View all text of Part D [§ 1018 - § 1018b]
§ 1018. Performance-Based Organization for delivery of Federal student financial assistance
(a) Establishment and purpose
(1) Establishment
(2) PurposesThe purposes of the PBO are—
(A) to improve service to students and other participants in the student financial assistance programs authorized under subchapter IV, including making those programs more understandable to students and their parents;
(B) to reduce the costs of administering those programs;
(C) to increase the accountability of the officials responsible for administering the operational aspects of these programs;
(D) to provide greater flexibility in the management and administration of the Federal student financial assistance programs;
(E) to integrate the information systems supporting the Federal student financial assistance programs;
(F) to implement an open, common, integrated system for the delivery of student financial assistance under subchapter IV; and
(G) to develop and maintain a student financial assistance system that contains complete, accurate, and timely data to ensure program integrity.
(b) General authority
(1) Authority of SecretaryNotwithstanding any other provision of this part, the Secretary shall maintain responsibility for the development and promulgation of policy and regulations relating to the programs of student financial assistance under subchapter IV. In the exercise of its functions, the PBO shall be subject to the direction of the Secretary. The Secretary shall—
(A) request the advice of, and work in cooperation with, the Chief Operating Officer in developing regulations, policies, administrative guidance, or procedures affecting the Federal student financial assistance programs authorized under subchapter IV;
(B) request cost estimates from the Chief Operating Officer for system changes required by specific policies proposed by the Secretary; and
(C) assist the Chief Operating Officer in identifying goals for—
(i) the administration of the systems used to administer the Federal student financial assistance programs authorized under subchapter IV; and
(ii) the updating of such systems to current technology.
(2) PBO functionsSubject to paragraph (1), the PBO shall be responsible for the administration of Federal student financial assistance programs authorized under subchapter IV, excluding the development of policy relating to such programs but including the following:
(A) The administrative, accounting, and financial management functions for the Federal student financial assistance programs authorized under subchapter IV, including—
(i) the collection, processing, and transmission of data to students, institutions, lenders, State agencies, and other authorized parties;
(ii) the design and technical specifications for software development and procurement for systems supporting the Federal student financial assistance programs authorized under subchapter IV;
(iii) all software and hardware acquisitions and all information technology contracts related to the administration and management of student financial assistance under subchapter IV;
(iv) all aspects of contracting for the information and financial systems supporting the Federal student financial assistance programs authorized under subchapter IV;
(v) providing all customer service, training, and user support related to the administration of the Federal student financial assistance programs authorized under subchapter IV; and
(vi) ensuring the integrity of the Federal student financial assistance programs authorized under subchapter IV.
(B) Annual development of a budget for the activities and functions of the PBO, in consultation with the Secretary, and for consideration and inclusion in the Department’s annual budget submission.
(C) Taking action to prevent and address the improper use of access devices, as described in section 1092b(d)(7) of this title, including by—
(i) detecting common patterns of improper use of any system that processes payments on Federal Direct Loans or other Department information technology systems;
(ii) maintaining a reporting system for contractors involved in the processing of payments on Federal Direct Loans in order to allow those contractors to alert the Secretary of potentially improper use of Department information technology systems;
(iii) proactively contacting Federal student loan borrowers whose Federal student loan accounts demonstrate a likelihood of improper use in order to warn those borrowers of suspicious activity or potential fraud regarding their Federal student loan accounts; and
(iv) providing clear and simple disclosures in communications with borrowers who are applying for or requesting assistance with Federal Direct Loan programs (including assistance or applications regarding income-driven repayment, forbearance, deferment, consolidation, rehabilitation, cancellation, and forgiveness) to ensure that borrowers are aware that the Department will never require borrowers to pay for such assistance or applications.
