Washington News Brief

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

ED denies Argosy’s change in ownership application; Argosy campuses and Art Institutes close

On Feb. 28, 2019, the Department of Education sent a letter to the court-appointed federal receiver of the Dream Center, who controls Argosy and its finances, Dottore Companies, and the Chairman of the Dream Center Education Holdings (DCEH), which owns Argosy, informing them that the Department has denied the pending application for the change of ownership and the request to convert Argosy from a for-profit to a nonprofit institution for the purpose of participating in the Title IV programs. The Department stated that it took this step because of the institution’s failure to pay credit balances to its students and parents, which is a “severe breach of the required fiduciary standard of conduct to disburse the student’s Title IV, HEA program funds…” (Page 4 of letter.) Argosy was given until March 11, 2019, to provide the Department with factual evidence to dispute ED’s findings.

The Department also made an announcement on the FSA website. Included in the announcement was a series of frequently asked questions, which advises students that they could seek to transfer their credits or apply for a loan cancellation in the event the college shuts down.

If a buyer is not found, the receiver plans on closing the Argosy campuses. Chairman of the House Committee on Education and Labor Bobby Scott (D-VA) issued a statement that said: “The Department of Education has been derelict in its responsibility to protect students from the impact of this collapse … The Department has one more opportunity to fulfill its duty to protect students. It must discharge the loans of every student who suffered financial harm because they were misled by Argosy.” Dream Center also closed the Art Institutes of Pittsburgh and Seattle.

A copy of the Department’s letter is found at: https://studentaid.ed.gov/sa/sites/default/files/argosy-cio-denial-redacted.pdf

A copy of the Department’s announcement and guidance for students posted by the Department on March 7, 2019, is found at: https://studentaid.ed.gov/sa/about/announcements/dream-center

A copy of Chairman Scott’s press release is found at: https://edlabor.house.gov/media/press-releases/chairman-scott-statement-on-closing-of-dream-center-owned-college-chain

Ranking Member Murray describes her principles for reauthorizing the HEA

On Feb. 28, 2019, Senate Health, Education, Labor and Pensions (HELP) Committee Ranking Member Patty Murray (D-WA) delivered a speech at the Center for American Progress where she described her vision for higher education and how to improve the Higher Education Act (HEA). Her speech was partially in response to priorities that were outlined by Senator Lamar Alexander (R-TN) on Feb. 4, 2019, at the American Enterprise Institute. Senator Alexander had said that his key concerns were for simplifying the federal student aid system, streamlining the loan repayment process, and holding colleges accountable with a single borrower-repayment rate for each program across all sectors. Senator Murray’s speech expanded on the Democrats’ four priorities for an HEA reauthorization, which mirror the “Higher Education Act Reauthorization Principles” released by the Senate Democratic Caucus last Feb. 1, 2018. The four priorities for the reauthorization of the HEA include:

• Making college more affordable;
• Holding institutions accountable for student outcomes;
• Expanding access to higher education; and
• Increasing campus safety and protecting students’ civil rights.

Senator Murray stated that college affordability is a top priority for the reauthorization of the HEA, but the free-college proposals put forward by some Democrats might be a step too far. Senator Murray argued that Congress shouldn’t just make it easier to get student aid, but also should give more money to students. Senator Murray said that “Everyone who wants to go to college should have the choice to do so and should not be saddled with debt as a result.” She noted that because of the increased costs, students have to rely on student loans, and there is currently $1.5 trillion in outstanding student loan debt. Senator Murray said: “We need to provide them with real relief on student debt, not just prioritize their student loan payments over all their other expenses.”

Senator Murray also criticized the federal student loan servicing system and said that it has to work for borrowers not against them. Regarding the issue of accountability, Senator Murray said that schools have to hold up their end of the bargain and enroll all students including those who are under-represented. She went on to say that a reauthorization package must protect the investment that students and taxpayers put into higher education, including cracking down on proprietary schools and addressing the epidemic of sexual assault on college campuses. She and other Democrats are opposed to the Secretary’s new rules that would strengthen the rights of the accused because it will once again “sweep campus sexual assault under the rug.”

Finally, Senator Murray said that she wanted to negotiate a comprehensive reauthorization that addresses the “full spectrum of issues students are facing today,” an approach similar to that described by Congressman Bobby Scott (D-VA), Chairman of the House Education and Labor Committee.

The principles introduced last year are found at: https://www.help.senate.gov/imo/media/doc/Senate%20Dem%20HEA%20Principles.pdf

Durbin and Waters re-introduce bill to prohibit mandatory arbitration agreements

On Feb. 28, 2019, Senate Minority Whip Dick Durbin (D-IL) and House Financial Services Committee Chairman Maxine Waters (D-CA) re-introduced S. 608/H.R. 1430, the Court Legal Access and Student Support (CLASS) Act, which would prohibit a postsecondary institution from using mandatory arbitration and class action waiver classes in their enrollment agreements. The bills are designed to prohibit “any school receiving Title IV student aid funding from placing restrictions on students’ ability to pursue legal claims, individually or with others, against higher education institutions in court.”

