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Washington News Brief

Washington News Brief


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

Durbin, Blumenthal and Brown call on Secretary DeVos to cooperate with investigation into ED’s role in Dream Center accreditation misrepresentation

On Nov. 1, 2019, Senators Dick Durbin (D-IL), Richard Blumenthal (D-CT), and Sherrod Brown (D-OH) sent a letter to Secretary of Education Betsy DeVos asking her to cooperate with the House Education and Labor Committee Chairman Bobby Scott’s (D-VA) investigation into the Department’s role in the Dream Center Holding’s accreditation misrepresentation at its Illinois Institute of Art and Art Institute of Colorado campuses. Secretary DeVos reportedly failed to substantially respond to a July 17 2019, letter from Chairman Scott concerning the Department’s role.

A copy of the letter is found at: https://www.durbin.senate.gov/newsroom/press-releases/durbin-blumenthal-brown-call-on-devos-to-immediately-cooperate-with-investigation-into-departments-role-in-dream-center-accreditation-misrepresentation

ED withdraws motion to reconsider fine for violating judge’s order on collecting on Corinthian College borrowers

On Nov. 5, 2019, it was reported in many higher education newsletters that the Department of Education withdrew its request asking the U.S. District Court for the Northern District of California Judge Sallie Kim to reconsider the $100,000 fine that she levied as part of the decision to hold Secretary of Education Betsy DeVos in contempt for failure to comply with her earlier ruling prohibiting the agency from collecting on former Corinthian students’ loans. On Oct. 31, 2019, the U.S. Department of Justice argued that the fine was not warranted since the Department started to correct its noncompliance with the court order, which included compensating borrowers for payment that they made when the agency should not have been collecting on their loans. In the filing on Nov. 5, 2019, the Department of Justice said that they are unsure if the Department is in full compliance with the court’s preliminary injunction and may renew its motion once FSA completes its review process for the 14,000 additional borrowers described in the November Compliance Report.

ED issues revised policy for standard term length

On Nov. 5, 2019, the Department of Education released an electronic announcement announcing a revised policy for measuring standard term length. Many institutions have asked the Department for increased flexibility to modify the length of their standard terms to better accommodate the needs of students and the specialized coursework associated with certain types of educational programs. In response, the Department reviewed its “standard term” policy and announced the following changes:

  • Semesters and trimesters may now be between 14 and 21 weeks of instruction;
  • Quarters may now be between 9 and 13 weeks of instruction; and
  • Standard terms are no longer required to be substantially equal.

A copy of the electronic announcement is found at: https://ifap.ed.gov/eannouncements/110519RevisionGuidelinesApplicableStandardTerms.html

ED issues amendment to Audit Guide regarding implementation of the Gramm-Leach-Bliley Act

On Nov. 13, 2019, the Department of Education issued an amendment to the 2016 Audit Guide, Guide for Audits of Proprietary Schools and for Compliance Attestation Engagements of Third-Party Servicers Administering Title IV Programs regarding student information security. The letter adds a section to the Audit Guide requiring auditors to determine if institutions have complied with the Gramm-Leach-Bliley Act in regards to ensuring the security and confidentiality of customer information. The procedures are required for compliance attestation engagements of fiscal years ending on or after Dec. 31, 2019 that are conducted using the September 2016 Audit Guide.

The announcement is found at: https://ifap.ed.gov/eannouncements/111319DearCPALetterCPA1901.html

The letter to the CPA is found at: https://www2.ed.gov/about/offices/list/oig/nonfed/cpa1901.pdf

Senators introduce bipartisan bill to close 90/10 loophole; Senator Alexander supports bill

On Nov. 14, 2019, Senator Tom Carper (D-DE) led a group of bipartisan Senators, who include James Lankford (R-OK), Bill Cassidy (D-LA), and Jon Tester (D-MT), Ranking Member of the Senate Committee on Veterans’ Affairs, in introducing S. 867, the Protect Veterans’ Education and Taxpayer Spending (Protect VETS) Act of 2019. The bill would:

  • Close the 90/10 loophole by counting VA and DoD educational funds on the 90% side of the 90/10 formula rather than the 10% side;
  • Require proprietary schools to provide updated 90/10 data in their audited financial statements that will be included in the Secretary’s annual report to Congress;
  • Move to a system of tiered penalties for schools that violate the 90/10 rule. Beginning with the 2022-2023 school year, the penalties for violating the 90/10 rule escalate over a three-year time period: Year 1 – no VA and DoD assistance for new student enrollments (to protect the GI Bill); Year 2 – no VA and DoD assistance for new student enrollments and a total enrollment cap; and Year 3 – loss of access to federal funding for at least two years with the possibility of regaining eligibility after two years;
  • Provide an appeal process that grants high-quality proprietary institutions relief from penalties. The limited appeal process gives schools additional time to comply with the 90/10 rule if they are serving military and veterans students and taxpayers well;
  • Add a caution flag to the GI Bill Comparison Tool when an institution violates 90/10; and
  • Apply the new 90/10 rule for a limited time to for-profit schools after they convert to non-profit status.

