By Sharon H. Bob, Ph.D, Higher Education Specialist, Powers Pyles Sutter & Verville, PC
OMB releases Biden’s budget request for FY 2022
On May 28, 2021, the Office of Management and Budget (OMB) released President Biden’s budget request for FY 2022. The budget request for the Department of Education is $102.8 billion, a 41% increase over FY 2021 levels, and includes the following:
- Pell Grants: The budget request includes $25.5 billion in discretionary funding for the Pell Grant program, which would increase the maximum annual award by $400. The budget request states that this increase along with the $1,475 increase included in the American Families Plan, represents a significant first step to deliver on the President’s goal to double the Pell Grant.
- Campus-Based Programs: The budget requests $880 million for Supplemental Educational Opportunity Grants (FSEOG) and $1.19 billion for Federal Work-Study, the same amount as provided last year.
- Expand Federal Student Aid Eligibility for DREAMers: The budget proposes to expand eligibility for Pell Grants and campus-based aid to Deferred Action for Childhood Arrival (DACA) recipients. The proposal states that the Administration would also work with Congress to ensure that these students are eligible for federal student loans.
- Free Community College and Tuition-Free HBCUs: The budget requests $14.3 billion for a partnership between the federal government and states, tribes, and territories to ensure that first-time students and workers wanting to reskill can enroll in a community college to earn a degree for free. The budget would also provide $4.6 billion for grants to eligible four-year Historically Black Colleges and Universities, Tribal Colleges and Universities, and Minority-Serving Institutions.
- Completion Grants: The budget requests $6.2 billion for a new Completion Grant program to support a comprehensive set of completion and retention activities at colleges and universities that serve high numbers of low-income students.
- Other Federal Student Loan Proposals: The budget proposal states that “the Administration also looks forward to working with the Congress on changes to the Higher Education Act of 1965 that ease the burden of student debt, including improvements to the Income-Driven Repayment and Public Service Loan Forgiveness programs.”
- Student Aid Administration: The budget proposes $2.1 billion for the Student Aid Administration account to administer federal student aid programs. Included in the budget proposal is the following statement: “The Department anticipates using the authority provided in the Consolidated Appropriations Act, 2021, to extend legacy loan servicing to ensure stable operations while also working to develop a long-term servicing solution. Extending the legacy loan servicing contracts will give the Department the ability to focus on major challenges including ensuring a smooth transition out of the payment pause and implementing the FAFSA Simplification Act and FUTURE Act as quickly as possible.”
Secretary of Education Miguel Cardona released a statement and said: “This [budget] proposal reflects the Biden-Harris Administration’s commitment to ensuring that student success remains at the heart of the Department of Education’s work.”
A copy of the Secretary’s press release is found at: https://www.ed.gov/news/press-releases/statement-secretary-education-miguel-cardona-presidents-fiscal-year-2022-budget
Congressional Democrats praised the Administration’s investments, but the Republicans largely panned the budget request and considered the spending a nonstarter for budget talks.
On June 16, 2021, Secretary of Education Cardona testified before the Senate Health, Education, Labor and Pensions Committee on behalf of President Biden’s FY 2022 Budget Request for the Department of Education. With regard to higher education, Secretary Cardona said: “…our budget proposal would make postsecondary education more affordable for students from low-income households through a $400 increase in the maximum Pell Grant.” Further, the budget proposal would provide two years of free community college to first-time students and make college more affordable for low- and middle-income students and those wishing to reskill.
A copy of the Secretary’s testimony is found at: https://www.ed.gov/news/press-releases/statement-miguel-cardona-secretary-education-us-department-education-fiscal-year-2022-budget-request?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=
FSA announces new guidance on state access to student loan data
On May 28, 2021, Federal Student Aid’s (FSA) Chief Operating Officer Richard Cordray announced new guidance to its vendors that would now permit state and federal regulators to access student loan borrowers’ data and information held by servicers in an effort to provide better oversight to the servicers and debt collectors contracted by the Department of Education. In a memo sent to vendors, Mr. Cordray said that ED will create a “streamlined and expedited process” for any federal, state, or local authorities to request access to borrowers’ information that is needed to investigate or oversee student loan companies.
