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Washington News Brief


Federal Judge denies ACICS’ request to block Department of Education’s decision to terminate the recognition of ACICS; Preliminary Injunction hearing set for Feb. 1, 2017

On Dec. 20, 2016, U.S. Federal Judge Reggie B. Walton denied the request by the Accrediting Council for Independent Colleges and Schools (ACICS) to block the Department of Education’s Dec. 12, 2016 decision to uphold the decision of the Senior Department Official (SDO) Emma Vadehra to terminate the recognition of ACICS. On Sept. 22, 2016, the SDO concluded that ACICS was noncompliant with numerous regulatory criteria for departmental recognition and terminated ACICS’ recognition. The Secretary of Education agreed with the decision and chose not to continue ACICS’ recognition. The Secretary also concluded that ACICS could not come into compliance within 12 months or less.

Judge Walton ordered the Department to file the administrative record by Jan. 20, 2017 and set a preliminary injunction hearing for Feb. 1, 2017.

A copy of the Secretary of Education’s decision is found at: http://www2.ed.gov/documents/acics/final-acics-decision.pdf

ACICS filed its lawsuit against the Department of Education on Dec. 15, 2016, seeking to regain its recognition. In a written statement, Roger Williams, Interim President, said: “ACICS has acknowledged its shortcomings and worked diligently to correct them so that, together with ACICS-accredited institutions, we can continue to work to help students achieve their academic and career goals.”

Both John Kline (R-MN), Chairman of the House Committee on Education and the Workplace, and Congresswoman Virginia Foxx (R-NC), incoming Chair of the House Committee on Education and the Workplace, issued statements on the decision.

Chairman Kline said: “The Department’s decision will disrupt the education of students across the country, and it will hurt low-income and minority students the most. There was another path that would have protected taxpayers and students, without disrupting hundreds of thousands of lives. Unfortunately, the Secretary decided not to follow it. While Secretary King’s decision is certainly unprecedented, it comes as no surprise. This administration has led a continued and coordinated attack on career colleges and universities with little regard for the consequences of its actions.”

Chairman-designate Foxx said: “The Secretary’s decision will hurt hundreds of thousands of students who have been working hard to earn a postsecondary education, and those students will find themselves in an incredibly difficult situation. We should have never reached this point. It’s clear accreditation is something we need to look at more closely as we work to improve our nation’s higher education system. The accreditation process must provide students and taxpayers the highest degree of accountability, and that includes identifying and correcting concerns before hundreds of thousands of students are harmed.”

A copy of the Kline and Foxx statements is found at: http://edworkforce.house.gov/news/documentsingle.aspx?DocumentID=401171

Steve Gunderson, President and CEO of CECU, issued a statement that said: “No Administration has politicized education or accreditation like the current one. Since the November election, the Department has forcibly shutdown two colleges, released faulty and biased gainful employment data, and attached overly burdensome and stringent conditions on the sale of a major institution to new owners.”

A copy of the CECU statement is found at: http://www.career.org/news/cecu-statement-on-departments-acics-decision

The Department issued a press release on Dec. 12, 2016, stating that the Department will inform colleges accredited by ACICS of additional operating conditions required for continued participation in the federal student aid programs. Colleges accredited by ACICS will be provisionally certified and will have 18 months to find a new accreditor or risk losing access to federal student aid programs. The ACICS-accredited institutions will have to comply with additional conditions that are designed to protect students and safeguard taxpayer dollars. These conditions include additional monitoring, transparency, oversight, and accountability measures.

