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Washington News Brief


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

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

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

Democratic lawmakers urge Secretary DeVos to restore student loan servicing protections

On April 26, 2017, more than 130 Democratic lawmakers sent a letter to Secretary of Education Betsy DeVos urging her to reinstate the consumer protections for student borrowers. On April 11, 2017, Secretary DeVos advised Federal Student Aid Chief Operating Officer James Runcie that she was revoking the student loan servicing guidance issued under the Obama administration. The letter said that the Secretary’s decision to rescind the previous guidance raises questions about how the Department will hold student loan servicers accountable and protect the borrowers’ rights.

A copy of the letter is found at: https://www.help.senate.gov/imo/media/doc/Servicing%20Memo%20Bicam%20Letter%20(FINAL).pdf

A copy of the Secretary’s rescission of the guidance is found at: https://www.ed.gov/news/press-releases/memorandum-secretary-education-betsy-devos-fsa-chief-operating-officer-james-runcie-regarding-student-loan-servicer-recompete

Senate Democrats express concern to Secretary Mattis over DoD’s college oversight

On April 5, 2017, Senators Elizabeth Warren (D-MA), Jack Reed (D-RI), Patty Murray (D-WA), Richard Blumenthal (D-CT), and Dick Durbin (D-IL) sent a letter to Secretary of Defense James Mattis expressing concern about the Department of Defense’s (DoD) plans for regulating colleges that educate service members through the DoD’s Tuition Assistance program. The DoD plans to randomly select 200 of the more than 2,000 colleges for an audit each year and select an additional 50 colleges that are identified as low-performing on a series of metrics. The Senators wrote that they are unsure about the plan’s ability to properly deter misconduct at colleges. “While we appreciate the institution of any compliance structure given the lack of a current one, and the inclusion of student outcomes and complaints in the methodology, substantial questions remain regarding how DoD intents to protect service members form predatory actors in higher education.” The Senators were also concerned about the DoD’s plan to hire PricewaterhouseCoopers to conduct the reviews because they believe the hire could present a conflict of interest as some colleges hire the company to perform other services.

A copy of the letter is found at: https://www.warren.senate.gov/files/documents/2017_04_05_Mattis_DOD_Tuition_Assistance_Letter.pdf

Hundreds of organizations request that Congress protect student aid programs

On April 4, 2017, more than 570 organizations representing students, educators, advocates, consumers and others sent a letter to Senators and Congressmen requesting Congress to protect student aid programs such as the Federal Work Study program, TRIO and federal student loan programs and to strengthen the Pell Grant program. The letter said: “Federal student aid serves a critical role in preserving access to higher education, and enabling student success at a time when postsecondary education has never been more necessary to support the American economy.”

A copy of the letter is found at: http://ticas.org/sites/default/files/u159/student_aid_support_letter_4-4-17.pdf

Senators demand action and answers from the Department of Education for the inconsistent treatment of student loan borrowers in public service jobs

Student loan borrowers who entered low-paying public service careers with the expectation that their debt would be forgiven by the federal government are no longer able to count on the assurances from government contractors that they qualify for the loan forgiveness. On April 6, 2017, 36 senators, led by Mark Warner (D-VA), Claire McCaskill (D-MO), Kirsten Gillibrand (D-NY), Bill Nelson (D-FL), and Patty Murray (D-WA), sent a letter to Secretary of Education Betsy DeVos stating their concern over announcements that borrowers may not be able to rely on notices they have previously received about their eligibility for the Public Service Loan Forgiveness (PSLF) program. The senators call on the Department to make those borrowers whole by grandfathering them into the program for the period they were previously approved. The senators called the Department’s treatment of the borrowers “unacceptable” and accuse the Department of “creating a great deal of confusion for applicants” based on where they work. The letter requests that the Secretary further streamline the application process and make it more transparent to reduce the confusion and inconsistency for PSLF borrowers.

