By Sharon H. Bob, Ph.D., Higher Education Specialist, Powers Pyles Sutter and Verville, PC
Senate Democrats oppose proposal to create a system of industry-recognized apprenticeships; republicans seek changes to the IRAP
On Aug. 26, 2019, 43 Senate Democrats as well as Independent Senators Bernie Sanders and Angus King wrote to Acting Secretary of Labor Patrick Pizzella that the proposal to create a system of industry-recognized apprenticeships would undermine current protections involving workplace safety, wages, and quality. The Senators wrote that the proposal released on June 25, 2019, “would create a parallel system that outsources the secretary’s statutory role in overseeing the nation’s registered apprenticeship programs to unaccountable, nongovernmental entities.” The Democrats also stated that the Trump Administration has presented no evidence that industry-recognized apprenticeships would be more effective than the existing registered apprenticeship program. They sought a 60-day extension of the public comment period.
A copy of the letter is found at: https://www.help.senate.gov/imo/media/doc/082619%20IRAPs%20Caucus%20Comment%20Letter%20-%20FINAL1.pdf
On Aug. 23, 2019, Ranking Member of the House Education and Labor Committee, along with 19 Republican Members of Congress, sent a letter to Acting Secretary Pizzella seeking changes to the proposed industry-recognized apprenticeship program (IRAP). The letter applauded the Department of Labor’s efforts to give apprenticeship programs greater flexibility to better address the nation’s growing skills gap, but it also urges the Department to allow all industries in IRAPs so the labor market demands can be better met. The Republicans expressed disappointment that the construction sector was specifically excluded from participating in IRAPs. The Republicans urged the Department to issue a final rule that is “impartial when considering industries or economic sectors eligible to participate in IRAPs.”
A copy of the letter is found at: https://republicans-edlabor.house.gov/uploadedfiles/8.23.2019_irap_comment_letter.pdf
ED releases 2020-2021 College Financing Plan
On Sept. 5, 2019, the Department of Education’s Office of Postsecondary Education released the 2020-2021 College Financing Plan (formerly known as the Financial Aid Shopping Sheet). The College Financing Plan is a consumer tool that may be used in place of or as a supplemental cover sheet to an institution’s existing award notice. As a result of working with NASFAA, financial aid administrators, students, parents, and other stakeholders, ED has modified the template. The 2020-2021 College Financing Plan reflects the following changes:
- Changed the name of the template from Financial Aid Shopping Sheet to College Financing Plan to emphasize to students that they are making a significant investment in enrolling in an institution;
- Added more transparency for students so they know the interest rate they will pay on each loan; have more detail about need-based and merit-based scholarships and grants; can compare on-campus and off-campus living arrangements; and are provided a clear distinction between loans; and
- Simplified the language and format, removing elements that add clutter, are unnecessarily complex, or are not seen as relevant to students or valuable to the decisions they must make.
A copy of the electronic announcement, which contains the template with annotated and non-annotated versions, along with a Technical Reference Guide, is found at: https://ifap.ed.gov/eannouncements/090519CollegeFinancingPlan2021.html
Department levies $4.5 million fine – the largest-ever Clery fine – against Michigan State University
On Sept. 5, 2019, the Department of Education announced that it will fine Michigan State University the largest-ever Clery fine of $4.5 million and will require the University to make major changes to its Title IX procedures following its systemic failure to protect students from sexual abuse. After two investigations, one by Federal Student Aid (FSA) and the other by the Office for Civil Rights (OCR), the Department found that the University had failed to protect women in its handling of the Larry Nassar scandal. Dr. Nassar was a former team doctor who was convicted of sexually abusing hundreds of women during the decades he worked at the University.
Secretary of Education Betsy DeVos said: “What transpired at Michigan State was abhorrent, inexcusable, and a total and complete failure to follow the law and protect students. Michigan State will now pay for its failures and will be required to make meaningful changes to how it handles Title IX cases moving forward. No future student should have to endure what too many did because concerns about Larry Nassar and William Strampel [former dean] were ignored.”
A copy of the Secretary’s press release is found at: https://www.ed.gov/news/press-releases/secretary-devos-levies-largest-ever-clery-fine-against-michigan-state-university-requires-major-corrective-action-following-systemic-failure-address-sexual-abuse
House Education and Labor Committee announces that it will hold a hearing on the PSLF program
On Sept. 5, 2019, the House Education and Labor Committee announced that it will be holding a hearing on Sept. 19, 2019, on the Department of Education’s implementation of the Public Service Loan Forgiveness (PSLF) program.
