Washington News Brief

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

GAO releases report on the Public Service Loan Forgiveness program

On Sept. 27, 2018, the Government Accountability Office (GAO) released a report titled, “Public Service Loan Forgiveness: Education Needs to Provide Better Information for the Loan Servicer and Borrowers.” (GAO-18-547) As of April 2018, over a million borrowers had taken steps to pursue Public Service Loan Forgiveness (PSLF) from the Department of Education, but few borrowers have been granted loan forgiveness to date. The GAO recommended that the Department should develop and publish in a timely manner a comprehensive Public Service Loan Forgiveness manual for staff and servicers, provide a definitive source for servicers to determine if a borrower’s employment is eligible for PSLF, and standardize the process of eligible loan payment counting to allow borrowers to track their progress more easily.

A copy of the GAO report is found at: https://www.gao.gov/products/gao-18-547

Department launches FSA mobile app

On Oct. 2, 2018, Secretary of Education Betsy DeVos announced that the Department of Education launched its first-ever mobile application. The myStudentAid app will allow students and parents to complete the 2019-2020 Free Application for Federal Student Aid (FAFSA) using a mobile app, which is available for iPhones and Android devices. Students can use the app’s myCollegeScorecard feature to view and compare additional information about the schools they selected on the FAFSA.

A copy of the press release is found at: https://www.ed.gov/news/press-releases/us-secretary-education-betsy-devos-announces-launch-first-ever-fsa-mobile-app?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=

American Federation of Teachers sues Navient over PSLF program

On Oct. 3, 2018, the American Federation of Teachers (AFT) and its member filed a class-action lawsuit against Navient for allegedly misleading borrowers in public service professions in ways that prevented their access to the Public Service Loan Forgiveness (PSLF) program. The lawsuit claims that Navient provided teachers with incorrect information, which extended the amount of time that they needed to wait before being able to have their loans discharged under the PSLF program. Rather than promoting the loan forgiveness program, Navient recommended forbearance and other less-effective remedies to those borrowers seeking loan relief. AFT President Randi Weingarten issued a press release stating: It is Congress’ “intent when they created PSLF to help those who are helping others.”

A copy of the press release is found at: https://www.aft.org/press-release/class-action-lawsuit-launched-against-student-loan-servicer-navient-over

Senate Democrats introduce Affordable Loans for Any Student Act of 2018

On Oct. 11, 2018, a group of Senate Democrats, led by Senator Jeff Merkley (D-OR), introduced S. 3584, the Affordable Loans for Any Student Act of 2018. The co-sponsors include Senators Debbie Stabenow (D-MI), Kirsten Gillibrand (D-NY), Tammy Baldwin (D-WI), Richard Blumenthal (D-CT), Brian Schatz (D-HI), Ben Cardin (D-MD), and Catherine Cortez Masto (D-NV). Senator Merkley said: “Higher education should create a path to opportunity, not a millstone of debt hanging around young Americans’ necks.”

The bill addresses several issues related to student loan affordability, complexity, and consumer information:

• Simplification: The bill reduces the number of federal student loan repayment plans to two:
  • An income-based repayment (IBR) plan with a new monthly payment calculation and forgiveness after 20 years; and
  • A fixed 10-year repayment plan with terms identical to the current standard plan, except for a $25 minimum monthly payment instead of the current minimum of $50.
• Affordability:
  • Parent PLUS borrowers would be eligible to enroll in the IBR plan;
  • IBR payments would be lower due to the IBR payment calculation;
  • Up to three years of interest subsidy for subsidized loans during repayment would be available; and
  • Direct Loan origination fees and interest capitalization would be eliminated.
• Help for struggling borrowers:
  • Limits would be set on wage garnishment and tax refund offsets for defaulted borrowers equal to the amount the borrower would be expected to pay under an IBR plan;
  • Borrowers would be permitted to rehabilitate their loans by making 9 consecutive, on-time monthly payments to bring the loan back into current status, twice in each loan’s lifetime, rather than once as currently allowed;
  • Current array of deferment and forbearance options would be streamlined into a single “pause payment” process, maintaining all of the current eligibility categories, and using a common application form and terminology;
  • Borrowers who are more than 120 days delinquent in repayment and borrowers whose loans have been rehabilitated would be automatically enrolled into an IBR plan; and
  • Separation of joint consolidation loans would be available.
• Consumer information and counseling:
  • Master Promissory Note would be renamed the student loan contract and would be required to be completed annually;
  • Loan counseling would be completed annually;
  • Loan counseling would include new consumer protection disclosures, such as projected monthly loan payments and recommendations to take advantage of grant aid and work study before borrowing loans; and
  • Consumer testing of loan counseling would be required.

