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Washington News Brief


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

Department of Labor introduces apprenticeship website

The Department of Labor introduced a new website for information on apprenticeship programs. The website includes general information, specific information about apprenticeships, and specific information about employers. A link to Frequently Asked Questions is also included. The website is found at: http://www.apprenticeship.gov

ED warns public of active phishing campaign targeting student email accounts

On Aug. 31, 2018, Federal Student Aid (“FSA”) announced that it has identified a “malicious phishing campaign” that may lead to potential fraud associated with student refunds and distributions. According to the announcement, several institutions have reported that attackers are using phishing email to obtain access to student accounts via the institution’s student portal. “The nature of the requests indicates the attackers have done some level of research and understand the schools’ use of student portals and methods. These attacks are successful due to student compliance in providing requested information and the use of just one factor for authentication.” FSA warned that once the attacker gains access to the student portal, it can change the student’s direct deposit destination to a bank account controlled by the attacker.

The announcement describes why institutions are vulnerable and how they can strengthen their cybersecurity posture through the use of two-factor or multi-factor authentication processes. The Department also states that if the institution has fallen victim to an attack, it should immediately contact the Department.

A copy of the announcement is found at: https://ifap.ed.gov/eannouncements/083118ActivePhishingCampaignTargetStudentEmailAccount.html

House passes student loan counseling improvement bill

On Sept. 5, 2018, the House of Representatives passed H.R. 1635, the Empowering Students Through Enhanced Financial Counseling Act, which seeks to improve the entrance and exit loan counseling requirements. H.R. 1635 passed by a vote of 406-4. All four of the “no” votes were from the Republicans. The bill, introduced by Representatives Brett Guthrie (R-KY) and Suzanne Bonamici (D-OR), would replace required entrance counseling with required annual counseling. In addition to student borrowers, Pell Grant recipients and Parent PLUS Loan borrowers would have to receive the annual counseling.

The bill now moves to the Senate for consideration. Both Senate Democrats and Republicans have indicated that they would prefer to deal with higher education reform through a comprehensive reauthorization of the Higher Education Act.

Chairman of the House Committee on Education and the Workforce Virginia Foxx (R-NC) and Ranking Member of the House Committee Bobby Scott (D-VA) released a press release praising the House passage of the bipartisan bill. A copy of the press release is found at: https://edworkforce.house.gov/news/documentsingle.aspx?DocumentID=403007

Senators Warner and Portman urge the Department to expand dual enrollment Pell Grant experiment

On Sept. 11, 2018, Senators Mark Warner (D-VA) and Rob Portman (R-OH) sent a letter to Secretary of Education Betsy DeVos urging her to expand the Department of Education’s current pilot program allowing low-income high school students to earn college credit while gaining access to Pell Grants. “Specifically, we write to request the Department consider accepting another round of applications for additional institutions to join the experiment, and to relay feedback we have received on the experiment’s current construction and offer recommendations as to how it might be modified for an additional round of applications to have an even greater impact for low-income students and the institutions they serve.”

A copy of the letter is found at: https://www.portman.senate.gov/public/index.cfm/press-releases?ID=AE6C2CFD-3E2D-4B34-B561-31CC6A725C38

Judge rules against Secretary DeVos in lawsuit over delay in borrower defense rules

On Sept. 12, 2018, U.S. District Court Judge Randolph Moss ruled against the Secretary of Education for delaying the borrower defense to repayment regulations. Judge Moss ruled that the delay was “arbitrary and capricious” and that “the Department failed to offer a reasoned basis to stay the implementation of the borrower defense regulations.” In June 2017, the Secretary had announced that she would halt the implementation of the borrower defense rules, which were to go into effect on July 1, 2017, and convene new negotiated rulemaking sessions to revise the rules. The Department said at that time that due to a pending lawsuit brought by the California Association of Private Postsecondary Schools (CAPPS), it had the authority to halt the effective date of the borrower defense regulations under section 705 of the Administrative Procedure Act (APA). Section 705 of the APA states that when an agency finds “that justice so requires, it may postpone the effective date of action taken by it, pending judicial review.” Meaghan Bauer, Stephano Del Rose, and a coalition of 19 states and the District of Columbia brought the suit against the Department.

Judge Moss ruled that he would hold a conference to hear from both sides of the case on Friday, Sept. 14, 2018 before entering his decision regarding the appropriate remedies, including whether to vacate the Department’s delay of the effective date of the borrower defense to repayment regulations. As a result, Judge Moss gave the Department of Education until Oct. 12, 2018 to remedy the deficiencies identified in the initial opinion. If the Department cannot provide stronger justification for delaying the borrower defense to repayment rules, then the rule will take effect.

