Washington News Brief

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

DoD report opposes repeal of Public Service Loan Forgiveness program

A Department of Defense Information Paper, dated January 10, 2018, which was recently made public, recommends opposing H.R. 4508, the PROSPER Act, because it would repeal the Public Service Loan Forgiveness (PSLF) program. The PSLF program “has been an important recruitment and retention tool for the military to compete with the civilian sector, predominantly in specialty fields, such as the Judge Advocates General Corps, for whom graduates are required. The absence of this program, particularly in a strong economy, makes recruitment and retention especially difficult in specialized occupations.”

A copy of the DoD information paper is found at: http://democrats-edworkforce.house.gov/imo/media/doc/2018-01-10%20DoD%20Opposition%20to%20HR450811.pdf

Department of education restores ACICS’ recognition following the ruling of the District Court Judge that the Department had “procedurally erred” in terminating ACICS

On March 23, 2018, U.S. District Court Judge Reggie B. Walton wrote in a 66-page opinion that the Department of Education had “procedurally erred” in terminating the Accrediting Council for Independent Colleges and Schools (ACICS), by violating the Administrative Procedure Act (APA), because it failed to consider supplementary information provided by ACICS. Specifically, the Department failed to consider a supplement to ACICS’ response to a set of questions the Department asked ACICS in March 2016, as well as information ACICS gave the Department about its placement verification and data integrity procedures. By failing to consider the additional evidence, the Department acted “arbitrarily and capriciously.” As a result, Judge Walton remanded the case to Secretary of Education Betsy DeVos for reconsideration of the relevant evidence.

As a result of the decision of the U.S. District Court, on April 3, 2018, the Department issued a notice to ACICS that its status as a federally recognized accrediting agency is restored effective as of December 12, 2016 and it will remain in that status until the Secretary of Education reaches a final decision on its January 2016 petition. Secretary of Education Betsy DeVos said in the press release of April 3, 2018: “As the court ordered, we will fairly consider all of the facts presented and make an appropriate determination on ACICS’ petition.” ED is also allowing ACICS to submit additional evidence, which must be submitted by May 30, 2018. Therefore, the Department will not conduct any further review of the full petition for recognition submitted by ACICS in December 2017, and ACICS was removed from the agenda for the May 2018 meeting of the National Advisory Committee on Institutional Quality and Integrity (NACIQI). The Secretary’s options following a review of ACICS’ 2016 petition for recognition include full recognition through 2021, limited recognition for a period of 12 months in order for ACICS to have the ability to come into compliance, or revocation of ACICS’ recognition.

A copy of the U.S. District Court’s decision is found at: https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2016cv2448-76

A copy of the Department’s order sent to ACICS is found at: http://www.cecuevents.org/_res/u/downloads/ACICS.pdf

A copy of the Department of Education’s press release is found at: https://www.ed.gov/news/press-releases/following-court-ruling-devos-orders-further-review-2016-acics-petition

A copy of the ACICS letter to its members: http://www.acics.org/news/content.aspx?id=7154

Grassley questions the oversight of the SEVP program

On March 26, 2018, Senator Chuck Grassley (R-IA), Chairman of the Senate Judiciary Committee, wrote to the Secretaries of the Department of Homeland Security (DHS), the Department of Education (ED), and the State Department questioning the oversight of the Student and Exchange Visitor Program (SEVP) and claiming that some institutions have used the program to operate as “visa mills.” Senator Grassley said that there are many reputable colleges and universities that enroll foreign students, but there are dozens of questionable schools that provide little or no educational benefit to those who pay tuition.

Included in the letter were examples of ways he believes colleges and universities have skirted the guidelines of the SEVP program. For instance, many schools are exploiting the lure of employment opportunities to maximize revenues. He said some institutions, including Pomona College, Williams College, Yale and MIT, all recently reclassified their Economics program so that they qualify for the Department of Education’s “STEM” designation because foreign students in STEM fields can work in the U.S. for three years or more after graduation. Senator Grassley also described other egregious practices, such as identifying an institution that reported many more foreign students than it was certified to enroll and offered no real classes to those students.

Senator Grassley included a list of questions to better understand what DHS, ICE, and SEVP are doing to eliminate visa mills, protect U.S. graduates, and combat student visa overstays.

