Washington News Brief

By Sharon H. Bob, Ph.D., Higher Education Specialist, Powers Pyles Sutter and Verville, PC

Trump introduces FY 2018 “skinny budget” proposal that eliminates SEOG, reduces FWS, and takes Pell surplus

On March 16, 2017, the White House Office of Management and Budget (OMB) released President Trump’s budget request for FY 2018, known as the “skinny budget.” The detailed spending and policy proposals are expected to be released in May. The Trump budget requests $59 billion for the Department of Education programs, a $9.2 billion or 13.5 percent reduction below the funding level included in the FY 2017 Continuing Resolution. The reduction of more than $54 billion from non-defense discretionary spending will be used to increase defense and homeland security spending.

The FY 2018 budget proposals call for:

• Level-funding the discretionary portion of the Pell Grant program;
• Eliminating the $732 million FSEOG program;
• Reducing FWS “significantly” and reforming “the poorly targeted allocation to ensure funds go to undergraduate students who would benefit most;”
• Providing $808 million for Federal TRIO programs and $219 million for GEAR UP, a cut of $193 million;
• Providing $492 million in funding for Historically Black Colleges and Universities and Minority-Servicing Institutions; and
• Eliminating or reducing over 20 categorical programs, including Teacher Quality Partnerships and International Education programs.

Secretary Betsy DeVos released a statement saying: “Today’s Budget Blueprint keeps with President Trump’s promise to promote the U.S. Department of Education on its mission to serve students.”

A copy of Secretary DeVos’ statement is found at: https://www.ed.gov/news/press-releases/statement-secretary-education-betsy-devos-america-first-budget

A copy of the “America First: A Budget Blueprint to Make America Great Again” is found at: https://assets.documentcloud.org/documents/3518210/2018-Budget-Blueprint.pdf

Enzi asks Secretary DeVos to conduct a comprehensive audit of all student loan-related data

On Feb. 28, 2017, Senate Budget Committee Chairman Mike Enzi (R-WY) released a letter he sent to Secretary of Education Betsy DeVos on Feb. 23, 2017, asking her to conduct audits of all student loan- related data. Senator Enzi cited inaccurate data about the projected cost of income-driven repayment plans that was found in a fall 2016 Government Accountability Office (GAO) study and student loan repayment rates included in the College Scorecard and in the Financial Aid Shopping Sheet that was disclosed in an Electronic Announcement of Jan. 13, 2017. Senator Enzi said: “It’s important to realize that if the Education Department were a bank, it would be among the largest in the nation, based on its $1.3 trillion student loan portfolio.”

A copy of the Senator’s letter is found at: http://www.budget.senate.gov/imo/media/doc/Letter%20to%20Secretary%20DeVos.pdf

House Education Subcommittee holds hearing focusing on improving federal student aid system

On March 21, 2017, the House Education and Workforce Training Subcommittee held a hearing entitled, “Improving Federal Student Aid to Better Meet the Needs of Students,” to examine proposals to streamline and simplify the federal student aid system during the reauthorization of the Higher Education Act. In his opening statement, Chairman Brett Guthrie (R-KY) discussed the complexity of the federal student aid system and of the need for change. “Over the years, the federal student aid system has become too complex. Students and their families are forced to navigate six different types of federal student loans, nine different repayment plans, eight different forgiveness programs, and 32 deferment and forbearance options – each with its own rules and requirements. We need to get rid of the complexity. We need to eliminate the confusion students face.” Ranking Member Susan Davis (D-CA) said substantial success has been made in promoting access but there is tremendous room for improvement.

Both lawmakers and the witnesses described the potential benefits and challenges associated with implementing a “one grant, one loan” system for aid, bringing back the year-round Pell Grant, expanding authority for financial aid officers to counsel students and in some cases limit their borrowing or distributing aid more incrementally, and implementing income-share agreements more broadly as an alternative funding mechanism.

