By Sharon H. Bob, Ph.D., Higher Education Specialist, Powers Pyles Sutter and Verville, PC
House Majority Leader Hoyer and Senator Durbin urge their colleagues to nullify ED’s most recent version of the borrower defense to repayment rule
On Jan. 3, 2020, House Majority Leader Steny Hoyer (D-MD) circulated a Dear Colleague letter outlining the House schedule for January. The letter indicated that the House would consider House Joint Resolution 76, which states that the House would use the Congressional Review Act (CRA) to nullify the Department of Education’s most recent version of the borrower defense to repayment rule published on September 23, 2019 and effective July 1, 2020. Representative Susie Lee (D-NV) introduced House Joint Resolution 76.
The CRA process permits Congress to invalidate a regulation issued by an executive branch agency by a simple majority vote, leaving the prior rule in place and preventing the agency from regulating again. Under the CRA process, the joint resolution must pass both the House and Senate and be signed into law by the President.
On Jan. 13, 2020, the President issued a Statement of Administration Policy stating that if the President was presented with H.J. Res. 76, “his advisors would recommend that he veto it.” “This resolution would undermine the Administration’s efforts to protect students and taxpayers by nullifying the Borrower Defense Institutional Accountability rule published on September 23, 2019. H.J. Res. 76 would restore the partisan regulatory regime of the previous administration, which sacrificed the interests of taxpayers, students, and schools in pursuit of narrow, ideological objectives.”
A copy of the Statement of Administration Policy is found at: https://cecu.informz.net/cecu/data/images/WH%20Statement%20of%20Admin%20Policy%20on%20BDR.pdf
Senator Dick Durbin (D-IL) urged his colleagues to support the CRA resolution (Senate Joint Resolution 56): “I’m asking my colleagues on both sides of the aisle: Put the party labels outside…stand up for students across America who did their best to get a college education and were deceived in the process. Stand up for students loaded up with student debt, which could destroy their lives, and give them a fighting chance for a future by saying that Secretary DeVos’ borrower defense rule is unfair to veterans, unfair to students, and unfair to American families.”
A copy of Majority Leader Hoyer’s Dear Colleague letter is found at: https://www.majorityleader.gov/content/dear-colleague-house-vote-pfas-action-act-5g-legislation-borrower-defense-cra-protecting
A copy of Senator Durbin’s press release, which includes a copy of the Senate Joint Resolution, is found at: https://www.durbin.senate.gov/newsroom/press-releases/durbin-stand-up-for-veterans-students-and-families-by-overturning-devos-borrower-defense-rule
ED releases updated quarterly reports on its FSA Data Center
On Jan. 3, 2020, the Department of Education released a series of updates to the quarterly application, disbursement, and portfolio reports on its FSA Data Center to include data through Sept. 30, 2019. Some of the key findings include the following:
- About 16.1 million applications for the FAFSA were submitted for the 2019-2020 cycle;
- The outstanding federal student loan portfolio currently is $1.51 trillion, and the Direct Loan portfolio represents 82% of the total;
- Enrollment in income-driven repayment (IDR) plans continues to increase with about 7.8 million Direct Loan borrowers in IDR plans, an 8% increase from the prior year;
- During the last quarter, FSA received approximately 15,000 new borrower defense to repayment applications, bringing the total to 288,000 applications. Almost 48,000 applications have been approved resulting in nearly $535 million in discharges; and
- About 110,000 borrowers have submitted more than 136,000 applications for discharge under the Public Service Loan Forgiveness (PSLF). Of the 125,000 applications processed, more than 74% were ineligible due to not meeting the program requirements and 24% were ineligible due to missing or incomplete information. As of Sept. 30, 2019, 1,561 PSLF applications have been approved.
A copy of the electronic announcement is found at: https://ifap.ed.gov/eannouncements/010320FSAPostsNewReportstoFSADataCenter.html
A copy of the press release is found at: https://www.ed.gov/news/press-releases/department-education-announces-recovery-assistance-students-schools-impacted-natural-disasters
Senator Elizabeth Warren announces bankruptcy reform plan to include discharging student loans
On Jan. 7, 2020, Senator Elizabeth Warren (D-MA), who is running for the Democratic nomination for President, announced a plan to repeal the changes made in 2005 to the bankruptcy code and overhaul consumer bankruptcy rules. The proposal would make it easier for people being crushed by debt to obtain relief through bankruptcy by streamlining the bankruptcy process and reducing the costs of filing for bankruptcy. Senator Warren said: “We have a student loan debt crisis in America. And one reason is that our bankruptcy system makes it nearly impossible to get rid of that debt, even when you have nothing left.”