The Dec. 12, 2016 press release is found at: http://www.ed.gov/news/press-releases/education-department-establishes-enhanced-federal-aid-participation-requirements-acics-accredited-colleges

A “Summary of Selected Requirements for Institutions Accredited by ACICS” describes the additional conditions that institutions must abide by during the term of the provisional PPAs, which include submitting a teach-out plan to the Department within 30 days after ACICS’ loss of recognition; having an “In-Process Application” with another accrediting agency within 90 days of the Secretary’s final decision; and engaging their auditors to evaluate key data and compliance indicators normally monitored by the accrediting agency. The Summary is found at: http://www2.ed.gov/documents/acics/ppa-provisions.pdf

An updated blog post was issued by the Department of Education on Dec. 12, 2016, which describes “What College Accreditation Changes Mean for Students.” The blog includes a series of questions and answers for students. It is found at: http://blog.ed.gov/2016/12/college-accreditation-update/. In addition, another blog issued by the Department of Education on Dec. 12, 2016, advises students what the loss of federal recognition means, and is found at: http://blog.ed.gov/2016/12/letter-to-acics-students/

Senate narrowly avoids government shutdown

On Dec. 9, 2016, the Senate voted to approve the Continuing Resolution extending funding for the federal government until April 28, 2017, despite a few Senate Democrats who wanted to include language dealing with a health program for retired coal miners. The Senate voted 63 to 36 shortly before midnight, narrowly avoiding a temporary shutdown. The House passed the bill on Dec. 8, 2016, by a vote of 326 to 96.

The Continuing Resolution is an extension of last year’s Omnibus Appropriations Act that originally expired Sept. 30, 2016, but was extended until Dec. 9, 2016. The Continuing Resolution holds funding levels for most federal agencies at FY 2016 levels, adhering to a $1.07 trillion annual budget cap.

With that action, Congress has adjourned until 2017. The 115th Congress convenes on Jan. 3, 2017 and it will be tasked with confirming President-elect Donald Trump’s nominees, confirming a possible Supreme Court nominee, and confirming agreement on spending levels for the remainder of the FY 2017 fiscal year.

Foxx selected as Chairwoman of the House Committee on Education and the Workforce

On Dec. 2, 2016, with approval from the full Republican conference, the House Republican Steering Committee selected Congresswoman Virginia Foxx (R-NC) as the Chairwoman of the House Committee on Education and the Workforce for the 115th Congress. Chairwoman Foxx said: “At all times, we will strive in our service to hold government institutions to the highest standards of accountability and transparency, with a constant eye towards eliminating waste and inefficiency.” In a Dec. 1, 2016 article in Politico, Congresswoman Foxx laid out her priorities and said: “I’m going to push to diminish the role of the federal government in everything it’s in that isn’t in the Constitution. That’s education, health care. All the things that the federal government does that it should not be doing. I’m happy to diminish its role.”

Congressman John Kline (R-MN), current Chairman of the House Committee on Education and the Workforce, said “I want to congratulate Virginia Foxx on her selection to serve as the next chair of this great committee, an opportunity she has earned through many years of dedicated public service.”

Senator Lamar Alexander (R-TN), current Chairman of the Health, Education, Labor and Pensions Committee, said: “I look forward to working with Representative Foxx, who is a diligent, hard-worker on ensuring that the law fixing No Child Left Behind is implemented the way that Congress wrote it. We will also turn our attention to higher education and helping make it easier and simpler for more students to attend college.”

A copy of the press release from the House Committee is found at: http://edworkforce.house.gov/news/documentsingle.aspx?DocumentID=401157

A copy of Senator Alexander’s press statement is found at: http://www.alexander.senate.gov/public/index.cfm/pressreleases?ID=127B112C-AD57-4B04-BB25-B245EFB58DA2

Congressman Scott to remain Ranking Member of the House Committee on Education and the Workforce

On Dec. 6, 2016, Congressman Bobby Scott (D-VA) was re-elected by the Democratic Caucus to serve as Ranking Member of the House Education and the Workforce Committee for the 115th Congress. “I am honored to have the confidence and support of my colleagues to continue to serve as Ranking Member in the 115th Congress. I look forward to fighting for students, working families, and retirees across the country and defending them against attacks on their access to a quality education, living wages, and affordable healthcare.”

