Washington News Brief

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

Higher education committee of 50 issues policy recommendations on college access, affordability, and transparency

On March 13, 2019, the Higher Education Committee of 50, a group facilitated by the National Association of Student Financial Aid Administrators (NASFAA) and funded through a Bill & Melinda Gates Foundation grant, released 36 comprehensive and practical policy recommendations for the reauthorization of the Higher Education Act (HEA). The Committee of 50, comprised of college presidents, members of governing boards, enrollment managers, admissions staff, financial aid and bursar leaders, students, and other leaders from all sectors of postsecondary education, spent the last 18 months examining policy areas related to college access, affordability, accountability, and transparency. Some of the recommendations from the report include:

• Requiring the Department of Education to provide more transparency on the verification-selection process through the FAFSA;
• Requiring ED to develop and add a dynamic, user-tested truth-in-lending calculator and annual debt letter to entrance counseling and the federal web-portal for borrowers;
• Permitting students to file a FAFSA that would allow financial aid consideration for multiple years (e.g., a one-time FAFSA);
• Eliminating higher education tax credits and putting those funds into the Pell Grant program;
• Lifting the ban on collecting student unit-record level data and develop a Student Unit Record Data System (SURDS);
• Simplifying and improving the current financial aid application process by implementing a three-level application process, expanding the functionality of the Internal Revenue Service Data Retrieval Tool (DRT), considering multi-year FAFSA, and/or considering the use of the federal tax return as the aid application;
• Returning the 90/10 rule ratio to 85/15 and including the Department of Defense tuition assistance benefits and veteran’s benefits;
• Retaining gainful employment requirements; and
• Requiring Title IV gatekeeper accreditors to develop and adopt common elements for the function of institutional reflection.

A copy of the report, the executive summary, and the press release is found at: http://www.highereducationcommitteeof50.org/final-report

Senators introduce three bills to provide students and families with better information about college costs

On March 27, 2019, Senators Charles Grassley (R-IA), Tina Smith (D-MN), and Joni Ernst (R-IA) introduced three bills to provide students and their families with better information about college costs:

• The Net Price Calculator Improvement Act would improve the effectiveness of and access to net price calculators, which provide students with early, individualized estimates of higher education costs and financial aid information before they decide where to apply;
• The Understanding the True Cost of College Act would create a universal financial aid award letter so students could compare financial aid packages; and
• The Know Before You Owe Federal Student Loan Act would strengthen the current loan counseling requirements for institutions of higher education under the Higher Education Act by making the counseling an annual requirement before new loans are disbursed rather than just for first-time borrowers and lets students decide how much to borrow rather than having the maximum amount serve as the default option.

A copy of the press release, which allows you to obtain a summary of each of the bills, is found at: https://www.grassley.senate.gov/news/news-releases/grassley-smith-ernst-introduce-bipartisan-bills-help-students-understand-cost

Consumer groups release list of priorities for reauthorization of the HEA

On April 2, 2019, Education Trust President and Chief Executive Officer John King and National Student Legal Defense Network President Aaron Ament jointly released their priorities for reauthorization of the Higher Education Act (HEA). John King and Aaron Ament sent a letter to the House Education and Labor Committee and the Senate Health, Education, Labor and Pensions Committee asking “to pursue equitable policy change that serves the best interests of students who encounter systemic barriers in access, completion, and repayment of loans as part of their pursuit of higher education.” Three priorities identified to protect students include:

• Revising the 90/10 rule regarding veterans and military tuition benefits and reinstating the 85/15 rule;
• Codifying the debt-to-earnings metrics of the gainful employment rule; and
• Including a private right of action allowing students to sue their institutions of higher education and federal loan servicers.

