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Washington News Brief


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

House Democrats send letter to Secretary DeVos criticizing recent change to College Scorecard

On Oct. 29, 2018, House Education and the Workforce Ranking Member Bobby Scott (D-VA), House Veterans’ Affairs Committee Ranking Member Tim Walz (D-MN), House Committee on Financial Services Ranking Member Maxine Waters (D-CA), and House Committee on Veterans’ Affairs Ranking Member Mark Takano (D-CA) sent a letter to Secretary of Education Betsy DeVos expressing concern about a change made to the College Scorecard, which is designed to help students and families make enrollment decisions. On Sept. 28, 2018, ED posted the updated College Scorecard and removed the national median outcome data that allowed students and families to compare academic and financial outcomes across all Title IV-participating institutions. “The elimination of the only national comparison point used on the College Scorecard renders the tool significantly less effective in guiding students’ enrollment decisions and requires customers to spend more time doing their own research.” Further, “[t]he removal of these data comes fewer than two weeks after the Department closed a comment period on its notice of proposed rulemaking to repeal the Gainful Employment (GE) regulation and put in place better outcomes data on the College Scorecard.” The letter urged the Secretary to reverse its recent update.

A copy of the letter is found at: https://edlabor.house.gov/media/press-releases/top-house-democrats-to-devos-reverse-changes-to-college-scorecard-

21 AGs ask Secretary DeVos when loan discharges for closed schools will occur

On Oct. 30, 2018, 21 Attorneys General sent a letter to Secretary of Education Betsy DeVos seeking advice as to the Department’s plan for effectuating the automatic closed-school discharges mandated by the Nov. 1, 2016 regulations on borrower defense to repayment. The letter pointed out that a recent federal court “invalidated the Department’s repeated delay attempts and denied an industry trade group’s motion to halt implementation of the regulations.” The letter noted that “[a]lthough the Secretary may disagree with the Department’s 2016 policy, there is no legitimate basis for the Department to unlawfully withhold agency action where applicable regulations dictate a specific, unequivocal command about which the Secretary has no discretion whatsoever.”

A copy of the letter is found at: https://www.mass.gov/files/documents/2018/10/30/CA-MA%20Multistate%20Letter%20to%20Sec.%20DeVos%20re%20Closed-School%20Discharge.pdf

Congressman Takano introduces PRO Students Act

On Oct. 30, 2018, Congressmen Mark Takano (D-CA), John Garamendi (D-CA), and Pete Aguilar (D-CA) introduced H.R. 7112, the Protections and Regulation for Our Students Act or PRO Students Act with the goal of improving the Higher Education Act. The 85-page bill includes a number of provisions that would restrict the activities of for-profit institutions, including:

  • Changing from the 90/10 rule to the 85/15 rule;
  • Defining default manipulation as “engaging in a device or practice, including branching, consolidation or manipulation of the identification codes used by OPE to designate campuses and institutions, change of ownership or control, serial forbearance, or any similar device or practice (as determined by the Secretary) when, but for the device or practice, one or more campuses of an institution of higher education would be at risk of cohort default rate sanctions…”;
  • Prohibiting the use of Federal funds to pay any person for influencing or attempting to influence an officer or employee of Congress in connection with any Federal actions (i.e., the awarding of any Federal contract, Federal grant, Federal loan, entering into any Federal cooperative agreement, or any extension or continuation of any Federal contract).
  • Prohibiting the use of Federal funds to hire a registered lobbyist or to pay any person for securing an earmark;
  • Prohibiting the use of revenues derived from Federal educational assistance funds for recruiting or marketing activities;
  • Prohibiting the discharge or demotion against a person as retaliation for such person disclosing a violation of any law, rule or regulation by the institution;
  • Establishing a complaint tracking system, including a toll-free telephone number and a website, to facilitate the collection and responses to complaints or inquiries;
  • Amending terms and conditions to borrower defense provisions, including prohibiting pre-dispute arbitration clauses;
  • Expanding consumer disclosures to include information related to the institution’s cohort default rate;
  • Expanding prohibition on incentive compensation to include securing any enrollments based on performance in educational coursework, graduation, job placement, or any other facet of a student’s enrollment in an institution;
  • Providing civil penalties for substantial misrepresentations, which are further defined.
  • Requiring mandatory program reviews on an annual basis if one or more of criteria is met by the institution:
    • Has more than 15 percent of the students received Direct Unsubsidized Loans during the prior year;
    • Has more than a 20 percent cohort default rate;
    • Has cohort default rate that exceeds national average;
    • Has an aggregate amount of defaulted loans that places the institution in the highest one percent of institutions in terms of aggregate amount of defaulted loans;
    • In the case of proprietary institutions, has received more than 80 percent of its revenues from Federal funds during the two most recent years;
    • Is among the top one percent in terms of numbers or rates of complaints;
    • Is among the top one percent in terms of low graduation rates;
    • Has spent more than 20 percent of its revenues on recruiting and marketing activities and executive compensation;
    • Has loan defaults that increased by 50 percent or more as compared to the preceding period or more than 50 percent of the students who received loans;
    • Has publicly acknowledged that the institution is in violation or noncompliance with any provision of a law administered by Federal or State agency; and
    • Is a proprietary institution that has acquired a nonprofit during the one-year period preceding the date of determination or was a proprietary school and became a nonprofit institution during the one-year period preceding the date of determination.
  • Secretary shall use a risk-based approach to select, on an annual basis, not less than two percent of institutions for a program review that has:
    • Received large increases in funding during the five-year period preceding the date of determination;
    • A large proportion of overall revenue from Federal funds;
    • A significant fluctuation in Direct Loan volume, Federal Pell Grant volume, or any combination;
    • Experienced sharp increases in enrollment;
    • High default rates;
    • A large aggregate dollar amount of loans in default;
    • A high proportion of complaints;
    • Extremely low graduation rates;
    • Poor financial health;
    • Been spending a large percentage of revenues on recruiting and marketing;
    • Large profit margins and profit growth in the case of proprietary schools;
    • Been on notice, warning, or probation from an accrediting agency;
    • Been found to have compliance problems with Federal or State laws;
    • Had a large amount of funds returned under the Return of Title IV formula; and
    • Experienced a change in ownership or control.
  • In conducting program reviews, the Department must:
    • Establish guidelines to ensure uniformity of practice;
    • Permit an institution 90 days following the issuance of the final program review report to correct or cure errors in accounting or recordkeeping;
    • Inform the relevant Federal and State agencies and accrediting agencies if there is a violation of Title IV;
    • Provide an institution 90 calendar days to review any program review report before any final program review report is issued; and
    • Review an institution’s response and issue a final program review determination or a final audit determination no later than 180 days after issuing the program review report.

The text of H.R. 7112 is found at: https://www.congress.gov/bill/115th-congress/house-bill/7112/text

Senate and House Education Committee ranking members urge Department to suspend upcoming negotiated rulemaking sessions

On Oct. 31, 2018, Senator Patty Murray (D-WA), Ranking Member of the Senate Health, Education, Labor and Pensions Committee, and Congressman Bobby Scott (D-VA), Ranking Member of the House Education and the Workforce Committee, sent a letter to Secretary of Education Betsy DeVos urging her to suspend the upcoming negotiated rulemaking sessions that cover 16 areas for deregulation, including the recognition process of accrediting agencies, according to an agenda that was published in the Federal Register on Oct. 15, 2018. The forthcoming rulemaking “could abandon key protections for students and give predatory institutions free reign to take advantage of students and taxpayers.” They asked the Secretary to “allow Congress to address these issues comprehensively through the reauthorization of the Higher Education Act (HEA).” Ranking Members Murray and Scott expressed concern about the rulemaking process’s overly expansive agenda, which covers 16 areas for deregulation, but only allocates 11 days for negotiation, the Department’s use of multiple simultaneous subcommittees that are closed to public participation, and the Department’s protocols for who may speak during negotiations. “[T]he Department’s proposed procedures for the forthcoming negotiated rulemaking severely limit the number of expert and affected voices at the negotiating table…”

A copy of the letter is found at: https://www.murray.senate.gov/public/_cache/files/88cf7a86-5e36-4ee1-9b6c-e88a21fecbfe/10.31.18-multi-reg-rulemaking-committee-letter.pdf

A copy of the press release is found at: https://www.help.senate.gov/ranking/newsroom/press/murray-scott-blast-devos-for-deeply-flawed-rulemaking-process-that-could-weaken-key-protections-for-students_

Senator Wyden expresses concerns over Department’s Payment Vehicle Account Pilot Program