Democratic Senators urge Department of Education to protect students and taxpayers should ACICS lose recognition

On Dec. 5, 2016, Senators Richard Durbin (D-IL), Patty Murray (D-WA), Elizabeth Warren (D-MA), Sherrod Brown (D-OH), and Richard Blumenthal (D-CT) sent a letter to Department of Education Under Secretary Ted Mitchell urging the Department to take steps to protect students and taxpayers should the Department withdraw the recognition from ACICS. The letter acknowledges that almost 250 ACICS-accredited institutions will be able to continue to participate in student aid programs under provisional certification for up to 18 months while they seek accreditation from another federally-recognized accreditor. The letter outlines the steps the Department should take using its authority to protect students, families and taxpayers while the institutions are on provisional status, which include:

  • Halting new student enrollment at institutions not making progress in obtaining new federally-recognized accreditation and placing limitations on institutions that pose substantial risks;
  • Prohibiting institutional growth and expansion;
  • Requiring teach-out agreements;
  • Prohibiting the use of mandatory arbitration clauses in student enrollment agreements;
  • Prohibiting bonuses and other excessive compensation;
  • Immediately placing institutions on Heightened Cash Monitoring;
  • Requiring letters of credit;
  • Requiring clear disclosures to students; and
  • Requiring a disclosure of a denial of accreditation.

A copy of the Senate Democrats’ letter to the Department is found at: http://www.durbin.senate.gov/imo/media/doc/12.5.16%20Senate%20ACICS%20letter.pdf

Congressman Tom Reed unveils blueprint on college affordability

On Dec. 6, 2016, Congressman Tom Reed (R-NY), a member of the House Ways and Means Committee and Vice Chair of President-elect Trump’s transition team, unveiled a blueprint that describes new requirements Congress could place on colleges to achieve affordability. “Our Vision for Students” describes legislation that he plans to introduce. “We must use all available tools to make sure college is affordable and accessible.” According to the press release, the Vision for Students is a comprehensive plan that focuses on innovative solutions to encourage transparency and accountability at colleges, which will in turn bring college costs down. The plan includes Congressman Reed’s Reducing Excessive Debt and Unfair Costs of Education (REDUCE) Act, which would require institutions with endowments larger than $1 billion to use returns on those endowments for direct tuition relief for middle and working class families or risk hefty tax penalties. The proposal also would require colleges to submit plans to keep costs below the rate of inflation. Should colleges fail to comply with these plans, they could face reductions in certain federal aid programs. That funding would then be redirected to schools that perform well and keep costs low. Finally, the proposal requires colleges to disclose administrator salary information and total compensation, including extravagant benefits packages that include housing expenses, vehicles, and membership fees to elite social clubs, for all college employees. That information will be available on the institution’s website in a searchable format.

A copy of the press release is found at: https://reed.house.gov/media-center/press-releases/reed-fights-students-working-families

A copy of the plan is found at: https://reed.house.gov/sites/reed.house.gov/files/Our%20Vision%20for%20Students%2C%20Final%2C%2012.2.16.pdf

Department publishes State Authorization Rule

On Dec. 19, 2016, the Department of Education published in the Federal Register its final rule on state authorization requirements for institutions offering distance education and correspondence courses. Currently, institutions must have state authorization in states where they are physically located. The new rule, which takes effect July 1, 2018, addresses what the Department considered a “loophole” in the program integrity rules governing eligibility to participate in the federal student aid programs. The new rule requires institutions offering distance education or correspondence courses to be authorized by each state in which the institution enrolls students, if such authorization is required by the state. The regulation recognizes authorization through participation in a state authorization reciprocity agreement, as long as the agreement does not prevent a state from enforcing its own laws.