A copy of the letter from the senators is found at: https://www.help.senate.gov/imo/media/doc/040617%20Dem%20Caucus-DeVos%20PSLF%20Final.PDF

Department updates quarterly list of colleges under review

In mid-April 2017, the Department of Education updated its quarterly list of colleges subject to heightened cash monitoring because they are under additional oversight by the Department. The data indicates that as of March 1, 2017, 545 postsecondary institutions face some restrictions on their access to federal financial assistance. On Dec. 1, 2016, the number of postsecondary institutions subject to heightened cash monitoring was 538.

The data center for schools on heightened cash monitoring is found at: https://studentaid.ed.gov/sa/about/data-center/school/hcm

Department of Education launches new database to search accreditation statuses of colleges and universities

In mid-April 2017, the Department of Education launched a new database that allows users to search and view the accreditation status of colleges and universities. This action follows the guidance provided by the Department to accreditors on Nov. 17, 2016 clarifying terminology and requirements for accrediting agency reporting to the Department.

The link to the Department’s accreditation website is found at: https://ope.ed.gov/accreditation/

Secretary asks FSA COO to withdraw several policy memos regarding student loan servicing

On April 11, 2017, Secretary of Education Betsy DeVos sent a letter to Federal Student Aid (FSA) Chief Operating Officer James Runcie announcing that she was withdrawing several policy memos regarding student loan servicing that were issued by former Secretary John B. King, Jr. and former Under Secretary Ted Mitchell, which focused on improving loan servicing for borrowers and changing the way the Department of Education determines which third-party servicers would participate in a new servicing platform. In April 2016, the Department launched its student loan servicing initiative, which aimed at streamlining the loan servicing process for borrowers.

Secretary DeVos said: “We now find ourselves in a situation where we must promptly address not only these shortcomings but also any other issues that may impede our ability to ensure borrowers do not experience deficiencies in service. This must be done with precision, timeliness and transparency.? Secretary DeVos said that she was removing the memos “to negate any impediment, ambiguity or inconsistency in the approach needed to accomplish this critical mission.” She also noted in her letter that “We must create a student loan servicing environment that provides the highest-quality customer service and increases accountability and transparency for all borrowers, while also limiting the cost to taxpayers.”

A copy of the memo is found at: https://www2.ed.gov/documents/press-releases/student-loan-servicer-recompete.pdf

A number of news articles reported that many members of the higher education community are alarmed that the Department appears to no longer be focusing on the interests of borrowers. In an April 13, 2017 Chronicle of Higher Education article, Senator Elizabeth Warren(D-MA) was reported to have tweeted that “Betsy DeVos made clear she stands with companies that cheat & squeeze borrowers.”

Secretary meets with higher education groups

On April 12, 2017, Secretary of Education Betsy DeVos met with representatives from the higher education community. The group discussed a wide range of topics related to higher education. Secretary DeVos said: “Increasing access to and affordability of higher education is a top priority for this Administration.”

A copy of the press release is found at: https://www.ed.gov/news/press-releases/statement-secretary-education-betsy-devos-following-meeting-higher-education-groups

Secretary participates in President’s Strategy and Policy Forum listening session

On April 11, 2017, Secretary of Education Betsy DeVos participated in a listening session with the President’s Strategy and Policy Forum with her fellow Cabinet members and White House senior staff. Secretary DeVos said: “In a rapidly changing economy, it is imperative that we give our students the skills they need to succeed outside the classroom. This starts by returning decision making powers back to state and local governments and giving them flexibility they need to meet the unique challenges they face. When the federal government gets out of the way, we remove a major obstacle blocking states from implementing common sense reforms.”