Senator Durbin said: “Mandatory pre-dispute arbitration clauses amount to traps in contractual fine print that hurt people and undermine their ability to seek justice. Predatory for-profit colleges often use these clauses in their student enrollment agreements in order to shield themselves from accountability.” Congresswoman Waters said: “The for-profit college industry is rife with bad actors that lure potential students into some of the most expensive academic programs, all while knowingly and fraudulently misrepresenting the quality and success of these programs. These schools use mandatory arbitration clauses and other tactics to shield themselves from being held responsible for their wrongdoing.”

The Senate bill is co-sponsored by Senators Sheldon Whitehouse (D-RI), Richard Blumenthal (D-CT), Maxie Hirono (D-HI), Elizabeth Warran (D-MA), Sherrod Brown (D-OH), Jack Reed (D-RI), and Ed Markey (D-MA). The House bill is co-sponsored by Representatives Mark Takano (D-CA), Jackie Speier (D-CA), Eleanor Holmes (D-DC), and Steve Cohen (D-TN).

A copy of the press release is found at: https://www.durbin.senate.gov/newsroom/press-releases/durbin-waters-re-introduce-bill-to-give-students-defrauded-by-for-profit-colleges-their-day-in-court

Warren and Rubio re-introduce bill prohibiting states from suspending or revoking professional licenses due to student loan defaults

On Feb. 28, 2019, Senators Elizabeth Warren (D-MA) and Marco Rubio (R-FL) re-introduced S. 609, the Protecting Job Opportunities for Borrowers (Protecting JOBs) Act, which would prevent states from suspending, revoking, or denying state professional, teaching, or driver’s licenses solely because a borrower is behind on their federal student loan.

The bill would:

• Prevent states from denying, suspending, or revoking state-issued licenses;
• Give states two years to comply; and
• Provide borrowers with legal recourse for non-compliance, by allowing them to file for prospective injunctive relief if a state violates the terms of the act.

Senator Warren said: “We shouldn’t punish people struggling to pay back their student loans by taking away their drivers’ or professional licenses, preventing them from going to work and making a living.” Senator Rubio said: “It is wrong to threaten a borrower’s livelihood by rescinding a professional license from those who are struggling to repay student loans, and it deprives hardworking Americans of dignified work.”

A copy of the press release is found at: https://www.warren.senate.gov/newsroom/press-releases/senators-warren-and-rubio-reintroduce-bill-to-protect-jobs-for-workers-struggling-with-student-loans

Federal Judge rules that California can sue Department of Education on borrower defense claims

On March 4, 2019, U.S. Magistrate Judge Sallie Kim issued an order in People of the State of California v. United States Department of Education that most of California’s legal challenge to Secretary of Education Betsy DeVos’ handling of borrower defense claims can proceed. After Judge Kim rejected the original lawsuit filed on Dec. 14, 2017 because she said the state lacked standing to bring the case, California Attorney General (AG) Xavier Becerra amended his claims to prove how the state was harmed by the delay in processing borrower defense claims, which was filed on July 27, 2018. AG Becerra said in a press release, “We applaud this decision denying the Department of Education’s attempt to run and hide from accountability.” AG Becerra also said: “This decision means that we can continue fighting in court for the tens of thousands of Corinthian students who enrolled in shoddy for-profit college programs, only to be saddled unfairly with debt and abandoned by Secretary Betsy DeVos. These students have every right to pursue an education and deserve the relief that they are eligible for under the law.”

A copy of Attorney General Becerra’s press release is found at: https://oag.ca.gov/news/press-releases/attorney-general-becerra-applauds-court-decision-advance-challenge-us-department

A copy of the order is found at:
https://www.courtlistener.com/recap/gov.uscourts.cand.320421/gov.uscourts.cand.320421.56.0.pdf

Secretary DeVos names Mark Brown as COO of FSA

On March 4, 2019, Secretary of Education Betsy DeVos named Mark Brown as the new Chief Operating Officer (COO) of Federal Student Aid (FSA). He replaces James Manning, who served as Acting COO, who is returning to retirement. Mr. Manning has been temporarily filling the position since former COO Dr. A. Wayne Johnson moved into a new role in January 2018 to focus on creating the Next Generation (Next Gen) Financial Services Environment. The Secretary announced that Mr. Brown has more than 32 years of military service in a variety of roles and brings a deep understanding of large-scale organizational leadership and complex financial issues, along with a “sense of duty to America’s students, their futures, and ours.” Mr. Brown retired from the U.S. Air Force last June as a Major General.