On Nov. 1, 2018, Senate Finance Committee Ranking Member Ron Wyden (D-OR) sent a letter to Secretary of Education Betsy DeVos expressing his concerns that private student aid will be accessed and monetized by private, for-profit financial institutions under the Department’s recently proposed Payment Vehicle Account Pilot Program. Under the Pilot Program, the electronic payment method will generate data each time a student uses his/her financial aid to pay bills, purchase goods or withdraw cash. Since this student data will become part of the property of the financial institution issuing the student’s financial aid, the transfer of the data would create the potential for abuse and misuse of thousands of students’ sensitive data. “Students should not have to sacrifice their privacy as a condition of accessing their federal financial aid in a timely and efficient manner.” Senator Wyden requested answers to a number of questions by Nov. 16, 2018.

A copy of the letter is found at: https://cdn.ymaws.com/www.ncher.us/resource/resmgr/daily_briefing/Wyden_letter.pdf

Bipartisan group of Senators introduce bill to allow ED-IRS data sharing

On Nov. 13, 2018, Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) introduced S. 3611, the Faster Access to Federal Student Aid (FAFSA) Act of 2018. The bill would amend the IRS Code to allow the Internal Revenue Service (IRS) to share taxpayer information with the Department of Education (ED) to simplify the FAFSA application, verification, and student loan repayment processes. Co-sponsors include Senators Sheldon Whitehouse (D-OH) and Cory Gardner (R-CO). The IRS Code currently does not permit the IRS to share taxpayer data with ED. The IRS Data Retrieval Tool (DRT) was designed to work around the lack of data-sharing authority by instead having the applicant obtain his/her own tax information from the IRS and then importing the information into the FAFSA. In addition to the information currently retrieved via the DRT, the allowable information would also include the filing status of the taxpayer. The bill further permits taxpayer data sharing between IRS and ED for the purpose of verifying income for applicants requesting or renewing eligibility for income-driven loan repayment plans as well as for the 3-year monitoring period after a borrower has received a discharge for total and permanent disability. The FAFSA Act would allow the IRS to disclose tax return information to authorized ED officials for the purposes of “determining eligibility for, and amount of, Federal student financial aid.”

Given that it is a lame duck session, it is unlikely to pass Congress this session.

Several veterans’ groups urge Secretary DeVos to automatically cancel loans for disabled veterans

On Nov. 13, 2018, Veterans Education Success and several other groups sent a letter to Secretary of Education Betsy DeVos urging her to implement automatic loan cancelations with an opt-out option for veterans with disabilities. Earlier this year, Secretary DeVos announced that the Department would identify and inform veterans with disabilities that they are eligible to have their federal student loans discharged. ED matched its student loan records with disability records provided by the Department of Veterans Affairs and sent customized letters explaining the application process. However, veterans’ groups want the Department to automatically provide the loan discharges and expressed concern about the paperwork burden. A letter was also sent by Senate Democrats, led by Senate Health, Education, Pensions and Labor Committee Ranking Member Patty Murray (D-WA) and Senator Jack Reed (D-RI), to Secretary DeVos asking her to automatically discharge the loans of disabled veterans who are eligible for student loan forgiveness.

A copy of the letter from the veterans’ groups is found at: https://www.insidehighered.com/sites/default/server_files/media/VA_ED%2BMatching%2BProgram%2BPublic%2BComment.SIGNED.pdf

Secretary DeVos reinstates ACICS for at least 12 months

On Nov. 21, 2018, Secretary of Education Betsy DeVos reinstated the Accrediting Council for Independent Colleges and Schools (ACICS) as a federally-recognized accrediting agency. Secretary DeVos agreed with the analysis and recommendation from Diane Auer Jones, the designated Senior Department Official (SDO). The Secretary agreed that the Department under the Obama administration had ignored or mischaracterized relevant evidence when it removed ACICS’ recognition. Secretary DeVos agreed that ACICS was in compliance with 19 of 21 applicable recognition criteria and gave ACICS 12 months to demonstrate full compliance.