A copy of the press release is found at: https://www.merkley.senate.gov/news/press-releases/merkley-senate-democrats-introduce-legislation-to-ensure-affordable-student-loans-for-every-borrower

Four Senators introduce bill to promote innovation in higher education

On Oct. 11, 2018, Senators Todd Young (R-IN), Maggie Hassan (D-NH), Orrin Hatch (R-UT), and Tim Kaine (D-VA) introduced S. 3596, the Innovation Zone Act, which would “replace the experimental sites initiative within the Higher Education Act to promote effective, evidence-based innovation in higher education and better prepare students for the workforce.” The bill would:

• Expressly state that experiments must increase student success;
• Provide an opportunity for the public, institutions of higher education and other stakeholders to submit suggestions for experiments;
• Specify the length of a given experiment;
• Require data collection methodology, rigorous evaluation methods, estimated cost, and answerable questions to be established before launching an experiment;
• Require the Secretary of Education to report on the status of experiments every two years that will be published on the Department’s website;
• Require a review of existing experiments; and
• Rename the experimental site initiative as innovation zones to better reflect the purpose of the title.

A copy of the press release is found at: https://www.young.senate.gov/newsroom/press-releases/bipartisan-group-of-senators-introduce-bill-to-promote-innovation-in-higher-ed/

ED announces intent to establish neg reg to develop proposed rules related to accreditation and other issues

On Oct. 15, 2018, the Department of Education published a notice in the Federal Register of its intent to establish a negotiated rulemaking committee to develop proposed regulations related to accreditation, distance learning and educational innovation, TEACH grants, and participation by faith-based educational entities. The committee will be divided into 3 subcommittees (Distance Learning and Educational Innovation Subcommittee, the Faith-Based Entities Subcommittee, and the TEACH Grants Subcommittee) with three sessions each beginning on Jan. 14, 2019 and ending on March 12, 2019. The Department is soliciting suggestions for individuals who could serve on the neg reg committee. The topics are as follows:

• Requirements for accrediting agencies in their oversight of member institutions and programs;
• Criteria used by the Secretary to recognize accrediting agencies that focus on educational quality and deemphasize those that are anti-competitive;
• Simplification of the Department’s recognition and review of accrediting agencies;
• Clarification of the core oversight responsibilities amongst each entity in the regulatory triad to hold institutions accountable;
• Clarification of the permissible arrangements between an institution and another organization to provide a portion of the educational program;
• The roles and responsibilities of institutions and accrediting agencies in the teach-out process;
• Elimination of regulations related to programs that have not been funded in many years;
• Needed technical changes and corrections;
• Regulatory changes required to ensure equitable treatment of brick-and-mortar and distance education programs; enable expansion of direct assessment programs, distance education, and competency-based education; and to clarify disclosure and other requirements of state organizations;
• Protections to ensure that accreditors recognize and respect institutional mission, and evaluate an institution’s policies and educational programs based on that mission;
• Simplification of State authorization requirements related to programs offered through distance education or correspondence courses, including disclosures about programs and other State authorization issues;
• Definition of “regular and substantive” interaction;
• Definition of “credit hour;”
• The requirement that an institution demonstrates a reasonable relationship between the length of the program and the entry-level requirements for the recognized occupation for which the program prepares the student;
• The barriers to innovation in postsecondary education and to student completion, graduation, employment, including regulatory barriers; and
• Direct assessment programs and competency-based education, focusing on the ability of institutions to develop and students to progress in innovative programs.

