NASFAA Off the Cuff Podcast – Episode 128 Transcript Justin Draeger: Hey everybody, welcome to another edition of “Off The Cuff.” I'm Justin

Draeger.

Allie Arcese: I'm Allie Arcese, on our communications team.

Justin Draeger: Wait a minute.

Jill Desjean: That sounds...

Justin Draeger: Wait...

Megan Coval: That caught me off guard.

Justin Draeger: I was...

Allie Arcese: I know, I was going to tell you guys at first, but I decided just do it.

Justin Draeger: Well, I was going to email you this morning, or I did email you or Slack you, or something, and I noticed your name still says Bidwell, on Slack. So, I was actually just thinking about it this morning, I wondered if you were going to start using your married name.

Allie Arcese: Okay, I just updated my Slack bio.

Justin Draeger: Just now, as we were here?

Allie Arcese: Right now.

Justin Draeger: Okay.

Allie Arcese: Now, it says Allie Arcese. For a while, I was not going to change it at work.

Megan Coval: Yes, that's what I was remembering.

Justin Draeger: Professionally, you were going to keep the name, because you've built so much capital. That's not a joke, I'm serious.

Allie Arcese: Well, yeah, I've had that byline-

Justin Draeger: Now, you're starting all over.

Allie Arcese: I've had that byline for 10 years.

Justin Draeger: Right.

Allie Arcese: Then, I was like, Well, I'm not writing regularly anymore, so I think I'm going to do the transition into the new name, like you did, Megan.

Justin Draeger: What does that mean? What did you do?

Allie Arcese: For a while, you went as Megan McClain-Coval.

Justin Draeger: Are you still doing that?

Allie Arcese: In the very beginning.

Megan Coval: Yeah, I still have on my email signature, Megan McClain-Coval. I probably could take that out now, but for a while I left that in there, and then I just started to pull it out.

Justin Draeger: I think the “less woke Justin” would be like, “It's easier if you just have two names – your first and your last – but now I'm more educated, and I would support if you wanted to just do both, or do a hyphenated or whatever. Do you feel like you're getting a clean slate because you're completely changing your last name, so everything you wrote at U.S. News will be disassociated from your new name?

Allie Arcese: No, because in my email signature I still have it. It says Allie Bidwell-Arcese, for right now.

Justin Draeger: Also, I don't know how long it's going to take me to learn to spell that last name.

Allie Arcese: Arcese.

Justin Draeger: A-R-Arcese. Is there a C, and then a S?

Allie Arcese: A-R-C-E-S-E.

Justin Draeger: Oh, I guess it's not that complex.

Megan Coval: But it's Arcese. Arcese?

Allie Arcese: Yeah.

Megan Coval: Okay.

Justin Draeger: Okay, moving on. Who else is with us today?

Megan Coval: Megan Coval, with NASFAA's policy team.

Jill Desjean: And Jill Desjean with NASFAA's policy team.

Justin Draeger: Welcome everybody back from Thanksgiving. I just realized this, this very morning, it's 2019, we're in December, so this is the last month of the last year of this decade, right? This is going to be where we cap everything and then VH1 will put out the best of the decade or whatever. Do they still do that?

Megan Coval: I forgot about that.

Justin Draeger: Right? This is the end of a decade.

Megan Coval: This is it. Yup.

Justin Draeger: I feel this decade went really fast. What I'm going to ask you to do is get your phones, and the reason I realized this was because I use, what do you use to listen to music? What's your main streaming?

Megan Coval: Spotify.

Justin Draeger: You're a Spotify user.

Jill Desjean: Spotify.

Allie Arcese: Spotify. I know where you're going with this.

Justin Draeger: This is working out better than I thought. In Spotify, did you see today that they did like...

Megan Coval: Oh, a decade one?

Justin Draeger: A best of the year and decade.

Megan Coval: Oh, I see the year. Actually I found that this morning.

Allie Arcese: Mine just disappeared.

Jill Desjean: Where's the decade one?

Justin Draeger: You're going to have to turn off the sound or it's going to be loud. What I'm curious about is, because everybody says, “Oh I like this music or I listened to that music,” but this is legit. This is going to tell you what did you actually listen to? So, if you just scroll through there, I'm curious, there's a couple ones that I'm going to ask. The first one I'm going to ask is, and this is not...

Megan Coval: Are you looking in the decade one? Where, I see the...

Justin Draeger: Well, it's right on... It might be just a year, but within the slide show it'll give you...

Allie Arcese: Yeah, mine was at the top and now it's gone.

Megan Coval: Your top songs?

Justin Draeger: Did you lose it?

Allie Arcese: Yeah because I already looked at it.

Justin Draeger: What was the last song you listened to? The very last one. If you were to go to your Spotify right now and look, what was the last song?

Allie Arcese: It's something by Lady Antebellum.

Justin Draeger: Okay. What is that, country contemporary?

Allie Arcese: It’s a country band.

Justin Draeger: That's contemporary country though.

Allie Arcese: Yeah.