The announcement was made following the release of the U.S. Government Accountability Office (GAO) report titled, “Improving the Temporary Expanded Process Could Help Reduce Borrower Confusion,” which criticized the Department’s implementation of the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program. The TEPSLF was created by Congress in 2018 as a fix for borrowers who were denied loan forgiveness under PSLF because they were enrolled in repayment plans that were ineligible for PSLF.
The Department established a process for borrowers to initiate their TEPSLF requests via email, but also required TEPSLF applicants to submit a separate PSLF application before it would consider their TEPSLF request. However, the process became confusing for borrowers “who do not understand why they must apply separately for PSLF – a program they are ineligible for – to be eligible for TEPSLF.”
As of May 2019, the Department had processed 54,000 requests for TEPSLF loan forgiveness since May 2018, and approved 1% of these requests, totaling about $26.9 million in loan forgiveness. Most of the denials were due to the borrower not submitting the PSLF application. Others were denied because the borrower had not made 120 qualifying payments or had no qualifying federal loans.
Committee Chairman Bobby Scott (D-VA) released a statement stating that the GAO report showed that the Department was failing to properly implement the program. “The Department’s failure to implement this program is mystifying and unacceptable.”
A copy of the GAO report is found at: https://www.gao.gov/products/GAO-19-595
A copy of the House Education and Labor announcement is found at: https://edlabor.house.gov/media/press-releases/gao-report-reveals-education-departments-failure-to-implement-temporary-expanded-public-service-loan-forgiveness-program
Senator Bennett releases education plan for pre-school, K-12, and higher education
On Sept. 5, 2019, Senator Michael Bennett (D-CO), who is running for the Democratic nomination for President, released his education plan for improving pre-school, K-12, and higher education. The plan includes the following provisions regarding higher education:
- Enact free community college;
- Make four-year public colleges debt free through increased support through Pell Grants;
- Work with States to reduce the cost of higher education;
- Collect better data on outcomes;
- Hold schools and programs that receive Federal aid accountable;
- Invest in career and technical training;
- Reduce student debt burdens; and
- Expand debt forgiveness and allow for refinancing of student loans.
Senator Bennett said that the reason students have all of this debt is that the cost of higher education has been driven up while public support for higher education has been reduced.
A copy of his education plan is found at: https://michaelbennet.com/Education/
Senator Rick Scott outlines five higher education priorities
On Sept. 10, 2019, Senator Rick Scott (R-FL) described his priorities for higher education at an event sponsored by the Heritage Foundation titled, “What’s Next for U.S. Higher Education?” He said that not all students should attend four-year colleges and colleges and universities have sufficient resources to educate students. Senator Scott outlined five steps to lower the cost of education for students:
- If a student defaults on his/her federal student loan, the institution where he/she took classes should be responsible for a portion of that default.
- Congress needs to apply the same rules to not-for-profit institutions as those applied to for-profit institutions. All institutions should be accountable for their performance.
- If an institution raises tuition or fees, it will automatically be cut off from all federal funding.
- Pell Grants should be eligible for use at technical colleges.
- All onerous Obama-era regulations that hinder private lenders from giving loans should be eliminated. If a private bank wants to lend to students, it can.
A copy of the Senator’s remarks is found at: https://www.rickscott.senate.gov/sen-rick-scott-announces-proposals-lower-cost-higher-education
House Financial Services Committee holds hearing on protecting student borrowers and holding student loan servicers accountable
On Sept. 10, 2019, the House Financial Services Committee held a hearing titled, “A $1.5 Trillion Crisis: Protecting Student Borrowers and Holding Student Loan Servicers Accountable.” In her opening statement, Committee Chairman Maxine Waters (D-CA) said that this was the first-ever hearing on student lending and the impact that it has on borrowers. She said that Americans collectively have over $1.6 trillion in student loan debt, more than credit card and auto loan debt, and that more than 44 million people carry student debt averaging almost $33,000. Chairman Waters said: “This crisis is affecting people across the country, and ultimately it negatively affects the entire economy.” She criticized the Department of Education and the Consumer Financial Protection Bureau (CFPB) for their actions regarding the student loan program. Ranking Member Patrick McHenry (R-NC) criticized House and Senate Democrats in his opening statement because they had nationalized the federal student loan program during passage of the Affordable Care Act of 2010.