A copy of the notice is found at: https://ifap.ed.gov/fregisters/attachments/FR101518.pdf

House and Senate Democrats seek updated details on PSLF program from Secretary DeVos

On Oct. 16, 2018, Senate Health, Education, Labor, and Pensions Committee Ranking Member Patty Murray (D-WA), House Education and the Workforce Committee Ranking Member Bobby Scott (D-VA), and more than 150 Democrats sent a letter to Secretary of Education Betsy DeVos asking for information regarding the status of the Public Service Loan Forgiveness (PSLF) program since new data released by the Department indicates that “an alarming number of PSLF borrowers (99.6 percent) are being denied forgiveness.” The letter referenced the September 2018 report by the Government Accountability Office (GAO) that criticized the Department’s management of the PSLF program (GAO-18-547) and objected to the Department providing only “piecemeal guidance” to the federal student loan servicers. The Democrats asked for PSLF implementation data by Nov. 27, 2018.

A copy of the press release is found at: https://democrats-edworkforce.house.gov/media/press-releases/over-150-democrats-call-on-devos-to-release-more-information-about-the-departments-failure-to-faithfully-implement-the-public-service-loan-forgiveness-program. The press release includes the text of the letter and the link to the GAO report.

U.S. District Court Judge rejects CAPPS request for preliminary injunction to delay borrower defense to repayment rules; BDR rules in effect

On Oct. 16, 2018, U.S. District Court for the District of Columbia Judge Randolph Moss issued a ruling that rejected a request for a preliminary injunction made by the California Association of Private Postsecondary Schools (CAPPS) to prevent the borrower defense to repayment rules from being implemented by the Department of Education. Judge Moss stated that CAPPS “failed to carry its burden of demonstrating that any one of its members is likely to suffer an irreparable injury” if the rules went into effect.

While Secretary of Education Betsy DeVos has described the borrower defense to repayment rules as unfair and too costly for schools, the Department announced that it would not seek any further postponement of the final rules. However, the Department is committed to finalizing the proposed revisions to the rule that would create a stricter standard for fraud claims and eliminate the ban on mandatory arbitration agreements. The Department, however, has indicated that it will not meet the Nov. 1, 2018 deadline and, therefore, the revised regulations will not go into effect until July 1, 2020. However, the Secretary could use her authority for an earlier implementation date.

The Department is expected to provide further guidance as to the next steps for implementing the Nov. 1, 2016 borrower defense to repayment regulations.

ED seeks proposals from companies for student payment card pilot program

On Oct. 17, 2018, the Department of Education published a notice in the Federal Register that it is seeking proposals from companies to develop a new, federally-branded financial services product to allow students to receive their Title IV credit balances without any fees via a mobile app. The notice indicates that the Department plans to enter into an agreement with one or more financial services providers to carry out a pilot program called the “FSA Payment Vehicle Account Program” that will provide students with a fee-free option to receive their federal student aid credit balances. The companies will not receive any compensation from the Department to participate in the pilot program and will be prohibited from charging schools or students any fees to use the product. The companies will receive “authority to use the FSA brand” and will be allowed to include Department logos and other branding on their products. The companies will also have access to student information for marketing purposes, although students will have to first opt-in to receive any promotions. The Department will announce its decisions by Dec. 5, 2018.

A copy of the notice is available at: https://ifap.ed.gov/fregisters/attachments/FR101718.pdf

Former Secretary of Education Duncan Argues that ED’s decision to rescind GE rules walks away from accountability standards and conservative principles

On Oct. 17, 2018, the Brookings Institution released a report authored, by former Secretary of Education Arne Duncan and David Whitman, Secretary Duncan’s former speechwriter, titled “Betsy DeVos and her Cone of Silence on For-Profit Colleges,” described their surprise that Secretary DeVos was rescinding the gainful employment rules. They said that it ensures that for-profit institutions cannot lose access to federal funds no matter how poorly they perform. Former Secretary Duncan and Mr. Whitman argue that the decision not only walks away from accountability standards, but also conservative principles. “Her elimination of federal sanctions for low-performing programs marks a complete flip-flop from the administrations of Ronald Reagan and George H. W. Bush, which insisted on accountability for federal dollars and regulated outcomes like unfettered student debt in the federal student loan program.” The authors of the report went on to say that the rolling back of the gainful employment regulations is a revival of Democrats’ defense of those same institutions from three decades ago. However, Democrats ended their defense “in the face of overwhelming evidence that recruiting abuses and student debt burdens were heavily concentrated in the for-profit sector, even after taking account of student demographics.”