The final rule also requires institutions to document the state process for resolving student complaints regarding distance education programs. In addition, institutions will also be required to make public and individualized disclosures to enrolled and prospective students in distance education programs, including adverse actions against the school, the school’s refund policies, and whether each program meets applicable state licensure or certification requirements. The rule also addresses eligibility of foreign branch campuses.

A copy of the press release is found at: http://www.ed.gov/news/press-releases/education-department-announces-final-rule-state-authorization-postsecondary-distance-education-foreign-locations

A copy of the final regulations is found at: https://ifap.ed.gov/fregisters/attachments/FR121916.pdf

Given that the effective date of the rule is July 18, 2018, many believe (or hope) that this rule may be eliminated by the Trump administration.

Department reports that many for-profit schools could exceed the 90/10 Rule if Post 9/11 GI Bill and DoD benefits are added to Title IV Aid in the calculation

On Dec. 21, 2016, the Department of Education released an analysis that found that many for-profit institutions would likely exceed the 90/10 rule if revenue from the Post 90/10 GI Bill benefits and the Department of Defense Tuition Assistance programs were included in the 90/10 calculation. Under current rules, 17 schools were determined to have exceeded the 90/10 rule. However, when the Post 90/10 GI Bill benefits and the Department of Defense Tuition Assistance benefits are added to the 90/10 calculation, almost 200 schools would violate the 90/10 rule. President Obama’s FY 2017 budget proposal, released on Feb. 9, 2016, recommended including all Federal educational aid programs, including Post 90/10 GI Bill and Department of Defense Tuition Assistance benefits, in the calculation, and decreasing the percentage of funds at proprietary institutions that can come from federal funds from 90 percent back to 85 percent. If the threshold was lowered, the analysis shows that the number of failing schools in a single year would increase from 17 to 563 schools.

A copy of the press release is found at: http://www.ed.gov/news/press-releases/new-analysis-finds-many-profits-skirt-federal-funding-limits. It includes the link to the 90/10 analysis.

Department releases quarterly student aid data updates and a preliminary report on the federal student aid feedback system

On Dec. 20, 2016, the Department of Education’s Federal Student Aid (FSA) posted a series of updates to its data center, a collection of key performance data related to the federal student aid portfolio. The information in the FSA Data Center includes reports on the loan portfolio managed by the Department. For example, the outstanding portfolio of federal student loans is $1.29 trillion, 81 percent of which consists of Direct Loans and federally-owned FFELP Loans.

The Department also released a preliminary report about the FSA feedback system, which was launched in July 2016 to fulfill one of the primary objectives of President Obama’s Student Aid Bill of Rights (SABOR). Between April 11, 2016 and Sept. 30, 2016, FSA received 4,811 comments, which were a combination of complaints, positive feedback, and allegations of suspicious activity. More than 75 percent of the submissions were complaints, which covered issues related to their experience with the federal student aid process, including applying for and receiving federal loans, grants, and work study; federal loan servicing; the collection of defaulted federal loans; and schools’ administration of federal student aid programs. The top 10 most frequently submitted subcategories included: student eligibility; delays receiving aid; school quality of education; completing the FAFSA; school closure; loan discharge, cancellation or forgiveness; school-owed student money (credit balance/refund); FSA ID; loan disbursement (pay out) process; and FAFSA verification. About 11 percent of the complaints were related to student loan servicing.

A copy of the press release that announces the posted data updates and the release of the preliminary report is found at: http://www.ed.gov/news/press-releases/education-department-posts-quarterly-student-aid-data-updates-and-releases-preliminary-report-federal-student-aid-feedback-system

The Electronic Announcement announcing the posted updates and release of the preliminary report is found at: https://ifap.ed.gov/eannouncements/122016FSAPostsUpdatedReportstoFSADataCenter.html

ED ends federal student aid participation for Charlotte School of Law

On Dec. 19, 2016, the Department of Education announced that as of Dec. 31, 2016, it will end all federal student financial aid for Charlotte School of Law (CSL), a for-profit member institution in the InfiLaw System. The Department said that CSL failed to meet accreditation standards and misled prospective students about their chances of passing the bar exam. The ABA placed CSL on probation on Nov. 14, 2016, citing the school’s non-compliance with several of its standards, and the Department said that CSL did not inform current and prospective students when the ABA told the school that it was out of compliance with accreditor’s standards.