Democrats on the Committee and the panelists they brought in to testify argued that students need more consumer protections to shield themselves from the federal student loan servicers. Ranking Member McHenry and those panelists brought in by the Republicans argued that Congress was at fault for “saddling a generation with unaffordable debt and an education that does not outmatch the cost of that education.”
GE reporting for 2018-2019
On Sept. 13, 2019, the Department of Education released Electronic Announcement #123 advising institutions that if they did not early implement the gainful employment rules that were published in the Federal Register on July 1, 2019, they are still expected to comply with the 2014 GE rule until the rescission becomes effective on July 1, 2020. This would include complying with the GE reporting requirement for the 2018-2019 Award Year to NSLDS by Oct. 1, 2019. On July 1, 2019, institutions were given the option to early implement the rescission of the GE rule and, if they early implement the GE rule, they will not be required to report GE data for the 2018-2019 Award Year.
A copy of the Electronic Announcement is found at: https://ifap.ed.gov/eannouncements/091319GEEA123GERptingfor1819.html
Warren and her colleagues call for restoring Pell Grant eligibility for defrauded students
On Sept. 16, 2019, Senator Elizabeth Warren (D-MA) and Representative Jahana Hayes (D-CT), along with Senators Sherrod Brown (D-OH), Mazie Hirona (D-HI), and Chris Murphy (D-CT), as well as Representatives Mary Gay Scanlon (D-PA) and Lucy McBath (D-GA), reintroduced the Pell Grant Restoration Act (H.R.4298) in both the House and the Senate. The bill would restore students’ Pell Grant eligibility for any period of time during which they would have qualified for loan forgiveness due to school closure or institutional fraud or misconduct.
Copies of the press release and a text of the bill are found at: https://www.warren.senate.gov/newsroom/press-releases/-senators-warren-brown-hirono-and-murphy-representatives-hayes-scanlon-and-mcbath-introduce-bicameral-legislation-restoring-pell-grant-eligibility-to-victims-of-predatory-for-profit-colleges
Warren and Pocan investigate how private equity buyouts exacerbate problems at for-profit colleges
On Sept. 17, 2019, Senator Elizabeth Warren (D-MA) and Congressman Mark Pocan (D-WI) wrote to six private equity firms with current holdings in for-profit colleges (i.e., KKR, Sterling Partners, Atlas Partners, Vistra, Leeds Equity Partners, and Apollo Global Management) and requested information about the firms’ management of colleges and universities. In July, Senator Warren and Congressman Pocan had introduced the Stop Wall Street Looting Act (S.2155 and H.R.3848), a bill that would bring greater responsibility to the private equity industry by holding private equity firms jointly liable for the debts of companies under their control and by requiring greater transparency in private equity firms’ practices. The letters highlighted the destructive role of private equity firms in for-profit colleges and asked for information about their fees, returns, marketing, and other financial practices. They also asked the firms to explain their role in the tuition hikes, education quality declines, and the many other failures that plague the for-profit sector. “The continued spread of private equity in the for-profit higher education sector, and thus the maximizing of short-term profits at the detriment of students, presents a serious concern for both students and taxpayers.”
Copies of the press release and the letters are found at: https://www.warren.senate.gov/oversight/letters/warren-pocan-investigate-how-private-equity-buyouts-exacerbate-problems-plaguing-for-profit-colleges
Senate Appropriations Committee releases its FY 2020 education spending bill
On Sept. 18, 2019, the Senate Appropriations Committee released its FY 2020 Labor, Health and Human Services, Education, and Related Agencies funding bill. The House has already marked up all of its appropriations bills for FY 2020 and passed 10 on the floor. The House proposed raising the annual Pell Grant award from $6,195 to $6,345, and the Senate bill includes an increase to $6,330. The Senate bill also proposed to fund education programs at lower levels than the House did. Specifically, the Senate included level funding for the SEOG program at $840 million and FWS at $1.1 billion while the House proposed increases for both programs. The bill also included an additional $1 million to aid borrowers who were otherwise eligible for Public Service Loan Forgiveness (PSLF) yet were enrolled in an eligible repayment plan. The House and Senate will need to work out any differences in their respective bills.