A copy of the letter is found at: https://edtrust.org/press-release/letter-to-congress-from-the-education-trust-and-the-national-student-legal-defense-network-regarding-the-reauthorization-of-the-higher-education-act/

House Subcommittee on Higher Education holds hearing on accountability in higher education

On April 3, 2019, the House Subcommittee on Higher Education and Workforce Investment held a hearing titled, “Strengthening Accountability in Higher Education to Better Serve Students and Taxpayers.” Chairwoman Susan Davis (D-CA) noted that the education system maintains its integrity through three unique entities: the federal government, states, and accreditors, “but the recent wave of for-profit closures raises serious questions about their effectiveness, and unfortunately, students and taxpayers are paying the price.” Chair Davis outlined her recommendations for each branch of the triad, proposing that accreditors need to be more effective at upfront gatekeeping and ongoing monitoring of institutions, states need to have more well-defined roles in the accreditation process, and the Department of Education must ensure that any institution receiving Title IV funds is financially stable and not defrauding students. Ranking Member of the Subcommittee Lloyd Smucker (R-PA) said that “the accreditation process must foster stronger educational outcomes for students.” He went on to say that “[p]reserving the current accreditation framework is important…But there is room to reform the system for greater accountability and quality.” The witnesses discussed the roles of the states and accreditors in overseeing schools and their shared responsibility. All agreed that their approaches to accountability needed to be strengthened.

House Veterans Affairs Committee holds hearing with VA Secretary

On April 3, 2019, the House Veterans Affairs Committee held a hearing titled, “U.S. Department of Veterans Affairs (VA) Budget Request for FY 2019,” with Secretary of Veterans Affairs Robert Wilkie. The Secretary was asked by Congresswoman Kathleen Rice (D-NY) whether he supported revising the 90/10 rule for proprietary schools. Secretary Wilkie responded that proprietary schools that primarily rely on federal aid “need to be looked at closely,” but did not suggest changing the 90/10 rule.

Neg Reg sessions conclude with consensus on accreditation and innovation rules

On April 3, 2019, the negotiated rulemaking committee reached consensus on a package of regulations covering a variety of issues, including accreditation, state approval of online programs, religious institutions, competency-based education, and TEACH grants. Consensus was reached after the Department of Education pulled back some of its controversial proposals. The next step is the release of proposed regulations based on the consensus reached by the negotiators. The Department will solicit public comments on the proposed regulations before issuing a final set of regulations.

Secretary of Education Betsy DeVos welcomed the news that the negotiators had reached consensus and said: “Rethinking higher education required each person at the negotiating table to challenge assumptions and examine past practice in order to better serve students.”

A copy of Secretary DeVos’ response to the welcomed news is found at: https://www.ed.gov/news/press-releases/secretary-devos-applauds-consensus-higher-education-reforms

ED announces distribution of final GE completers lists and draft GE completers lists correction results

On April 5, 2019, the Department of Education released Electronic Announcement #118 regarding the distribution of final GE completers lists on April 8, 2019. On April 8, 2019, the institution will be able to review the results of the Department’s review of the institution’s corrections.

The Department also announced that the Memorandum of Understanding (MOU) under which the Social Security Administration (SSA) shared earnings data with the Department has expired. Therefore, the Department is unable to calculate Debt/Earnings rates in 2019.

A copy of the Electronic Announcement is found at: https://ifap.ed.gov/eannouncements/040519GEEA118FinalCompleterListDraftCompleterListCorrectionResults.html

Senate HELP Committee holds hearing on accountability

On April 10, 2019, the Senate Health, Education, Labor and Pensions (HELP) Committee held a hearing titled, “Reauthorizing the Higher Education Act: Strengthening Accountability to Protect Students and Taxpayers.” In his opening statement, Chairman Lamar Alexander (R-TN) said that the bipartisan hearing will look at ways “to ensure that students are earning degrees worth their time and money and that taxpayers are paid back the hundreds of billions that they have loaned to students to earn degrees.” Chairman Alexander said that lawmakers need to identify what information schools actually need to report and provide direction to the Department on how to make that information accessible and useful to students. Finally, he said that the “44 federally recognized accrediting agencies upon which we rely for certifying that students are receiving a quality education” should be strengthened. Senator Alexander also said that he is proposing a new accountability system based upon whether borrowers are actually repaying their student loans. He asserted that there needed to be a more effective measure other than cohort default rates, gainful employment debt-to-earnings rates, or the 90/10 rule.

