Performance-based organization for delivery of Federal student financial assistance

(a)

PBO

Section 141 of the Higher Education Act of 1965 (20 U.S.C. 1018) is amended— (1)in subsection (a), by amending paragraph (2) to read as follows:

(2)

Purposes

The purposes of the PBO are as follows: (A)To prioritize students and borrowers in the decisionmaking process of the PBO. (B)To improve service to students and other participants in the Federal student financial assistance programs authorized under title IV. (C)To make such programs more understandable to students and their parents. (D)To increase the efficiency and effectiveness of such programs for students and their parents. (E)To manage the costs of administering such programs. (F)To increase the accountability of the officials responsible for administering the operational aspects of such programs. (G)To increase oversight of institutions, contractors, and third party servicers that participate in the Federal student financial assistance programs authorized under title IV. (H)To provide greater flexibility in the management and administration of such programs. (I)To implement open, common, integrated systems for the delivery of Federal student financial assistance programs authorized under title IV. (J)To develop and maintain a student financial assistance system that contains complete, accurate, and timely data to ensure program integrity. (K)To increase transparency in the operations and outcomes of Federal student financial assistance programs authorized under title IV.

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(2)in subsection (b)— (A)in paragraph (1)— (i)by redesignating subparagraphs (B) and (C) as subparagraphs (C) and (D), respectively; and (ii)by inserting after subparagraph (A) the following:

(B)implement oversight and accountability measures to ensure that the PBO carries out its duties under this section efficiently, effectively, and in a manner that accomplishes the purposes specified in subsection (a)(2);

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(B)in paragraph (2)(A)— (i)by redesignating clauses (ii) through (vi) as clauses (iii) through (vii); (ii)by inserting after clause (i) the following:

(ii)in accordance with paragraph (3), the collection, publication, and sharing of longitudinal data that may be used to evaluate Federal student financial assistance programs authorized under title IV, including the outcomes such programs achieve;

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(iii)in clause (vii), as so redesignated, by inserting , including oversight of institutions, contractors, and third party servicers that participate in such programs after title IV ; (C)by redesignating paragraphs (3) through (6) as paragraphs (4) through (7), respectively; and (D)by inserting after paragraph (2) the following:

(3)

Collection, sharing, and publication of data

(A)

Collection

The PBO shall collect longitudinal data, including student-level data, that shall be used to evaluate Federal student financial assistance programs authorized under title IV. (B)

Sharing with NCES

The PBO shall make the data collected under subparagraph (A) available to the Commissioner of the National Center for Education Statistics for purposes of research and policy analysis. (C)

Sharing with researchers

The Commissioner of the National Center for Education Statistics shall make the data shared under subparagraph (B) available to researchers for vetted research and evaluation purposes. Data made available to researchers under this subparagraph shall not include any data that would reveal personally identifiable information. (D)

Publication

(i)

In general

Not less frequently than once annually, and subject to clause (ii), the PBO shall make the data collected under subparagraph (A) available on a publicly accessible website of the Department of Education in a format that enables members of the public to easily retrieve, sort, and analyze the data. (ii)

Privacy protections

The data made available under clause (i) shall not include— (I)student-level data; or (II)any data that would reveal personally identifiable information about an individual student.

(3)by amending subsection (c) to read as follows:

(c)

Performance plan, report, and briefing

(1)

Performance plan

(A)

In general

Not later than one year after the date of the enactment of the Student Loan Advocacy Act, and not less than once every five years thereafter, the Secretary and Chief Operating Officer shall agree on a performance plan for the PBO for the succeeding 5 years that— (i)establishes measurable quantitative and qualitative goals and objectives for the organization; and (ii)aligns such goals and objectives with the purposes specified in subsection (a)(2). (B)

Consultation

In developing the five-year performance plan and any revision to the plan, the Secretary and the Chief Operating Officer shall consult with students, institutions, Congress, contractors, the Borrower Advocate, student aid experts, including consumer advocacy and research groups, the Director of the Bureau of Consumer Financial Protection, State attorneys general, and other relevant parties. (C)

Revisions

The Secretary and Chief Operating Officer may annually update the plan under paragraph (1) to incorporate the recommendations made pursuant to the consultation required under subparagraph (B) that are accepted by the Secretary and the Chief Operating Officer. (D)

Areas

The plan developed under subparagraph (A) shall address the responsibilities of the PBO in the following areas: (i)Improving service to students and other participants in the Federal student financial assistance programs authorized under title IV, including making those programs more understandable and accessible to students and their parents. (ii)Managing the costs and increasing the efficiency of such programs. (iii)Improving, integrating, and investing in the systems that support such programs. (iv)Developing open, common, and integrated systems for such programs. (v)The collection, publication, and sharing of data on such programs as described in subsection (b)(3). (vi)Improving performance standards and outcomes with respect to institutions, contractors, and third party servicers that act as agents of the Department or as agents of institutions that participate in such programs. (vii)Any other areas identified by the Secretary. (E)

Public availability

Each plan developed under subparagraph (A) shall be made available on a publicly accessible website of the Department of Education. (2)