Chairman Guthrie’s opening remarks are found at: http://edworkforce.house.gov/news/documentsingle.aspx?DocumentID=401468

For copies of all of the opening statements, witness testimony and an archived webcast, go to: http://edworkforce.house.gov/calendar/eventsingle.aspx?EventID=401416

Senators Bennet and Rubio introduce bill to establish alternative process to authorize higher education providers

On March 13, 2017, Senators Michael Bennet (D-CO) and Marco Rubio (R-FL) introduced S. 615, Higher Education Innovation Act, a bill that would establish an alternative, outcomes-based process for authorizing innovative, higher-quality higher education providers to participate in programs under Title IV of the Higher Education Act of 1965. S. 615 would give previously unaccredited institutions access to federal financial aid under a five-year pilot program. Higher education providers would be eligible for aid through contracts with the Department of Education if they demonstrate quality through positive student outcomes.

Senator Rubio said in a press release: “America needs a 21st century higher education system that embraces all the new ways people can learn and acquire skills without having to go the traditional four-year college degree track.” Senator Bennet said: “In order for our kids and grandkids to succeed in the 21st century economy, they need access to higher education. Our generation is at risk of becoming the first American generation to leave less opportunity to our children than we inherited … This bill is an important first step to change some of the broken incentive structures in higher education, and create an outcomes-based process for schools and students.”

A copy of the press release is found at: https://www.bennet.senate.gov/?p=release&id=3826

Senate HELP Committee Democrats request hearings on ED appointees

On March 7, 2017, Senators Elizabeth Warren (D-MA), Bernie Sanders (D-VT), Bob Casey (D-PA), Tammy Baldwin (D-WI), Al Franken (D-MN), Maggie Hassan (D-NH), and Chris Murphy (D-CT) sent a letter to Chairman of the Health, Education, Labor and Pensions Committee Lamar Alexander (R-TN) requesting that the HELP Committee hold hearings for those Department of Education appointees needing confirmation including Deputy Secretary, Under Secretary, General Counsel, and Assistant Secretaries with authorities over policy, civil rights and postsecondary education. “We have an obligation to question the individuals with whom Secretary DeVos will work in the Department and whom she admittedly expects to rely upon to protect the integrity of our higher education system.”

A copy of the Senate Democrat’s letter is found at: https://www.warren.senate.gov/files/documents/2017-3-7_Ltr_to_Alexander_re_HELP_nominees.pdf

Murray and Scott request answers on program cuts

On Feb. 24, 2017, Senate Health, Education, Labor and Pensions (HELP) Committee Ranking Member Patty Murray (D-WA) and House Education and the Workforce Committee Ranking Member Bobby Scott (D-VA) asked Secretary of Education Betsy DeVos to explain comments she made on a Michigan radio program a few weeks before when she said she would review, audit, and examine all programs at the U.S. Department of Education for possible elimination. The letter stated that her “comments raise questions on the purpose of the review, of the criteria by which she will judge the programs and units for their importance, mission, and efficacy, as well as any involvement or consultation of stakeholders, including seeking input from parents, teachers, and staff of education systems, students, advocates, and community members.”

Senator Murray and Congressman Scott also requested answers from Secretary DeVos regarding reports that the Trump Administration might downsize the Department of Education, possibly eliminating the post of Under Secretary and a number of deputy assistant secretary positions. The letter said that “Qualified and effective staff is critical to fulfill the Department’s mission and responsibilities.”

A copy of the letter is found at: https://www.nasfaa.org/uploads/H5QB4B-f.pdf

Senate votes to approve resolution repealing teaching training rules

On March 8, 2017, the Senate voted 59-40 to approve a resolution repealing teacher preparation and state accountability regulations published by the Department of Education in October 2016. The House of Representatives approved the resolution in Feb. 7, 2017. The resolution now goes to President Trump who is expected to sign the resolution. The regulation stipulated that federally-funded teacher preparation programs must be evaluated based on the academic outcomes of those teachers’ students. Public and private teacher colleges and Republican senators have long-opposed the regulation.

