Washington News Brief

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

Federal Judge issues order finding ED’s delay in implementing the 2016 State Authorization Rule unlawful

On April 26, 2019, U.S. District Court Magistrate Judge Laurel Beeler issued an order in favor of two unions, the National Education Association and the California Teachers Association, finding that the U.S. Department of Education unlawfully delayed the implementation of the 2016 State Authorization Rule on distance education because the Department failed to offer negotiated rulemaking with regard to the delay and that the 15-day public comment period was not sufficient. The two unions sued the Department last August 2018 in the U.S. District Court of the Northern District of California, alleging that the Department failed to follow the correct process. However, instead of requiring the rule to go into effect immediately, Judge Beeler postponed the effective date for 30 days, from April 26, 2019, to minimize the risk of confusion or disruption. The short period will provide an opportunity for the Department to notify affected stakeholders of the Court’s decision.

Senator Warren sends letter to FSA COO requesting his plans for managing FSA

On May 7, 2019, Senator Elizabeth Warren (D-MA) sent a 23-page letter to the newly appointed Chief Operating Officer (COO) of Federal Student Aid (FSA), Mark Brown, requesting his vision for administering the financial aid programs. Senator Warren asked for details about FSA’s plans for holding student loan servicers and contractors accountable, for improving customer service for its 43 million student borrowers, for ensuring borrower-focused implementation of the existing repayment, discharge, and forgiveness programs, and for reducing delinquencies and defaults. She concluded by stating that Mr. Brown had a “great deal of work to do to improve FSA.”

A copy of the letter is found at: https://www.warren.senate.gov/imo/media/doc/2019.05.07.%20Letter%20to%20FSA%20Chief%20Mark%20Brown%20re%20Student%20Loan%20Program2.pdf

House Appropriations Committee approves FY 2020 Labor-HHS-Education funding bill

On May 8, 2019, the House Appropriations Committee considered and approved the FY 2020 Labor, Health and Human Services, Education, and Related Agencies Appropriations Act, which would provide a 6 percent funding increase to the Department of Education. Subcommittee Chairman Rosa DeLauro (D-CT) said that the allocation of $189.9 billion demonstrated the Committee’s strong commitment to social programs. Subcommittee Chairwoman DeLauro said: “For too long, working people and middle-class families of this country have been shortchanged. So this Committee is moving ambitiously to make up for lost ground and to make sure we provide every individual with a better chance at a better life.” Subcommittee Ranking Member Tom Cole (R-OK) said that while he supported a number of items in the bill, “funding levels are unsustainable over the long run.”

Some of the education provisions include the following:

• The bill sets the maximum Pell Grant at $6,345, an increase of $150 over the FY 2019 enacted level;
• The bill provides $1 billion for FSEOG, an increase of $188 million above the FY 2019 enacted level;
• The bill provides $1.4 billion for Federal Work-Study, an increase of $304 million above the FY 2019 enacted level.

The House Subcommittee Report accompanying the funding bill includes a number of directives to the Secretary of Education specifically targeted at for-profit institutions of higher education:

• The Committee directs the Secretary to provide within 90 days of enactment of the Act to the Committees on Appropriations a report that identifies all for-profit institutions that would exceed the 90/10 federal funding limits if revenue from the VA and DoD were to be included in the 90/10 calculation.
• The Committee directs the Secretary to update within 60 days of enactment of the Act the Borrower Defense to Repayment Report on FSA’s Data Center on a monthly basis and to submit to the Committees on Appropriations the number of claims and the total amount of loans covered by those claims according to institutional type.
• The Committee directs the Secretary to submit a report to the Committees on Appropriations within 90 days of enactment of the Act outlining its plans to prevent precipitous closures in the for-profit sector.
• The Committee directs the Secretary to publish on FSA’s Data Center the list of schools with a letter of credit in fiscal years 2017 through 2019.
• The Committee directs the Secretary to issue a report to the Committees on Appropriations within 90 days of enactment of the Act outlining the process through which it approves or disapproves of a for-profit institution’s conversion to not-for-profit status and a list of any staff involved in such decisions. The report must also identify all institutions that have changed their for-profit status in the past three fiscal years and any action the Department has made with respect to the institutions.