House Democrats have expressed their support for the changes to the 90/10 rule. While marking up their bill, the College Affordability Act (H.R. 4674) to reauthorize the Higher Education Act last month, the House Education and Labor Committee accepted an amendment offered by Congresswoman Donna Shalala (D-FL) to include military benefits in the 90% rather than the 10% side and to change the ratio to 85/15.

On Nov. 19, 2019, Senator Lamar Alexander (R-TN), Chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee, who is leading the reauthorization effort in the Senate, said that he is planning to include the elements of the Protect VETS Act, which would count VA and DoD benefits in the 90% side, in a comprehensive HEA bill that will be introduced in the coming weeks. Senator Alexander’s unexpected position differs from his earlier position. Senator Alexander stated: “This is a responsible and reasonable step to ensure that all of our military and veteran students are attending quality institutions worth their time and money.” In 2018, Senator Alexander took a contradictory view when he requested comments to a White Paper he released in anticipation of drafting his bill to reauthorize the HEA. In the White Paper (Page 5), Senator Alexander asserted that “what 90-10 really measures is the socioeconomic status of students enrolled at the school, not the quality of the institution.” In the White Paper, he went on to conclude: “If an institution produces valuable outcomes for its students, including that students are able to graduate, get a job, and repay their federal loans, then concerns over the volume of taxpayer dollars as a percentage of revenue becomes less meaningful as an accountability measure.”

Congressional Democrats have introduced at least eight bills during this Congress that would include VA and DoD benefits in the 90/10 calculation. Consumer groups and membership organizations for veterans and service members support Senator Alexander’s change in his position.

A copy of the press release, which includes the text of the bill, is found at: https://www.carper.senate.gov/public/index.cfm/pressreleases?ID=1F2296F8-2DF9-4F25-8046-C13323F94F6E

A copy of Senator Alexander’s 2018 White Paper is found at: https://www.alexander.senate.gov/public/_cache/files/cfd3c3de-39b9-43dd-9075-2839970d3622/alexander-staff-accountability-white-paper.pdf

ED cancels student loans, resets Pell eligibility, and extends closed school discharge period for students impacted by Dream Center school closures

On Nov. 18, 2019, Secretary of Education Betsy DeVos announced that students who attended the Art Institute of Colorado or the Illinois Institute of Art between Jan. 20, 2018 and Dec. 31, 2018, will have their student loans cancelled and their Pell Grant eligibility restored. The Secretary also announced the Department will extend the lookback period of eligibility for closed school discharges for students who attended Dream Center schools that closed in December 2018.

A copy of the press release is found at: https://www.ed.gov/news/press-releases/secretary-devos-cancels-student-loans-resets-pell-eligibility-and-extends-closed-school-discharge-period-students-impacted-dream-center-school-closures

Mayor Buttigieg releases higher education platform

On Nov. 18, 2019, Democratic presidential candidate Peter Buttigieg released his higher education platform. The proposals include:

  • $120 billion in additional funding for Pell Grants to increase the maximum award by $1,000 and a notification requirement to students in ninth grade as to their Pell Grant eligibility;
  • $1 billion for a new Community College Fund that would reward colleges for meeting “their communities” educational and career goals;
  • $2 billion for a pilot to expand the current free- and reduced-price lunch program in the elementary and secondary schools to provide food vouchers to students in community colleges;
  • Automatically enrolling students who fall behind in their loan payments in income-driven repayment;
  • Altering the Public Service Loan Forgiveness Program (PSLF) to offer earlier loan forgiveness to government and nonprofit workers and improve the management of PSLF; and
  • Making tuition at public colleges free for those earning less than $100,000 and providing tuition reductions for those making between $100,000 and $150,000.

A copy of the higher education platform is found at: https://peteforamerica.com/policies/education/

Department releases College Scorecard with programmatic data

On Nov. 20, 2019, the Department of Education released an updated version of the College Scorecard that now includes median earnings and median debt information of a school’s graduates by program. Previously, the College Scorecard only included institutional-level median earnings and median debt information. Secretary of Education Betsy DeVos announced that “Thanks to the groundbreaking redesign of the College Scorecard, students can now find customized, accessible, and relevant data on potential debt and earnings based on fields of study, … graduation rates, and even apprenticeships.” The total College Scorecard “rethink” builds on President Trumps’ Executive Order on Improving Free Inquiry, Transparency, and Accountability at Colleges and Universities, according to Secretary DeVos.

The College Scorecard also “ensures students can make apples-to-apples comparisons by providing the same data about all of the programs a student might be considering without regard to the type of school.” The new College Scorecard also includes data on 2,100 institutions that offer only certificates to the existing information on 3,700 degree-granting institutions that the College Scorecard has tracked since 2015.

A copy of the press release, which includes a link to the Executive Order, is found at: https://www.ed.gov/news/press-releases/secretary-devos-delivers-promise-provide-students-relevant-actionable-information-needed-make-personalized-education-decisions

A copy of the electronic announcement is found at: https://ifap.ed.gov/eannouncements/112019CollegeScorecardMetricsbyFieldofStudy.html

Department announces implementation of a new component to the MPN

On Nov. 21, 2019, the Department of Education announced a modification to the Master Promissory Note (MPN) starting with loans associated with the 2020-21 award year. The new component is called the “Informed Borrowing Confirmation” process, a process that will be managed by Federal Student Aid (FSA). All MPN confirmation processes will require student and parent borrowers to view how much they currently owe in federal student loans and to acknowledge that they have seen this amount before a school can make a first disbursement of the first Direct Loan that a student or parent borrower receives for each new award year.