A copy of Senator Warren’s plan is found at: https://medium.com/@teamwarren/fixing-our-bankruptcy-system-to-give-people-a-second-chance-f1dd0812a65a
Democratic presidential candidate Bloomberg supports expanding Pell Grants
On Jan. 8, 2020, former New York City Mayor and Democratic presidential candidate Mike Bloomberg released his “All-In Economy” agenda, which states that he would make education and training a priority should he become President. The proposal calls for “invest[ing] in states, community and technical colleges, and others to build career-training systems and programs providing skills and credentials employers identify as priorities for hiring for good jobs – and the supports that learners need to participate and get ahead.” The plan also proposes investing in community college partnerships and apprenticeships that connect people with identifiable jobs and career paths.
A copy of Mike Bloomberg’s agenda is found at: https://www.bbhub.io/mike/sites/27/2020/01/Jobs-Rollout-Press-Release-Fact-Sheet.pdf
ED publishes adjustment to civil monetary penalties for inflation
On Jan. 14, 2020, the Department of Education published final regulations in the Federal Register to adjust the Department’s civil monetary penalties (CMPs) for inflation. As of Jan. 14, 2020, the CMP, which is a fine for violations of Title IV of the HEA, is $58,328.
A copy of the final regulations is found at: https://ifap.ed.gov/fregisters/attachments/FR011420.pdf
“Directory information is defined in 34 C.F.R. § 99.3 as information contained in an education record of a student, and the information would not generally be considered harmful or an invasion of privacy if it were disclosed.” “FERPA provides that a school may disclose directory information if it has given public notice of the types of information which it has designated as directory information, the student’s right to restrict the disclosure of such information, and the period of time within which a student has to notify the school in writing that he or she does not want any or all of those types of information about him or her designated as directory information.”
The letter goes on to explain that the Bureau may ask school officials to disclose, without prior written consent, to the Bureau’s representatives information that the student has not opted out of having disclosed, which may include the student’s name, age, date of birth, and address data. However, if the Bureau’s representatives ask about the student’s sex, Hispanic, Latino, or Spanish origin, and race, the school officials may not disclose this information, without prior consent. In addition, school officials may not disclose Social Security Numbers, without prior consent.
A copy of the updated letter is available at: https://studentprivacy.ed.gov/sites/default/files/resource_document/file/ED_SPPO%20Letter%20to%20IHEs%20re%202020%20Census_v_01292020.pdf
Senator Warren describes her plan to cancel student loan debt on day one
On Jan. 14, 2020, Senator Elizabeth Warren (D-MA), running for the Democratic nomination for President, released her plan to cancel the student loan debt of 42 million Americans on the first day of her presidency if elected President. The plan calls for the U.S. Department of Education to provide up to $50,000 in debt relief to federal student loan borrowers earning less than $100,000. She said: “So I will start to use existing laws on day one of my presidency to implement my student loan debt cancellation plan that offers relief to 42 million Americans – in addition to using all available tools to address racial disparities in higher education, crack down on for-profit institutions, and eliminate predatory lending.” The Senator’s plan also proposes to use federal civil rights laws to combat racial disparities in student lending and promises to open “a wide scale investigation into the roles that colleges, state higher education systems, and the student loan industry play in contributing to racial disparities in student borrowing and student loan outcomes.” Senator Warren’s plan also calls for restoring many of the Obama-era regulations that cracked down on proprietary colleges and strengthening Internal Revenue rules for proprietary colleges seeking to convert to nonprofit entities.
A copy of Senator Warren’s plan is found at: https://elizabethwarren.com/plans/student-loan-debt-day-one
Treasury and IRS provide exemption on some cancelled student loans
On Jan. 15, 2020, the Treasury Department and the Internal Revenue Service (IRS) issued new guidance exempting students from having to pay taxes on loans cancelled as a result of a closed school discharge or approved borrower defense to repayment claim. The tax relief also applies to certain private student loans discharged due to settlements involving “allegations of unlawful business practices, including unfair, deceptive, and abusive acts and practices against a nonprofit or for-profit school or private lenders that made student loans to finance attendance at these schools.” The new guidance covers loans forgiven on or after Jan. 1, 2016 and notes that “taxpayers to whom this revenue procedure applies may claim a credit or refund for an overpayment of tax for taxable years for which the period of limitations under section 6511 of the Code has not expired.”