A copy of the Memorandum Opinion and Order of Sept. 12, 2018 is found at: https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2017cv1330-87

A copy of the Sept. 17, 2018 Memorandum Opinion and Order is found at: https://www.insidehighered.com/sites/default/server_files/media/Moss_order_0917.pdf

Senate Democrats urge Secretary DeVos to preserve the gainful employment rule

On Sept. 13, 2018, 31 Senate Democrats, led by Ranking Member of the Senate Health, Education, Labor and Pensions Committee Patty Murray (D-WA), sent a letter to Secretary of Education Betsy DeVos urging her to preserve the gainful employment rule “that holds predatory career training programs accountable when their students are unable to find good-paying jobs after graduation and struggle to pay back unmanageable levels of debt.”

The Senators said: “The Department’s proposal will weaken higher education accountability at a time when more and more students are taking out substantial levels of student debt but are unable to find good-paying jobs to pay back their loans.”

A copy of the press release and the text of the letter are found at: https://www.help.senate.gov/ranking/newsroom/press/senate-democrats-condemn-devos-proposal-to-abandon-student-protections-from-predatory-career-training-programs-

Senator Murray and Congressman Scott urge ED to abandon negotiated rulemaking process to revise federal regulations impacting accreditation and competency-based education

On Sept. 14, 2018, Senate Health, Education, Labor and Pensions Committee Ranking Member Patty Murray (D-WA) and House Education and the Workforce Committee Ranking Member Bobby Scott (D-VA) sent comments to Secretary of Education Betsy DeVos urging her to abandon the new negotiated rulemaking process that has been announced to revise regulations impacting accreditation, competency-based education, the credit hour definition, distance education, and other provisions. The letter said: “Over the past 18 months, the Department’s regulatory actions have stripped students and taxpayers of protections from predatory institutions, revealing a fundamental unwillingness and hostility toward providing effective federal oversight.” They went on to say: “We therefore urge you to abandon this aggressive deregulatory agenda that overrides Congressional intent to protect students, taxpayers, and the integrity of the federal financial aid programs, and defer to Congress as it works to achieve a comprehensive reauthorization of the HEA.”

A copy of the letter is found at: https://www.help.senate.gov/imo/media/doc/091418%20Scott-Murray%20Dem%20Caucus%20Dereg%20Comment.pdf

Foxx and Guthrie commend the Department for its proposed rule on borrower defense to repayment

On Sept. 19, 2018, House Education and the Workforce Committee Chairman Virginia Foxx (R-NC) and House Education and the Workforce Subcommittee on Higher Education and Workforce Development Chairman Brett Guthrie (R-KY) sent a letter to Secretary of Education Betsy DeVos commending the Department for its proposed rule on borrower defense to repayment. The letter said: “I am pleased to see your proposal seeks to correct the negative impact the prior rules would have on the student aid system.”

A copy of the letter is found at: https://edworkforce.house.gov/uploadedfiles/09.19.18_-_reps._foxx_and_guthrie_borrower_defense_letter.pdf

FSA releases new data on the Federal Student Loan Program

On Sept. 19, 2018, Federal Student Aid released several new reports that provide snapshots of the number of applications and resulting loan discharges processed as a result of borrower defense to repayment and the Public Service Loan Forgiveness Program as of June 30, 2018. As of June 30, 2018, FSA received approximately 166,000 borrower defense claims, and about 64 percent of those claims were still pending processing. Of the 60,000 processed claims, 80 percent had been approved, resulting in $534.8 million loan discharges.

A copy of the electronic announcement is found at: https://ifap.ed.gov/eannouncements/091918FSAPostsNewReportstoFSADataCenter.html

NY Attorney General sues nine student loan debt relief companies

On Sept. 20, 2018, New York Attorney General Barbara Underwood announced that she had filed a lawsuit against nine student loan relief companies, their financing company, and two individuals with leadership roles in several of the companies. The lawsuit, filed in the New York Supreme Court, alleges that the defendants “fraudulently, deceptively, and illegally advertised, marketed, offered for sale, sold, and financed student debt relief services to thousands of consumers.” The defendants typically charged more than $1,000 for their services to students, and made claims that they could eliminate their student loan debt by making payments to the companies.