A copy of the announcement is found at: https://www.ed.gov/news/press-releases/secretary-devos-names-mark-brown-new-chief-operating-officer-fsa?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=

ED issues guidance on regulatory provisions related to prorating charges

On March 5, 2019, the Department of Education issued guidance related to 34 C.F.R. § 668.164(c) regarding crediting a student’s ledger with Title IV funds to pay for allowable charges associated with the payment period, particularly where an institution debits the account at the beginning of the student’s enrollment for the entire cost of books, supplies and equipment to be used throughout the program. Additionally, ED provided guidance on determining whether a charge for books and supplies is an institutional charge or a non-institutional charge.

A copy of the electronic announcement is found at: https://ifap.ed.gov/eannouncements/030519Determingproratedamtchgsasstwapytperiod.html

Bipartisan group of Senators re-introduce bill to provide critical cost information to students and families

On March 6, 2019, Senators Ron Wyden (D-OR), Marco Rubio (R-FL) and Mark Warner (D-VA) re-introduced S. 681, the Student Right to Know Before You Go Act, which is designed to provide critical information about costs and outcomes associated with higher education to students, families, policymakers, and taxpayers. The bill would require the Department of Education’s National Center for Education Statistics (NCES) to develop a new higher education data system that would make data available to prospective students about schools’ graduation rates, debt levels, how much graduates can expect to earn, and other critical measures of success. Outcome measures would be broken down by institution and program of study. The bill would also protect student privacy by requiring the use of privacy-enhancing technologies that encrypt and protect the data used to produce the consumer information.

A companion bill, H.R. 1565, was introduced by Congressmen Duncan Hunter (R-CA), Scott Peters (D-CA), and Ryan Fitzgerald (R-PA).

A copy of the press release is found at: https://www.wyden.senate.gov/news/press-releases/wyden-rubio-warner-reintroduce-student-right-to-know-before-you-go-act-to-empower-students-as-consumers

A copy of the press release for the House bill is found at: https://hunter.house.gov/press-release/hunter-introduces-education-legislation-protecting-college-students

Democratic Senators send letter to SEC chairman seeking answers on SEC settlement with Corinthian College executives

On March 6, 2019, Senators Elizabeth Warren (D-MA), Sherrod Brown (D-OH), Dick Durbin (D-IL) and Richard Blumenthal (D-CT) sent a letter to Securities and Exchange Commission (SEC) Chairman Jay Clayton seeking answers about the SEC settlement with two top Corinthian College executives. On Feb. 28, 2019, the SEC announced a settlement with former Corinthian CEO Jack Massimino and former CFO Robert Owen. Mr. Massimino was fined $80,000 and Mr. Owen was fined $20,000, and neither admitted any wrongdoing as part of the settlement. The Senators wrote: “This weak settlement by the SEC is an insult to the victims of Corinthian’s fraud.”

A copy of the Senators’ press release is found at: https://www.warren.senate.gov/newsroom/press-releases/senator-warren-and-colleagues-demand-answers-on-shamefully-weak-sec-settlement-with-corinthian-college-executives

Senate Democrats send letter to Secretary DeVos criticizing the campus debit card pilot program

On March 8, 2019, Senators Bob Menendez (D-NJ), Elizabeth Warren (D-MA), and Richard Blumenthal (D-CT) sent a letter to Secretary of Education Betsy DeVos criticizing the Department of Education’s campus debit card pilot program. They are seeking additional answers on the safeguards to ensure the protection of student spending data from government manipulation and exploitation by financial institutions. “We are alarmed by the message the card sends to students that their spending habits are going to be monitored by the federal government, that the Department is essentially selling its services to corporate partners, and that the Department will have unprecedented access to student spending data under this program.”

Last fall, the Department of Education announced it intended to launch a campus debit card program that would offer all Federal Student Aid (FSA) recipients at participating schools a debit card co-branded by FSA and a soon-to-be-chosen private financial institution.

The Senators also wrote that the Trump Administration “has shown an unwillingness to protect students and student borrowers, from rolling back protections for students who are victims of fraud and abuse at the hands of predatory colleges, to undermining the ability of states to protect their residents from substandard student loan servicing failures.”

A copy of the press release with the text of the letter is found at: https://www.menendez.senate.gov/news-and-events/press/menendez-warren-blumenthal-demand-answers-from-betsy-devos-on-college-aid-debit-card-that-would-allow-government-to-monitor-student-spending-give-corporations-exclusive-marketing-access-to-potentially-millions-of-fsa-borrowers

Chairman of the House Education Committee releases Democrats’ vision for reauthorization of the HEA

On March 8, 2019, Chairman of the House Education and Labor Committee Bobby Scott (D-VA) released a report describing the Democrats’ vision for the reauthorization of the Higher Education Act (HEA). The report was released in anticipation that the House Education Committee will begin this week with a series of five hearings on reauthorizing the HEA. In releasing the report titled, “Don’t Stop Believin’ (in the Value of a College Degree),” Chairman Scott said: “More than 50 years after the initial passage of the HEA, America still falls short of the law’s original promise to open the door to and extend the benefit of higher education to all students. The next reauthorization of the HEA should aim to finally close those gaps in access, affordability and completion that continue to prevent so many students from fulfilling their greatest potential.”