Justin Draeger: Okay. Megan, how about you?

Megan Coval: Something by Tim McGraw.

Justin Draeger: So contemporary country, although Tim McGraw... More traditional.

Megan Coval: He's kinda old school.

Justin Draeger: He's traditional.

Megan Coval: He's traditional.

Justin Draeger: Okay. Jill, how about you?

Jill Desjean: You probably don't know it, it's called Unobstructed Views. It's by Death Cab For Cutie.

Justin Draeger: Oh, I know Death Cab For Cutie. They were back from the 90s right?

Jill Desjean: Ah, yeah.

Justin Draeger: Right. So that's okay. I live in the 90s as well, but I remember them from... I don't know their newer stuff, but they hit big in the all rock scene in the 90s.

Jill Desjean: I still think of them as very popular and relevant.

Justin Draeger: Yeah. They wouldn't play at like a stadium, but they would play at the Anthem.

Jill Desjean: I saw them at the Anthem very recently. It was amazing.

Justin Draeger: I try to put bands in the venue that you would see them at. So they wouldn't be playing like national stadium.

Jill Desjean: They draw a nice crowd, of nice people too.

Justin Draeger: The last one I was listening to, I did not set this up, even though I thought about this, I just literally came in and listened to what I normally, “It Was a Good Day” by Ice Cube. This gets at my point, which is, if you look into your Spotify, it tells you, what is the genre of music you most listened to over the last year? Do you see that? Do you have that?

Allie Arcese: No, my slideshow went away ‘cause I looked at it this morning already, but it told me I was “genre fluid.”

Justin Draeger: Right. I'm also genre fluid. So if you go through, are you in yours Megan?

Megan Coval: Yeah.

Justin Draeger: Click through. I'm curious where it says, the one lucky artist, your number one artist that you listened to.

Megan Coval: Piano Guys were my number one.

Justin Draeger: Piano Guys were your number one? What is the Piano Guys?

Megan Coval: Oh, they're amazing. They're really, really, really good.

Justin Draeger: Is this like, they play everything? They're just piano, but they do it on a piano?

Megan Coval: Piano, cello, but they mix contemporary and classical. They'll play a song called, “I want you Bach” and it's Michael Jackson and Bach. I listened to it a lot with the baby.

Justin Draeger: Do they have words?

Megan Coval: No.

Justin Draeger: Okay. My number one artist, which I'm a little embarrassed about, my number one was DJ Khaled.

Megan Coval: For the year, or for the decade?

Justin Draeger: For the year. Take it easy.

Megan Coval: Where was he in 2011?

Allie Arcese: Because my number one artist for the year and the decade were the same.

Justin Draeger: Who was it?

Allie Arcese: The Backstreet Boys.

Justin Draeger: Oh, Allie, gross.

Allie Arcese: Apparently… I'm simultaneously embarrassed and proud. In 2019, apparently, I spent 11 hours listening to them.

Justin Draeger: Well, that's only one and a half work days, so that's not that bad. My number two was Lil Wayne, number three was Chance the Rapper, number four was B.I.G., and number five was Queen.

Megan Coval: Oh, that's a nice list.

Justin Draeger: All right, let me go under the, you're genre fluid, it gives you what genre of music you listen to the most. What was yours, Megan?

Megan Coval: Contemporary country.

Justin Draeger: Yeah, I would've guessed that for you. Do you know yours?

Allie Arcese: I can't look at it right now, but I think it was probably just pop.

Jill Desjean: Indie rock.

Justin Draeger: Indie rock. All right. Mine was Rap and followed by Rock and now, this is the surprising one because I've grown a lot in the last year, number three was contemporary country. I've really never opened my heart or mind to country music.

Megan Coval: See a while back this year, I believe, you put together a list of music.

Justin Draeger: For my birthday. Yeah. It was like, “Hey, let's all listen, I'll put together a playlist.”

Megan Coval: I remember being very surprised that Eric Church was on there. I just didn't realize that you liked any country and I'm a big Eric Church fan, so I'm happy to see you coming over a little bit.

Justin Draeger: Opening up a little bit, trying new things. I've never been big into indie rock, but I don't...

Jill Desjean: Why don't you try it in 2020?

Justin Draeger: All right.

Jill Desjean: I'll give you a playlist.

Megan Coval: That's a good way to start.

Justin Draeger: Okay. All right, I'll try it. Well, on that note, do you guys make public your playlists?

Allie Arcese: Certain ones I do.

Justin Draeger: Why don't you check and I'll at least put my Spotify... Can I put it in the show notes and if people want to follow along.

Justin Draeger: I'll pull it up and if you guys want to do it, go for it. If not, people can follow along with me. I listen to music all the time, it's constantly background.

Allie Arcese: Actually, I know one playlist I have that is public, I'm pretty sure a couple of years ago when we had the conference in San Diego, we had the #FightforFinAid rally, we made a playlist for that.

Justin Draeger: And that's public. The other thing this makes me think about is this week is FSA week, big week. But they had a playlist.

