obtain information about that assistance from his or her institution or the Department of Education website.

14.  Interest rates available with respect to Title IV financial assistance.

15.  Maximum monthly payment, calculated using the maximum rate of interest applicable to the borrower’s loan.

16.  Any other information the Board of Governors of the Federal Reserve System prescribes by rule.

 

Student Self-Certification (TILA Section 128(e)(3) and HEOA Section 155)
Beginning 18 months after enactment of the HEOA (February 2010), students that wish to take out private loans must provide their lenders with a form developed by the Secretary of Education and obtained from their institution that contains the following disclosures:  (a) noting that the student may qualify for Title IV federal financial assistance, state, or institutional aid instead of the private loan; (b) encouraging the student to discuss the availability of federal, state or institutional aid with his or her financial aid office; (c) acknowledging that the private loan may affect the student’s eligibility for federal, state, or institutional aid; and (d) noting that the information the student is required to provide is available from his or her financial aid office.   Further, the form must include information on the student’s cost of attendance, expected family contribution, estimated financial assistance, difference between the cost of attendance and the student’s estimated financial assistance, and the total of the student’s expected family income and net financial need.  Finally, the certification must be signed by the student.

 

Disclosures When Private Loan is Consummated (Section 128(e)(4) and (7))
Beginning 18 months after enactment of the HEOA (February 2010), lenders will be required to disclose to borrowers the items listed in bullets 1, 2-11, 13-16 of the Section entitled, Disclosures When Private Loan is Approved, above as well as that the borrower may cancel the private loan without penalty any time within 3 business days of the date on which the loan was consummated.

 

Lenders in Preferred Lender Arrangements (Section 128(e)(5) and (11))
Any private lender that has a preferred lender arrangement with an institution must provide an annual report (on a date determined by the Board of Governors of the Federal Reserve System) to that institution a copy of the disclosures required when the loan is approved (see above) above for each type of private loan the lender plans to offer to a student at the institution. 

 

Section 140 of the Truth in Lending Act (15 U.S.C. 1631)

Prohibitions on Relationship with Institutions of Higher Education (TILA 140(a) – (e).)
A lender of private loans may not offer gifts (defined essentially the same as Section 487 above) to an institution or one of its employees or agents in exchange for any advantage provided to the lender with regard to the provision of private loans to the institution’s students.  A private lender also may not use an institution’s name, logo, mascot or any other representation of the institution to market its loans.   An institution’s financial aid personnel may not receive anything of value for serving on an advisory board for a lender (they may, however, have their reasonable expenses reimbursed).  Private lenders may not penalize borrowers for prepayment of their loans.  All of these prohibitions become effective immediately upon enactment of the HEOA except the co-branding prohibition, which is not effective until 18 months after enactment (February 2010).  

 



[1] The six lists must be broken down by 4-year public institutions, 4-year private nonprofit institutions, 4-year proprietary institutions, 2-year public institutions, 2-year private nonprofit institutions, 2-year proprietary institutions, less than 2-year public institutions, less than 2-year private non-profit institution, and less than 2-year proprietary institution.

[2] The two requirements related to increases in tuition over the last three academic years do not apply to institutions with increases equal to or less than $600 a year. 

[3] The Act authorizes the Secretary along with the Board of Governors of the Federal Reserve System to develop a model form for these disclosures within 18 months of the date of enactment of the HEOA (August 14, 2008).  ( 153(a)(2)(B).)

[4] The provisions within Section 128(e) that do not become effective for 18 months are delayed because Congress expects the Board of Governors of the Federal Reserve System (the “Fed”) to issue implementing regulations in that time period.  If, however, the Fed issues final regulations earlier, these provisions become effective upon the issuance of those final regulations.