Ranking Member Patty Murray (D-WA) said in her opening remarks that it is critical for all institutions of higher education to enroll diverse students and provide them with the support that they need to complete their education and be prepared for success after college. In terms of accountability, Senator Murray said that the current accountability system should be maintained and strengthened. “As we work toward reauthorization, we should not only protect students from predatory or ineffective actors, we have to also look at broader educational outcomes to ensure all schools are preparing all students for success.” Ranking Member Murray concluded her remarks by saying that the reauthorization needs to ensure schools are using data to better target their resources and provide schools with the tools they need to help their students succeed.

The panelists discussed the role of the accrediting agencies, the role of the states, and the concerns about for-profit institutions.

Secretary DeVos testifies before House Education and Labor Committee

On April 10, 2019, the House Education and Labor Committee held a hearing titled, “Examining the Policies and Priorities of the U.S. Department of Education” with Secretary of Education Betsy DeVos. In his opening statement, Chairman Bobby Scott (D-VA) said that the Department’s FY 2020 budget request makes the responsibility of implementing and enforcing federal laws covering students nationwide nearly impossible. He said that the budget cuts are “a clear message that the Administration is not serious about achieving equity in education.” Ranking Member Virginia Foxx (R-NC) said that her members are deeply committed to ensuring that all programs under the Department’s jurisdiction are implemented effectively and help grantees and stakeholders provide students a high-quality, effective education. She addressed the national skills gap problem and asserted that a bachelor’s degree is not the only way to a good-paying job.

Secretary DeVos said that federal student aid programs “should be flexible enough to support students on the path of their choice” and noted that the Department’s FY 2020 budget request would expand Pell Grant eligibility to include high-quality short-term programs. She also said the budget would reform the campus-based programs by focusing limited resources on bolstering effective workforce development opportunities for students with the most need. The budget proposal would also improve student loan repayment by consolidating the multiple repayment plans into a single Income-Driven Repayment (IDR) plan. The FSA’s Net Generation Financial Services Environment will create “a more agile, flexible model that will streamline FSA’s existing operations.”

During the question and answer portion of the hearing, many of the Democrats challenged the management of the Department. For instance, Congresswoman Ilhan Omar (D-MN) asked the Secretary for additional information about the potential conflicts of interest involving several officials at the Department. Congressman Joe Courtney (D-CT) pointed to an Inspector General’s report that showed that 61 percent of all federal student loan servicers were not in compliance with federal rules. The Secretary defended the practices of the Department throughout the hearing.

ED sends draft final GE rule to OMB

On April 12, 2019, the Department of Education sent its final revisions to the gainful employment rule to the White House Office of Management and Budget (OMB) for review, the final step in the process before the rule goes to the Federal Register. According to the notice, it will be a final rule and will go into effect on July 1, 2020, if published before Nov. 1, 2019.

Under the proposed GE rule, the Department would repeal the GE rule. The Department also stated at the time that it published the proposed GE rule that it planned to update the College Scorecard or a similar web-based tool to provide program-level outcomes for all higher education programs at all institutions that participate in the Title IV programs.

ED releases recommendations on making financial aid offers

On April 15, 2019, the Department of Education released an electronic announcement making recommendations on what schools should avoid when issuing financial aid offers. The recommendations include:

• Avoid calling your financial aid offer an “award” or calling it a “letter;”
• Avoid issuing a financial aid offer that does not include cost of attendance;
• Avoid listing the cost of attendance without breaking it down into clear components;
• Avoid listing grant/scholarship aid, loans and work-study together;
• Avoid listing student loans without clarifying the source;
• Avoid listing Parent PLUS loans with student loans;
• Avoid issuing a financial aid offer without CRITICAL next steps; and
• Avoid issuing a financial aid offer without net cost calculations.