A copy of the press release is found at: https://www.ed.gov/news/press-releases/statement-secretary-education-betsy-devos-presidents-strategy-and-policy-forum-listening-session?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=

Secretary of Education DeVos announces new flexibilities for FAFSA filers

On April 24, 2017, Secretary of Education Betsy DeVos announced new flexibilities available to institutions to use for verification of the FAFSA. The announcement is part of the Department’s effort to provide additional assistance to students and families impacted by the suspension of the IRS Data Retrieval System (DRT) because of security concerns. Previously, on April 6, 2017, IRS Commissioner John Koskinen advised the Senate Finance Committee that the personal information for up to 100,000 taxpayers may have been compromised in a security breach of the DRT. He testified that the IRS has begun notifying those potentially affected breach. Mr. Koshinen said that about 8,000 fraudulent refunds were issued, costing $30 million. He also said that the IRS filters stopped 52,000 returns and prevented 14,000 illegal refund claims from being sent.

Secretary DeVos said: “We will continue to look for additional ways to ease the burdens created by the IRS DRT outage until the tool can be restored with added security measures in place later this year.” The new options include:

  • In lieu of using the DRT, or obtaining an IRS transcript, institutions may consider a signed paper copy of the 2015 IRS tax return; and
  • Institutions are no longer required to collect documentation from the IRS for the verification of non-filing.

A copy of the press release is found at: https://www.ed.gov/news/press-releases/secretary-education-betsy-devos-announces-new-flexibilities-fafsa-filers-impacted-irs-drt-suspension?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=

A copy of the letter sent to institutions is found at: https://ifap.ed.gov/dpcletters/GEN1704.html

Department announces it will restore Pell Grant eligibility of students who attended schools that closed

On April 3, 2017, the Department of Education announced that it will move forward with a plan developed under the Obama administration to restore Pell Grant eligibility of students who had attended schools that closed. The Department will begin sending emails to Pell Grant recipients who attended closed colleges to advise them that the Department will be resetting their eligibility for the Pell Grant, which has a lifetime cap of six years or 12 semesters. The Department will remove the portion of the Lifetime Eligibility Used (LEU) attributable to the students’ attendance at a closed school.

A copy of the electronic announcement is found at: https://ifap.ed.gov/eannouncements/040317GuidanceCODProcPellGrantRestorationforClosedSchools.html

Trump announces new Assistant Secretary for Management who has been designated as senior department official for purposes of considering NACIQI recommendations

On April 20, 2017, President Trump announced that he will appoint Holly Luong Ham as Assistant Secretary for Management at the Department of Education. Ms. Ham has been serving as Secretary of Education Betsy DeVos’ Special Assistant. Earlier, Ms. Ham was named to be the designated Senior Department Official who will rule on the recommendations from the National Advisory Committee on Institutional Quality and Integrity (NACIQI). Before joining the Department of Education, Ms. Ham worked for Hewlett Packard Enterprise for the past 18 years.

The President’s announcement is found at: http://www.the-president.us/17667.html

The designation of Ms. Ham as Senior Department Official by the Department is found at: http://static.politico.com/28/b1/853ab4e5432587a6f833e2ea1e2a/education-department-taps-holly-ham-as-senior-official-overseeing-accreditation.pdf

White House announces nominee for ED General Counsel; Secretary announces selection of Deputy Assistant Secretary for Civil Right and other staff

On April 12, 2017, President Trump nominated Carlos Muñiz as General Counsel of the Department of Education. Mr. Muñoz is an attorney at McGuireWoods. His prior experience includes serving as Deputy Attorney General in Florida and as Deputy General Counsel to the Governor of Florida. He earned degrees from the University of Virginia and Yale Law School.

Candice E. Jackson has accepted the appointment to serve as the Deputy Assistant Secretary for Civil Rights and Acting Assistant Secretary for Civil Rights. Ms. Jackson was reported to have helped the Trump campaign organize an event last fall with several women who have accused Bill Clinton of sexual misconduct.

In a press release of April 12, 2017, Secretary of Education Betsy Devos announced the hiring of several staff members including the nomination of Mr. Muñoz and the hiring of Ms. Jackson.