Pages 197 to 198 of the report describe the Subcommittee’s recommendations for the for-profit sector. The report is found at: https://appropriations.house.gov/sites/democrats.appropriations.house.gov/files/FY2020%20LHHS_Report.pdf

Senators Durbin, Warren, and Reed re-introduce Student Loan Borrower Bill of Rights

On May 8, 2019, Senators Dick Durbin (D-IL), Elizabeth Warren (D-MA), and Jack Reed (D-RI) re-introduced the Student Loan Borrower Bill of Rights Act of 2019, which would amend the Truth-in-Lending Act, to create consistent disclosure and servicing standards across federal and private student loan programs. The bill would:

• Require various disclosures to borrowers when a loan is sold or transferred;
• Standardize the application of payments and the allocation of payments among multiple loans in a manner that is most beneficial to a borrower;
• Limit when borrowers are subject to late fees and other consequences;
• Prohibit servicers from using mandatory arbitration clauses or class action restrictions;
• Require servicers to establish Repayment Specialists to keep at-risk borrowers from defaulting;
• Require private loans to be discharged upon death or disability of the borrower;
• Require institutions of higher education to certify private education loans prior to the borrower taking out a private loan; and
• Codify the authority of the CFPB’s Student Loan Ombudsman.

A copy of Senator Durbin’s press release is found at: https://www.durbin.senate.gov/newsroom/press-releases/durbin-warren-reed-reintroduce-bill-creating-student-loan-borrower-bill-of-rights

Warren, Bonamici and six other Senate and House Members send letter to CHEA urging it to deny recognition to ACICS

On May 9, 2019, Senator Elizabeth Warren (D-MA) and Congresswoman Susan Bonamici (D-OR), along with six of their Senate colleagues and seven of their House colleagues, sent a letter to the Council for Higher Education Accreditation (CHEA) urging it to deny recognition to the Accrediting Council of Independent Colleges and Schools (ACICS) when CHEA reviews ACICS’ status at its June 2019 meeting. The letter urged CHEA to consider ACICS’ past non-compliance with CHEA’s standards “as well as evidence that ACICS continues to fail to meet basic standards designed to protect students from predatory and low-quality institutions.” The letter went on to say that: “ACICS now has the unique distinction of being the sole accrediting agency that has overseen the three largest collapses of institutions of higher education in American history.”

A copy of the letter is found at: https://www.warren.senate.gov/imo/media/doc/2019.05.09%20Letter%20to%20CHEA%20re%20ACICS_SIGNED.pdf

House Education and Labor Subcommittee holds hearing on improving student outcomes

On May 9, 2019, the House Education and Labor Subcommittee on Higher Education held a hearing titled, “The Cost of Non-Completion: Improving Student Outcomes in Higher Education.” Chairwoman Susan Davis (D-CA) stated that the need to complete college is “a matter of national importance, but only 60 percent of students finish college with a degree or certificate.” Ranking Member Lloyd Smucker (R-PA) said that there are millions of students who are unable to complete their education in six years. He pointed out that when students do not graduate, they are left with significant student loan debt without the value of a degree.

One of the witnesses, Dr. Susan Dynarski, Professor at the University of Michigan, said that rising student loan debt has shifted financial risk onto students. She also noted that the completion rates vary dramatically by student demographics and, within every sector, there are stark differences by sex, race, ethnicity, and socioeconomic status in completion rates. The witnesses focused on possible solutions to support students who are likely to drop out.

ED releases GE Disclosure Template

On May 9, 2019, the Department of Education released the 2019 GE Disclosure Template in Electronic Announcement #119. Institutions have until July 1, 2019, to update disclosures for each of their Gainful Employment (GE) programs, using the 2019 GE Disclosure Template, and to post the disclosures to their program webpages.
The 2019 GE Disclosure Template has been simplified and streamlined. It now includes:

• Normal time to complete the program;
• Total program costs if completing the program within normal time (including tuition and fees plus books, supplies, and equipment; excluding room, board, or other expenses);
• Median cumulative debt for Title IV students completing the program within the normal time (including Federal, private, and institutional debt);
• Licensure information for the program’s target occupation;
• URL for the College Scorecard;
• Warning language if required under 34 C.F.R. § 668.410.

Unlike previous templates, the 2019 GE Disclosure Template is not a web-based application. It will not generate a completed template for institutions. Instead, institutions may copy the text and fill in the information for their GE program(s), fill in the relevant data elements, and post the completed disclosure template to each relevant program webpage.

A copy of Electronic Announcement #119 is found at: https://ifap.ed.gov/eannouncements/050919GEAnnounce119Release2019GEDisclosureTemplate.html

OIG releases audit report identifying problems with FAFSA verification

On May 16, 2019, the Department of Education’s Office of Inspector General (OIG) released a report titled, “Federal Student Aid’s Process to Select FAFSA Data Elements and Students for Verification,” which asserts that the Department’s process for verifying the accuracy of the FAFSA elements provides no reasonable assurance of identifying errors. The OIG report found that Federal Student Aid (FSA) “did not evaluate its process for selecting FAFSA data elements to verify,” nor did it “effectively evaluate three of its four processes reviewed for selecting students for verification.” The report also noted that FSA did not evaluate the effectiveness of its 30 percent limitation for selected students it required schools to verify. The OIG concluded that “there is no reasonable assurance that the verification processes effectively identified FAFSAs with errors that would result in improper payments.”