Allie Arcese: I saw that.

Megan Coval: Oh right.

Allie Arcese: They were like here's our soundtrack for the conference.

Justin Draeger: Yes. And I think they published it on Twitter and it was called “Corporate Rock.”

Allie Arcese: Oh, that's the title of the playlist?

Justin Draeger: Well I don't know if they just ripped off another playlist because Spotify comes up...

Jill Desjean: Sounds like they did.

Justin Draeger: The idea that I would subscribe, I'm flipping through these pre-identified playlists. Oh, Corporate Rock, yes, definitely sign me up for that one. Maybe we can put FSA's Corporate Rock playlist in our show notes as well, just for people who weren't there could get a feel for their vibe.

Allie Arcese: Some new outro music.

Justin Draeger: Yeah, I like that idea. Let's do that. Speaking of FSA, it's wrapping up here in the next day, but we do have some impressions of things that have already happened. Secretary DeVos came. I think she's come to every FSA, hasn't she? Every one.

Allie Arcese: I would hope so.

Justin Draeger: Oh no I don't... The former secretary's in the Obama administration did not attend FSA.

Megan Coval: Maybe once.

Allie Arcese: No?

Justin Draeger: Once. Yes. I can't speak for Secretary King. I know Arnie Duncan was not there every year.

Allie Arcese: Interesting.

Justin Draeger: Yeah, she's been there every year.

Allie Arcese: I will say, I never paid as close attention to the FSA conference until last year probably.

Justin Draeger: Why?

Allie Arcese: We didn't use to cover it as heavily.

Justin Draeger: I feel it didn't use to be... Well, first of all, we used to have two conferences, people forget that, but there used to be two conferences. Then, they had one conference that was the training conference and another one where it was electronic something conference. There was a big overlap between the two of them.

Jill Desjean: An electronic access conference.

Justin Draeger: That's right.

Jill Desjean: I remember those.

Justin Draeger: Yes.

Jill Desjean: We used to have a separate direct loan conference too.

Justin Draeger: Yeah, they all consolidated into this massive behemoth. The secretary did not use to come to these regularly, but Secretary DeVos has been there every year, we've met with her, the NASFAA board has met with her at several of those.

This year, she came and it was being billed as groundbreaking, I think was what POLITICO put out.

Allie Arcese: Right.

Justin Draeger: So was it groundbreaking?

Allie Arcese: That was actually the press release that the Education Department put out ahead of time saying, that she was going to deliver a groundbreaking opening address during the opening general session at FSA. There were some big announcements, I don't know if I would say groundbreaking, but definitely big announcements. We had an article in Today's News, that Joelle wrote earlier this week, that shared some of those updates, including she put out the idea that maybe FSA should be a stand-alone agency. Some other technical updates were Aiden the ChatBot, that FSA is rolling out, like a virtual financial aid administrator and an online portal for financial aid administrators that would be pretty revamped, but I think...

Justin Draeger: And consolidated.

Allie Arcese: And consolidated.

Justin Draeger: The idea of getting to one login thing, or at least one portal for everything.

Allie Arcese: When Secretary DeVos announced Aiden the ChatBot, she said that... This whole modernizing and streamlining of FSAs services has been known as the “next generation financial services environment” or NextGen. So, she said, this year NextGen is NowGen.

Justin Draeger: NowGen? All right. Aiden's not live, right? We can't go use Aiden?

Megan Coval: I think it's being... No, it's not live. It's being beta tested I think.

Justin Draeger: Okay, it'll be out soon.

Megan Coval: It took me an embarrassingly long time to realize the meaning of that name. Did everyone else pick up on it right away?

Allie Arcese: A-I-D.

Justin Draeger: Oh, Aid?

Allie Arcese: Aiden.

Megan Coval: Just yesterday, I was reading it again. I was like, oh!

Justin Draeger: No, I didn't get it.

Allie Arcese: At first you were like, interesting name. Why is it not just Bob?

Justin Draeger: It was Kebab. So ask Aiden. Let's go back to the thing you said Allie, about the stand-alone agency. We have a clip here of the secretary talking about that.

Secretary Devos: “We should be discussing whether FSA would be stronger as a stand-alone entity, wholly and entirely separate from the U.S. Department of Education. We should be talking about the benefits of professional experienced leadership, who – as in the private sector – would be responsible for setting strategy for FSA, for overseeing the management of the loan portfolio, for ensuring institutions hold up their end of the bargain, and for reporting to Congress. To be clear, I don't think such an agency should look like another CFPB, nor should it be a return to FEL and it would not report to the Secretary of Education.”

Justin Draeger: Did she expand on that at all? We know what she doesn't want it to be, but what would it be?

Allie Arcese: I found that particular sentence to be a little confusing. The CFPB part makes sense, but adding FEL in there threw me.

Justin Draeger: I will say that for the people that are constantly like, is FEL coming back? I do appreciate that she just said up front like not FEL.

Allie Arcese: Yeah, but FEL's not an agency.