A copy of the Department’s press release is found at: http://www.ed.gov/news/press-releases/charlotte-school-law-denied-continued-access-federal-student-aid-dollars

ED ends federal student aid participation for Globe University and Minnesota School of Business

On Dec. 6, 2016, the Department of Education announced that it would end the participation in student aid for Globe University and Minnesota School of Business (MSB), two institutions under common ownership. The Program Compliance and Enforcement Units within Federal Student Aid (FSA) determined that the two institutions are ineligible to participate in federal student aid programs because Globe University and MSB have been judicially determined to have committed fraud involving Title IV program funds. The announcement also stated that both institutions “knowingly misrepresented the nature of their criminal justice programs and the transferability of credits earned to other institutions.”

Over the last three fiscal years, the Department has denied recertification applications for more than 30 institutions.

A copy of the Department’s press release is found at: http://www.ed.gov/news/press-releases/globe-university-minnesota-school-business-denied-access-federal-student-aid-dollars

FSA restores Pell Grant eligibility for students who attended closed schools

In a Dec. 21, 2016 Electronic Announcement, the Department of Education announced that it has determined that it has the authority to restore semesters of Pell Grant eligibility for Pell Grant recipients who were unable to complete their course of study due to the closing of their school. The Department is in the process of modifying its systems to implement the restoration of Pell Grant eligibility for students who received Pell Grant funds for attendance at a now closed school. The first phase is expected to be completed by March 2017.Once the first phase is completed, the Department will conduct outreach to affected students.

A copy of the Electronic Announcement is found at: https://ifap.ed.gov/eannouncements/122116FedPellGrantRestoratforStudentsWhoAttendClosedSchools.html

FSA officials warn former ACS phone number now belongs to a debt relief company

On Nov. 29, 2016, at the FSA Conference, Department of Education officials announced that the phone number that previously belonged to a third-party private, campus-based, and Federal Family Education Loan servicer, ACS Education, now belongs to a “questionable debt relief company.” The Department officials urged the participants to check their institutions’ websites to ensure that they have the correct phone number listed. An Electronic Announcement advised institutions in an Electronic Announcement of Dec. 19, 2016 that some institutions are including the invalid toll-free phone number on their institutional websites. ED requested that each institution conduct a thorough review of its websites to determine whether it is providing the incorrect phone number.

A copy of the Electronic Announcement is found at: https://ifap.ed.gov/eannouncements/121916ThirdPartyDebtReliefCoPhoneNumberDLServicingCtr.html

Jeff Baker to retire in 2017

Department of Education officials announced at the FSA Conference on Nov. 29, 2016 that Jeff Baker, Director of the Policy Liaison and Implementation Staff, will be retiring in 2017. Before working for the Department, Jeff Baker worked at the University of Wisconsin at Milwaukee and then for San Francisco State University. Jeff Baker will retire with 30 years of service in the financial aid profession.

ED announces delay in releasing the 2017 GE disclosure template and applicable deadlines

On Dec. 16, 2016, the Department of Education released Electronic Announcement #99 to inform the higher education community of a delay in the release of the 2017 Gainful Employment (GE) Disclosure Template and to provide guidance on how this delay affects institutions’ efforts to comply with the GE regulations related to GE disclosures and student warnings. The 2017 GE Template is not expected to be released until the end of January 2017. Once the Department releases the 2017 GE Template, institutions will have at least 60 days to be in compliance with the regulatory posting and dissemination requirements. Institutions are advised that they should continue to include their existing 2016 GE Disclosure Templates in all promotional materials made available to prospective students, and continue to display the templates on the institution’s websites. Deadlines and dissemination requirements are also described in the Electronic Announcement.

