Washington News Brief

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

Democratic lawmakers open investigation of ECA

On Dec. 21, 2018, Senator Elizabeth Warren (D-MA), Ranking Member of the House Committee on Oversight and Government Reform Elijah L. Cummings (D-MD), and Vice Ranking Member of the House Committee on Education and the Workforce sent a letter to Education Corporation of America’s (ECA) Chief Executive Officer Stu Reed and John F. Kennedy, Receiver, James Bates Brannan Groover, L.L.P., expressing their concern that the company did not properly tell students and regulators about its financial problems. They also wondered if ECA had taken adequate steps to pursue “teach-out agreements” that would have protected the students’ credits and investments in the event the school closed. The lawmakers’ letter included a series of questions of ECA in order to better understand ECA’s operations and actions up to its closure.

A copy of the letter to ECA is found at: https://www.warren.senate.gov/imo/media/doc/Letter%20to%20ECA.pdf

Another letter sent by lawmakers was sent to Accrediting Council for Independent Colleges and Schools’ (ACICS) President and Chief Executive Officer Michelle Edwards, which sought information on the due diligence measures ACICS took or should have taken to protect the 18,000 students affected by the ECA school closures. They expressed concern as to why ACICS extended the accreditation of ECA schools in 2016 when there were warning signs of the company’s documented financial instability. A list of questions were asked of ACICS, which seeks an explanation as to why ACICS did not use its authority to require formal teach-out agreements from ECA before its collapse.

A copy of the letter to ACICS is found at: https://www.warren.senate.gov/imo/media/doc/Letter%20to%20ACICS.pdf

A third letter was sent by eight Democratic Senators, led by Elizabeth Warren (D-MA), to Secretary of Education Betsy DeVos, which expressed concern about the abrupt closing of the ECA schools and demanded that the Department take immediate steps to protect students, veterans, and taxpayers. “Despite the Department’s long-standing knowledge of ECA’s financial instability in the months leading up to the ultimate collapse, the Department appears to have taken little action to protect students and taxpayers.” The Senators stated that the ECA collapse is a reminder that the Department’s actions to prevent accountability of risky for-profit schools create a “higher education landscape that is far more vulnerable to sudden meltdown and predatory behavior.” The Senators urged the Department to take actions to protect the ECA students including providing students all relevant information related to their financial aid, extending the window for a closed-school discharge back to May 8, 2018, when Virginia College was initially sanctioned by ACICS, requiring state agencies to approve transfer options so students may complete their programs, and holding owners and investors of ECA financially liable for closed school and borrower defense discharges.

ED publishes notice of location of negotiations on accreditation and innovation and subcommittee meetings

On Dec. 26, 2018, the Department of Education published a Notice of the locations for the negotiations on accreditation and innovation and the subcommittee meetings in the Federal Register. The accreditation and innovation sessions will be held on Jan. 14-16, 2019, Feb. 19-22, 2019, and March 25-28, 2019. Sessions will run from 9 a.m. to 5 p.m. The distance learning and educational innovation subcommittee will be held on Jan. 17-18, 2019, Feb. 12-13, 2019, and March 11-12, 2019. Sessions will run from 9 a.m. to 5 p.m. There will also be subcommittee sessions on faith-based entities and another on the TEACH Grant.

A copy of the Notice is found at: https://ifap.ed.gov/fregisters/attachments/FR122618AccreditationInnovation.pdf

ED publishes notice of membership on NACIQI

On Dec. 26, 2018, the Department of Education published a Notice of membership for the National Advisory Committee on Institutional Quality and Integrity (NACIQI) in the Federal Register. The term expiration dates are also included.

A copy of the Notice is found at: https://ifap.ed.gov/fregisters/attachments/FR122618NACIQuality.pdf

CAPPS files motion to narrow legal challenge on borrower defense to repayment rule

On Dec. 28, 2018, the California Association of Private Postsecondary Schools (CAPPS) filed a motion in the U.S. District Court for the District of Columbia to amend its lawsuit against Secretary of Education Betsy DeVos regarding the borrower defense to repayment rules. CAPPS is now focusing its legal challenge on the rule’s ban on colleges using mandatory arbitration agreements. CAPPS is arguing that the Department does not have the legal authority to prohibit the use of mandatory arbitration.