Justin Draeger: I understand that, you're right, it's not an agency in that context that makes no sense. The fact that she was like...

Allie Arcese: It's not coming back.

Justin Draeger: I didn't want to have to answer questions this week from people like, is FEL coming back? No, it's not coming back. But not the CFPB. I have no particular insight into that statement except that Republicans have historically hated the CFPB because they feel like...

Allie Arcese: They feel like it's too political.

Justin Draeger: Yeah, it has no accountability, it's not accountable to Congress, in terms of, they don't confirm the CFPB director, do they? I think it's appointed, and that was the big thing. It was this tsar that now became... But it's also not a cabinet level position, the CFPB director is not in line for the presidency or anything. They feel like it's running amuck, it can do what it can investigate, it has all these powers, but there's no congressional oversight.

Allie Arcese: I think that's what Secretary DeVos was getting at with FSA because she said it's not serving students the way that it should and its more serving politicians.

Justin Draeger: From our standpoint, we're one of the few organizations, to my knowledge the first, that did a complete overview and comparison of FSA as a PBO to other performance based organizations. Megan, you want to summarize our report on that?

Megan Coval: Yeah, we did this report in 2017 and basically found that compared to other performance-based organizations within the federal government, that FSA really wasn't keeping up their end of the deal in terms of what they needed to do to be in good-standing as a PBO. The example that we brought out is, they weren't regularly publishing a strategic plan, not as often as they should be, but also not getting stakeholder engagement either, not getting general feedback from stakeholders on other things, not issuing annual reports, not going through a proper process for raises. That was a big piece of it, there had to be different sign offs on bonuses and things like that, there was no proof of improved performance and still big bonuses were getting paid out. So, finding that it was really running amuck.

Justin Draeger: Yeah, performance based organizations get these private sector flexibilities that don't exist in other federal agencies. But in the private sector, we all report to boards of directors, and those boards determine, are you doing a good job or not? I have to go to the NASFAA board on an ongoing basis, and report out on our metrics and whether we're meeting our mission, and my employment is contingent on that. That structure didn't seem to exist in any real way at FSA. In our report we said, it should continue as a PBA but it just needs some updates to it.

Megan Coval: Oversight.

Allie Arcese: Restructuring.

Justin Draeger: With a board.

Megan Coval: Yeah, with a board. That was our main recommendation that there... Not dismantle, not make its own agency and that was a little bit confusing in their remarks because our report was cited as this was a recommendation. I think we just want to make clear...

Justin Draeger: Which she was really... She had cited that we found problems with their structure and that's absolutely true. We were silent, we didn't say it should or shouldn't be a stand-alone agency.

Megan Coval: Yeah.

Justin Draeger: We were just saying governance wise, there are changes that need to be made.

Megan Coval: Yeah, and a board where you have appointed members from both the house and Senate, Republicans and Democrats, to sign off on the COO, secretary can

still pick the COO, but sign off on it. That is actually typical and standard for the other PBOs that exist right now. We really aren't even talking about something major here, just bringing it up to snuff.

Justin Draeger: FSA was the first PBO, so maybe lessons learned. The other PBO in the federal government, they've inserted some things that do have a little bit more accountability, like a board and oversight function.

Allie Arcese: But didn't go back and make those adjustments.

Justin Draeger: Right. But FSA has never been updated. If the secretary is going down this road, and I said this in the Washington Post article that was published the next day, here, here, we want to have that conversation. Where this really broke loose for us was gainful employment and leaving aside the policy of gainful employment, the way that it was implemented so heavy handed, is what led us down the road of, this feels like operations, which is what the secretary appointed to FSA is supposed to be operations, not policy. That was her point about it, reports to these political entities and congressional wins. Our point was, this is an operations organization run amuck into policy and that's what led us to... And since then, New America, I think it's New America, right? Didn't they come out with their own report?

Megan Coval: New America and CAP, I think, were together. Finding similar...

Justin Draeger: Similar issues.

Megan Coval: Yeah, similar issues.

Justin Draeger: The other general session, on day one, was by General Mark Brown, who's the now the chief operating officer at FSA and we have a clip of him speaking.

Mark Brown: No matter how far you travel, I want to thank you for making the journey to be here. I want to invite you to make another journey, one with me and Federal Student Aid, as equal partners.

Justin Draeger: General Brown has been on the job for several months now, and before he was chief operating officer, he was also providing some strategic advice and consulting to FSA. Very welcome comments. We've talked for a long time as a profession about FSA, this dual role they play, of oversight and partnering, and it feels, for a lot of years, we were tilted far to one side, which that side being oversight. It's awfully hard to have a partnership with an organization that feels like it's constantly castigating you or sending letters to your presidents, telling them how terrible of a job you're doing. That relationship has definitely shifted in the last couple of years and General Brown's remarks were very well welcomed by the attendees.