While FSA is managing the process, a series of announcements will provide operational information about the changes to Direct Loan processing needed to incorporate the new Informed Borrowing Confirmation process.

A copy of the electronic announcement is found at: https://ifap.ed.gov/eannouncements/112119InformBorrowConfirmModAppMPNConfirmProc.html

ED issues an interim final rule to restart loan forgiveness process for disabled veterans

On Nov. 26, 2019, the Department of Education issued a final interim regulation in the Federal Register, which was issued to amend and update the regulations for total and permanent disability so that it could resume discharging the federal student loans of disabled veterans. The disabled veterans were promised relief under a Presidential Memorandum signed by President Donald Trump on Aug. 21, 2019. Previously, the Department had streamlined the application process, but the application process continued to be an unnecessary hardship for disabled veterans. Under the November 2019 rule, the Secretary will consider a borrower for whom data is obtained from the Department of Veterans Affairs showing that the borrower is “totally and permanently disabled” to be eligible for a loan discharge and will not require further documentation. This action occurred after the Department’s attorneys determined in late October that the process of providing automatic loan forgiveness to severely disabled veterans violated its current regulations. The temporary suspension of the automatic loan forgiveness process affected more than 24,000 disabled veterans.

A copy of the interim final regulations is found at: https://www.govinfo.gov/content/pkg/FR-2019-11-26/pdf/2019-25813.pdf

A copy of the Presidential Memorandum is found at: https://www.whitehouse.gov/presidential-actions/presidential-memorandum-discharging-federal-student-loan-debt-totally-permanently-disabled-veterans/

Alexander signs on to College Transparency Act

Senator Lamar Alexander (R-TN), Chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee, signed on as a co-sponsor of the College Transparency Act, a bill that would remove the federal ban on a student-level data system. The bill was introduced as S. 800 by Senator Bill Cassidy (R-LA) on March 14, 2019. A companion bill was introduced as H.R. 1766 by Congressman Paul Mitchell (R-MI) on March 14, 2019. Proponents of the bill support tracking student outcomes of all students and not just for those who are Title IV recipients.

FSA Chief Wayne Johnson resigns position to run for Senate

Dr. A. Wayne Johnson, the Chief Strategy and Transformation Officer at the Department of Education, announced that he would resign from his position effective Oct. 24, 2019. Dr. Johnson was the chief architect of FSA’s Next Generation Financial Services Environment, which aims to reform the student loan servicing and collections systems. He plans to run for the Senate seat being vacated by Senator Johnny Isakson (R-GA). In his announcement, Dr. Johnson said he would push a proposal to forgive most of the federal student loan debt of the nation’s borrowers.

OIG releases FY 2020 management report

In Oct. 2019, the Department of Education’s Office of Inspector General (OIG) released its annual report titled, “FY 2020 Management Challenges Facing the U.S. Department of Education.” The annual report identified four management challenges at Federal Student Aid (FSA), including improper payments, information technology security, oversight and monitoring, and data quality and reporting. The report said that the Pell Grant and Direct Loan programs are susceptible to improper payments. In FY 2018, the Department reported improper payment of $2.3 billion for the Pell Grant program and $3.8 billion for the Direct Loan program. The annual report stated that the Department expects that pending legislation authorizing disclosure of tax return information directly to the Department would improve the administration of the Title IV programs.

With regard to information technology security, the OIG report found that FSA’s information technology control was deficient. Finally, the OIG report indicated that it continues to find issues with FSA’s oversight of federal student aid programs, and highlighted a range of problems, from FSA not ensuring that institutions addressed problematic satisfactory academic progress findings to the fact that FSA has not evaluated its FAFSA verification process, which has been flagged for selecting a greater than required number of applications for verification. In response to a Government Accountability Office (GAO) report earlier this year that identified the potential for fraud within income-driven repayment (IDR) plans, the OIG report stated that FSA anticipates undertaking a 12-month pilot project to assess the incidence of error and fraud in determining income-driven repayment plan amounts.

A copy of the OIG report is found at: https://www2.ed.gov/about/offices/list/oig/misc/mgmtchall2020.pdf

Grand Canyon announces to analysts that ED does not consider it to be a non-profit for purposes of Title IV funding

Some higher education publications reported that the Department of Education ruled that Grand Canyon University will continue to be treated as a for-profit institution of higher education for the purposes of the Higher Education Act. The IRS and Grand Canyon’s accreditor, Higher Learning Commission, have approved the institution’s conversion from for-profit to non-profit.

A copy of the ED letter to Grand Canyon University is found at: https://www.documentcloud.org/documents/6548148-Grand-Canyon-University-Decision-on-CIO-11-06-19.html

Sharon Bob

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


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