Washington News Brief

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

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.

Secretary of Education Betsy DeVos stated in a press release: “We committed to students that we would continually improve the College Scorecard so that they can access relevant, accurate and actionable data as they make decisions about their education after high school. The updates released today are another step in fulfilling that promise. We look forward to seeing how students, parents, institutions and researchers utilize this important information.”

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, and plan to publish updated data this fall. ED strongly encouraged 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

Ringleader of student loan debt relief scheme agrees to FTC settlement

On May 30, 2019, Tuan Duong, the ringleader of a California-based student loan debt relief scheme, agreed to settle the Federal Trade Commission’s (FTC) charges that he “bilked $1.1 million from consumers who were trying to reduce their student loan monthly payments or get loan forgiveness.” The FTC alleged that the defendants charged consumers illegal upfront fees of $300 or more for these purported debt relief services. He admitted to having violated a 2016 court order, which banned Mr. Duong from advertising, marketing, or promoting debt relief services or misrepresenting any fact material to consumers related to any product or service. The U.S. District Court for the Central District of California issued an order on May 29, 2019, that contains an $11,000,215.25 judgment as compensatory relief to the FTC and permanently bans Mr. Duong from the telemarketing industry.

A copy of the FTC press release is found at: https://www.ftc.gov/news-events/press-releases/2019/05/ringleader-student-loan-debt-relief-scheme-liable-11-million

ED releases BDR questions and answers

On June 3, 2019, the Department of Education released a Questions and Answers document related to the final regulations published by the Department of Education in the Federal Register on Nov. 1, 2016, regarding borrower defense to repayment rules. The information supplements the information found in the electronic announcement issued on March 15, 2019.

A copy of the document is found at: https://ifap.ed.gov/eannouncements/060319Comp2016BD2RypmtRegsQandA.html

IRS announces changes to tax transcript retrieval processes

On June 4, 2019, the Internal Revenue Service (IRS) announced that it will stop its tax transcript faxing service in June and will amend the Form 4506 series to end third-party mailing of tax returns and transcripts in July in an effort to protect taxpayers from identity thieves.

The Department of Education previously announced in a Federal Register Notice on May 24, 2019, that institutions will be allowed to accept copies of tax returns and signed statements of Verification of Non-filing (VONF) for the 2020-2021 award year.

A copy of the IRS announcement is found at: https://www.irs.gov/newsroom/irs-takes-additional-steps-to-protect-taxpayer-data-plans-to-end-faxing-and-third-party-mailings-of-certain-tax-transcripts

A copy of ED’s Federal Register Notice is found at: https://ifap.ed.gov/fregisters/attachments/FR052419.pdf

A copy of ED’s electronic announcement regarding the IRS changes in its tax transcript service is found at: https://ifap.ed.gov/eannouncements/061219IRSAnnEndFaxThirdPartyMailTaxTranscripts.html

Senator Warren and two Congressional Democrats warn Secretary DeVos and seven universities about promoting income-share agreements

On June 4, 2019, Senator Elizabeth Warren (D-MA) and Representatives Ayanna Pressley (D-MA) and Katie Porter (D-CA) sent a letter to Secretary of Education Betsy DeVos expressing concern about reports that ED is exploring an experiment with income-share agreements (ISA), and they are seeking to learn about the Department’s plans in order to evaluate whether these plans are in the best interest of students and within the Department’s authority under the law. The letter said: “At a time when student debt stands at more than $1.5 trillion, it is deeply disturbing to see a Department official boosting novel forms of student debt instead of trying to stem the tide of indebtedness – and even more disturbing is to hear the official propose using federal taxpayer dollars to do so.”

Income-share agreements offer students financial support while they are in school and require students to repay a portion of their income for a set number of years. Some coding boot camps and some four-year colleges and universities have begun offering their own ISA plans. Separate letters were sent to seven four-year colleges and universities seeking information on student protections offered in their ISA plans. The letters expressed concern that the terms of ISA contracts can be “predatory and dangerous for students, and ISAs have received little federal oversight.” The letters were sent to the presidents of Messiah College, Clarkson University, Colorado Mountain College, Purdue University, University of Utah, Lackawanna College, and the University of California, San Diego.