The OIG recommended that FSA and the Office of Postsecondary Education (OPE) “ensure that the FAFSA data elements that are selected for verification are those that have the greatest impact on the expected family contribution and are most likely to be misreported.”

A copy of the OIG report is found at: https://www2.ed.gov/about/offices/list/oig/auditreports/fy2019/a02q0007.pdf

ED addresses questions regarding financial responsibility provisions of the 2016 BDR regulations

On May 20, 2019, the Department of Education released an Electronic Announcement reminding institutions of the March 15, 2019, Electronic Announcement that provided “Guidance Concerning Some Provisions of the 2016 Borrower Defense to Repayment Regulations.” ED noted that there have been many questions regarding the BDR rules and, until such time when answers can be provided, that the 2016 BDR rules are in effect.

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

ED announces new experimental site to expand FWS and expansion of Second Chance Pell Program

On May 20, 2019, the Department of Education announced the launch of a new experimental site on Federal Work-Study (FWS), which will provide institutions with additional flexibility if they want to assist students participating in apprenticeships, internships, and work-based learning programs as well as those students that are completing clinic rotations, externships, and student teaching. Under the experimental site, the Department will waive the current 25 percent cap on the share of FWS that may be used to pay the wages of students employed by a private, for-profit organization and increase the share of wages that the federal program may cover for students working at small businesses from 50 to 75 percent. The Department said it plans to select a limited number of institutions to participate in the experiment.

Separately, the Department announced that it will expand the experimental site that allows Pell Grants to go to incarcerated students by allowing new cohorts of colleges and universities to participate. It is the first expansion of the Second Chance Pell Program since it was launched by the Obama administration. There are currently 64 schools in 26 states participating in the experiment. However, more than 200 schools submitted applications seeking to participate when it was launched four years ago. Secretary of Education Betsy DeVos said: “We hope that through this expansion, we can reach more students and utilize the information gathered to better inform Congress about future updates to the Higher Education Act.”

A copy of Secretary’s press release on providing flexibility on the FWS program is found at: https://www.ed.gov/news/press-releases/secretary-devos-builds-rethink-higher-education-agenda-expands-opportunities-students-through-innovative-experimental-sites

An announcement of the pre-publication of the Federal Register Notice inviting institutions to participating in the FWS Experiment was released on May 20, 2019:
https://ifap.ed.gov/eannouncements/052019PubofFRFWSExpUnderExpSitesInitiative.html

A copy of the Federal Register Notice is available at: https://www.nasfaa.org/uploads/documents/2019_10811.pdf

A copy of the Electronic Announcement on expanding the Second Chance Pell Program is found at: https://ifap.ed.gov/eannouncements/052019InvitationPartSecondChancePellExperUnderESI.html

ED releases expanded College Scorecard

On May 21, 2019, Secretary of Education Betsy DeVos announced major improvements to the College Scorecard. The College Scorecard now includes 2,100 non-degree-granting institutions. Previously, the College Scorecard provided disclosures for about 3,700 degree-granting institutions. The College Scorecard now also includes information on graduation rates for non-first-time and non-full-time students and the percentage of students who transferred or were still enrolled in school. Previously, the site only presented graduation rates for first-time, full-time students, which generally do not represent all students at many institutions.

Finally, building on President Trump’s March 2019 Executive Order, the College Scorecard released new preliminary loan data by field of study. For years, the undergraduate loan debt information was only available at the institution-level. The press release noted that this information is preliminary because institutions need time to adjust their historical enrollment data.

A copy of the press release is found at: https://www.ed.gov/news/press-releases/secretary-devos-delivers-promise-expand-college-scorecard-provide-meaningful-information-students-education-options-and-outcomes

An Electronic Announcement issued on May 21, 2019, advised institutions that in mid-July 2019, ED will calculate the data metrics for earnings and debt by field of study using data reported/updated by institutions as of July 10, 2019. ED strongly encourages institutions to ensure the accuracy of previously reported program-level enrollment data that was reported to NSLDS on or after July 1, 2014. The Department suggested the use of various resources to evaluate and update previously reported data.

A copy of the Electronic Announcement is found at: https://ifap.ed.gov/eannouncements/052119CorrectHistPrgmEnrollData4Metrics.html

House Education and Labor Subcommittee on Higher Education holds hearing on community colleges, HBCUs, TCUs, and HSIs

On May 22, 2019, the House Education and Labor Subcommittee on Higher Education and Workforce Investment held a hearing titled, “Engines of Economic Mobility: The Critical Role of Community Colleges, Historically Black Colleges and Universities (HBCUs), and Minority-Serving Institutions in Preparing Students for Success,” the fourth hearing related to the reauthorization of the Higher Education Act. Chairwoman Susan Davis (D-CA) opened the hearing by stating that federal data released on May 22, 2019, revealed a 50 percentage point gap between low-income students and their wealthy peers. She said that HBCUs, Tribal Colleges and Universities (TCUs), Hispanic-Serving Institutions (HSIs), and community colleges are forced to do more with less. She concluded that “Congress has a responsibility to strengthen and invest in institutions that are promoting economic mobility.”