The proposals align with the broad vision Senator Patty Murray (D-WA), Ranking Member of the Senate Health, Education, Labor and Pensions (HELP) Committee, recently outlined on Feb. 28, 2019. Some of the House Democratic proposals also overlap with a few of Senator Lamar Alexander’s (R-TN), Chairman of the HELP Committee, proposals released on Feb. 4, 2019, which include simplifying the FAFSA and improving the data available to students and families.

Chairman Scott said: “This report lays out the overwhelming evidence that a college degree is still well worth the cost.” The report outlined the following principles:
1. Expanding access

• Supporting high school students that earn college credit early;
• Strengthening college access programs that provide services for vulnerable student populations;
• Simplifying the FAFSA; and
• Expanding access to high-quality short-term stackable certificates that create an entryway to further education.

2. Improving affordability

• Increasing grant aid to help students cover the costs of college;
• Creating federal-state partnerships that encourage states to reinvest in higher education;
• Improving the federal student loan system so that students understand their loan terms and are better able to manage repayment; and
• Strengthening institutional quality and accountability to ensure return on investment for students and taxpayers.

3. Promoting completion

• Improving postsecondary data infrastructure to help students, families, policymakers, and institutions answer critical questions about college outcomes;
• Expanding access to multiple pathways, including dual enrollment and short-term certificates, so that students can complete college credits in quality programs that fit their needs and goals;
• Improving remediation so that more students can earn college credits;
• Investing in student supports like child care, mental health services, and tutoring to ensure students can focus on learning and skill-building;
• Investing in community colleges, HBCU’s, and Minority Serving institutions so that traditionally underserved students have access to the same quality experience as others; and
• Supporting campus diversity and ensuring a safe learning environment for all students.

A copy of the press release, which includes the link to the report, is found at: https://edlabor.house.gov/media/press-releases/dont-stop-believin-committee-report-confirms-college-is-still-well-worth-the-cost

ED releases the Administration’s budget request for FY 2020

On March 11, 2019, the Department of Education released the Administration’s budget request for FY 2020. Secretary of Education Betsy DeVos said: “This budget at its core is about education freedom – freedom for America’s students to pursue their life-long learning journeys in the ways and places that work best for them, freedom for teachers to develop their talents and pursue their passions and freedom from the top-down ‘Washington knows best’ approach that has proven ineffective and even harmful to students.” The budget proposal includes the following provisions for postsecondary education:

• Fully funding the maximum Pell Grant award of $6,195 and expanding of Pell Grant eligibility for students enrolled in high quality short-term programs that lead to a credential, certification, or license in a high demand field;
• Simplifying the student loan program and loan repayment by consolidating multiple income-driven repayment (IDR) plans into a single plan, which would cap a borrower’s monthly payment at 12.5 percent of discretionary income with any debt forgiven after 15 years of repayment for undergraduate students and after 30 years of repayment for graduate students;
• Eliminating FSEOG program;
• Reducing FWS from $1.13 billion to $500 million;
• Eliminating the Public Service Loan Forgiveness program;
• Eliminating Subsidized Direct Loans; and
• Providing $1.8 billion to support the improved administration of the student aid programs.

The budget proposal also said the Trump Administration hoped to work with Congress on advancing a shared-accountability system since some institutions of higher education consistently fail to deliver a quality education that enables students to successfully repay their Federal student loans. “A better system would require postsecondary institutions accepting taxpayer funds to share a portion of the financial responsibility associated with student loans. The Administration plans to work with the Congress to address these issues.”

Higher education groups were quick to criticize the budget proposals for its cuts to the student aid programs.

A copy of the press release, which includes the FY 2020 Budget Request, is found at: https://www.ed.gov/news/press-releases/presidents-budget-expands-education-freedom-supports-teachers-protects-vulnerable-students?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=

Senate HELP Committee holds hearing on FAFSA simplification and verification

On March 12, 2019, the Senate Health Education, Labor, and Pensions (HELP) Committee renewed its efforts to work toward reauthorizing the Higher Education Act (HEA) by holding the first of several hearings. The first hearing entitled, “Reauthorizing the Higher Education Act: Simplifying the FAFSA and Reducing the Burden of Verification,” focused on the FAFSA and reducing verification burden. Chairman Lamar Alexander (R-TN) opened the hearing by citing information provided to him on the chilling effect that the complexity of the FAFSA has on student enrollment. He asserted that FAFSA completion is the single biggest impediment to enrollment in Tennessee Promise, which allows state residents to attend community colleges for free. He also said that while he originally recommended that the FAFSA be reduced to two questions, he now understands that more questions are needed, but could be reduced to 15 to 25 questions. Substituting for Ranking Member Patty Murray (D-WA), Senator Tammy Baldwin (D-WI) said that she is more interested in income verification and the impact it has on low-income families.