(3) Additional functions
(4) Independence
(5) Audits and review
(6) Changes
(A) In general
(B) Revisions to agreement
(c) Performance plan, report, and briefing
(1) Performance plan
(A) In general
(B) Consultation
(C) AreasThe plan shall include a concise statement of the goals for a modernized system for the delivery of student financial assistance under subchapter IV and identify action steps necessary to achieve such goals. The plan shall address the PBO’s responsibilities in the following areas:
(i) Improving service
(ii) Reducing costs
(iii) Improvement and integration of support systems
(iv) Delivery and information system
(v) Other areas
(2) Annual reportEach year, the Chief Operating Officer shall prepare and submit to Congress, through the Secretary, an annual report on the performance of the PBO, including an evaluation of the extent to which the PBO met the goals and objectives contained in the 5-year performance plan described in paragraph (1) for the preceding year. The annual report shall include the following:
(A) An independent financial audit of the expenditures of both the PBO and the programs administered by the PBO.
(B) Financial and performance requirements applicable to the PBO under the Chief Financial Officers Act of 1990 and the Government Performance and Results Act of 1993.
(C) The results achieved by the PBO during the year relative to the goals established in the organization’s performance plan.
(D) The evaluation rating of the performance of the Chief Operating Officer and senior managers under subsections (d)(4) and (e)(2), including the amounts of bonus compensation awarded to these individuals.
(E) Recommendations for legislative and regulatory changes to improve service to students and their families, and to improve program efficiency and integrity.
(F) Other such information as the Director of the Office of Management and Budget shall prescribe for performance based organizations.
(3) Consultation with stakeholdersThe Chief Operating Officer, in preparing the report described in paragraph (2), shall establish appropriate means to consult with students, borrowers, institutions, lenders, guaranty agencies, secondary markets, and others involved in the delivery system of student aid under subchapter IV—
(A) regarding the degree of satisfaction with the delivery system; and
(B) to seek suggestions on means to improve the delivery system.
(4) Briefing on enforcement of student loan provisionsThe Secretary shall, upon request, provide a briefing to the members of the authorizing committees on the steps the Department has taken to ensure—
(A) the integrity of the student loan programs; and
(B) that lenders and guaranty agencies are adhering to the requirements of subchapter IV.
(d) Chief Operating Officer
(1) Appointment
(2) Reappointment
(3) RemovalThe Chief Operating Officer may be removed by—
(A) the President; or
(B) the Secretary, for misconduct or failure to meet performance goals set forth in the performance agreement in paragraph (4).
The President or Secretary shall communicate the reasons for any such removal to the authorizing committees.
(4) Performance agreement
(A) In general
(B) Transmittal
(5) Compensation
(A) In general
(B) Bonus
(C) Payment
(e) Senior management
(1) Appointment
(A) In general
(B) Compensation
(2) Performance agreement
(3) Compensation
(A) In general
(B) Bonus
(4) Removal
(f) Student Loan Ombudsman
(1) Appointment
(2) Public information
(3) Functions of OmbudsmanThe Ombudsman shall—
(A) in accordance with regulations of the Secretary, receive, review, and attempt to resolve informally complaints from borrowers of loans described in paragraph (1), including, as appropriate, attempts to resolve such complaints within the Department of Education and with institutions of higher education, lenders, guaranty agencies, loan servicers, and other participants in the loan programs described in paragraph (1); and
(B) compile and analyze data on borrower complaints and make appropriate recommendations.
(4) Report
(g) Personnel flexibility
(1) Personnel ceilings
(2) Administrative flexibility
(3) Excepted service
(h) Establishment of fair and equitable system for measuring staff performance
(i) Authorization of appropriations
(Pub. L. 89–329, title I, § 141, as added Pub. L. 105–244, title I, § 101(a), Oct. 7, 1998, 112 Stat. 1604; amended Pub. L. 110–315, title I, §§ 103(b)(2), 117, Aug. 14, 2008, 122 Stat. 3088, 3114; Pub. L. 111–39, title I, § 101(b)(5), July 1, 2009, 123 Stat. 1935; Pub. L. 116–251, § 5, Dec. 22, 2020, 134 Stat. 1131.)