Justin Draeger: A personal observation is, we've met with General Brown, the things that he's saying publicly are the things he's also saying privately. Which is we want your input, we want to be around, we want to be involved, we want to support the schools. That rhetoric is a very welcome change in FSA in the last couple of years and we look forward to working with them. Speaking of the report that we did that talked about governance issues at FSA, the other issue we dug into was verification transparency and they had a whole general session it looks like on verification and then maybe some breakout sessions. Jill, you want to catch us up there?

Jill Desjean: Sure, we learned that for 2019-20, ED selected 900,000 fewer applications for verification than they did in 2018-19, which by itself doesn't tell you a heck of a lot because you don't know how many FAFSAs there were filed or who was selected versus not, as far as student populations, demographics, things like that. I'm guessing that there are roughly 19 million FAFSAs that get filed every year. A 30% rate would be about 5.7 million, 900,000 less would be about 4.8 million, which would be a 25% selection rate. That actually seems in line with other information Needes put out recently. Every three years, they put out this information collection request in the federal register, which re-estimates the verification burden and they said there, that their goal was to select 25% of applications for verification, which is down from about 30 that they've been using in the past.

Jill Desjean: The skeptic would ask which student populations are affected there. We know that Pell Grant students are the most likely to get selected because they pose the most risk to taxpayers. We have some evidence from membership surveys that a lot of EFCs don't change at all after verification, especially among the low EFC ranges, who are those Pell recipients, they really don't budge after verification. A lot of verification efforts seems to be going in and not producing a lot of results. We don't really know much from that 900,000 people decrease in selection, who they are and how much that's really going to improve program integrity.

Jill Desjean: It is still fewer.

Justin Draeger: Right. It would probably be fair to say that this is a great first step, especially coming off of a year or two ago when verifications were skyrocketing and were above 30%. By the end of the year, we got to 30% but at the beginning of the year...

Jill Desjean: On average.

Justin Draeger: On average. We'll come back to the average piece in a second. The way that they described it, during the session, was that this is all because of machine learning, and he described it as... Ed Pacchetti, over at the Department, was giving the session, along with some colleagues, and he had described it as like Watson, the IBM computer that will eventually rule all of our lives. He was saying it, so your point, Jill, about these people whose EFCs never change, but

we keep selecting them, that it's through this machine learning, apparently, they can do much more sophisticated analysis to try to determine who to verify because they're the most likely to change. Instead of, this blanket thing like, let's just do 30% of all grant recipients because grants are the thing we're worried about. Which is a really blunt and ugly way to try to do verification work.

Justin Draeger: They're always touchy about sharing verification data because they're afraid people are going to game the system. It does appear that we're moving in the right direction, so I guess we'll see in future years. Going back to the averages thing, it was during an open forum or Q&A, where we had some aid administrators that were not buying into the idea that verifications were decreasing all that much.

Jill Desjean: We've learned from serving our members, that even if we averaged out their responses, 30%ish, you would see a certain college with rates of 70% and some with rates of 10%, depending on the populations they serve.

Jill Desjean: Typically the community colleges are the ones that are serving high numbers of Pell Grant recipients, and they're the ones that are really heavily burdened by verification without the 30% cap that used to be in place, where they could only verify 30% of their population and then be done with that. Not only are those low-income students being burdened, but the low resourced institutions are also being burdened by all that extra work. I'll paraphrase, but one of our community college members said that, you could have a foot in hell and a foot on an iceberg and on the average you would be okay. That says it nicely.

Justin Draeger: Right.

Jill Desjean: Great for you guys.

Justin Draeger: You'd be dying either way, but on average, the fire and the ice offset each other. That was Jones Anders, by the way, from Northern Virginia Community College.

Justin Draeger: Kudos to Joan for saying it so perfectly. We've asked the Department to either privately, with a group of people share their verification distribution numbers, or even publicly, just put them out in some way that doesn't disclose, in any way, how people could gain the system. But try to tell us what are the verification rates amongst different sectors. The reason why this is important is because when we changed verification regulations through negotiated rule making, now years ago, schools used to have a cap that they would say, if my verification rates ever exceed 30%, I don't have to do any more verifications, and that cap was lifted because the Department had promised that they would be able to bring verification rates down through machine learning. That was within the decade, but it didn't happen as quickly as everybody had been led to believe that it would happen.

Justin Draeger: I'm glad it's happening now, but without those caps in place, it is important to... what are the selection rates across various institutions? Some schools that are the least resources might be doing verification rates of 50%. I don't know if that's actually happening this year.

Jill Desjean: It's all we've heard in the past.

Jill Desjean: Apparently, they also mentioned that 22% is the ideal rate to maximize the benefit at the lowest costs. Maybe the 25 is a happy step toward eventually getting down to 22 which could be nice.

Megan Coval: Have they ever pushed out that ideal rate before too? Because I wondered if that was a new...

Jill Desjean: I haven't heard that before.

Megan Coval: That's them giving a little, to say publicly, okay, 22 is where it's at.

Justin Draeger: Right. I will say, I've heard the 30% on the overall population number for a number of years privately.