Senator Alexander said: “After five years of bipartisan work, the FAFSA is simpler and on mobile devices, and Congress is now ready to take the final step to make it easier for 20 million American families to apply for federal financial aid and to eliminate $6 billion annually of mistakes that are unfair to taxpayers.”

The four experts who testified supported the Senators’ views. Both the Republicans and Democrats on the HELP Committee discussed ways to simplify the federal financial aid system and indicated that there was a consensus as the Committee begins its efforts to rewrite the HEA.

A copy of Senator Alexander’s press release is found at: https://www.alexander.senate.gov/public/index.cfm/pressreleases?ID=D1918681-3434-47CC-A700-841CCC8590E3

House Education and Labor Committee holds hearing on cost of college

On March 13, 2019, the House Education and Labor Committee held the first of five hearings on the reauthorization of the Higher Education Act (HEA) titled, “The Cost of College: Student Centered Reforms to Bring Higher Education Within Reach.” Chairman Bobby Scott (D-VA) noted that the five hearings on reauthorization will be about finding common ground among Democrats and Republicans. “The goal of our work in this committee in higher education is not just to write a new higher education bill, it is to pass a comprehensive higher education bill.” He went on to say: “If we do not address the rising costs, not only will we lose our economic competitiveness, but a growing number of students and families will lose out on the benefits of a college degree.” Ranking Member Virginia Foxx (R-NC) explained that the hearing goes to the heart of why postsecondary education reform is necessary and why it is so difficult to accomplish. She went on to say that any discussion on college affordability must involve serious questions about institutional accountability. “College costs are not simply a matter of supply and demand or loan amounts or interest rates, but a symptom of deeper systemic flaws in American postsecondary education systems and, perhaps more importantly, popular perceptions.”

Chairman Scott said that reauthorizing the landmark higher education legislation provides an opportunity to level the playing field and to rectify obstacles that prevent low-income students and students of color from accessing a higher education. While recognizing the differences between the Democrats and Republicans, Chairman Scott called for a comprehensive higher education bill developed in a bipartisan way. Ranking Member Foxx also emphasized the importance of the Pell Grant program and expressed an interest in granting Pell Grant eligibility to students in short-term or skills-based programs. She also criticized the complexity of the federal student loan system and questioned whether all institutions are managing their finances appropriately.

The nearly four-hour hearing ran the gamut of topics on college cost and affordability. Committee members and witnesses discussed how public institutions react to state budget cuts, the impact of federal mandates on institutional college costs, the complexity of the federal financial aid system and its impact on low-income and first-generation students, loan forgiveness, the pitfalls of income-share agreements, the benefits of FWS, holding proprietary schools accountable for student success, the importance of online colleges to promote student success, what was responsible for the dramatic increases in tuition, the decline in the purchase power of Pell Grants, the benefits of accelerated education, support for the College Transparency Act, dual enrollment programs, tuition discounting, and why colleges are not graduating more students.

A copy of Committee’s press release is found at:
https://republicans-edlabor.house.gov/news/documentsingle.aspx?DocumentID=403299

A copy of Ranking Member Foxx’s opening statement is found at: https://republicans-edlabor.house.gov/news/documentsingle.aspx?DocumentID=403298

Bipartisan Group of Senators Re-Introduce the College Transparency Act

On March 14, 2019, a bipartisan group of Senators re-introduced S. 800, the College Transparency Act, a bill that would produce new data on program-level college student outcomes, such as completion rates, graduate earnings, and loan repayment rates. The current system is overly burdensome on institutions and provides little practical information for students and families due to the gaps in college-level data reporting. Under the updated system, institutions would securely report private-protected student-level data to the National Center for Education Statistics (NCES).

Instead of Senator Orrin Hatch (R-UT), who retired this past year, the bill was sponsored by Senator Bill Cassidy (R-LA). Other co-sponsors include Elizabeth Warren (D-MA), Tim Scott (R-SC), and Sheldon Whitehouse (D-RI). The bill now has 17 co-sponsors. A companion bill, H.R. 1766, was introduced by Congressman Paul Mitchell (R-MI). Co-sponsors of H.R. 1766 include Representatives Raja Krishnamoorthi (D-IL), Elise Stefanik (R-NY), and Josh Harder (D-CA).