The announcement rescinds a previous Trump Administration policy that made it more difficult for state and federal regulators to access pertinent records of borrowers, effectively forwarding all requests for data to FSA, which generally rejected them. In a blog post, Mr. Cordray said: “Instead of finding reasons to deny these requests, we should be spending our time partnering with state agencies to effectively oversee our loan servicers and debt collectors.”
The memo is found at: https://www2.ed.gov/policy/fund/guid/revised-vendor-guidance-fsa.pdf
A copy of the blog post is found at: https://blog.ed.gov/2021/05/stronger-partnerships-with-state-allies-to-protect-student-borrowers/
ED terminates recognition of ACICS as a federal accreditor
On June 2, 2021, the Department of Education issued an opinion withdrawing the recognition of the Accrediting Council for Independent Colleges and Schools (ACICS) as a federal accreditor. The Department stated that ACICS had failed to properly oversee its institutions of higher education and had inadequate administrative capability in order to be recognized as an accreditor. In a letter to ACICS, Deputy Under Secretary of Education Jordan Matsudaira said: “Following years of review involving four different compliance inquiries and reports, and after considering the entire lengthy and complex record before me, ACICS’s significant and systemic noncompliance with multiple regulatory recognition criteria leaves me no reasonable option but to terminate its recognition, effective immediately.” ACICS has 30 days to appeal the decision to Education Secretary Miguel Cardona, which the accreditor said that it plans to do.
A copy of the Department’s press release is found at: https://www.ed.gov/news/press-releases/statement-us-department-education-status-recognition-nine-accrediting-agencies-and-withdrawal-recognition-accrediting-council-independent-colleges-and-schools
House and Senate Republican education committee leaders urge Secretary of Education to resume collecting federal student loan payments
On June 2, 2021, Senate Health, Education, Labor and Pensions Committee Ranking Member Richard Burr (R-NC) and House Education and Labor Committee Ranking Member Virginia Foxx (R-NC) sent a letter to Secretary of Education Miguel Cardona to resume collecting monthly federal student loan payments when the COVID-19 pandemic relief for borrowers expires at the end of September 2021. The letter stated that the pause has caused taxpayers $40 billion last year alone, not counting the $63 billion in loan re-estimates added to the program costs in 2020 due to previously unanticipated levels of forgiveness. The letter asks the Department to give clear directions on how borrowers can reenroll in the Income-Driven Repayment Plan and asked the Department if it will communicate how borrowers enrolled in auto-debit payments prior to the loan pause will be treated reentering repayment.
A copy of the letter is found at: https://www.help.senate.gov/imo/media/doc/2021.06.02%20Letter%20-%20Burr%20and%20Foxx%20to%20Cardona%20on%20Return%20to%20Repayment.pdf
Chairman Scott asks Secretary of Education to halt all approvals of for-profit to nonprofit conversions until reforms are in place
On June 3, 2021, Chairman of the Committee on Education and Labor Bobby Scott (D-VA) sent a letter to Secretary of Education Miguel Cardona regarding the Department of Education’s process for reviewing, approving, and monitoring for-profit college conversions to non-profit institutions. He pointed out that the Government Accountability Office (GAO) recently investigated the conversion process and found serious shortcomings in the Department’s monitoring of converted institutions, which gives rise to risks of insiders taking advantage of non-profit institutions at student and taxpayer expense. These issues combined with concerns raised at a Committee hearing held on April 20, 2021, that the Department and the Internal Revenue Service (IRS) must take steps to reform their processes, the Department should halt the approval of all conversions until they finalize those reforms. Chairman Scott said that GAO’s findings indicate that lapses in Department oversight have allowed billions to flow annually to institutions it treats as non-profits, but which may operate as for-profits.
A copy of the letter is found at: https://www.republicreport.org/2021/rep-scott-demands-halt-to-for-profit-college-conversions-to-non-profit/
A copy of the GAO report is found at: https://www.gao.gov/products/gao-21-89
Senate passes U.S. Innovation and Competition Act; Senator Paul blocks bipartisan amendment to expand Pell Grant program to short-term programs
On June 8, 2021, the Senate passed the United States Innovation and Competition Act of 2021 (S. 1260) by a vote of 68 to 32. The bill, known as the “China Bill,” would boost support for science and technology in an effort to enhance the United States’ competitiveness with China. Before the passage of S. 1260, Senator Rand Paul (R-KY) objected to a unanimous consent request to add a manager’s package of amendments to the bill. Senator Rand objected to the increased federal spending in the bill as a whole. Among the amendments in the manager’s package that was left out was a bipartisan deal reached earlier in June, the Kaine-Portman Amendment, that would have expanded the Pell Grant program to short-term programs and would have ended the Direct Loan program for short-term programs. The Kaine-Portman Amendment would have prohibited proprietary institutions from participating in the new short-term Pell Grant program. The Senate will now send S. 1260 to the House for its consideration.