According to a statement made by the Attorney General, “These companies sought to line their own pockets by taking advantage of students who were simply trying to pay for their education. My office will continue to do everything in our power to protect students – and all New Yorkers – from predatory scammers.”

A copy of the statement is found at: https://ag.ny.gov/press-release/ag-underwood-files-suit-against-nine-student-loan-debt-relief-companies-costly-student

Diane Auer Jones outlines the Department’s plans for conducting neg reg on accreditation and innovation issues

On Sept. 21, 2018, Diane Auer Jones, Principle Deputy Under Secretary, Delegated to Perform the duties of Under Secretary, addressed the Education Writers Association’s Fall Seminar in Las Vegas, and was reported to have said, according to various articles published on Sept. 25, 2018 in Politico and other publications, that the Department’s goal in conducting a negotiated rulemaking session on various accreditation and innovation issues next year was to streamline regulations that are burdensome to institutions while holding institutions accountable for their mission. Ms. Jones said: “We need safe spaces for innovation” that have “very careful controls.” With regard to the proposed elimination of the gainful employment rules, Ms. Jones said: “We do not think it’s the role of the federal government to make the decision on behalf of the student.” Instead, she said consumers will “walk with their feet” when armed with the right information. The Department plans to publish earnings and debt data for programs at all colleges and universities.

ED releases FY 2015 official cohort default rates

On Sept. 25, 2018, the Department of Education announced that it had distributed the FY 2015 official cohort default rate notification packages to all eligible domestic and foreign schools. The FY 2015 national cohort default rate decreased by 6.1 percent compared to the FY 2014 national rate, from 11.5 percent to 10.8 percent.

From FY 2014 to FY 2015, cohort default rates fell for public and private, nonprofit institutions, while rising slightly among borrowers who attended proprietary schools. A Sept. 26, 2018 press release described the changes in cohort default rates for each of the sectors. For public institutions, the FY 2015 rate, 10.3 percent, fell from 11.3 percent in FY 2014. Public institutions make up approximately 27 percent – or 1,660 – of the total number of schools and represent approximately 53 percent of borrowers who entered repayment that year. The rate dropped among private schools from 7.4 percent in FY 2014 to 7.1 percent in FY 2015. Private schools comprise approximately 28 percent – or 1,726 – of the total number of schools. Among the 2,364 proprietary institutions in the borrower cohort, the default rate went from 15.5 percent for FY 2014 to 15.6 percent for FY 2015. Proprietary schools accounted for approximately 38 percent of the total number of schools.

A copy of the National Default Rate Briefing for FY 2015 official cohort default rates, which was posted on Sept. 26, 2018, is found at: https://ifap.ed.gov/eannouncements/092618CDRNationalBriefingsFY15.html

A copy of the press release is found at: https://www.ed.gov/news/press-releases/national-student-loan-cohort-default-rate-falls?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=

Trump signs combined Labor, HHS, Education, and Defense Spending bill for FY 2019

On Sept. 28, 2018, President Trump signed into law the FY 2019 Labor, Health and Human Services (HHS), Education, and Related Agencies Appropriations Act. The House had passed the conference report on Sept. 26, 2018, by a vote of 361-61. The Senate had approved the conference report on Sept. 18, 2018, by a vote of 93-7. The conference report includes a short-term Continuing Resolution that will keep the government open until Dec. 7, 2018.

The bill includes $22.5 billion in funding for the Pell Grant program, the same level as last year. However, the bill increases the maximum Pell Grant award to $6,195, a $100 increase, for the 2019-2020 award year. In addition, the bill includes $840 million for Federal Supplemental Educational Opportunity Grants (FSEOG) and $1.13 billion for Federal Work-Study (FWS), the same funding levels as last year. For student aid administration, the bill includes $1.68 billion, including $980 million for servicing activities, the same level as last year.

Jones recommends giving ACICS another 12 months

On Sept. 28, 2018, Diane Auer Jones, Principle Deputy Under Secretary, Delegated to Perform the Duties of Under Secretary, sent a letter to the Accrediting Council for Independent Colleges and Schools (ACICS) recommending a reversal of the Department’s decision to derecognize ACICS in 2016. Ms. Jones said in her review of the supplementary documents submitted by ACICS that it had made major improvements. According to the letter, ACICS met all of the criteria except for two. ACICS could have another 12 months to meet the final two criteria. The final decision rests in the hands of Secretary of Education Betsy DeVos, who is expected to make a decision in the near future.

A copy of the letter is found at:

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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