Former Secretary Duncan and Mr. Whitman said ending the gainful employment sanctions is also an abandonment of a long-held conservative principle of fiscal responsibility since there is no risk of losing federal dollars for poorly performing programs. They also argued that rolling back the regulations would cost the federal government $5.3 billion in Title IV funds in the next 10 years. Further, they noted that the use of the College Scorecard to hold institutions accountable will not work since research has shown that transparency without sanctions does not have a noticeable impact on student behavior.

A copy of the report is found at: https://www.brookings.edu/research/betsy-devos-for-profit-colleges-education-america/

Four Senate Democrats urge SSA to renew data-sharing agreement with ED to allow the calculation of the debt-to-earnings rates under the GE rule

On Oct. 18, 2018, Senators Dick Durbin (D-IL), Patty Murray (D-WA), Elizabeth Warren (D-MA), Sherrod Brown (D-OH), and Richard Blumenthal (D-CT) sent a letter to the Social Security Administration (SSA) urging it to enter into a new data sharing agreement with the Department of Education to allow for the calculation of the debt-to-earnings (D/E) rates under the gainful employment rule. The previous data sharing agreement expired on May 24, 2018. “A new data sharing agreement between SSA and the Department is critical to fulfilling the federal government’s legal responsibility under the gainful employment rule to protect students and taxpayers.”

A separate letter was sent to Secretary of Education DeVos questioning the Department’s delays and misuse of data which led to the data sharing agreement expiring and seeking an update on the Department’s progress and timeline for a second round of D/E rates. The Department is at least a year behind the schedule for publishing final rates set by the Department.

A copy of the letter sent to the SSA is found at: https://www.durbin.senate.gov/newsroom/press-releases/durbin-murray-senators-urge-social-security-administration-to-provide-data-needed-for-gainful-employment-

A copy of the letter sent to Secretary DeVos is found at: https://www.durbin.senate.gov/imo/media/doc/RJD%20ED%20GE%20letter%2010.18.18.pdf

Democratic lawmakers ask Secretary DeVos for documents used in recommendation to restore recognition of ACICS

On Oct. 19, 2018, Senator Elizabeth Warren (D-MA) and Representative Suzanne Bonamici (D-OR), along with six of their Senate colleagues and six of their House colleagues, sent a letter to Secretary of Education Betsy DeVos requesting information regarding the Department’s recommendation to reinstate the Accrediting Council of Independent Colleges and Schools (ACICS) as a federally-recognized accreditor. In their letter, the lawmakers stated that new information indicates that the Senior Designated Official (SDO) “significantly misrepresented the endorsements of multiple accrediting agencies.” The lawmakers pointed out that although the SDO claimed that a group of nine accrediting agencies endorsed ACICS, all but one denied ever sending an endorsement. The letter requested that the Secretary release all of the documents used in its recommendation to restore federal recognition of ACICS before she makes a final decision.

A copy of the lawmakers’ letter is found at: https://www.warren.senate.gov/imo/media/doc/2018-10-16%20Letter%20to%20ED%20re%20ACICS2.pdf

College Scorecard recent update removes national median measures

The current update of the College Scorecard no longer includes national median data as a way for students to compare some key metrics, such as net price, graduation rates, repayment rates, and typical earnings, according to a blog post by Clare McCann, the Deputy Director for Federal Higher Education Policy at New America and a former Department of Education official. The Department viewed the comparisons as being potentially misleading because they were calculated for all institutions regardless of program type, selectivity, or student populations served. The update to the College Scorecard also dropped the threshold earnings data, which show what percentage of former students earn more than the typical high school graduates since the Department viewed this as being misleading.

Ms. McCann noted that since the College Scorecard does not include any indicator of an institution’s performance relative to another, students have no way of knowing whether one institution performs better than another. Ms. McCann pointed out that the proposed regulations to rescind the gainful employment rule assumes that the Department would publish program-level outcomes data on the College Scorecard “so that students and parents can compare the institutions and programs available to them and make informed enrollment and borrowing choices.” Ms. McCann suggested that the Department is changing the definition of transparency.

A copy of the blog post is found at:
https://www.newamerica.org/education-policy/edcentral/college-scorecard-cuts-context/

Veterans’ groups have been reported to be angry with the change to the College Scorecard. An article published on Oct. 8, 2018 in Inside Higher ED stated that many veterans’ groups are upset with the Department’s move to drop the national comparison measures because the data is no longer helpful.

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.