20 U.S.C. § 1018 — Performance-Based Organization for delivery of Federal student financial assistance
submitted 28 years ago by Pub. L. 89-329 to r/title-20-EDUCATION · 2,695 words · no verdicts yet
This section establishes a Performance-Based Organization to administer Federal student financial assistance programs. It sets the organization’s duties, leadership, reporting, personnel, complaint, and funding rules.
(a) Establishment and purpose. (1) The Department* has a separate management unit called the “PBO.” It manages the administrative and oversight functions supporting subchapter-IV programs. This section does not otherwise define “PBO.” (2) Its purposes are to improve service and understanding for students and parents, lower administration costs, increase officials’ accountability, give management more flexibility, integrate supporting information systems, create an open common system for aid delivery, and maintain complete, accurate, timely data for program integrity.
(b) General authority. (1) The Secretary* remains responsible for policy and regulations and directs the PBO. The Secretary must work with the Chief Operating Officer on rules, policies, guidance, and procedures; request cost estimates for proposed system changes; and help set goals for administering and modernizing the systems. (2) Subject to that authority, the PBO administers the programs, including data collection and transmission, system design and specifications, technology acquisitions and contracts, contracting for information and financial systems, customer service, training, user support, program integrity, and an annual budget. It must prevent and address improper use of access devices by detecting patterns, maintaining contractor reports, warning borrowers whose accounts show likely improper use, and clearly telling applicants that the Department never requires payment for help with Direct Loan applications or assistance. (3) The Secretary and Chief Operating Officer may assign additional necessary functions. (4) The PBO independently controls its budget, personnel, procurement, and other management functions. (5) It remains subject to Federal audits and Inspector General review. (6) The Secretary and Chief Operating Officer must consult about changes affecting the performance plan and may revise their annual agreement.
(c) Plan, report, and briefing. (1) Each year they must publish a measurable five-year performance plan after consulting students, institutions, Congress, lenders, the Advisory Committee, and others at least 30 days before implementation. The plan must state* modernization goals and action steps for improving service, reducing cost, integrating support systems, creating open common systems, and other Secretary-identified areas. (2) Each year the Chief Operating Officer must send Congress, through the Secretary, a report evaluating performance against the plan. It must include independent financial audits, applicable financial and performance requirements, results against goals, performance ratings and bonuses for the Chief Operating Officer and senior managers, recommendations for legal or regulatory changes, and OMB-required information. (3) The Chief Operating Officer must consult students, borrowers, institutions, lenders, guaranty agencies, secondary markets, and others about satisfaction and improvements. (4) On request, the Secretary must brief authorizing committees* about program integrity and lender and guaranty-agency compliance.
(d) Chief Operating Officer. (1) The Secretary appoints a Chief Operating Officer for 3–5 years based on management and financial-technology expertise, without regard to political affiliation, and outside specified title 5 rules. (2) The Secretary may reappoint for 3–5 years if performance is satisfactory. (3) The President or Secretary may remove the officer; the Secretary may do so for misconduct or failure to meet performance goals, and the reasons must go to the authorizing committees. (4) Each year they must sign a measurable performance agreement and make it public and send it to those committees. (5) Basic pay may not exceed the Senior Executive Service maximum plus authorized locality pay. A bonus may be up to 50 percent of basic pay, but total calendar-year compensation may not reach the President’s salary.
(e) Senior management. (1) The Chief Operating Officer may appoint needed senior managers outside competitive-service rules and pay them outside specified classification and General Schedule rules. (2) Each year each manager and the Chief Operating Officer must sign a measurable performance agreement, reviewable and renegotiable at term end. (3) Basic pay may not exceed the Senior Executive Service maximum plus authorized locality pay; a bonus may bring total pay to no more than 125 percent of that maximum, based on performance. (4) The Chief Operating Officer may remove a senior manager, or the Secretary may do so when that office is vacant.
(f) Ombudsman. (1) The Chief Operating Officer, consulting the Secretary, must appoint a Student Loan Ombudsman to help subchapter-IV borrowers. (2) The office must publicize the Ombudsman’s availability and functions. (3) Under Secretary regulations, the Ombudsman receives and tries to resolve complaints informally and compiles complaint data and recommendations. (4) Each year the Ombudsman reports activities and effectiveness to the Chief Operating Officer for inclusion in the annual report.
(g) Personnel flexibility. The PBO has no employee-number or grade ceiling. The Chief Operating Officer must work with the Office of Personnel Management on staffing, classification, and pay flexibility consistent with title 5, and may appoint technical and professional employees outside competitive-service rules and specified pay rules.
(h) Staff performance. The PBO must establish an annual, title-5-compliant system that sets and communicates individual, group, or organizational goals consistent with its performance plan and applicable law.
(i) Appropriations. The Secretary must allocate appropriate section 1087h funds to PBO functions, and Congress may appropriate sums needed for this part.