A copy of the motion is found at: https://www.courtlistener.com/recap/gov.uscourts.dcd.186760/gov.uscourts.dcd.186760.82.0.pdf

President Trump signs Veterans benefits legislation into law

On Dec. 30, 2018, President Trump signed into law S. 2248, the Veterans Benefits and Transition Act of 2018, which contains provisions designed to help veterans. The bill ensures that veterans are held harmless from any penalties that their school may impose due to potential delays in the processing of tuition payments. Congressman Bilirakis said: “Veterans should never experience financial harm or delays in education due to bureaucratic red tape in processing paperwork at the VA or school.”

On Jan. 18, 2018, Congressman Gus Bilirakis (R-FL) introduced H.R. 4830, the Servicemembers Improved Transition through Reforms for Ensuring Progress (SIT-REP) Act. On June 25, 2018, Senators Elizabeth Warren (D-MA) and John Boozman (R-AK) introduced Congressman Bilirakis’ bill as part of Senator Jon Tester’s (D-MT) bill, S. 2248.

A copy of Congressman Bilirakis’ press release, which was made available when the bill was introduced, is found at: https://bilirakis.house.gov/media/press-releases/bilirakis-bill-enhances-educational-benefit-veterans

President signs GI Bill legislation to correct housing issue

On Jan. 3, 2019, President Trump signed into law S. 3777, the Forever GI Bill Housing Payment Fulfillment Act, which requires the Department of Veterans Affairs (VA) to create a “tiger team” of specialists to develop a detailed plan to address the GI Bill housing benefits problem that has plagued the VA over the last view months. The bipartisan bill would also require the VA to reimburse student veterans for missed or underpaid GI Bill housing benefits.

House Democrats Elect Scott as Chairman of Education Committee

On Jan. 4, 2019, House Democrats approved a resolution formally appointing Congressman Bobby Scott (D-VA) as Chair of the renamed House Education and Labor Committee. The name of the committee under the Republicans was the House Education and the Workforce Committee. A new website has been rolled out and all content from the Republican-controlled site has been moved.

The new website with Chairman Scott’s press release is found at: https://edlabor.house.gov/media/press-releases/scott-statement-on-election-as-chairman-of-education-and-labor-committee

The Republican content has moved to: https://republicans-edlabor.house.gov/

FSA determines WGU is eligible to participate in the FSA programs

On Jan. 11, 2019, Federal Student Aid (FSA) released the Final Audit Determination letter (FAD) for Western Governors University (WGU), which concluded that “particularly in light of a lack of clear guidance from the Department at the time of the audit period, WGU’s efforts to comply with the governing law and regulations were reasonable and undertaken in good faith.” FSA’s final determination was made after the Office of Inspector General (OIG) performed an audit on WGU and concluded WGU should return $712 million in federal student aid funds that it had received after “purportedly being ineligible.” The audit, which covered the period from July 1, 2013, through June 30, 2014, concerned WGU’s online competency-based academic model and the amount of interaction that occurred between students and faculty. WGU’s academic model relies on the use of student mentors to engage with students on a regular basis, and students only earn credit when they demonstrate mastery of the competencies in the program. The Department’s press release noted that the Department has since clarified the eligibility issues in Dear Colleague letter GEN-14-23, which was released on Dec. 29, 2014. The topic of distance education and regular and substantive interaction is being addressed as part of the Department’s current negotiated rulemaking.

A copy of DCL GEN-14-23 is found at: https://ifap.ed.gov/dpcletters/GEN1423.html

A copy of the Department’s press release regarding the Final Audit Determination, which includes the link to the letter, is found at: https://www.ed.gov/news/press-releases/us-department-education-issues-final-audit-determination-wgu

First session of Neg Reg on accreditation and innovation takes place

Despite losing a day to snow, the first session of negotiated rulemaking on accreditation and innovation took place on Jan. 15-16, 2019. Much of the initial discussion related to the protocols that will govern the work of the negotiating committee and consideration of additional membership on the negotiating committee. A subject of much debate was whether a representative from the State Attorneys General (AGs) should be a negotiator. While the group of negotiators agreed to include David Tandberg, representing the states from the State Higher Education Executive Officers (SHEEO), as a negotiator, the group rejected the representative from the AGs. As a compromise, Carolyn Fast, Special Counsel at the Office of the Attorney General of the State of New York, was asked to join the distance education and innovation subcommittee.