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

Copies of the letters sent to the colleges and universities are found at:
https://www.warren.senate.gov/imo/media/doc/Letters%20to%20higher%20ed%20orgs%20re%20ISAs.pdf

Department of Justice reaches settlements with two Christian universities for violations of the incentive compensation rules

On June 5, 2019, the Department of Justice issued a news release announcing a settlement reached with Oral Roberts University where the University agreed to pay $303,502 to resolve allegations under the False Claims Act of submitting false claims to the Department of Education in violation of the federal prohibition on incentive compensation plans. It was reported by Inside Higher Ed on June 6, 2019, that North Greenville University had settled a similar claim in February 2019 for $1.5 million.

The press release indicated that Oral Roberts University hired Joined Inc. to recruit students for it. The University allegedly compensated Joined Inc. in part with a “share of the tuition that ORU received from the enrollment of recruited students, in violation of the prohibition on incentive compensation.”

A copy of the press release is found at: https://www.justice.gov/opa/pr/oral-roberts-university-pay-over-300000-allegedly-violating-ban-incentive-compensation

ED issues additional guidance on completing the 2019 GE Disclosure Template

On June 7, 2019, the Department of Education issued Electronic Announcement #121, which provides additional guidance on completing the 2019 GE Disclosure Template. Guidance is provided regarding which students to include in the median debt calculation, disclosing information on programs with fewer than 10 completers or new programs, and the use of school logos.

A copy of EA #121 is found at: https://ifap.ed.gov/eannouncements/060719GEEA121AdditionalGuidanceComplet2019GEDisclosureTemplate.html

Durbin and Cohen introduce bills to reinstate 85/15

On June 10, 2019, Senator Dick Durbin (D-IL) and Congressman Steve Cohen (D-TN) announced that they were introducing bicameral legislation that would put an end to for-profit colleges’ aggressive recruiting of veterans, service members, and their families. The Protecting Our Students and Taxpayers (POST) Act would prohibit for-profit colleges and universities from receiving more than 85 percent of their revenue from the federal government and change the calculation of federal revenue to include all federal funds, including Department of Veterans Affairs GI Bill benefits and Department of Defense Tuition Assistance benefits. (S.1775 and H.R.3179)

Senator Durbin said: “We can’t let this invitation to exploit our veterans and service members continue,” and Congressman Cohen said: “Too often, these schools fail their duty to sufficiently prepare graduates for jobs that will enable them to repay these loans, leaving taxpayers to foot the bill.”

Along with Senator Durbin, the bill is cosponsored by Senators Richard Blumenthal (D-CT), Sherrod Brown (D-OH), Maggie Hassan (D-NH), Bernie Sanders (I-VT), Brian Schatz (D-HI), Jack Reed (D-RI), and Elizabeth Warren (D-MA). Along with Congressman Cohen, the House bill is cosponsored by Representatives Sheila Jackson Lee (D-TX) and Gil Cisneros (D-CA).

A copy of the press release is found at: https://www.durbin.senate.gov/newsroom/press-releases/durbin-cohen-congress-must-close-loophole-that-encourages-for-profit-colleges-to-target-veterans-and-service-members

Senator Murphy releases white paper outlining his priorities for the reauthorization of the HEA

On June 11, 2019, Senator Chris Murphy (D-CT), who is a member of the Senate Health, Education, Labor and Pensions (HELP) Committee, released a white paper outlining his priorities for the reauthorization of the Higher Education Act (HEA). The white paper, titled “Are You Getting What You Pay For? A New Proposal for Accountability in Higher Education,” states that Congress has a “unique and timely opportunity to set the expectation that federal spending on higher education will yield more return on investment for both students and taxpayers.”