Ranking Member Lloyd Smucker (R-PA) said that as they move toward reauthorization, lawmakers have the opportunity to ensure that the higher education system provides all students equal access to opportunities that offer pathways to success. Each witness highlighted the importance of the role of the particular group they each represented and described the challenges to success faced by their particular group.

House Oversight Subcommittee holds hearing on oversight of for-profit colleges

On May 22, 2019, the House Oversight and Reform Subcommittee on Economic and Consumer Policy held a hearing titled, “Examining For-Profit College Oversight and Student Debt.” The focus of the hearing was to discuss for-profit school closures, the role of accreditation, and the impact on student debt. The Democrats and Republicans on the Subcommittee took very different positions on how to address accountability, prevention of waste, fraud, and abuse, and student loan debt. While the Democrats pointed to abuses within the for-profit sector and the Department’s attempt to rewrite federal regulations related to for-profit college oversight as a reason for concern, Republicans claimed there have been abuses and poor outcomes in all sectors of higher education.

Subcommittee Chairman Raja Krishnamoorthi (D-IL) opened the hearing by describing the rapid growth of the for-profit college sector followed by the closure of two large for-profit college chains, which prompted increased regulatory oversight in the Obama administration. One of the witnesses included Diane Auer Jones, Principal Deputy Undersecretary for the Department of Education, who began her testimony by stating that the landscape of higher education continues to change and as enrollments shrink, school closures will be inevitable and will include both for-profit institutions and non-profit institutions. In terms of oversight, Ms. Jones described ED’s ability to place institutions on heightened cash monitoring to help protect students and taxpayers as well as the requirement for institutions to submit a letter of credit when failing the financial responsibility composite score requirement. She described the recently concluded negotiated rulemaking session on accreditation and other issues including distance education and state authorization. Ms. Jones asserted that the consensus reached on the proposed regulations would encourage accreditors and the Department to take action sooner. In response to a question regarding the backlog of outstanding borrower-defense claims, Ms. Jones indicated that the Trump Administration has not taken any action on the claims in almost a year because a federal judge in California blocked the use of a formula for awarding partial debt relief of loans and ED was waiting for a further ruling. Chairman Krishnamoorthi asked Ms. Jones to reconsider her recommendation on ACICS. They disagreed as to whether ACICS’ peers had provided sufficient support to meet the federal standard of having “wide acceptance” in the field. She concluded that the Department was making progress in dealing with closures, but she admitted the Department has work to do.

House Education and Labor Committee Members introduce Stop Student Debt Relief Scams Act

On May 22, 2019, House Education and Labor Committee Representatives Haley Stevens (D-MI) and Lloyd Smucker (R-PA) introduced H.R. 2888, the Stop Student Debt Relief Scams Act, which would give the Department of Education and law enforcement agencies the tools needed to identify and shut down third-party debt relief companies. Similar bills were introduced in the Senate by Senators Tammy Baldwin (D-WI) and Mike Braun (R-IN). The bill clarifies that it is a federal crime to access Department of Education information technology systems for fraud, commercial advantage, or private financial gain, and imposes fines on scammers for violations of the law. Representative Stevens said: “Millions of Americans are working to pay off their student loan debt, and they deserve to be protected from scammers who want to take advantage of them for financial gain.”

A copy of the press release is found at: https://stevens.house.gov/media/press-releases/reps-stevens-smucker-introduce-legislation-crack-down-student-debt-relief

ED reminds institutions of the July 1, 2019, GE requirements

On May 23, 2019, the Department of Education released Gainful Employment Electronic Announcement #120, which reminded institutions to comply with two gainful employment provisions. On July 1, 2019, institutions will be required to provide a prospective student, as a separate document, a copy of the disclosure template before the prospective student signs an enrollment agreement, completes registration, or makes a financial commitment to the institution.

In addition, all promotional materials made available by or on behalf of an institution to prospective students that identify a GE program by name, or otherwise promote the program, must include the disclosure template in a prominent manner. If space is limited, an institution may include the web address (URL) of, or the direct link to, the disclosure template. “That URL or link must be prominent, readily accessible, clear, conspicuous, and direct.”

A copy of Electronic Announcement #120 is found at: https://ifap.ed.gov/eannouncements/052319GEEANo120AnnApp2019GECompliDates.html

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.