Bills, Laws, Regulations, and Prosperity - OH MY!

by Emily Haynam, Assistant Director of Compliance, The Ohio State University

In light of the Promoting Real Opportunity, Success, and Prosperity through Education Reform Act (PROSPER Act) being introduced in the House of Representatives as the first step in the Higher Education Act reauthorization process, I thought it would be a good time to revisit our civics-class roots and get a refresher on how a bill becomes a law, and why it’s important to us as financial aid professionals.

♪♫♬“I’m just a bill. Yes, I’m only a bill, and I’m sitting here on Capitol Hill… But I know I will be a law someday, at least I hope and pray that I will, but today I am still just a bill…  ” ♪♫♬

I’m guessing some of you over the age of 30, may have watched the Schoolhouse Rock video in a social studies class growing up on how a bill becomes a law.  For all the young’uns out there, here is the video for some fun 70’s cartoon viewing:

Click HERE.   

(PLUG: Additional SNL bonus spoof video at the end!)

We work in a highly regulated field.  We hear folks talk about Title IV this, and federal regulations that… The handbook says… the CFR indicates… Higher Education Act states… It can get confusing fast trying to keep track of all the laws and/or regulations.   For purposes of what we will talk about below, we are focused on the federal process, as states and local governments comes in separate processes.   Just a reminder, though, that the U. S. Constitution and the laws of the United States are the “supreme law of the land”.  State and local laws cannot break federal law – but that is another conversation for another day.  Here we are going to focus on the federal laws and materials financial aid professionals need to know about.

Did you know the Federal Student Aid (FSA) Handbook is not actually the written law?  It’s actually an interpretation of the regulations that were made by the Department of Education to carry out the law.  Sound confusing?  Let’s break it down.  

Law & Order

A federal law is a product of a written statute that is passed by the U.S. Congress.  Legislator(s) create a bill (I’m just a bill♬) that, when passed by a vote of Congress and signed by the President, becomes a statutory law or also referred to as a statute.  Popular examples of laws are the Fair Labor Standards Act (as known as FLSA), the Securities and Exchange Act of 1934, and of course the Higher Education Act of 1965 (HEA).   

The HEA is a law that was originally intended to strengthen the educational resources of our colleges and universities and to provide financial assistance for students in postsecondary and higher education.  The financial assistance for students is covered in Title IV of the HEA, hence where we get this popular reference.   Reauthorization Congress is required of HEA, and it has been reauthorized nine times in total (typically every four to six years).  The ninth reauthorization, however, took 10 years and was completed in 2008.  The tenth reauthorization was scheduled for 2014, but is now several years overdue.  This is where the PROSPER Act comes in.  The PROSPER Act is a House of Representatives bill (H.R. 4508) that is a comprehensive revision to the HEA reauthorization which includes a wide-ranging re-write of legislation.  Areas covered in the bill touch every aspect of higher education – Title IX, Hazing, Voter Registration Forms, Federal Student Aid, etc.   The PROSPER Act is far from complete, and much debate and revisions are expected before a final bill is put to Congress for a vote.  However, as financial aid professionals, since this new law would directly impact federal student aid programs, we need to be paying attention and advocating as appropriate.

So where do the laws go if they are passed?  Laws are written down in an organized manner or “codified” in the United States Code.  This compilation is organized by the U.S. Government Publishing Office (GPO) and was first published in 1926, edited in 1934, with additional editions edited and published every six years since.  Between editions, supplemental materials are added and published in order to keep it current.  Keep in mind the United States Code does not contain state or local laws, or regulations issued by executive branch agencies.

Rules and Regulations

Federal regulations are the standards and rules adopted by the executive departments and agencies of the federal government of the United States that govern how laws will be enforced.  That is where the Department of Education or “ED” comes in for us as financial aid professionals.  ED reviews the Title IV section of the HEA and puts forth proposed administrative regulations to execute the law.  They publish proposed regulations in the Federal Register.   All proposals then go through a process that you may have seen announcements about in the daily NASFAA news called “Negotiated rulemaking” which is often commonly referred to as “Reg Neg”.  Whenever ED wants to add, change or adjust a regulation they will send out a public “Notice of Proposed Rulemaking (NPRM)”.  This is where the government agency gives the opportunity for affected groups and individuals to give public feedback and negotiate the terms of the proposed rule.  All of the public comments are then evaluated for inclusion in the final rule.  ED is required by law to use NPRM, unless the Secretary of Education determines that in doing so is impractical, unnecessary, or contrary to the public interest.  The final rule is then published in the Federal Register.

So why do we as financial aid professionals need to know this process?  For one thing, we need to be proactive in knowing what laws could be passed (e.g., PROSPER Act) that would impact federal student aid regulations.  Then we need to be aware of what changes or new regulations are being proposed by ED and have a voice in the reg neg process that behooves our students and university.   Further, we need to know where to look for answers to ensure we are in compliance. 

Are we done yet…?  Not quite.  From the Federal Register, rules are then codified (or organized in writing) in the Code of Federal Regulations (CFR).  The FSA Handbook is an interpretation by ED to help simplify or put the CFR into layman’s terms for us to more easily execute.  However, the CFR is really our bible of information that we have to follow as financial aid professionals.  When questions come up where there is confusion or gray area, we always look to the CFR to try to nail down the right answer.  The section of the CFR that applies to financial aid is in Title 34, Volumes 3 and 4, Chapters VI and VII, Parts 600 – 799.  Proper citation for where our section starts is 34 CFR 600.  It is not at all pretty or easy to read, which is why the FSA Handbook was created.

If you made it all the way through this article than wow! For a fun bonus video, here is a Saturday Night Live spoof of the bill video:  Click HERE.   (Disclaimer: This is not a political statement, but rather just political satire bringing humor toward both political parties. Viewpoints expressed in the video are not shared as representative of mine personally or any other entity..)

Below is a visual of how a bill becomes a law, and where the PROSPER Act currently sits in the process (click on the image to enlarge) …