There is established in the Department* a Performance-Based Organization (hereafter referred to as the “PBO”) which shall be a discrete management unit responsible for managing the administrative and oversight functions supporting the programs authorized under subchapter IV of this chapter, as specified in subsection (b).
The purposes of the PBO are—
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;
to reduce the costs of administering those programs;
to increase the accountability of the officials responsible for administering the operational aspects of these programs;
to provide greater flexibility in the management and administration of the Federal student financial assistance programs;
to integrate the information systems supporting the Federal student financial assistance programs;
to implement an open, common, integrated system for the delivery of student financial assistance under subchapter IV; and
to develop and maintain a student financial assistance system that contains complete, accurate, and timely data to ensure program integrity.
Notwithstanding 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—
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;
request cost estimates from the Chief Operating Officer for system changes required by specific policies proposed by the Secretary; and
assist the Chief Operating Officer in identifying goals for—
the administration of the systems used to administer the Federal student financial assistance programs authorized under subchapter IV; and
the updating of such systems to current technology.
Subject 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:
The administrative, accounting, and financial management functions for the Federal student financial assistance programs authorized under subchapter IV, including—
the collection, processing, and transmission of data to students, institutions, lenders, State* agencies, and other authorized parties;
the design and technical specifications for software development and procurement for systems supporting the Federal student financial assistance programs authorized under subchapter IV;
all software and hardware acquisitions and all information technology contracts related to the administration and management of student financial assistance under subchapter IV;
all aspects of contracting for the information and financial systems supporting the Federal student financial assistance programs authorized under subchapter IV;
providing all customer service, training, and user support related to the administration of the Federal student financial assistance programs authorized under subchapter IV; and
ensuring the integrity of the Federal student financial assistance programs authorized under subchapter IV.
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.
Taking action to prevent and address the improper use of access devices, as described in section 1092b(d)(7) of this title, including by—
detecting common patterns of improper use of any system that processes payments on Federal Direct Loans or other Department information technology systems;
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;
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
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.
The Secretary may allocate to the PBO such additional functions as the Secretary and the Chief Operating Officer determine are necessary or appropriate to achieve the purposes of the PBO.
Subject to paragraph (1), in carrying out its functions, the PBO shall exercise independent control of its budget allocations and expenditures, personnel decisions and processes, procurements, and other administrative and management functions.
The PBO shall be subject to the usual and customary Federal audit procedures and to review by the Inspector General of the Department.
The Secretary and the Chief Operating Officer shall consult concerning the effects of policy, market, or other changes on the ability of the PBO to achieve the goals and objectives established in the performance plan described in subsection (c).
The Secretary and the Chief Operating Officer may revise the annual performance agreement described in subsection (d)(4) in light of policy, market, or other changes that occur after the Secretary and the Chief Operating Officer enter into the agreement.
Each year, the Secretary and Chief Operating Officer shall agree on, and make available to the public, a performance plan for the PBO for the succeeding 5 years that establishes measurable goals and objectives for the organization.
In developing the 5-year performance plan and any revision to the plan, the Secretary and the Chief Operating Officer shall consult with students, institutions of higher education, Congress, lenders, the Advisory Committee on Student Financial Assistance, and other interested parties not less than 30 days prior to the implementation of the performance plan or revision.
The 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:
Improving service to students and other participants in student financial aid programs authorized under under 1 subchapter IV, including making those programs more understandable to students and their parents.
Reducing the costs of administering those programs.
Improving and integrating the systems that support those programs.
Developing open, common, and integrated systems for programs authorized under under 1 subchapter IV.
Any other areas identified by the Secretary.
Each 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:
An independent financial audit of the expenditures of both the PBO and the programs administered by the PBO.
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.
The results achieved by the PBO during the year relative to the goals established in the organization’s performance plan.
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.
Recommendations for legislative and regulatory changes to improve service to students and their families, and to improve program efficiency and integrity.
Other such information as the Director of the Office of Management and Budget shall prescribe for performance based organizations.
The 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—
regarding the degree of satisfaction with the delivery system; and
to seek suggestions on means to improve the delivery system.
The Secretary shall, upon request, provide a briefing to the members of the authorizing committees* on the steps the Department has taken to ensure—
the integrity of the student loan programs; and
that lenders and guaranty agencies are adhering to the requirements of subchapter IV.
The management of the PBO shall be vested in a Chief Operating Officer who shall be appointed by the Secretary to a term of not less than 3 and not more than 5 years, and compensated without regard to chapters 33, 51, and 53 of title 5. The appointment shall be made on the basis of demonstrated management ability and expertise in information technology, including experience with financial systems, and without regard to political affiliation or activity.
The Secretary may reappoint the Chief Operating Officer to subsequent terms of not less than 3 and not more than 5 years, so long as the performance of the Chief Operating Officer, as set forth in the performance agreement described in paragraph (4), is satisfactory.
The Chief Operating Officer may be removed by—
the President; or
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.