A copy of Electronic Announcement #99 is found at: https://ifap.ed.gov/eannouncements/121616GEAnnounce99DelayRel2017GEDiscTempandDeadlines.html

Department announces participants in loan counseling pilot program

On Dec. 15, 2016, the Department of Education announced a new experiment to identify promising loan counseling practices that can help students make the right decisions about borrowing student loans and to help colleges find ways to counsel students to reduce unnecessary loan borrowing. Fifty-one colleges and universities were selected to participate in the experiment that will require additional loan counseling beyond what is already mandated by federal law, one-time entrance and exit counseling.
The Department also released a toolkit that highlights promising practices from a dozen schools that are increasing college completion rates for students on their campuses.

A copy of the press release is found at: http://www.ed.gov/news/press-releases/us-department-education-announces-loan-counseling-experiment-and-new-college-completion-toolkit

GAO report shows that more than 100,000 Americans have their Social Security benefits garnished to repay student debt

On Dec. 19, 2016, the Government Accountability Office (GAO) released a report titled, “Social Security Offsets: Improvements to Program Design Could Better Assist Older Student Loan Borrowers with Obtaining Permitted Relief,” that found that 114,000 Americans aged 50 or older have had their Social Security benefits garnished over the past year due to outstanding student loan debt. The GAO report (GAO-17-45) found that as a result of the garnishment, thousands of retirees and disabled individuals are now living below the poverty line. The report said that of those who were 50 and older at the time of their Social Security garnishment, 43 percent had their student loans for 20 years or more. More than 75 percent of these borrowers took out the loans for their own education and not to pay for a family member to go to college. The report also found that of the approximately $1.1 billion collected through Social Security garnishments from 2001 to 2015 budget years, 70 percent was applied to fees and interest and not the principal owed.

A copy of the GAO report is found at: http://www.gao.gov/products/GAO-17-45

ABA sues Department of Education over the Public Service Loan Forgiveness program

On Dec. 20, 2016, Politico reported that the American Bar Association (ABA) is suing the Department of Education claiming that ED reneged on promises to forgive student loans for four public service lawyers. The lawsuit claims that the four attorneys took low-paying public-service jobs expecting that their loans would be forgiven under the Public Service Loan Forgiveness program. The program discharges student loan debt for borrowers who worked in public service jobs and made regular payments for 10 years. Nine years into the program, the lawsuit alleges that the Department advised the borrowers that they did not qualify. Three out of the four lawyers received verification from the Department that their jobs qualified under the program and the fourth lawyer claimed she qualified because she worked for a nonprofit agency that the Department had previously certified as qualifying for the program.

SACS places 10 colleges and universities on probation

Following its biennial meeting, the Commission on Colleges of the Southern Association of Colleges and Schools (SACS) placed 10 colleges and universities on probation, including the University of Louisville and the University of Texas’s new campus in the Rio Grande Valley. The University of Louisville received a warning last year from SACS that the University would be out of compliance with its standards governing external influence, due process for dismissing board members, and selection of a president when Governor Matt Bevin abolished and replaced the University’s Board of Directors. A state judge blocked Governor Bevin’s actions to reconstitute the board in September saying it violated state law designed to insulate public institutions from partisan politics. But blocking the Governor’s move did not appease SACS and it placed the University of Louisville on one-year probation because it had violated its requirements and standards concerning the proper functioning of a governing board, evaluation and selection of the chief executive officer, external influence, and board dismissal.

The University of Texas Rio Grande Valley represented an effort to merge multiple institutions to better serve residents on Texas’ southern border, which is one of the most underprivileged regions of the state. But SACS cited the institution for an unusually long list of shortcomings of the accreditor’s requirements and standards. There were 10 major areas of concern, including that its degrees need to be based on instruction it offers itself and not offered by other institutions.