Senator Murphy’s priorities include:

• Committing to Consumer Protection Safeguards:
  • Maintaining and strengthening the Cohort Default Rate by addressing loopholes, such as schools pushing students into forbearance and deferment; and
  • Codifying the Protect Students Act, introduced by Senators Dick Durbin (D-IL) and Maggie Hassan (D-NH), a bill which strengthens the 90/10 rule.
• Implementing a New Accountability Framework Based on Student Success Outcomes: the Secretary must identify schools that fail either of the following metrics:
  • Metric 1 – Completion; or
  • Metric 2 – Value – Is there a return on investment by students and taxpayers?
• Applying Consequences Based Upon the Spending Threshold: Institutions that come up short on student outcomes would face different consequences based upon how much of their resources they devote to success.
• Preserving Access: Bias against low-income students should not be used to limit access.
• Improving Technical Assistance and Best Practice Sharing: Accrediting agencies and the Department should provide ongoing feedback and technical assistance to help institutions address any findings and share best practices.

A copy of the white paper is found at: https://www.murphy.senate.gov/download/hea-white-paper-

ED publishes NPRM on accreditation and innovation in the Federal Register

On June 12, 2019, the Department of Education published a notice of proposed rulemaking (NPRM) on accreditation and related matters in the Federal Register. The Department is providing a 30-day comment period with comments due on or before July 12, 2019. The NPRM is the result of negotiated rulemaking that took place from January to April 2019 culminating in consensus on April 3, 2019.

The major provisions would:

• Revise the requirements for accrediting agencies in their oversight of member institutions and programs to be less prescriptive and provide greater autonomy and flexibility in order to facilitate responsiveness to innovation;
• Revise the criteria used by the Secretary to recognize accrediting agencies to focus on education quality and allow competition;
• Revise the Department’s process for recognition and review of accrediting agencies;
• Clarify the core oversight responsibilities among each entity in the regulatory triad to hold institutions accountable;
• Establish the roles and responsibilities of institutions and accrediting agencies in the teach-out process;
• Establish that the Department recognizes an institution’s legal authorization to operate postsecondary educational programs when it is exempt from state authorization under the State constitution or by State law as a religious institution with a religious mission;
• Revise the State authorization requirements for institutions offering distance education or correspondence courses; and
• Remove the regulations for the Robert C. Byrd Honors Scholarship program, which has not been funded in many years.

Because of the long list of issues that were addressed in negotiated rulemaking, the Department has chosen to release the proposed regulations in related buckets similar to the manner that the issues were reviewed by the negotiated rulemaking committee.

Secretary of Education Betsy DeVos said: “These changes, which were developed by consensus from a diverse negotiated rulemaking panel earlier this year, are designed to promote innovation, protect students while ensuring they have access to the higher education options that meet their unique needs, and reduce irrelevant and over burdensome regulations of higher education institutions.”

A press release is found at: https://www.ed.gov/news/press-releases/secretary-devos-advances-higher-education-reform-forged-historic-consensus

A copy of the NPRM is found at: https://www.govinfo.gov/content/pkg/FR-2019-06-12/pdf/2019-12371.pdf

Senate Democrats send letter to Department requesting status update on borrower defense to repayment claims

On June 18, 2019, 22 Senate Democrats sent a letter to Secretary of Education Betsy DeVos requesting that the Department of Education provide an update on group discharge applications filed by 21 State Attorneys General (AGs) on behalf of students who filed claims under the borrower defense to repayment rule. The applications cover students who attended American Career Institute, Anthem University, Corinthian Colleges, Inc., Globe University and Minnesota School of Business, Kaplan University, Lincoln Technical Institute, Westwood College, Illinois Institute of Art, and Art Institute of Colorado. The letter stated that both the Department and AGs have found that the group of student borrowers is eligible for loan discharge, but the Department has failed to respond to the applications. The letter also said that the recent federal district court ruling stated that ED must review the group applications and cease collection activities covered by the group. “It is time for your cruel delays to end and for you to provide federal student loan discharges to which defrauded borrowers are entitled under the law; the courts have ordered it, students are begging for it, Congress expects it, and justice demands it.”