Annual report

(A)

Report required

Not later than one year after the date of the enactment of the Student Loan Advocacy Act and annually thereafter, the Secretary, acting through the Chief Operating Officer, shall submit to Congress an annual report on the performance of the PBO. (B)

Contents

The annual report shall include the following: (i)An evaluation of the extent to which the PBO met the goals and objectives contained in the five-year performance plan described in paragraph (1) for the preceding year. (ii)A summary of the consultation process under paragraph (1)(B) for the preceding year, including the recommendations that were accepted or denied by the Chief Operating Officer during such year, and the rationale for accepting or denying such recommendations. (iii)An independent financial audit of the expenditures of both the PBO and the programs administered by the PBO. (iv)A summary of the actions taken by the PBO to address— (I)the findings of the audit described in clause (iii); and (II)consumer feedback. (v)Financial and performance requirements applicable to the PBO under— (I)the Chief Financial Officers Act of 1990 (Public Law 101–576); or (II)the Government Performance and Results Act of 1993 (Public Law 103–62). (vi)The results achieved by the PBO during the preceding year and whether such results met the goals specified in the performance plan under paragraph (1). (vii)With respect to the preceding year, the evaluation rating of the performance of the Chief Operating Officer and senior managers under subsections (d)(5) and (e)(2), including the amounts of bonus compensation awarded to the Chief Operating Officer and senior managers. (viii)Recommendations for legislative and regulatory changes to improve service to students and their families, and to improve the efficiency and integrity of Federal student financial assistance programs authorized under title IV. (ix)Financial statements that provide a rationale for appropriately funding the activities of the PBO. (x)A summary of the management and compliance of contractors managed by the PBO in the preceding year, including corrective actions taken by the PBO with respect to such contractors. (xi)A description of how the PBO used the authority under paragraph (5) of subsection (b) for making personnel and procurement decisions in the preceding year, including the number of individuals hired through such authority and the bonuses provided to staff during such year. (xii)A summary of the oversight activities of institutions, contractors, and third party servicers that participate in the Federal student financial assistance programs authorized under title IV including— (I)fines levied on such institutions, contractors, and third party servicers, disaggregated by entity; (II)instances of fraud or misrepresentation by such institutions, contractors, or third party servicers; and (III)violations of provisions in this Act by such institutions, contractors, or third party servicers disaggregated by entity and type of violation. (xiii)A summary of any improvements made with respect to transparency and any new types of data made available in the preceding year. (xiv)A description of the progress made in the preceding year towards the specific measurable organization and individual goals specified in subsection (d)(5)(A). (xv)The report submitted to the Secretary under subsection (f)(7). (xvi)Other such information as the Director of the Office of Management and Budget shall prescribe for performance based organizations. (3)

Consultation with stakeholders

The Chief Operating Officer, in preparing the annual report described in paragraph (2), shall establish appropriate means to consult with students, borrowers, institutions, student aid experts, including consumer advocacy and research groups, the Director of the Bureau of Consumer Financial Protection, and others involved in the delivery and evaluation of student aid under title IV— (A)regarding the degree of satisfaction with the delivery system; and (B)to seek suggestions on means to improve the performance of the delivery system. (4)

Briefing on enforcement of program integrity

The Secretary shall, at the request of the authorizing committees, provide to the authorizing committees a briefing on the steps the Department of Education has taken to ensure— (A)the experiences of students and borrowers are accounted for in decision making; and (B)that contractors, lenders, and guaranty agencies and third party servicers are adhering to the requirements of title IV, the terms of any contract with the Secretary, consumer protection laws, Federal regulations and guidelines, and directives of the PBO. (5)

Coordination with the Director of the Bureau of Consumer Financial Protection

Not later than 180 days after the date of the enactment of the Student Loan Advocacy Act, the Secretary shall enter into a memorandum of understanding with the Private Education Loan Ombudsman in accordance with section 1035(c)(2) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5535(c)(2)).

(4)in subsection (d)— (A)in paragraph (1), by striking management ability and all that follows through the period at the end and inserting management ability, including contractor management, expertise in the Federal student financial assistance programs authorized under title IV, experience with financial systems, and knowledge of consumer financial protection laws, and without regard to political affiliation or activity.; (B)by redesignating paragraphs (2) through (5) as paragraphs (3) through (6); (C)by inserting after paragraph (1) the following:

(2)

Restrictions

(A)

Preservice and in-service restrictions

An individual may not serve as the Chief Operating Officer if such individual— (i)is employed by, or has a financial interest in, an entity that contracts with the PBO; or (ii)was employed by, or had a financial interest in, any such entity in any of the five years preceding the date of the individual’s appointment as the Chief Operating Officer. (B)

Postservice restrictions

An individual who served as the Chief Operating Officer may not accept employment with an entity that contracts with the PBO until a period of five years has elapsed following the date on which such individual’s service as the Chief Operating Officer terminated.