Eight other colleges were placed or continued on probation. Two institutions were removed from probation: Kentucky Wesleyan College and the University of Tennessee at Martin.

Secretary issues Dear Colleague Letter calling on institutions to help eliminate harassment and discrimination

On Nov. 18, 2016, Secretary of Education John B. King, Jr. issued a Dear Colleague letter calling on institutions to do all they can to eliminate harassment and discrimination to ensure a positive environment for all students. Secretary King suggests the following to support all students in succeeding:

  • Training students, faculty, staff, and leadership on how to support diverse student populations and address the implicit biases we all carry;
  • Allocating resources to provide academic, social, and emotional supports for students from underrepresented communities;
  • Creating venues for safe and open exchange on issues of race and discrimination; and
  • Making it a priority to build a diverse staff and ensure that a diverse range of voices is given the opportunity to contribute perspectives on important decisions on campus.

A copy of the Dear Colleague letter is found at: http://www2.ed.gov/policy/highered/guid/secletter/161118.html

OIG releases its annual report

On Nov. 16, 2016, the Office of Inspector General (OIG) released its annual report that outlines the areas its investigators and analysts will focus in the coming year. The first four goals focus on promoting the economy, efficiency, and effectiveness and preventing and detecting waste, fraud, and abuse. The fifth goal focuses on the internal functions of the OIG. The specific goals are:

  • Improve the Department’s ability to effectively and efficiently implement its programs;
  • Strengthen the Department’s efforts to improve the delivery of student financial assistance;
  • Protect the integrity of the Department’s programs and operations;
  • Contribute to improvements in Department business operations; and
  • Strive for diverse and skilled workforce that is provided with the means and assistance necessary to achieve the OIG’s mission.

Within these goals, the OIG plans to target:

  • The Department’s oversight of state special education programs;
  • The Department’s management of financial aid pilot projects through its experimental sites authority;
  • The Department’s effectiveness of how it evaluates college accreditors; and
  • Whether the Department appropriately resolves student loan complaints.

A copy of the annual report is found at: http://www2.ed.gov/about/offices/list/oig/misc/wp2017.pdf

CFPB challenges “unconstitutional” ruling

On Nov. 18, 2016, the Consumer Financial Protection Bureau (CFPB) filed a petition with the D.C. Court of Appeals, asking the full slate of judges to review last month’s decision, which found the Bureau’s structure to be unconstitutional. In October, a three-judge panel of the Court found that the CFPB’s structure was unconstitutional since the agency’s independent director has too much unchecked power. “Because the director alone heads the agency without presidential supervision, and in light of the CFPB’s broad authority over the U.S. economy, the director enjoys significantly more unilateral power than any single member of any other independent agency.” The Court found that the director for the CFPB is the “single most powerful official in the U.S. Government, other than the president” in terms of unilateral power. In a letter of Dec. 7, 2016 to Senate Majority Leader Mitch McConnell (R-KY) and Senate Minority Leader-Elect Chuck Schumer (D-NY) sent by the Consumer Bankers Association (CBA), the Credit Union National Association (CUNA), the Independent Community Bankers of American (ICBA), and the National Association of Federal Credit Unions (NAFCU), representing over 12,000 banks and credit unions, the groups asked that in the 115th Session of Congress, members pass legislation establishing a five-person bipartisan board to govern CFPB. The board would “provide a balanced and deliberative approach to supervision, regulation, and enforcement over financial institutions that is more in keeping with other financial regulators.”