Each year, the Secretary and the Chief Operating Officer shall enter into an annual performance agreement, that shall set forth measurable organization and individual goals for the Chief Operating Officer.
The final agreement, and any revision to the final agreement, shall be transmitted to the authorizing committees, and made publicly available.
The Chief Operating Officer is authorized to be paid at an annual rate of basic pay not to exceed the maximum rate of basic pay for the Senior Executive Service under section 5382 of title 5, including any applicable locality-based comparability payment that may be authorized under section 5304(h)(2)(B) of such title. The compensation of the Chief Operating Officer shall be considered for purposes of section 207(c)(2)(A) of title 18 to be the equivalent of that described under clause (ii) of section 207(c)(2)(A) of such title.
In addition, the Chief Operating Officer may receive a bonus in an amount that does not exceed 50 percent of such annual rate of basic pay, based upon the Secretary’s evaluation of the Chief Operating Officer’s performance in relation to the goals set forth in the performance agreement described in paragraph (4).
Payment of a bonus under subparagraph (B) may be made to the Chief Operating Officer only to the extent that such payment does not cause the Chief Operating Officer’s total aggregate compensation in a calendar year to equal or exceed the amount of the President’s salary under section 102 of title 3.
The Chief Operating Officer may appoint such senior managers as that officer determines necessary without regard to the provisions of title 5 governing appointments in the competitive service.
The senior managers described in subparagraph (A) may be paid without regard to the provisions of chapter 51 and subchapter III of chapter 53 of such title relating to classification and General Schedule pay rates.
Each year, the Chief Operating Officer and each senior manager appointed under this subsection shall enter into an annual performance agreement that sets forth measurable organization and individual goals. The agreement shall be subject to review and renegotiation at the end of each term.
A senior manager appointed under this subsection may be paid at an annual rate of basic pay of not more than the maximum rate of basic pay for the Senior Executive Service under section 5382 of title 5, including any applicable locality-based comparability payment that may be authorized under section 5304(h)(2)(C) of such title. The compensation of a senior manager shall be considered for purposes of section 207(c)(2)(A) of title 18 to be the equivalent of that described under clause (ii) of section 207(c)(2)(A) of such title.
In addition, a senior manager may receive a bonus in an amount such that the manager’s total annual compensation does not exceed 125 percent of the maximum rate of basic pay for the Senior Executive Service, including any applicable locality-based comparability payment, based upon the Chief Operating Officer’s evaluation of the manager’s performance in relation to the goals set forth in the performance agreement described in paragraph (2).
A senior manager shall be removable by the Chief Operating Officer, or by the Secretary if the position of Chief Operating Officer is vacant.
The Chief Operating Officer, in consultation with the Secretary, shall appoint a Student Loan Ombudsman to provide timely assistance to borrowers of loans made, insured, or guaranteed under subchapter IV by performing the functions described in paragraph (3).
The Chief Operating Officer shall disseminate information about the availability and functions of the Ombudsman to students, borrowers, and potential borrowers, as well as institutions of higher education, lenders, guaranty agencies, loan servicers, and other participants in those student loan programs.
The Ombudsman shall—
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
compile and analyze data on borrower complaints and make appropriate recommendations.
Each year, the Ombudsman shall submit a report to the Chief Operating Officer, for inclusion in the annual report under subsection (c)(2), that describes the activities, and evaluates the effectiveness of the Ombudsman during the preceding year.
The PBO shall not be subject to any ceiling relating to the number or grade of employees.
The Chief Operating Officer shall work with the Office of Personnel Management to develop and implement personnel flexibilities in staffing, classification, and pay that meet the needs of the PBO, subject to compliance with title 5.
The Chief Operating Officer may appoint, without regard to the provisions of title 5 governing appointments in the competitive service, technical and professional employees to administer the functions of the PBO. These employees may be paid without regard to the provisions of chapter 51 and subchapter III of chapter 53 of such title relating to classification and General Schedule pay rates.
The PBO shall establish an annual performance management system, subject to compliance with title 5, and consistent with applicable provisions of law and regulations, which strengthens the effectiveness of the PBO by providing for establishing goals or objectives for individual, group, or organizational performance (or any combination thereof), consistent with the performance plan of the PBO and its performance planning procedures, including those established under the Government Performance and Results Act of 1993, and communicating such goals or objectives to employees.
The Secretary shall allocate from funds made available under section 1087h of this title such funds as are appropriate to the functions assumed by the PBO. In addition, there are authorized to be appropriated such sums as may be necessary to carry out the purposes of this part.
Source credit: (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.)
- 1998Enacted · Pub. L. 89-329 · 112 Stat. 1604
- 2008Amended · Pub. L. 110-315 · 122 Stat. 3088, 3114
- 2009Amended · Pub. L. 111-39 · 123 Stat. 1935
- 2020Amended · Pub. L. 116-251 · 134 Stat. 1131
A history note hasn’t been published yet. The record shows enactment by Pub. L. 89-329 on 1998-10-07.
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