In a press release announcing the bill’s release, Senate Labor, HHS, Education, and Related Agencies Subcommittee Chairman Roy Blunt (R-MO) said: “The bill focuses on giving every American the opportunity to be successful in whatever educational or career path they choose.” Report language included with the text of the bill calls for FAFSA data sharing with student aid organizations and supporting efforts to further simplify the FAFSA application and verification process.
A copy of the press release is found at: https://www.appropriations.senate.gov/news/fy2020-labor-hhs-and-education-appropriations-bill-released
Representatives Shalala, Pressley, and Tlaib introduce the Protecting Student Aid Act of 2019
On Sept. 20, 2019, Representatives Donna Shalala (D-FL), Ayanna Pressley (D-MA), and Rashida Tlaib (D-MI) introduced the Protecting Student Aid Act of 2019 (PSA Act), a bill designed to reinvigorate the Student Aid Enforcement Unit within the Department of Education. The press release says that the result of this action would allow the Department to better respond to fraud and abuse within the federal student aid programs.
A copy of the press release is found at: https://shalala.house.gov/news/documentsingle.aspx?DocumentID=2043
Department releases FY 2016 Official Cohort Default Rates
On Sept. 23, 2019, the Department of Education distributed the FY 2016 Official Cohort Default Rates to all eligible domestic and foreign schools. On Sept. 25, 2019, the Department released the national default rate briefing for FY 2016. Finally, on Sept. 25, 2019, the Department released a press release announcing that the national FY 2016 Official Cohort Default Rate decreased from 10.8% for FY 2015 to 10.1% for FY 2016. CDRs decreased across all sectors:
- For public institutions, the rate fell from 10.3% for FY 2015 to 9.6% for FY 2016;
- For private institutions, the rate fell from 7.1% for FY 2015 to 6.6% for FY 2016; and
- For proprietary institutions, the rate fell from 15.6% for FY 2015 to 15.2% for FY 2016.
A copy of the Electronic Announcement of Sept. 23, 2019 is found at: https://ifap.ed.gov/eannouncements/092319FY2016OfficialCDRDistributed092319.html
A copy of the Electronic Announcement of Sept. 25, 2019 is found at: https://ifap.ed.gov/eannouncements/attachments/FY16OfficialNationalRates.pdf
A copy of the press release is found at: https://www.ed.gov/news/press-releases/national-federal-student-loan-cohort-default-rate-continues-decline
Department publishes borrower defense to repayment rules
On Sept. 23, 2019, the Department of Education published the final regulations for the Institutional Accountability regulations in the Federal Register on borrower defense to repayment and closed school discharges.
- Sets a new federal standard for borrower defense to repayment claims for those federal student loans disbursed on or after July 1, 2020. It provides that a borrower may assert a defense to repayment if his/her institution made a misrepresentation of a material fact upon which the borrower reasonably relied and the borrower was financially harmed. “Misrepresentation” is defined as a “statement, act, or omission by an eligible school to a borrower that is false, misleading or deceptive; that was made with knowledge of its false, misleading, or deceptive nature or with a reckless disregard for the truth; and that directly and clearly relates to: (1) enrollment or continuing enrollment in the institution, or (2) the provision of educational services for which the loan was made.”
- Requires borrowers to file individual claims demonstrating by a preponderance of the evidence that they qualify for a borrower defense to repayment claim.
- Specifies that aggrieved borrowers do not have to wait until their student loans are in collection to assert a claim. However, with some exceptions, claims must be brought within three years from the date that the borrower withdraws or graduates from school.
- Creates streamlined procedures that ensure due process.
- Gives students the ability to allege a specific amount of financial harm.
- Provides that the final determination will be made by the Secretary of Education who may grant partial relief to a borrower.
- Extends the closed-school discharge window from 120 to 180 days.
- Specifies that borrower defense to repayment claims on federal student loans disbursed between July 1, 2017, and July 1, 2020, would be subject to the provisions of the Nov. 1, 2016 rules issued under the Obama administration.
- Permits institutions to use pre-dispute arbitration and class action waiver agreements with specific disclosures.
- Encourages institutions to complete well-planned teach-outs and allows students to choose between accepting an institution’s offer of a teach-out opportunity or submitting a closed-school discharge to the Department.
- Amends the list of conditions and events that must be reported to the Department and that could result in the Department recalculating an institution’s financial responsibility composite score and requiring the institution to provide additional financial protection to the Department.