“Overturning this regulation says that states – not a distant department in Washington, D.C. – are responsible for evaluating whether a college’s program gives teachers the skills they need to help their students learn,” according to Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander (R-TN).

A copy of Senator Alexander’s press release is found at: https://www.alexander.senate.gov/public/index.cfm/pressreleases?ID=4355AB8E-EF8F-42B1-8323-AF0738746683

Department delays GE deadlines for appeals and disclosures

On March 6, 2017, the Department of Education released Electronic Announcement #105 announcing that it was allowing additional time, until July 1, 2017, for institutions to submit an alternative earnings appeal to the gainful employment Debt-to-Earnings rates that were released on Jan. 9, 2017 and comply with the GE program disclosure requirements as released in Gainful Employment Electronic Announcement #103 published on Jan. 19, 2017. According to Electronic Announcement #105, “This action is taken to allow the Department to further review the GE regulations and their implementation.”

Electronic Announcement #105 states that institutions seeking to appeal a zone or failing rate were to provide a Notice of Intent to appeal by Jan. 23, 2017. The Jan. 23, 2017 deadline is not affected by the provision of additional time for submission of a final appeal.

A copy of Electronic Announcement #105 is found at: https://ifap.ed.gov/eannouncements/030617GEAnnounce105AddtlSubTimeAEAandGEDisReq.html

A Federal Register notice was issued on March 10, 2017 and is found at: https://ifap.ed.gov/fregisters/attachments/FR031017.pdf

On March 13, 2017, a group of Democrats sent a letter to Secretary Betsy DeVos expressing concern about the Department’s decision to delay implementation of the gainful employment regulation. See: https://www.reed.senate.gov/news/releases/reed-durbin-warren-call-on-us-department-of-education-to-explain-delay-of-gainful-employment-rule

On March 13, 2017, Senators Elizabeth Warren (D-MA), Dick Durbin (D-IL), and Sherrod Brown (D-OH) sent to a letter to the Department’s Inspector General Kathleen Tighe calling for an investigation into the Department’s decision to delay implementation of the gainful employment regulation. See: https://www.warren.senate.gov/files/documents/2017_03_3_ED_IG_Letter.pdf

On March 22, 2017, more than 50 organizations representing students, teachers, and veterans sent a letter to members of Congress asking them to refrain from rolling back regulations that protect students and taxpayers from the proprietary sector. The letter said that the protections should be strengthened not rolled back. See: http://www.ticas.org/sites/default/files/pub_files/coalition_letter_on_ge_bd_ic.3.21.17.pdf

Department issues notice that data retrieval tool is not available for several weeks due to security concerns

On March 10, 2017, the Department of Education issued an Electronic Announcement announcing that the IRS Data Retrieval Tool (DRT) is currently unavailable because of security concerns. The DRT permits students and families to transfer their federal tax data to the FAFSA. The Electronic Announcement said that the IRS and ED are investigating the system to strengthen the security of the information provided by DRT.

A copy of the Department’s notice is found at: https://ifap.ed.gov/eannouncements/031017IRSandDeptofEdStatementAboutIRSDataRetrievalToolDRT.html

Department issues further guidance on third-party servicers

On March 8, 2017, the Department of Education issued an updated version of the set of third-party servicer Questions and Answers that address questions submitted to the Department. There are four new questions attached to the initial set of Questions and Answers that was published in DCL GEN-16-15 on Aug. 18, 2016.

A copy of the Electronic Announcement is found at: https://ifap.ed.gov/eannouncements/030817UpdatedThirdPartyServicerQuestionsandAnswers.html

Department updates data on its FSA data center

On March 7, 2017, the Department of Education released updated data to the FSA Data Center. The updated data includes information on FAFSA volume, the makeup of the loan portfolio, enrollment in income-driven repayment plans, and new defaults and delinquency rates.