A copy of the Secretary’s decision is found at: https://www2.ed.gov/about/offices/list/ope/final-agency-decision-acics-november-2018.pdf

Politico reports on House Democrats’ plans to oversee the Department of Education

On Nov. 26, 2018, Politico reported on the House Democrats’ plans to oversee the Department of Education:

  • House Education and the Workforce Committee Ranking Member Bobby Scott (D-VA) said that his oversight activities would include how the Department is handling claims for student loan forgiveness under the Public Service Loan Forgiveness program;
  • House Veterans Affairs Committee Ranking Member Mark Takano (D-CA) said his top priority would be oversight of proprietary schools that enroll veterans, including Secretary DeVos’ efforts to rollback regulations that negatively impact veterans;
  • House Appropriations Subcommittee on Labor, Health and Human Services, and Education Ranking Member Rosa DeLauro (D-CT) said that she plans to hold Secretary DeVos accountable for her “failure to uphold federal protections for our students;”
  • House Financial Services Committee Ranking Member Maxine Waters (D-CA) plans to be involved in student loan issues as her committee has jurisdiction over student loan companies; and
  • House Oversight and Government Reform Committee Ranking Member Elijah Cummings (D-MD) expressed concern over Secretary DeVos’ treatment of the union that represents Department of Education employees.

Secretary of Education raises warning flag for America’s students and taxpayers regarding the state of student loans

On Nov. 27, 2018, Secretary of Education Betsy DeVos spoke at the FSA Conference raising a warning flag for America’s students and taxpayers regarding “a crisis in higher education.” While Secretary DeVos said that America’s higher education system was “the envy of the world,” she warned that, if significant policy changes are not made to the way federal student aid is distributed, administered, and managed, “the program on which so many students rely will be in serious jeopardy.” She went on to say that the federal student loan program is not only burying students in debt, it is also burying taxpayers and it is stealing from future generations. Secretary DeVos said that when the student loan portfolio was federalized under the previous administration in 2010, it caused a “parade of programs, repayment options, and complex rules that serves no one well. Everything has become more cumbersome and confusing for everyone.”

She also stated that innovation must be unleashed. If it is, “it will advance opportunity, efficiency, and results in education as it has in every other industry.” She highlighted the release of the myStudentAid mobile app, which aims to simplify the FAFSA process and helps students learn about and apply for federal student aid on their phones. She also said that “[i]n the near future, a student will be able to see how much he or she owes at any moment in time, what repayment options are available, and how those options will impact the total over time.” The Secretary said that the Department is working to bring new tools online so that in partnership with financial aid administrators it will fulfill “our charge to help students earn their degrees and be positioned to succeed when they enter repayment.”

A copy of the Secretary’s press release regarding her remarks at the FSA Conference is found at: https://www.ed.gov/news/press-releases/us-secretary-education-betsy-devos-warns-looming-crisis-higher-education

ED proposes rules under Title IX

On Nov. 29, 2018, the Department of Education published a Notice of Proposed Rulemaking (NPRM) in the Federal Register, which would improve schools’ response to sexual harassment and assault. The proposed regulation under Title IX, the federal civil rights law that prohibits discrimination on the basis of sex in education programs or activities that receive federal funds, would:

  • Address the issue of Title IX of the Education Amendments of 1972 through notice and comment rulemaking rather than non-binding guidance;
  • Ensure greater clarity to ensure that schools understand their legal obligations and that complainants and respondents understand their options and rights;
  • Ensure that schools honor complainants’ wishes about how to respond to the situation, including increased access to supportive measures; and
  • Seek to produce more reliable outcomes, thereby, encouraging more students to turn to their schools for support in the wake of sexual harassment and reducing the risk of improperly punishing students.

“Throughout this process, my focus was, is, and always will be on ensuring that every student can learn in a safe and nurturing environment,” according to Secretary of Education Betsy DeVos. She also said “[t]hat this starts with having clear policies and fair processes that every student can rely on. Every survivor of sexual violence must be taken seriously, and every student accused of sexual misconduct must know that guilt is not predetermined. We can, and must, condemn sexual violence and punish those who perpetuate it, while ensuring a fair grievance process. They are not mutually exclusive ideas. They are the very essence of how Americans understand justice to function.”

A copy of the fact sheet is found at: https://www2.ed.gov/about/offices/list/ocr/docs/proposed-title-ix-regulation-fact-sheet.pdf

A copy of the background and section-by-section summary is found at: https://www2.ed.gov/about/offices/list/ocr/docs/background-summary-proposed-ttle-ix-regulation.pdf

A copy of the Secretary’s press release is found at: https://www.ed.gov/news/press-releases/secretary-devos-proposed-title-ix-rule-provides-clarity-schools-support-survivors-and-due-process-rights-all

A copy of the NPRM is found at: https://www.govinfo.gov/content/pkg/FR-2018-11-29/pdf/2018-25314.pdf

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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