Congressman Mitchell said in a press release: “It has long been a priority of mine to ensure students and families have the necessary tools to make informed decisions about their future … The bill will streamline and update current data practices to arm students with information to make the best choices, while reducing bureaucratic burdens on universities.”

A copy of Congressman Mitchell’s press release is found at: https://mitchell.house.gov/media/press-releases/mitchell-krishnamoorthi-stefanik-harder-introduce-bipartisan-college

White House releases 10 “Proposals to Reform the Higher Education Act”

On March 18, 2019, the White House released its “Proposals to Reform the Higher Education Act,” which include 10 proposed reforms for higher education from the Trump Administration that would provide more Americans access to a quality education, hold institutions accountable, and help students and families make informed decisions regarding their educational options. This is the first time the Trump Administration has shared a broad higher education policy agenda. The proposals reflect the themes included in President Trump’s FY 2020 federal budget proposal released on March 11, 2019.

The White House proposals for reform are as follows:

• Reorient the accreditation process to focus on student outcomes: Congress should streamline the 10 standards of accreditation to focus on quality and to eliminate the archaic distinction between regional and national accreditors.
• Increase innovation in the education marketplace: Congress should establish a pilot program to increase access to market-driven workforce development programs.
• Better align education to the needs of today’s workforce: Congress should expand Pell Grant eligibility to include high-quality, short-term programs that provide students with a credential, certification, or license in a high-demand field.
• Increase institutional accountability: Institutions of higher education that accept taxpayer funds should share in the financial responsibility associated with student loans.
• Accelerate program completion: Congress should require that the financial aid award letter identify policies regarding the acceptance of prior learning assessments and the availability of aid to cover prior learning assessment costs.
• Support historically black colleges and universities: Congress should make the President’s Board of Advisors on HBCUs and the Interagency Working Group permanent.
• Encourage responsible borrowing: Congress should institute Parent and Grad PLUS loan limits and provide financial aid administrators with the information and authority to help students limit their student loan borrowing.
• Simplify student aid: Congress should consolidate the five income-driven repayment options into one simple plan that caps monthly payments at 12.5 percent of a borrower’s discretionary income and extends loan forgiveness after 180 months of repayment through an income-driven repayment plan.
• Support returning citizens: Congress should provide targeted Federal financial aid to prisoners eligible for release to improve employment outcomes and reduce recidivism.
• Give prospective students more meaningful and useful information about schools and programs: Congress should provide students with program-level earnings and outcome data that they need to make informed decisions.

Secretary of Education Betsy DeVos released a statement on the Administration’s Higher Education Act reform principles during the meeting held on March 18, 2019, of the National Council for the American Worker:

“The higher education reform principles released today provide an important roadmap for working with Congress to rethink higher education and pass meaningful reforms. Ideas like simplifying loan repayment, short-term and second-chance Pell and streamlining the FAFSA are common-sense, bipartisan and should be passed immediately.”

A copy of the Proposals is found at:
https://www.whitehouse.gov/wp-content/uploads/2019/03/HEA-Principles.pdf

A copy of the Secretary’s press release is found at: https://www.ed.gov/news/press-releases/secretary-devos-issues-statement-higher-education-act-reform-principles-introduced-during-national-council-american-worker-meeting

On March 18, 2019, Senate Health, Education, Labor and Pensions (HELP) Committee Ranking Member Patty Murray (D-WA) issued a statement criticizing the White House’s release of the new principles for the reauthorization of the Higher Education Act. “The White House’s proposal is a feeble attempt to claim the Trump Administration is helping students by identifying one symptom of rising student debt, while completely ignoring the root cause – that college costs are rising exponentially and most students can’t afford college without taking on massive amounts of debt.”

A copy of Senator Murray’s statement is found at: https://www.help.senate.gov/ranking/newsroom/press/murray-white-house-higher-education-proposal-would-end-up-hurting-students-commits-to-working-with-chairman-alexander-to-find-real-and-serious-solutions

Congressmen Green and Gonzalez introduce bill on ISAs

On March 18, 2019, Congressmen Mark Green (R-TN) and Vicente Gonzalez (D-TX) introduced H.R. 1810, the Kids to College Act, which is designed to provide a legal framework for income-share agreements (ISAs) that allow students to borrow money from their college or university to pay for the costs of tuition and fees and then repay the schools with a percentage of their future earnings. The press release states that the bill would expand the use of ISAs, which would help address inequities in college admissions.

The bill is similar to bills introduced in the 115th Congress by Senator Todd Young (R-IN) and former Congressman Luke Messer (R-IN).