A copy of the letter to the Senate leaders is found at: http://consumerbankers.com/sites/default/files/Commission115CongressLetter.pdf

NCES releases report that finds use of private loans to pay for college drops by half

On Nov. 29, 2016, the National Center for Education Statistics (NCES) issued a new Statistics in Brief report titled “Use of Private Loans by Postsecondary Students: Selected Years 2003-2004 through 2011-2012.” The data shows that after peaking in 2007-2008 at 14 percent, the percentage of undergraduate students who borrowed from private sources dropped by about 50 percent in 2011-2012 to 6 percent. In contrast, the percentage of undergraduate students borrowing from the federal government through the Stafford Loan program was higher, increasing from 35 percent to 40 percent. The report found that the lower rate of borrowing from private sources between 2007-2008 and 2011-2012 occurred among students in all types of institutions, regardless of the tuition charged by the institution, and across students of all income levels. Finally, similar to undergraduate students, the percentage of graduate students who borrowed from private sources was also lower between 2007-2008 and 2011-2012, going from 11 percent to 4 percent.

A copy of the NCES report is found at: http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2017420

Fall 2010 cohort outcomes are moving up after period of decline

According to the National Student Clearinghouse Research Center’s Signature Report, “Completing College: A National Review of Student Attainment Rates – Fall 2010 Cohort,” recent declines in the overall national six-year completion rates have reversed and are now on an upward trajectory. The effects of the recession on higher education included enrollment surges, followed by declines in completion rates, for the 2008 and 2009 entering cohorts for every institution type. For the fall 2010 cohort, the overall national six-year completion rate rebounded to 54.8 percent, an increase of 1.9 percentage points from the 2009 cohort. This comprehensive rate includes all students, including those enrolling part-time and full-time at all two-year and four-year institutions.

Some key data points include:

  • For students who started at four-year public institutions, the completion rate for the fall 2010 cohort increased 1.2 percentage points to 62.4 percent compared to that of the fall 2009 cohort.
  • The total completion rate for two-year starters, regardless of whether the completion rate occurred at a two-year or four-year institution, increased from 38.1 percent for the fall 2009 to 39.3 percent for 2010 students.
  • The completion rate for students who started in four-year private nonprofit institutions increased to 73.9 percent from the 2009 cohort’s 71.5 percent.
  • The rate rebounded for those who started in four-year for-profit institutions. The completion rate went up to 37.1 percent for the fall 2010 from the 2009 cohort’s 32.8 percent.

A copy of the report is found at: http://finance.yahoo.com/news/fall-2010-cohort-outcomes-decline-131500055.html

Center for American Progress releases report that graduate borrowing at for-profit institutions remains the same while enrollment declines

On Dec. 1, 2016, the Center for American Progress released a report titled “The Unlikely Area in which For-Profit Colleges are Doing Just Fine,” that shows that despite a decline in graduate school enrollment at for-profit institutions, borrowing among graduate students has remained steady at about $5 billion a year. Undergraduate borrowing dropped from $24 billion in 2010 to about $7 billion in 2014. Fifteen years ago, 3 percent of graduate students attended for-profit institutions but today 11 percent attend for-profit institutions. Between 2000-2001 and 2014-2015 school years, the number of people enrolled in for-profit graduate education increased from 82,000 to 436,000. Graduate enrollment fell just 6 percent in 2014-2015 from its peak of 460,000 students in 2010-2011.

A copy of the report is found at: https://www.americanprogress.org/issues/education/news/2016/12/01/291656/the-unlikely-area-in-which-for-profit-colleges-are-doing-just-fine/

SHARON H. BOB PH.D., Higher Education Specialist on Policy and Regulation, is a member of the Education Group at the Washington, DC law firm of Powers Pyles Sutter & Verville, PC. Dr. Bob advises all sectors of higher education regarding strategic issues pertaining to their participation in the federal student financial assistance programs, accreditation, licensure, education tax benefits, and related regulatory matters.

Contact Information: Sharon H. Bob, Ph.D. // Higher Education Specialist // Powers Pyles Sutter and Verville, PC // 1501 M Street, NW, Suite 700, Washington, DC 20005 // 202-872-6772 // Sharon.bob@ppsv.com // http://www.powerslaw.com



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