Justin Draeger: I don't know that they've said it publicly, but if that 22% is really targeted, then you've got two things. You've got decreased burden on students and then the schools that have to hound them about things and you have better program integrity, that is the definition of efficiency. You're getting something better or as well as, has been done in the past and outcomes with less work upfront.

Justin Draeger: Moving on, we also had a new experiment that was announced at FSA. Now I want to address a conspiracy theory up front here.

Justin Draeger: I don't know, Jill, if you are have been looped in on this, so I tweeted out the day of or the day before FSA like, ‘Hey attention, anybody who's interested in limiting their loan debt should check out this session, because in the description it talked about income share agreements, experimental sites, income share agreement and in there it said something about schools are wanting to limit loan debt.’ So, I just flagged it for schools that might miss it, then people were like, ‘This isn't in the printed program. This was added late.’ I'm like, ‘I'm pretty sure this has been online for weeks, this was not added the day before, I saw that in there a while ago.’ I just wanted to say it, I'm all for good conspiracy theories, I'm just not sure there's one here. I did see this session before and I don't know whatever about the printed program. Jill, can you catch us up on this session?

Jill Desjean: So, ED is proposing this new experiment on income share agreements, which would essentially lend direct loans to students as they are now.

Jill Desjean: But the student would immediately sign their loan over to the institution, who could then convert it into an income share agreement, so that the student could repay their loans according... Not loans... The financial instrument, that is the shared agreement.

Justin Draeger: It's not a debt, it's a contract. In practice, there's no difference because you have to pay something.

Jill Desjean: Right, it's still a monthly obligation for a significant time.

Justin Draeger: But for lawyers, it makes a big difference. One's a contract, one's a debt.

Jill Desjean: Yeah, they would pay back the institution. So the institution would be assuming some risk because the institution now owns the students loans they borrowed from the federal government, they have to pay those back no matter what. If they don't get the money back from the student, obviously they've taken on that risk.

Justin Draeger: Bridge a divide for me, one of the challenges that institutions are having here is how does that allow a school to then limit the debt? Technically, the student can still take out as much as they want in a loan.

Jill Desjean: Exactly.

Justin Draeger: If they just want one repayment, if they want one contract, as opposed to several, like a debt and a contract, then it's easier because the school can then say, only take out this much... we will only use your federal loan for this much in an income share contract. Maybe.

Jill Desjean: Maybe? Not even getting involved in the conversation about a private loan, that they could take on top of that and have separate payments. It's pretty confusing. There are a lot of questions in the session, a lot of really good questions, that one of our colleagues shared with us. I have a lot of questions too. I don't know how much students see it as a different thing, like you said to a lawyer, it's a different thing. From a student's point of view, it's like, you have to pay X dollars a month for X number of years. The fact that there isn't a principal balance is... I don't know.

Justin Draeger: Probably moot, unless you're maybe a business student. The other piece about the limiting debt, there are a lot of schools that are interested in this and the Department started an experiment, several years ago, about giving schools the authority to limit the extra $2,000 in unsub. I don't know if they ever got enough schools to participate that they could actually draw any conclusions from that experiment. But our critique of that experiment up front was it's too narrow. How would you get, quote unquote, ‘successful’ results out of that. Schools need more authority to... requiring certain counseling or limiting debt at a prorated amount for part-time students, or for students in a certain program, or

for all students at their institution. Same thing that was found in the Republican Prosper Act and the department didn't go that route.

Justin Draeger: I wonder, with this new experiment, if they could limit the extra $2,000, why couldn't you with an experimental site leaving aside the income share agreement, just do a debt limitation experiment. Even if it was just for part time students or just for students in certain programs. I understand why we don't want to get into limiting debt because it starts to appear like there are red lining concerns. But if you could give schools broad authority to limit debt for unprotected groups of students, I don't understand why that experiment couldn't happen in some way. The other thing with the income share agreements, the other critiques I've heard, are largely from consumer groups that feel like there just aren't the same consumer protections with income share agreements. In the session that the Department proposed, they're saying that schools would have to still allow deferments and forbearances, those things would still exist with the income share agreements. Right?

Jill Desjean: Those would still exist, yeah. They have some vague and no unreasonable repayment terms. I get what they're going for, but...

Justin Draeger: We don't want usury.

Jill Desjean: It might be nice to see something a little bit more clear cut, so that you could know that it wasn't unreasonable because what's reasonable to one person may not be.

Megan Coval: I was going to say in the protections pieces, and where the Hill gets interested, in the politics piece of it comes into play, we've seen Senator Warren, and I'm forgetting, a couple of senators, who have come out and sent letters, concerned over the rise of income share agreements and protections. There's that angle at work here too.

Justin Draeger: Yeah, I saw there was one economist and I'm sorry, I can't remember who it was, but it was a couple of weeks ago, where they were talking about... She was saying the onus is really on the creator of the new financial instrument to prove that it is useful and or better than the existing financial instruments, it's not the other way around. Right now, it feels like the discussion on income share agreements is, this is a fantastic new tool. If you're a naysayer, it feels like you're on this opposing obstinate view. And what she's saying, if we've learned anything from the financial crisis, where we had a bunch of subprime lending happening and securitization of subprime mortgages was supposed to be this great tool. She's like, if we've learned anything, it should be when there's a new financial tool, the onus should be on the new tool to prove that it's useful.