- Updates composite score calculations to reflect changes to the Financial Accounting Standards Board (FASB) accounting standards and makes changes to the treatment of leases and long-term debt in the calculation of the composite score.
The regulations go into effect July 1, 2020, but the regulations relating to financial responsibility may be implemented early, although many believe there is no advantage to implementing the financial responsibility provisions early.
Secretary of Education Betsy DeVos said: “If a school defrauds students, it must be held accountable.”
Congressional Democrats and consumer groups immediately criticized the Department’s actions. House and Labor Committee Chairman Bobby Scott (D-VA) said: “The Department failed to heed public comment from students, consumers, and Members of Congress in finalizing this rule, and Congress must act to put student borrowers first.”
A copy of the Department’s press release is found at: https://www.ed.gov/news/press-releases/us-department-education-finalizes-regulations-protect-student-borrowers-hold-higher-education-institutions-accountable-and-save-taxpayers-111-billion-over-10-years
A copy of a summary provided by the Department is found at: https://www2.ed.gov/policy/highered/reg/hearulemaking/2017/borrower-defense-institutional-accountability-summary.pdf
A copy of Congressman Scott’s press release is found at: https://edlabor.house.gov/media/press-releases/scott-statement-on-department-of-educations-final-borrowers-defense-rule-
A copy of the final regulations is found at: https://www.govinfo.gov/content/pkg/FR-2019-09-23/pdf/2019-19309.pdf
Senator Alexander introduces scaled-back version of reauthorization of the HEA bill
On Sept. 26, 2019, Chairman of the Senate Health, Education, Labor and Pensions Committee Lamar Alexander (R-TN) introduced a long-term solution to fund Historically Black Colleges and Universities (HBCUs) and other Minority Serving Institutions (MSIs) as part of a legislative package of eight bipartisan higher education bills drafted by 35 Senators (20 Democrat and 15 Republican). “This package of bills will make it easier for millions of students to get a college education by simplifying the Federal Application for Student Financial Aid (FAFSA), providing Pell grants to parole-eligible prisoners, allowing Pell grants to be used for short-term programs, and increasing the maximum Pell Grant award.”
On Sept. 19, 2019, on the Senate floor, Senator Doug Jones (D-AL) sought unanimous consent to take up and pass H.R.2486, the Fostering Undergraduate Talent by Unlocking Resources for Education Act (Future Act). The Future Act had passed the House on Sept. 17, 2019, which would extend three Historically Black Colleges and Universities (HBCU) and Minority-Serving Institutions (MSI) programs, paid for by eliminating Account Maintenance Fees (AMF) paid to guaranty agencies. Senator Lamar Alexander (R-TN), Chairman of the Health, Education, Labor and Pensions (HELP) Committee, objected to the request because it was a temporary fix.
Senator Alexander said on the Senate floor that Congress should pass a permanent solution to fund HBCUs and MSIs. While he and Senator Patty Murray (D-WA) are working on a larger Higher Education Act reauthorization bill, a number of bipartisan proposals to make college affordable could be enacted now if the scaled-back bill were adopted and enacted.
Included in a bill calling for permanent mandatory funding for HBCUs and MSIs, the following bipartisan proposals are included:
- Reducing the number of questions on the FAFSA from 108 to 17-30 questions;
- Incorporating the text of the FAFSA Act from last year, which allows students to prepopulate up to 22 questions on the current FAFSA with data from the Internal Revenue Service (IRS);
- Allowing incarcerated individuals who are eligible for parole to use a Pell Grant for prison-education programs;
- Allowing students to use their Pell Grants at high-quality short-term skills and job training programs that lead to credentialing and employment in high-demand fields like health care or cybersecurity;
- Expanding Pell Grant eligibility to 250,000 new students and qualify an additional 1.3 million students for the maximum Pell Grant award; and
- Increasing the maximum Pell Grant award.
A copy of the press release released from the HELP Committee is found at: https://www.alexander.senate.gov/public/index.cfm/pressreleases?ID=958E80DD-EC01-4473-B029-207BC395A513
A copy of the text of the bill is found at: https://www.help.senate.gov/imo/media/doc/ROM19662.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.
Contact Information: Sharon H. Bob, Ph.D. // Higher Education Specialist // Powers Pyles Sutter and Verville, PC // 1501 M Street, NW, Suite 700, Washington, DC 20005 // 202-872-6772 // Sharon.Bob@PowersLaw.com // http://www.powerslaw.com