The negotiators began to address the substance of its work by considering the Department’s proposed changes to the Secretary’s recognition criteria of accrediting agencies. The proposed changes are intended to give accreditors more flexibility to allow more innovation for their members. Many of the negotiators did not agree with some of the proposed changes, such as:

• Allowing new accreditors to apply for recognition if an institution could designate the agency as its link to the Title IV programs but chooses not to because it has designated another accreditor as its link to Title IV;
• Limiting the geographic scope of regional accreditors; and
• Allowing accreditors to develop and implement a waiver process whereby institutions would be able to innovate with fewer restrictions.

During the public comment period, Congressman Mark Takano (D-CA) warned that “the changes proposed by the department directly conflict with the safeguards in the Higher Education Act.”

The Department will now be re-writing its draft regulations in preparation for the next session that will begin on Feb. 19, 2019.

ED releases college financing plan

On Jan. 16, 2019, the Department of Education released the College Financing Plan (formerly the Financial Aid Shopping Sheet) and asked institutions to voluntarily commit to supplying financial aid information in a way that could be better understood and compared by students. The electronic announcement stated that the Department has heard a number of concerns about the elements of the Financial Aid Shopping Sheet template that could be improved to make it more user-friendly. ED stated that it has also reviewed the NASFAA report titled, No Clear Winner: Consumer Testing of Financial Aid Award Letters, as well as comments that have been submitted to ShoppingSheet@ed.gov.

As a result, ED developed a revised format that includes the following changes:

1. ED is changing the name of the template from Financial Aid Shopping Sheet to College Financing Plan that emphasizes that students are making a financial transaction when enrolling in an institution; and
2. ED is introducing the College Financing Plan template this year as part of a beta testing protocol, which is not required to be used for the 2019-2020 award year. However, if used, ED is requesting that comments be submitted to ED no later than April 1, 2019.

The College Financing Plan will be finalized and will fully replace the Financial Aid Shopping Sheet for the 2020-2021 award year. The format of the College Financing Plan for 2020-2021 will include additional data elements as well as a new design and will include the ability to customize the colors of the College Financing Plan to match those of an institution.

Institutions are expected to use the College Financing Plan (Financial Aid Shopping Sheet) for students who are eligible to receive Federal military and veterans’ educational benefits in accordance with Executive Order 13607, the Principles of Excellence. The College Financing Plan may be used in place of or as a supplement cover sheet to an institution’s existing financial aid award letter. By using either approach, institutions can ensure that students can compare institutions in terms of grant and scholarship amounts, net costs, graduation rates, loan repayment rates, median borrowing, and estimated monthly loan payments after graduation. Institutions may not modify the College Financing Plan. The Department attached the HTML specifications for 2019-2020 and the institutional metric data file, as well as the technical guide and a set of Frequently Asked Questions, to the electronic announcement.

A copy of the electronic announcement is found at: https://ifap.ed.gov/eannouncements/011619CollegeFinancingPlanShoppingSheet1920.html

Alexander hopes to pass a Reauthorization of the HEA by the end of 2019

On Jan. 28, 2019, Politico reported that Senator Lamar Alexander’s (R-TN) Chief of Staff, David Cleary, stated that Senator Alexander wants to pass a reauthorization of the Higher Education Act before Christmas. At an event for the Education Writers Association, Mr. Cleary said: “Our goal is to have a law before Christmas.” Senator Alexander offered a similar plan in January 2018, when he suggested that the Senate Health, Education, Labor and Pensions Committee could mark up an HEA reauthorization bill by April 2018. However, a bill was never drafted in 2018 by the HELP Committee.

Scott hopes to pass a Reauthorization of the HEA by the end of 2019

On Jan. 30, 2019, Politico reported that Congressman Bobby Scott (D-VA), Chairman of the House Committee on Education and Labor, outlined his plans for the Committee this year and said it was possible to pass a reauthorization of the Higher Education Act before the end of 2019, although the Democrats and Republicans seem to be going in different directions. Chairman Scott also said that he would be asking the Department a number of questions by letters rather than by holding immediate hearings. Inquiries will relate to Secretary of Education Betsy DeVos’ restoration of the accreditor, Accrediting Council for Independent Colleges and Schools (ACICS) as well as the Administration’s rollback and rewrite of Obama-era regulations, like the borrower defense to repayment rules.

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.