Jill Desjean: That’s a great point.

Justin Draeger: Caution is warranted, and we've had a lot of conversations with schools that are doing income share agreements, and I do believe they can be done responsibly for certain populations. I'm definitely pro-private sector solutions, but I think the idea of a federal income share agreement is stoking a lot of questions.

Jill Desjean: They were clear that it's not a federal income share agreement.

Justin Draeger: Well, correct.

Jill Desjean: It's a federal loan that they're giving institutions to make an institutional income share agreement.

Justin Draeger: Thank you.

Jill Desjean: You're welcome.

Justin Draeger: You work for the Department. No, that's right because it's actually the school taking on the debt and the contract is with the school, not with the feds.

Megan Coval: Right, this is, forgive this elementary question, I should have asked up front, this is happening, or this is still the feelers?

Jill Desjean: I feel like it still...

Justin Draeger: My impression is that it is happening but is a work-in-progress and they do not have the experiment completely spelled out yet. Do you have a different take?

Jill Desjean: They have in the description this proposed experiment. I assume that means, yeah...

Justin Draeger: Work in progress.

Jill Desjean: Work in progress.

Justin Draeger: Other big thing happening this week, at the same time as FSA, always seems like there's big congressional action around FSA.

Allie Arcese: Or our conference.

Justin Draeger: Yeah, that's true. But we don't have as many people at FSA, as we do at our conference. This was being managed by Megan and the policy team here, you want to catch us up?

Megan Coval: This is hot off the presses, just yesterday morning. Thursday morning, the Senate passed unanimously, which doesn't happen a whole lot here in DC, a student aid related bill that would do two things. First, it would provide permanent funding for minority-serving institutions. Second, it would allow for

direct data sharing between the IRS and the Department of Education. So these two things were packaged together, you might remember, it definitely feels like deja-vu to us here because it was exactly this time last year, the first iteration of the data sharing piece of the bill was the FAFSA Act, which we talked a lot about last year. We wrote about this in Today's News, but the big thing here again, direct data sharing between ED and the IRS, this will help with simplifying the FAFSA, it will help with enrollment in and recertifying income driven plan.

Megan Coval: Really great news for students. That bill never went anywhere last year, it was passed in the Senate but couldn't make it through the House. Basically, we're in that same position today. The interesting thing about the way this all moved is that, Congress has been looking for funding for minority-serving institutions and has needed to fund them, it's overdue at this point. Earlier this fall, there was a proposed bill, the FUTURE Act that would have temporarily funded them for two years, that passed out of the House and the Senate shot it down.

Allie Arcese: Right, that made a lot of news because it was actually Senator Alexander, who was holding it up, saying he wanted to address it in a full HEA reauthorization. Am I remembering that correctly?

Justin Draeger: Yeah, you're right. They kept bringing it to the Senate floor and Senator Alexander kept showing up and shooting it down and people were like, well, we'll push it through. And we were saying, well, we remember this with Perkins, the Senator Alexander kept showing up and just objecting and in the Senate you can do that. I was convinced that if Senator Alexander was not on board with the House FUTURE act, it was not going to happen. He was not on board, he would object until the cows come home. Clearly it needed some changes before it would be signed off on.

Megan Coval: The interesting thing here, I never would have thought of pairing these two things together, I don't know about you guys. But a few months ago, a GAO report came out finding that there was potential fraud and the income-driven programs. So, what got the wheels of the Senators who were leading this spinning is that, they then went to CBO to have scored what would the savings be if we share data directly with the IRS, therefore it was verifiable data. It came out to be about $2.8 billion and all of a sudden you look at that number, and you think, well that looks a lot like what we could permanently fund MSIs for. That's why they're being packaged together. Again, the big difference is this funding would be mandatory and not just two years as well. Now it goes to the House and that's where the big question are.

Justin Draeger: There was an article in Inside Higher Ed, this morning, about this. The point that I was trying to make in the article was that, it's just more complicated in the House because we have jurisdictional issues. This seems like an education issue, but it's going to intersect with ways and means, which oversees our tax code. The challenge that we'll have there is that, tax data, even before President Trump's tax transcripts, which became a political hot potato, and before people tried to steal them through the IRS data retrieval process... The tax data is

viewed by Congress as taxpayer assets. It's a tax payer, it's not owned by the federal government. They're very cautious about who can have access to it. It's your data, that's the point they're making.