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(D)in paragraph (5), as so redesignated— (i)in subparagraph (A)— (I)by inserting specific before measurable; and (II)by inserting and metrics used to measure progress toward such goals before the period; and (ii)in subparagraph (B), by inserting on the website of the Department before the period; and (E)in paragraph (6), as so redesignated, by amending subparagraph (B) to read as follows:

(B)

Bonus authorized

The Secretary may pay to the Chief Operating Officer a bonus in an amount that does not exceed 50 percent of such annual rate of basic pay. The decision to pay such a bonus, and the amount of the bonus, shall be based solely on the Secretary’s evaluation of the performance of the Chief Operating Officer with respect to the goals set forth in the performance agreement as described in paragraph (5)(A).

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(5)in subsection (e)(2), by striking organization and individual goals and inserting specific, measurable organization and individual goals and the metrics used to measure progress toward such goals. Performance agreements for senior management responsible for procurement shall include metrics that measure ability to oversee contractors.; (6)by amending subsection (f) to read as follows:

(f)

Borrower Advocate

(1)

In general

There is established in the PBO an Office of the Borrower Advocate (referred to in this subsection as the Office). The function of the Office shall be to provide timely assistance to borrowers of loans made, insured, or guaranteed under title IV by performing the duties described in paragraph (6). (2)

Head of Office

There shall be an official known as the Borrower Advocate who shall serve as the head of the Office. The Borrower Advocate shall be appointed by the Secretary from among individuals who have worked closely with the Federal student loan programs authorized under title IV. (3)

Removal

The Borrower Advocate may be removed only by the Secretary who shall communicate the reasons for any such removal to the authorizing committees. (4)

Restrictions

(A)

Preservice and in-service restrictions

An individual may not serve as the Borrower Advocate if such individual— (i)is employed by, or has a financial interest in, an entity that contracts with the PBO; or (ii)was employed by, or had a financial interest in, any such entity in any of the five years preceding the date of the individual’s appointment as the Borrower Advocate. (B)

Postservice restrictions

An individual who served as the Borrower Advocate may not accept employment with an entity that contracts with the PBO until a period of five years has elapsed following the date on which such individual’s service as the Borrower Advocate terminated. (5)

Staff

The Office shall be staffed sufficiently to carry out the responsibilities of the Office under this subsection. (6)

Duties of the Borrower Advocate

The Office of the Borrower Advocate shall— (A)assist borrowers of loans made, insured, or guaranteed under title IV in resolving problems with the PBO and its contractors or other agents, including by— (i)receiving and reviewing complaints of such problems from borrowers; (ii)working to resolve such complaints in a manner that is in the best interests of borrowers; and (iii)transmitting such complaints to States and recognized accrediting agencies or associations, as appropriate; (B)attempt to resolve complaints within the Department of Education and with institutions of higher education, lenders, guaranty agencies, loan servicers, and other participants in the Federal student loan programs authorized under title IV in a manner that will improve the experience of the borrower; (C)compile and analyze data on borrower complaints and share such data with the Director of the Bureau of Consumer Financial Protection; (D)publish, with any personally identifiable information redacted, such complaints and responses of the Secretary to such complaints on the website of the Department; and (E)make appropriate recommendations to Congress, the Chief Operating Officer, and Secretary with respect to Federal student loan programs authorized under title IV and the experiences of borrowers in repayment of loans under such programs. (7)

Public information

The Chief Operating Officer shall establish and maintain a public page on the website of the Department of Education exclusively to provide members of the public with information about the role of the PBO with respect to the oversight of institutions of higher education, lenders, guaranty agencies, contractors that contract with the PBO, subcontractors of such contractors, and third party servicers. (8)

Report

On an annual basis, the Borrower Advocate shall submit to the Chief Operating Officer a report on the activities of the Office during the preceding year that— (A)identifies the activities carried out by the Borrower Advocate; (B)summarizes the complaints received from borrowers, including the number of such complaints, and explains the activities undertaken by the PBO to address such complaints; (C)proposes changes in the administrative practices of the PBO to mitigate problems experienced by borrowers; and (D)identifies potential legislative changes which may be appropriate to mitigate such problems.

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(7)by redesignating subsection (i) as subsection (j); and (8)by inserting after subsection (h) the following:

(i)

Third party servicer defined

In this section, the term third party servicer has the meaning given that term in section 481(c).

(b)

Definition of third-Party servicer

Section 481(c) of the Higher Education Act of 1965 (20 U.S.C. 1088(c)) is amended— (1)in the matter preceding paragraph (1), by striking contract and inserting contract or other agreement, including a revenue sharing arrangement,; and (2)in paragraph (1), by striking , through either manual or automated processing, any aspect of such institution's student assistance programs and inserting services on behalf of the institution receiving student assistance funds . (c)

Conforming amendments

(1)Section 433(b)(13) of the Higher Education Act of 1965 (20 U.S.C. 1083(b)(13)) is amended by striking Student Loan Ombudsman and inserting Borrower Advocate. (2)Section 433(e)(3)(E) of the Higher Education Act of 1965 (20 U.S.C. 1083(e)(3)(E)) is amended by striking Student Loan Ombudsman and inserting Borrower Advocate.