A copy of the Senator’s letter is found at: https://www.grassley.senate.gov/news/news-releases/grassley-examines-lax-oversight-visa-mills-offering-visas-foreign-students

Senate Democrats request that ED “swiftly implement” changes made to the PSLF program

On March 30, 2018, Senators Tim Kaine (D-VA), Sheldon Whitehouse (D-RI), Tammy Duckworth (D-IL), and Maggie Hassan (D-NH) sent a letter to Secretary of Education Betsy DeVos requesting that the Department of Education “swiftly implement” changes made to the Public Service Loan Forgiveness (PSLF) Program that were included in the Consolidated Appropriations Act of 2018 (P.L. 115-141) that was signed into law by the President on March 23, 2018. The provision allocates $350 million for loan forgiveness for teachers, soldiers, social workers, and other public servants with loan balances that they thought would be eligible for PSLF but were not because they were enrolled in ineligible repayment plans. The funds are available on a first-come, first-serve basis. The Department is directed under this provision to develop a simple method for borrowers to apply for loan forgiveness within 60 days of enactment and is provided $2.3 million to conduct outreach to improve the knowledge of the benefits of the PSLF Program.

A copy of the letter is found at: https://www.kaine.senate.gov/press-releases/kaine-whitehouse-duckworth-hassan-push-devos-to-put-new-public-service-student-debt-relief-into-action

Senate Democrats ask GAO to study conversions from for-profit to nonprofit colleges

On April 2, 2018, Senators Maggie Hassan (D-NH), Dick Durbin (D-IL), and Patty Murray (D-WA) sent a letter to Gene L. Dodaro, Comptroller General of the U.S. Government Accountability Office, asking him to study the growing trend of for-profit institutions attempting to convert to not-for-profit status. The Senators expressed concern that the for-profit colleges may “use these conversions to shield themselves from scrutiny and continue to put profits over students’ best interests, even as not-for-profit institutions.” The three Senators are seeking more information about how attempts to convert from for-profit to non-profit status are evaluated and decided.

A copy of the letter is found at: https://www.republicreport.org/wp-content/uploads/2018/04/2018.04.02-Senators-to-GAO-re-higher-ed-conversions-letter.pdf

FSA releases new reports on Direct Loan Borrowers

On April 6, 2018, Federal Student Aid (FSA) released six new reports highlighting the characteristics of the Direct Loan borrowers. The new reports are posted on the FSA Data Center.

The Electronic Announcement is found at: https://ifap.ed.gov/eannouncements/040618FederalStudentAidPostsNewReportstoFSADataCenter.html

NACIQI announces agenda for the next meeting

On April 9, 2018, the National Advisory Committee on Institutional and Quality Integrity (NACIQI) published a Notice in the Federal Register setting forth the agenda, time and location of the May 22-24, 2018 meeting. In addition to considering applications for renewal of recognition and other compliance reports, NACIQI will be discussing the letter received from Senators Elizabeth Warren (D-MA), Sherrod Brown (D-OH), Patty Murray (D-WA), Dick Durbin (D-IL), and Ron Blumenthal (D-CT) regarding their concerns of for-profit institutions that are converting to nonprofit entities in order to avoid scrutiny.

A copy of the Notice is found at: https://www.gpo.gov/fdsys/pkg/FR-2018-04-09/pdf/2018-07212.pdf

Senate Democrats ask IRS to scrutinize conversions from for-profit to nonprofit colleges

On April 10, 2018, 11 Senate Democrats sent a letter to David Kautter, Assistant Secretary of the Treasury for Tax Policy and Acting Commissioner of the Internal Revenue Service (IRS), asking that the IRS scrutinize applications received from for-profit colleges that are seeking to convert to nonprofit entities. The Senators expressed concern “that these recent attempts by for-profit colleges to convert to nonprofit organizations with tax-exempt status may violate federal tax law.” “We want to make sure that colleges are not able to use their new tax-exempt status to unjustly enrich executives, administrators, board members, officers, or other institutional insiders at the expense of the students served by such institutions.”

A copy of the Senators’ letter is found at: https://www.republicreport.org/wp-content/uploads/2018/04/2018.04.09-Senators-to-IRS-re-higher-ed-conversions.pdf

Department approves partnership that approves financial aid for alternative education programs

On April 13, 2018, the Department of Education gave final approval to the first partnership in an experiment that opens up federal student aid for alternative education programs. Brookhaven College, part of the Dallas County Community College District (DCCCD), is the first institution to receive final approval to enroll students in the Educational Quality through Innovation Partnerships (EQUIP) experiment. Through the EQUIP experiment, students will be allowed, for the first time, to use federal student aid to enroll in programs offered by innovative, nontraditional education providers that are partnering with accredited colleges or universities. Brookhaven is set to begin collaborating with StraighterLine, an online provider of self-paced educational courses. Students who have some college credit, but no credential, will be able to complete up to two-thirds of a DCCCD associate’s degree with a concentration in business or criminal justice by enrolling in StraighterLine courses. The Council for Higher Education Accreditation (CHEA) will provide quality assurance oversight of the DCCCD EQUIP experiment.