A copy of the press release is found at: https://markgreen.house.gov/news/documentsingle.aspx?DocumentID=63

Department officially implements the borrower defense rule of 2016

On March 19, 2019, the Department of Education published a final rule in the Federal Register announcing that the Nov. 1, 2016 borrower defense to repayment (BDR) rule is officially in effect. The BDR rule was initially set to go into effect on July 1, 2017 and went through a series of regulatory delays and legal actions. As a result of a decision by the U.S. District Court of the District of Columbia on Oct. 12, 2018, the Nov. 1, 2016, final BDR rule is now in effect. The Department issued an electronic announcement on March 15, 2019, to clarify the responsibilities of institutions with respect to the Financial Responsibility, Class Action Bans and Pre-dispute Arbitration Provisions, and Repayment Rate Disclosure sections of the final regulations.

The 2016 Final Regulations included revisions to the Department’s standards that institutions must meet to be deemed financially responsible. Among other things, the regulations included a new and long list of financial responsibility events, actions, and conditions, including, for example, certain types of lawsuits, judgments, determinations, settlements, citations by state or accrediting agencies, violations of loan agreements, 90/10 violations, SEC actions, and other matters. The complete list with detailed descriptions of each event, action, and condition can be found in the regulations at 34 C.F.R. § 668.171. The regulations require institutions to notify the Department within specific timeframes if one or more of these events, actions, or conditions occur at the institution on or after July 1, 2017. The Department acknowledged in the notice that some institutions may have been uncertain about how to comply with these requirements in light of the delays and court orders. In general, the Department gives institutions within 60 days of the electronic announcement to send notifications of actions, events, and conditions that occurred between July 1, 2017 (effective date of the regulations) and the electronic announcement. However, there are exceptions: for example, institutions are not required to submit a notification for certain debts, liabilities and losses that occurred between July 1, 2017, and the last day of the fiscal year end for the most recent annual audit submission submitted to the Department. Therefore, institutions should review the electronic announcement and the regulations carefully to identify the specific requirements for the type of event, action, or condition in order to determine what must be reported and by when. Institutions must send any required notifications to the Department of Education to FSAFRN@ed.gov.

Specifically, the guidance offers information on mandatory arbitration agreements. The rule prohibits institutions receiving federal aid from requiring students to settle complaints through arbitration, rather than in court, and prohibits institutions from requiring students to agree not to participate in class action lawsuits. The guidance instructs institutions that they have 60 days to either change the binding arbitration provisions in their enrollment contracts or notify students they will not be enforced.

The guidance also outlines that the federal standard for loan discharges for students who attended closed schools will apply to loans disbursed on or after July 1, 2017, and that the Department will offer more information, at a later date, about the requirement that for-profit institutions provide repayment rate warnings to prospective students.

A copy of the final rule is found at: https://www.govinfo.gov/content/pkg/FR-2019-03-19/pdf/2019-04887.pdf

A copy of the electronic announcement is found at: https://ifap.ed.gov/eannouncements/030719GuidConcernProv2016BorrowerDefensetoRypmtRegs.html

President Trump signs Executive Order to improve free speech, transparency, and accountability at colleges and universities

On March 21, 2019, President Trump signed an Executive Order designed to “enhance the quality of postsecondary education by making it more affordable, more transparent, and more accountable.” The Order directs federal agencies to take appropriate steps to ensure that college and university campuses are places of free thought and debate. It also seeks to ensure that students have access to the information they need to make the postsecondary decisions that works best for them. The Department of Education will make improvements to its myStudentAid mobile app so borrowers are better informed about loan balances, payments, and repayment options. In addition, the Department will expand the data on the College Scorecard to include program level data for former Title IV recipients, which includes:

• Estimated median earnings;
• Median Stafford loan debt;
• Median Graduate PLUS loan debt;
• Median Parent PLUS loan debt;
• Student loan defaults; and
• Repayment rates.

In addition, the Order directs the Department to support the efforts of the states and institutions to reduce barriers to degree or program completion and save students money, as well as develop policy proposals that help ensure institutions share more of the financial risk associated with student loans.

Secretary of Education Betsy DeVos said: “All students should have access to relevant, accurate, and transparent data when making decisions about their education.”

A copy of the Fact Sheet released by the White House is found at: https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-is-improving-transparency-and-promoting-free-speech-in-higher-education/

A copy of the President’s Executive Order is found at: https://www.whitehouse.gov/presidential-actions/executive-order-improving-free-inquiry-transparency-accountability-colleges-universities/

A copy of the Secretary’s statement is found at: https://www.ed.gov/news/press-releases/secretary-devos-issues-statement-president-trumps-higher-education-executive-order

Senator Lamar Alexander (R-TN) announced that while he agrees with the Executive Order that there needs to be better data and greater accountability in reducing student debt, he does not want to see Congress, the President or the Department of Education creating speech codes to define what you can say on campus.