Justin Draeger: You think about all the entities that want taxpayer data, it would be all sorts of federal agencies including Justice Department, law enforcement, FBI. They're very cautious about opening up the tax code. That said, when you just look at the sheer number of FAFSAs that are filed every year and the sheer number of people that would be positively affected by this data share between the Department of Education for loan and FAFSA purposes, I think it's awfully hard to make the argument that we shouldn't open this up because so many Americans are going to be affected by this, in terms of the loan debt and the FAFSA piece alone. We're pushing for full support and we hope this gets passed quickly. HBCUs, minority-serving institutions, Hispanic-serving institutions, they have not been funded since September 30, and while they have funds to get them by now, this is starting to come to a critical head. These two things joined together, bipartisan support in the Senate, we need the House to act.

Megan Coval: To that point, I would say, stay tuned because we don't get to do this too often, but we are actually having an opportunity to really get our members, all of you, engaged in a real way here. We're going to be launching an advocacy campaign around this, so we'll talk more about that probably in the coming weeks, but we're going to need help to make noise.

Allie Arcese: In the meantime, we have a summary article on the whole bill, the amended bill, as well as, a statement of support that we pushed out after it passed out of the Senate. We'll link to those in the notes.

Justin Draeger: Fantastic. So people keep your eyes and ears open for that. I also want to plug, we have a policy webinar December 17th, two o'clock eastern, folks can tune in there, we'll be on line answering questions, giving some federal updates, where we'll dig into a little bit more of what's happening with these bills and how members can get involved. Yes?

Allie Arcese: And that's actually right after, we're also having a Facebook live Q&A, for Blue Icon the same day, at one o'clock, so immediately before the webinar.

Justin Draeger: Great, people can spend their afternoon virtually with NASFAA.

Allie Arcese: What better way to spend it?

Justin Draeger: That's right. All right, do we have a listener question as we get into this holiday season?

Allie Arcese: We do.

Justin Draeger: What do we got?

Allie Arcese: So, seems sort of mixed reactions, I don't know if you could even say mixed, maybe more negative reactions to Reno.

Justin Draeger: Yeah, I was going to say, where's the other side?

Allie Arcese: Reno being the location.

Justin Draeger: People are not thrilled with Reno. We have members in Reno, I love you Reno.

Megan Coval: It's getting there...

Allie Arcese: It's incredibly difficult to get to. When I was looking into going to FSA this year, the shortest, total travel time I saw was 11 hours.

Justin Draeger: It was a little rough.

Allie Arcese: Yeah, I will stay here.

Justin Draeger: And then a blizzard blew through the Sierra Nevada.

Allie Arcese: Some people, it took them 24 hours to get there.

Megan Coval: And someone was saying their ticket was $800, which you could go to Hawaii for that.

Allie Arcese: Yes, it was very expensive, very long travel. But anyway, the listener question is what would be your ideal location for the FSA conference?

Justin Draeger: D.C.

Allie Arcese: They swap East Coast, West Coast every year, right?

Justin Draeger: I don't know what they're doing anymore. I think they were trying to do that.

Allie Arcese: Last year was in Atlanta.

Jill Desjean: They used to do like Atlanta, Vegas, Atlanta, Vegas.

Justin Draeger: And Orlando.

Jill Desjean: Oh right, yeah, I don't know if they do.

Justin Draeger: I think they're going back to Atlanta next year.

Allie Arcese: It is Atlanta next year.

Jill Desjean: Right.

Justin Draeger: I'm all for Atlanta. Just in terms of airport operations.

Jill Desjean: It’s so easy, it's got an actual airport.

Allie Arcese: Well, considering that it's in the winter, you have to take that into account.

Justin Draeger: We have the opposite problem because people are always like, we do our conference locations and people are like, how would you choose insert city in June? And I'm like, find me. Where are we going in June where it's cool. The Pacific Northwest?

Jill Desjean: Burlington, Vermont.

Justin Draeger: Is it cool in June? Isn't everywhere hot in June?

Jill Desjean: They got a nice light breeze.

Allie Arcese: Northeast on the coast.

Justin Draeger: Like Maine? NASFAA 2030, Portland, Maine.

Jill Desjean: Portland, Maine.

Justin Draeger: Don't write that down. San Diego, obviously, it was just...

Megan Coval: I really enjoyed our conference in Austin, so I would throw that out there for FSA.

Justin Draeger: It was hot. But Austin...

Allie Arcese: It was a really cool city.

Justin Draeger: You're right. Austin, they need a convention center.

Allie Arcese: We had one, a convention center.

Justin Draeger: Did we have one? Dude, I don't... All these conferences are all one big conference in my mind. Seriously. Me and endless hallways, that's all I'm...

Allie Arcese: What you're saying is they need to rebuild the conference center that we had at our conference at.

Justin Draeger: The only conference center I ever remember is the San Diego one because it was right on the water and it was gorgeous and it was all glass. The rest of the conferences to me just blend together.

Allie Arcese: We should go there every year.

Justin Draeger: Can you talk them down in their pricing though?

Allie Arcese: Sure.

Justin Draeger: Okay, so we want people to tell us what would be your ideal place for an FSA conference? Okay. Thanks for joining us for another edition of “Off The Cuff.” Remember to subscribe, tell a friend, check out the links in the show notes, follow us on Spotify and see you again next week.