A copy of the press release with the letter is found at: https://www.durbin.senate.gov/newsroom/press-releases/durbin-murray-dem-senators-seek-status-of-group-discharge-applications-submitted-by-state-ags

House passes Labor, HHS, ED Appropriations Act for FY 2020

On June 19, 2019, the House of Representatives passed H.R.2740, the Labor, Health and Human Services, Education, and Related Agencies Appropriations Act for FY 2020, by a party-line vote of 226-203. The bill provides increases for Pell Grants, FSEOG, and FWS. The Senate is expected to take up the bill after the July fourth recess.

The committee’s press release is found at: https://appropriations.house.gov/news/press-releases/appropriations-committee-approves-fiscal-year-2020-labor-hhs-education-funding

Representative Donna Shalala introduces bill to revise 90/10 rule

On June 19, 2019, Representative Donna Shalala (D-FL) introduced the Defending All Veterans in Education (DAVIE) Act, which would revise the 90/10 rule. The bill was co-sponsored by Representatives Seth Moulton (D-MA), Chrissy Houlahan (D-PA), and Gil Cisneros (D-CA). The bill would define Veterans benefits and Department of Defense Tuition Assistance benefits as federal student aid in the percent of revenue from federal student aid. It would also revise the 90/10 rule to an 80/20 rule, requiring proprietary schools to earn 20 percent of their revenue from sources other than the federal government.

Representative Shalala said: “Current federal laws permit bad actors in the for-profit education industry to take advantage of our veterans. It is unacceptable and un-American that some for-profit institutions continue to use our veterans’ hard-earned benefits to line their own pockets. We need to ensure that veterans and GI Bill recipients do not fall victim to the predatory recruitment tactics of low-quality institutions that see them as little more than the profits they provide. My bill protects our veterans from these dishonest schemes.”

A copy of the press release is found at: https://shalala.house.gov/news/documentsingle.aspx?DocumentID=1722

Department releases revised Accreditation Handbook

On June 20, 2019, the Department of Education released its revised Accreditation Handbook, which was developed by the Office of Postsecondary Education’s Accreditation Group. The Accreditation Handbook includes voluntary guidelines on what college accreditors must do to obtain and retain their federal accreditation in 2019 and 2020. The Department said in a press release that the new 28-page Handbook “provides clearer, more concise requirements for accrediting agencies so they know what kind of evidence they should submit to meet compliance requirements.” The previous version released in 2012 was 88 pages.

Secretary of Education Betsy DeVos said: “Too much of the accreditation process has become about paperwork and not people.” She went on to say: “The current process for recognizing accreditors generates applications that are tens of thousands of pages long, but it does little to improve the quality of education for students.”

The press release stated that the changes made to the Accreditation Handbook respond to the President’s Executive Order 13777, Enforcing the Regulatory Reform Agenda as well as the bipartisan Task Force on Federal Regulation Reform Agenda.

A copy of the press release, which includes a link to the Accreditation Handbook, is found at: https://www.ed.gov/news/press-releases/secretary-devos-rethinks-departments-recognition-accreditors

Sanders, Jayapal and Omar introduce College for All Act

On June 24, 2019, Senator Bernie Sanders, Representative Pramila Jayapal (D-WA), and Representative Ilhan Omar (D-MN) announced that they will introduce the College for All Act, which would forgive all federal and private student loan debt for 45 million Americans totaling $1.6 trillion and eliminate tuition and fees at public four-year colleges and universities, community colleges, trade schools, and apprenticeship programs. The proposal would be paid for by imposing a new tax on Wall Street transactions, including stock trades, bonds, and derivatives.