A copy of the Electronic Announcement is found at: https://ifap.ed.gov/eannouncements/030917FSAPostsUpdatedReportsFSADataCenter.html

IG releases results of audit that assesses FSA processes for identifying Title IV schools at risk of unplanned closure

On Feb. 24, 2017, the Department of Education’s Office of Inspector General (OIG) released the results of its audit in a report titled, “Federal Student Aid’s Processes for Identifying At-Risk Title IV Schools and Mitigating Potential Harm to Students and Taxpayers.” The review covered the period January 2012 through July 2016, which enabled the IG to see how FSA’s processes have changed since fiscal issues first emerged at Corinthian Colleges, Inc. in February 2012 and the subsequent closure of its schools in April.

The audit report found that FSA has processes, including newer processes that were adopted in response to the Corinthian closure, as well as the new borrower defense regulations that can help FSA identify Title IV schools at risk of unexpected or abrupt closure and help mitigate the potential harm to students and taxpayers. However, the IG concluded that FSA could do more to protect students and taxpayers from these types of school closures, such as improving its processes for reviewing a school’s composite score calculation to prevent schools from manipulating composite scores to avoid sanctions or increased FSA oversight.

A copy of the IG audit report is found at: https://www2.ed.gov/about/offices/list/oig/auditreports/fy2017/a09q0001.pdf

On March 28, 2017, 18 Democratic Senators sent a letter to Secretary of Education Betsy DeVos urging her to implement the recommendations made by the OIG. The Senators wrote that “There were clear warning signs that the school’s instability posed a critical risk to students and taxpayers, but the Department’s failure to properly identify Corinthian’s financial instability and seek protections to guard against potential taxpayer losses associated with its closure meant tens of thousands of students’ lives were disrupted and taxpayers lost hundreds of millions of dollars.” The Senators also urged the Secretary to enforce the “borrower defense to repayment” regulations, which will improve FSA’s processes for “identifying Title IV schools at risk of unexpected or abrupt closure.”

A copy of the Senators’ letter is found at: https://www.warren.senate.gov/?p=press_release&id=1521

Justice Department argues the structure of CFPB is unconstitutional

On March 17, 2017, the Department of Justice filed an amicus brief for the United States in the appeal brought by PHH Corp. of a fine by the Consumer Financial Protection Bureau (CFPB). A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit last October set aside the fine, both because the CFPB’s action was not authorized under the Real Estate Settlement Procedures Act (RESPA) and because the Bureau’s structure is unconstitutional, as the CFPB’s director has too much unchecked power. The CFPB’s request for a rehearing by all active judges of the Court of Appeals was granted in February. The Justice Department brief supports the opinion of the three-judge panel that the CFPB’s structure violates separation of power rules.

NACIQI rejects staff report’s recommendation for ABHES to expand its scope to include master’s degree programs

On Feb. 22, 2017, the National Advisory Committee on Institutional Quality and Integrity (NACIQI) voted 8-2, along party lines, to recommend that the Secretary of Education deny the request of the Accrediting Bureau of Health Education Schools (ABHES) to expand its scope to include master’s degree programs. Several members of NACIQI raised questions about one of its institutions, Ultimate Medical Academy, that was run by the former chief operating officer of President Donald Trump’s Trump University. The Department’s accreditation staff had recommended to NACIQI that ABHES be approved for the expansion of scope. ABHES received full recognition at NACIQI’s last meeting in 2016. On March 6, 2017, ABHES submitted an appeal to NACIQI’s recommendation.

WICHE study shows that online courses do not cost less to produce than brick and mortar courses

A survey conducted by the WICHE Cooperative for Educational Technologies (WCET) found that most colleges charge students the same or more to study online. When additional fees are included, more than half of the distance education students pay more than those enrolled in brick and mortar courses. The higher charges to students are related to the higher production costs of online courses. According to the authors, Russell Poulin and Terri Taylor Straut, producing an online course means licensing software, engaging instructional designers, training faculty, and offering around-the-clock student support.

A copy of the report, “Distance Education Price and Cost Report,” is found at: http://wcet.wiche.edu/sites/default/files/Price-and-Cost-Report-2017_0.pdf

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.