The press release announcing the hiring of several senior staff is found at: https://www.ed.gov/news/press-releases/us-secretary-education-announces-chief-staff-and-additional-staff-hires

21 State Attorneys General send letter to Secretary opposing rollback of student loan servicing reforms

On April 25, 2017, 21 State Attorneys General and the Office of Consumer Protection of Hawaii sent a letter to Secretary of Education Betsy DeVos stating their opposition to the Department’s rollback of student loan servicing reforms. Last year, the Department had issued guidance that would ensure the consistency of service provided by student loan servicers, increase servicer accountability, and enhance transparency. On April 11, 2017, Secretary DeVos directed Federal Student Aid Chief Operating Officer James Runcie to withdraw student loan servicing guidance provided under the Obama administration. The letter states: “Many such borrowers would benefit greatly from entering income-driven repayment plans but are prevented from doing so by student loan servicer misconduct and misinformation.”

A copy of the Secretary’s memo is found at: https://www.ed.gov/news/press-releases/memorandum-secretary-education-betsy-devos-fsa-chief-operating-officer-james-runcie-regarding-student-loan-servicer-recompete

A copy of the April 25, 2017 letter to the Secretary is found at: https://ag.ny.gov/sites/default/files/multistate_letter_to_sec._devos_4.24.17.pdf

OMB issues memorandum to all Federal agencies directing them to make major program and personnel cuts

On April 12, 2017, the Office of Management and Budget (OMB) issued a memorandum to all federal agencies directing them to make major program and personnel cuts to downsize the federal government. The memorandum directs federal agencies to eliminate those programs that are duplicative, nonessential to the agency’s mission, or carried out by state and local governments. It also directs agencies to eliminate those programs that are “not justified by the unique public benefit it provides” and to restructure those programs that are retained to provide better customer service. The memorandum also instructs federal agencies to “begin taking immediate actions to achieve near-term workforce reductions” and by September 2017, to deliver an agency reform plan to shrink the number of personnel to accommodate the long-term reductions included in the proposed budget. The memorandum also directs federal agencies to develop a plan by June 30, 2017, to maximize employee performance, including steps to reward employees deemed effective while working to improve or dismiss low-performing employees.

A copy of the memorandum is found at: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2017/M-17-22.pdf

U.S. Court of Appeals unanimously rules in favor of ACICS

On April 21, 2017, the U.S. Court of Appeals unanimously ruled in favor of the Accrediting Council for Independent Colleges and Schools (ACICS) stating that ACICS did not have to comply with the request for information from the Consumer Financial Protection Bureau (CFPB) because its subpoena was overly vague. On Aug. 25, 2015, the CFPB had asked ACICS to identify the institutions that it had accredited since January 2010 and name a representative to testify on the accreditation of seven colleges. The CFPB wanted “to determine whether any entity or person has engaged or is engaging in unlawful acts and practices in connection with accrediting for-profit colleges.”

Last year, the U.S. District Court for the District of Columbia agreed with ACICS and ruled that the CFPB did not have the authority to investigate how accreditors accredit for-profit colleges. The April 21, 2017 decision upheld the lower court decision but wrote that the CFPB’s demand for information was invalid because the subpoena was too vague in describing the scope of the investigation.

Student loans impact older Americans

On April 12, 2017, a study was released by IonTuition, a student loan debt management company, which is titled, “An Unexpected Burden: Student Loans and their Impact on Americans Over 35.” Among the survey respondents, 74 percent (50 percent of Generation Xers and 14 percent of Baby Boomers) said they are still paying off student loans, which challenges the presumption that college graduates can be expected to pay off their student loan debt by the age of 34, typically within the 10-year standard repayment period. The survey found that older workers with student loans face a delayed retirement. In addition, older borrowers are not prepared to make monthly student loan payments this late in life and because of student loan payments, older Americans have not been able to save for their retirement.

A copy of the student is found at: https://blog.iontuition.com/student-loan-debts-affect-americans-35/

Sharon Bob

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@PowersLaw.com // http://www.powerslaw.com



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