The proposal is the latest from several Democrats who are running for President and follows a plan released by Senator Elizabeth Warren (D-MA) earlier this year that would forgive $50,000 of debt for borrowers earning less than $100,000 with proportionately less debt relief for those earning up to $250,000. The student loan forgiveness program would help 42 million borrowers. Senator Warren’s plan for student loan forgiveness would be paid for by imposing a 2 percent wealth tax on those who earn over $50 million a year with an additional 1 percent wealth tax for those who earn above $1 billion a year.

A copy of Senator Sander’s press release is found at: https://www.sanders.senate.gov/newsroom/press-releases/sanders-jayapal-and-omar-introduce-groundbreaking-bills-to-ensure-college-for-all-and-eliminate-all-student-debt

An article summarizes Senator Warren’s plan to forgive loans is found at: https://www.vox.com/2019/4/22/18509196/elizabeth-warren-debt-free-college

Department of Justice files notice in U.S. District Court appealing ruling regarding delay in state authorization rules

On June 25, 2019, the U.S. Department of Justice filed a notice in the U.S. District Court for the Northern District of California that it was appealing the April 2019 ruling that Secretary of Education Betsy DeVos had illegally delayed the state authorization rules for distance education issued by the Obama administration in December 2016 for implementation on July 1, 2018. The Secretary had delayed the state authorization rules until July 1, 2020, to allow ED the opportunity to conduct negotiated rulemaking. In the District Court decision, Judge Laurel Beeler struck down the two-year delay of the state authorization rules on April 26, 2019. To minimize the risk of confusion or disruption, Judge Beeler postponed the effective date for 30 days.

Consumer groups sue ED regarding borrower defense to repayment claims

On June 25, 2019, the Project on Predatory Student Lending, Legal Services Center of Harvard Law School, and Housing and Economic Rights Advocates, on behalf of seven student loan borrowers, filed a class-action lawsuit against Secretary of Education Betsy DeVos and the U.S. Department of Education accusing them of illegally delaying action on at least 158,000 borrower defense to repayment claims. The lawsuit said that the data provided to Congress indicates that the Department has yet to approve or deny a single claim in more than one year and some claims have been pending for as long as four years.

The article from CNN that describes the new legal case is found at: https://www.cnn.com/2019/06/25/politics/betsy-devos-borrower-defense-lawsuit/index.html

Bipartisan group of House Members introduce legislation to expand Pell Grant eligibility to short-term programs

On June 26, 2019, a bipartisan group of House members introduced H.R. 3497, the Jumpstart Our Businesses by Supporting Students (JOBS) Act, which would allow otherwise eligible Pell Grant recipients to be eligible for Pell Grants for programs that are as short as eight weeks of instruction. The Senate version of the legislation, S. 839, was introduced on March 14, 2019, by Senators Tim Kaine (D-VA) and Rob Portman (R-OH).

A copy of a press release from Congressmen Cedric Richmond (D-LA) and Anthony Gonzalez (R-OH) is found at: https://richmond.house.gov/media-center/press-releases/reps-richmond-and-gonzalez-join-colleagues-introducing-jobs-act

A copy of the press release from Senator Kaine is found at: https://www.kaine.senate.gov/press-releases/03/14/2019/kaine-portman-introduce-bipartisan-jobs-act-to-help-workers-access-training-for-in-demand-career-fields

ED publishes rescission of GE rule in the Federal Register and announces its early implementation

On June 28, 2019, the Department of Education issued Electronic Announcement #122 announcing the publication of the final rule rescinding the Department of Education’s gainful employment rule. On July 1, 2019, the Department published the final rule in the Federal Register. The Electronic Announcement provides guidance on what the rescission means and what institutions can do should they choose early implementation. For instance, an institution that early implements will no longer be required to post the GE Disclosure Template.

A copy of the Electronic Announcement is found at: https://ifap.ed.gov/eannouncements/062819GEAnnounce122EarlyImplofRescissionGERule.html

A copy of the final regulation published on July 1, 2019, is found at: https://ifap.ed.gov/fregisters/attachments/FR070119GERegulation.pdf

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.