Secretary of Education Betsy DeVos said: “Nontraditional students comprise the fastest growing student segment in higher education. These students are looking for new, more efficient and lower-cost ways to earn workplace-relevant credentials, oftentimes while working and raising a family.”

A copy of the press release is found at: https://www.ed.gov/news/press-releases/expanding-pathways-success-after-high-school-us-department-education-approves-first-innovative-equip-experiment

ED to simplify student loan discharge process for disabled veterans

On April 16, 2018, the Department of Education (ED) announced that it has partnered with the Department of Veterans Affairs (VA) to make it easier for disabled veterans to discharge their federal student loans. Starting this month, the Department will begin to match borrowers on the National Student Loan Data System, who have federal student loans or aid through the Teacher Education Assistance for College and Higher Education Grant Program (TEACH), to the VA database. Borrowers positively identified in the match will be sent a customized letter that explains eligibility for loan discharge and include a total and permanent disability application that a borrower can sign and return for the discharge. Secretary of Education Betsy DeVos said: “Simplifying the loan forgiveness process and proactively identifying veterans with federal student loans who may be eligible for a discharge is a small but critical way we can show our gratitude for veterans’ service.”

A copy of the press release is found at: https://www.ed.gov/news/press-releases/us-department-education-and-us-department-veterans-affairs-team-simplify-student-loan-discharge-process-disabled-veterans

GAO releases report on Grad PLUS Borrowers and potential implications of instituting loan limits on Grad PLUS Loans

On April 17, 2018, the Government Accountability Office (GAO) released a report titled, “Characteristics of Graduate PLUS Borrowers,” in response to an inquiry from Senators Mike Lee (R-UT), Bill Cassidy (R-LA), and Tom Cotton (R-AR). In addition to borrower characteristics, the report also discusses how the addition of loan limits might affect the number and type of Graduate PLUS borrowers. The GAO report found that as of June 30, 2017, the Department of Education disbursed $71 billion in Grad PLUS Loan to 1.7 million borrowers. Borrowing amounts ranged from $5,000 to $98,554 and the average amount borrowed was $41,530 and the median amount borrowed was $26,863.

Currently, graduate and professional students can borrow up to their cost of attendance per academic year with no lifetime limit. Under an annual loan limit of $10,000, the overall federal disbursements would be reduced by $22.4 billion. Under an annual loan limit of $25,000, the overall federal disbursements would be reduced by $16.5 billion. Based on available data, the GAO found that the largest group of borrowers who would be affected by certain lifetime limits would be those in the doctoral professional practice programs and those in law and health-related fields of study.

A copy of the GAO report is found at: https://www.gao.gov/products/GAO-18-392R

Consumer groups sue Department over postponement of borrower defense to repayment rule

On April 19, 2018, the National Consumer Law Center (NCLC) and Public Citizen filed a lawsuit against the Department of Education in the U.S. District Court for the District of Massachusetts, demanding that the Department turn over records relating to the Department’s decision to delay the implementation of the borrower defense to repayment rule, which was announced on June 16, 2017. The NCLC and Public Citizen are seeking access to communications between the Department officials and for-profit trade associations prior to the announcement of the delay.

A copy of the lawsuit is found at: http://www.nclc.org/images/pdf/litigation/complaint-capps-foia.pdf

House Democrats release report highlighting issues with PROSPER Act

On April 20, 2018, the House Budget Committee released a report highlighting a number of issues with H.R. 4508, the PROSPER Act. The report states: “H.R. 4508 does very little to address student loan debt, ensure the viability of the Pell Grant program, or protect students against unscrupulous corporations.” The report cites Congressional Budget Office (CBO) estimates that the bill would cut mandatory spending for education programs by a net of $15 billion. The cuts would:

• Increase student debt: The policies would force students to borrow more, pay more to borrow, and face higher monthly student loan repayment bills after graduation;
• Erode the Pell Grant program: Total dollars would increase under this bill, but more than half of the increase will go to students attending for-profit schools and corporations; and
• Create greater profits for corporate interests and for-profit colleges at the expense of students: The bill would give “unfettered access to federal student aid funds without safeguards to protect students and taxpayers. It also would repeal several key requirements that keep colleges accountable.”

A copy of the report is found at: https://democrats-budget.house.gov/sites/democrats.budget.house.gov/files/documents/Prosper%20Act%204.18.18_FINAL.pdf

Department to release staff analysis on ACICS

On April 23, 2018, the Department of Education sent a letter to Politico, which stated that the staff analysis on the petition submitted by the Accrediting Council of Independent Colleges and Schools (ACICS) will be released under the Freedom of Information Act and “will be made available promptly.”

A copy of the letter on ACICS is found at: http://c.ymcdn.com/sites/www.ncher.us/resource/resmgr/daily_briefing/forprofitletter.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.