A copy of Senator Alexander’s press release is found at: https://www.alexander.senate.gov/public/index.cfm/pressreleases?ID=D77CA832-79E7-4B93-B9E8-80815AE48BB3

ED extends neg reg sessions on accreditation and innovation

On March 22, 2019, the Department of Education published a notice in the Federal Register announcing the extension of the negotiated rulemaking committee sessions on revising federal rules governing accreditation and innovation. The first two rounds of negotiations over the draft rules were cut short because of weather-related closures of the federal government. The Department is extending a fourth day to the planned session in March and is scheduling a fourth round of negotiations, which will be held on April 1-3, 2019. If the committee does not come to consensus over the package of proposals, ED will be free to move ahead with its own proposals.

A copy of the announcement is found at: https://www.govinfo.gov/content/pkg/FR-2019-03-22/pdf/2019-05625.pdf

Senator Klobuchar and Collins re-introduce bill to support and expand apprenticeship programs

On March 25, 2019, Senators Amy Klobuchar (D-MN) and Susan Collins (R-ME) re-introduced the American Apprenticeship Act, which would provide funding to states for the creation or expansion of tuition assistance programs that benefit participants in pre-apprenticeship and apprenticeship programs. The bill would authorize the U.S. Department of Labor to award competitive grants to states that have developed effective strategies to diversify, market, and scale pre-apprenticeship and registered apprenticeship programs. It would also authorize states to utilize grant funds to assist participants in pre-apprenticeship and registered apprenticeship programs in obtaining industry-relevant classroom instruction, and would require the Department to study sectors where apprenticeships are in demand and issue a report to Congress.

A copy of Senator Klobuchar’s press release is found at: https://www.klobuchar.senate.gov/public/index.cfm/news-releases?ID=F7067604-2E2A-4E77-8782-4E5DBC3E22E0

A copy of the text of the bill is found at: https://www.hassan.senate.gov/imo/media/doc/BOM19242%20Text.pdf

ED releases an infographic on reporting data breaches

On March 26, 2019, the Department of Education released an infographic to help postsecondary institutions understand what constitutes a data breach and where to report breaches when they occur. The Department recommends that institutions print it and post it in the financial aid offices’ work area and common areas as well as the institution’s information security office.

A copy of the electronic announcement is found at: https://ifap.ed.gov/eannouncements/032619ReportEachDataBreach.html

Senators Hassan and Durbin introduce bill to protect students from predatory institutions

On March 26, 2019, Senators Maggie Hassan (D-NH) and Dick Durbin (D-IL) introduced S. 867, the Preventing Risky Operations from Threatening the Education and Career Trajectories of Students Act of 2019 (PROTECT Students Act), which would help safeguard students and taxpayers from “predatory and anti-student higher education practices and ensure that higher education meets the needs of hard-working students.” Senator Hassan said: “From closing a loophole that allows for-profit colleges to take advantage of our veterans who have sacrificed bravely in defense of our freedoms, to ensuring that higher education institutions are preparing students for good-paying jobs that allow them to repay their student loans, to implementing a process to give students the loan forgiveness they are entitled to under the law, the PROTECT Students Act is critical to providing basic consumer protections to our students and preparing them for success.”

Some of the key provisions include:

• Protecting veterans and students from predatory practices by closing the 90/10 loophole and include all Department of Veterans Affairs Post-9/11 GI Bill and Department of Defense as federal revenue and restoring the 85/15 rule.
• Establishing a process for for-profit institutions to convert to nonprofit or public status.
• Establishing prohibition on use of federal funds for recruiting and marketing.
• Ensuring career education programs prepare students for good-paying jobs by codifying the 2014 gainful employment regulations.
• Expanding restrictions on incentive compensation.
• Strengthening protections for student loan borrowers by codifying and strengthening the 2016 borrower defense to repayment regulations including ending the use of mandatory pre-dispute arbitration and class action restrictions.
• Codifying the FSA Student Aid Enforcement Unit to investigate allegations of misconduct by institutions.

A copy of Senator Hassan’s press release is found at: https://www.hassan.senate.gov/news/press-releases/senators-hassan-and-durbin-introduce-comprehensive-legislation-to-protect-students-and-taxpayers-from-predatory-higher-education-practices

ED launches preliminary investigation into the college admissions scandal at eight universities

The Department of Education recently announced that it has opened a preliminary investigation into the college admissions and bribery scandal. Both The Hill and Politico reported that eight universities were notified that each faces a preliminary investigation stemming from the criminal charges made earlier in the month to dozens of wealthy parents. The universities are being asked to turn over documents in the next 30 days including marketing and promotional materials, statements made to organizations that rank colleges and universities, and internal control policies and procedures related to admissions for recruited athletes.

The investigations into each of the eight universities are being conducted by the Department’s Student Aid Enforcement Unit, which has the power to issue subpoenas. Jeff Appel, who has recently been delegated the duties of chief enforcement officer until a permanent official is named, will be leading the investigations.

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.