A copy of the guidance is found at: https://www.irs.gov/pub/irs-drop/rp-20-11.pdf
ACICS withdraws its application for recognition from CHEA
On Jan. 17, 2020, the Accrediting Council for Independent Colleges and Schools (ACICS) announced that it withdrew its application for recognition from the Council for Higher Education Accreditation (CHEA), a nongovernmental group that oversees accreditors on behalf of colleges and universities. ACICS’ decision came after CHEA cited ACICS’ failure to meet nine of its standards. ACICS released a press release and ACICS President Michelle Edwards said that her organization decided to withdraw its application because of significant concerns about CHEA’s process. Ms. Edwards said: “Our decision to withdraw is based instead on our significant concerns related to the CHEA accreditation process and its ongoing implementation of several policies.” CHEA President Judith Eaton said: “ACICS is no longer recognized by CHEA and may apply for recognition not sooner than one year hence.”
While ACICS’ decision does not affect its recognition by the Department of Education, many state laws require accreditors to either have CHEA or Department recognition as a regional accreditor for purposes of programmatic licensure by a state.
A copy of the ACICS press release is found at: https://static1.squarespace.com/static/5ce58a38738b880001909396/t/5e20ee6a977670311f73902e/1579216490629/ACICS+CHEA+Withdrawal+-+Media+Statement.pdf
ED announces new, proactive civil rights compliance center
On Jan. 21, 2020, Secretary of Education Betsy DeVos announced that the Office of Civil Rights (OCR) at the Department of Education will launch the Outreach, Prevention, Education and Non-discrimination (OPEN) Center, which will focus on proactive compliance with federal civil rights laws. The OPEN Center will provide assistance and support to schools, educators, families, and students to ensure better awareness of the requirements and protections of federal non-discrimination laws.
A copy of the press release if found at: https://www.ed.gov/news/press-releases/secretary-devos-announces-new-proactive-civil-rights-compliance-center-within-office-civil-rights
AFT files lawsuit against Secretary of Education over GE rule repeal
On Jan. 22, 2020, the American Federation of Teachers (AFT) filed a lawsuit against Secretary of Education Betsy DeVos in the U.S. District Court for the Northern District of California for allegedly violating the Administrative Procedures Act when the Department of Education repealed the gainful employment rule. Secretary DeVos said the gainful employment rule unfairly targeted proprietary schools and plans to expand transparency through revisions to the College Scorecard was a better indicator of institutional quality. The lawsuit contends that the gainful employment rule was working, and the Department provided no legal basis for its repeal and failed to consider alternative methods.
A copy of the lawsuit is found at: https://apps.npr.org/documents/document.html?id=6668442-2020-01-22-AFT-v-Devos-Complaint
Senators Warren and Brown examine business practices of large managers of online degree programs
On Jan. 24, 2020, Senators Elizabeth Warren (D-MA) and Sherrod Brown (D-OH) wrote to the five largest Online Program Management (OPM) companies – 2U, Academic Partnerships, Pearson Learning, Wiley, and Bisk – that administer online degree programs for many colleges and universities, describing their concerns about the business practices of the companies that “appear to undermine the best interests of students.” They also inquired about their contracts and use of federal student aid dollars. The letter said that OPM companies often administer colleges’ and universities’ online academic programs as well as perform other non-academic services, such as recruiting and admissions services. The Senators stated that the OPM contracts often require that the college or university pay much of the tuition revenue from students enrolled in their online programs to the OPM companies. The letter suggested that because the contracts often delegate recruitment activities to the OPM companies, the tuition-sharing arrangement may violate federal law, which prohibits colleges and universities from paying commissions for recruiting and admitting new students.
The Senators said: “It is also critical that policy-makers determine if OPM business practices – specifically OPM contracts that require tuition-sharing arrangements – are legal, an appropriate use of federal student aid dollars, and in the best interest of students.”
A copy of the press release, which includes the text of the letters sent to the five OPM companies, are found at:
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