A copy of the electronic announcement at: https://ifap.ed.gov/eannouncements/041519RecWhatPostInstShouldWork2Avoid.html

ED releases quarterly report on student aid programs

On April 19, 2019, the Department of Education released its quarterly report on student aid, which showed that in the fourth quarter of 2018, FAFSA applications declined, enrollment in income-driven repayment plans continued to increase, approval in Public Service Loan Forgiveness (PSLF) applications increased, and decisions on borrower defense to repayment claims stalled. The data show that overall, the total outstanding federal student loan portfolio increased from $1.44 trillion in the third quarter of 2018 to $1.45 trillion in the fourth quarter of 2018.

A copy of the announcement is found at: https://ifap.ed.gov/eannouncements/041919PostsNewReportstoFSADataCenter.html

Senator Warren releases proposal to forgive federal and private student loans

On April 22, 2019, Senator Elizabeth Warren (D-MA) released a proposal to cancel about $640 billion in outstanding federal and private student loan debt. The plan is part of Senator Warren’s campaign and would forgive $50,000 in student loans for student and parent borrowers in households earning less than $100,000 a year and give “substantial debt cancellation” to every person in households earning between $100,000 and $250,000. The proposal would immediately provide relief to more than 95 percent of the 45 million Americans with student debt.

Senator Warren also called for a drastic increase in federal funding on higher education that would make tuition and fees free for all students at two- and four-year public colleges and expand grants for lower-income and minority students to cover costs, such as housing, food, books, and child care. The campaign estimates that the cost of the plan would be $1.25 trillion over 10 years paid for by an ultra-millionaire tax that Senator Warren introduced in January, which would tax the 75,000 wealthiest families in America.

A copy of the press release is found at: https://www.warren.senate.gov/newsroom/press-releases/as-a-long-time-champion-of-students-senator-warren-leads-the-fight-to-end-the-student-debt-crisis-and-truly-invest-in-opportunities-for-young-people

Deputy Under Secretary Diane Auer Jones discusses BDR rule at bipartisan policy center meeting

On April 23, 2019, Department of Education Principal Deputy Under Secretary Diane Auer Jones addressed the Bipartisan Policy Center attendees and discussed the Department’s higher education policies and priorities for 2019. Ms. Jones discussed the Department’s approach to dealing with the growing backlog of applications for borrower defense to repayment claims (more than 158,000) from students who claim they were defrauded by their colleges. She said that the Department did not approve or deny any claims for the last six months of 2018. Ms. Jones said that the Department is waiting for a court ruling. She stated that a federal judge blocked the Trump administration’s partial loan forgiveness policy on the grounds it violated privacy law, and the Department appealed the ruling to the ninth Circuit Court of Appeals, where it is pending. Ms. Jones indicated that the Department is continuing to process claims in cases where it believes a borrower should receive either 100 percent loan forgiveness or no loan forgiveness at all, but they are stuck if the students are likely to be eligible for partial relief. She concluded that while waiting for the decision of the court, they are trying to develop another methodology for partial loan forgiveness that would not be vulnerable to legal challenges.

Ms. Jones also announced that the Department recently reversed its plan announced last fall to publish a new borrower defense to repayment notice of proposed rulemaking (NPRM). Instead, the Department is likely to move directly to a final rule later this year.

Ms. Jones said that the Department is planning on launching a new pilot program aimed at permitting Federal Work-Study (FWS) funds to go toward apprenticeships. She also said that the pilot program would assist students by allowing some of the FWS funds to pay students’ wages for apprenticeships.

According to Ms. Jones, the Department is also exploring how it can play a role in income-share agreements (ISAs). ISAs allow colleges to share risk with students over tuition costs, with the student paying back the “award” as a percentage of their earnings over time.

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.