May 25, 2010

Federal Perkins Loan Program

Proposed Rule
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Additional details
Agency
Department of Education
Regulatory Identification Number
1840-AC94
Agency Name
Department of Education
Rule Publication Date
07/01/2008

RULE SUMMARY

The Secretary proposes to amend the Federal Perkins Loan (Perkins Loan) Program, Federal Family Education Loan (FFEL) Program, and William D. Ford Federal Direct Loan (Direct Loan) Program regulations. These proposed regulations are needed to implement provisions of the Higher Education Act of 1965 (HEA), as amended by the College Cost Reduction and Access Act of 2007 (CCRAA).

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion Score

Openness

1. How easily were the RIA , the proposed rule, and any supplementary materials found online?
A search on "Federal Perkins Loan proposed rule 2008" turns up a link to the NPRM via the department's "news" page. The RIA is in the NPRM. The proposed rule is also available via regulations.gov. There are no obvious, intuitive links that get the reader to the NPRM from the department's home page.
5/5
2. How verifiable are the data used in the analysis?
The analysis calculates some costs to the government, but it's not clear where the data came from. The analysis lists a variety of data sources but does not say which data came from where.
2/5
3. How verifiable are the models and assumptions used in the analysis?
The principal model used for calculating cost to federal government is OMB's credit subsidy calculator. This is presumably available to someone who knows where to look for it. No other behavioral models are used to estimate effects.
2/5
4. Was the analysis comprehensible to an informed layperson?
It is impossible to determine what the regulation does or what its effects will be solely from reading the regulatory analysis section.
1/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
0/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
The analysis and NPRM simply say the proposed rule implements a variety of statutory changes with no explanation of rationale. Grant recipients will receive transfers.
1/5
Does the analysis identify how these outcomes are to be measured?
The analysis does not address this topic.
0/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
The analysis does not address this topic.
0/5
Does the analysis present credible empirical support for the theory?
The analysis does not address this topic.
0/5
Does the analysis adequately assess uncertainty about the outcomes?
The analysis does not address this topic.
0/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?
0/5
Does the analysis identify a market failure or other systemic problem?
It does not explain why the changes are undertaken or what they are supposed to accomplish other than implementation of the law.
1/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?
The analysis does not address this topic.
0/5
Does the analysis present credible empirical support for the theory?
The analysis does not address this topic.
0/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
The analysis does not address this topic.
0/5
7. How well does the analysis assess the effectiveness of alternative approaches?
1/5
Does the analysis enumerate other alternatives to address the problem?
No fundamental alternatives to the rule itself are provided.
1/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?
A few small tweaks were considered. The RIA addresses alternative definitions or individual policy issues within the rule but no actual alternatives to the rule itself.
1/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
Outcome(s) are never defined, but sometimes inefficiencies are discussed.
1/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future?
The analysis asserts that the baseline is the state of affairs before the statute changed, but there is little elaboration or explanation.
1/5
8. How well does the analysis assess costs and benefits?
1/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
The anlysis calculates subsidy costs of the option chosen and, in a few cases, of alternative tweaks.
2/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
The analysis appears to estimate federal expenditures attributable to different portions of the rule. There's no discussion of whether these federal changes will drive changes in expenditures by colleges, students, or others.
3/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
The analysis does not address this topic.
0/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
It appears that the analysis gives little consideration to possible changes in human behavior, unless some assumptions are buried in the underlying data: "Absent evidence on the impact of these regulations on student behavior, budget cost estimates were based on behavior as reflected in various Department data sets and longitudinal surveys listed under Assumptions, Limitations, and Data Sources."
1/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
The analysis does not address this topic.
0/5
Does the analysis identify the alternative that maximizes net benefits?
It says it does, but in reality offers only simple cost estimates for some of the options. In several cases, the analysis asserts that alternatives not chosen would have had higher costs.
1/5
Does the analysis identify the cost-effectiveness of each alternative considered?
See above.
1/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
The accounting statement asserts that the regulation leads to transfers to student loan borrowers and from student loan holders.
1/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
The analysis names some beneficiaries but does not assess incidence: "Benefits provided in these regulations include: The provision of more flexible repayment options for student loan borrowers, expanded eligibility for economic hardship deferments for borrowers with large families, additional deferment benefits for military personnel, and the provision of loan forgiveness for public service employees. The Federal taxpayer also benefits from reduced costs related to the reduction of SAP paid to not-for-profit loan holders in the FFEL Program."
1/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
In a few cases, the department appears to have rejected alternative tweaks after calculating costs and determining that they were too high or that no offsetting changes could be made. Most of the decisions appear to have been made in a negotiated rulemaking.
3/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
It would not be possible to pick the alternative that maximized net benefits, because the analysis did not specify or measure outcomes. However, some alternatives appear to have been rejected because the department believed the costs were too high, which suggests some sensitivity to net benefits.
1/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
The analysis mentions that OMB's Credit Subsidy Calculator will be used to retrospectively calculate prior years' costs beginning in FY 2009. This could be interpreted as a commitment to measure one major outcome, though the department did not explicitly articulate a target level.
2/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so?
The department commits to gathering data on federal budget costs, but not benefits.
3/5
Total 21 / 60