ED announces delay in making changes to FAFSA methodology included in the Consolidated Appropriations Act, 2021
On June 11, 2021, the Department of Education announced that it will employ a delayed, phased in implementation of the changes made to the federal methodology and the FAFSA included in the Consolidated Appropriations Act, 2021. The statutory deadline for the changes is the 2023-2024 award year, with several provisions having early implementation options.
The Department’s phased-in implementation includes early implementation of the removal of the drug conviction and Selective Service eligibility criteria for the upcoming 2021-2022 award year, with the remainder of the changes set to be completed for the 2024-2025 award year, a year late. The Department cited the magnitude of the changes as the reason for the one-year delay. The Central Processing System (CPS) needs upgrading prior to implementation, ED needs to integrate with the IRS, and the states need to have time to adapt to the changes.
In an electronic announcement of June 11, 2021, the Department announced that it will implement the removal of the Selective Service and drug-conviction eligibility criteria in three phases, across three award years: 2021-2022, 2022-2023, and 2023-2024. The changes were also announced in a Federal Register Notice. Schools may implement the changes as early as the date the Federal Register Notice is published. Schools must implement the changes no later than 60 days after date of the publication of the Federal Register Notice, which was June 17, 2021.
A copy of the electronic announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2021-06-11/early-implementation-fafsa-simplification-acts-removal-selective-service-and-drug-conviction-requirements-title-iv-eligibility
A copy of the Federal Register Notice is found at: https://www.govinfo.gov/content/pkg/FR-2021-06-17/pdf/2021-12762.pdf
FSA announces updates to the quarterly portfolio reports on its data center
On June 14, 2021, Federal Student Aid (FSA) announced the release of two new sets of quarterly portfolio reports on its Data Center website (https://studentaid.gov/data-center/) with key data and other information about federal student aid programs as of Dec. 31, 2020, and March 31, 2021. FSA Chief Richard Cordray said: “We are committed to sharing data and information so that all Americans can better understand the value of federal student aid and how it actually works.”
FSA is highlighting the improvements in the Public Service Loan Forgiveness (PSLF) program. The PSLF report is redesigned to reflect the alignment with its reporting structure and the new application process.
The reports also reflect the novel flexibilities applied to student accounts as prescribed by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and extended by executive actions through Sept. 30, 2021. As a result, payments are paused, interest is waived, and collections are stopped on all Department of Education-held student loans as well as defaulted loans administered by guaranty agencies.
A copy of the electronic announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-06-14/federal-student-aid-posts-two-new-quarterly-portfolio-reports-fsa-data-center-and-highlights-recent-changes-public-service-loan-forgiveness-ea-id-general-21-40
ED announces implementation of the repeal of subsidized usage limit restriction
On June 14, 2021, the Department of Education announced in a Federal Register Notice and an electronic announcement that it will early implement the repeal of the limitation on lifetime subsidized loan eligibility, known as the Subsidized Usage Limit Applies (SULA), which currently limits students from receiving subsidized Direct Loans more than 150% of the published length of their program. The Consolidated Appropriations Act, 2021, required the Department to implement the repeal of the rule by July 1, 2023. The guidance also removes references to the lifetime subsidized loan limit in entrance and exit counseling so institutions should update their counseling materials. The Department has updated its online loan counseling to remove references to SULA. However, there are no changes to program level enrollment reporting requirements.
A copy of the electronic announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-06-11/150-direct-subsidized-loan-limit-electronic-announcement-25-guidance-and-operational-information-repeal-150-subsidized-usage-limit-ea-id-dl-21-04
A copy of the Federal Register Notice is found at: https://fsapartners.ed.gov/knowledge-center/library/federal-registers/2021-06-15/repeal-direct-loan-program-subsidized-usage-limit-restriction-sula
ED announces approval of new categories of borrower defense claims totaling $500 million in loan relief
On June 16, 2021, the Department of Education announced the approval of 18,000 borrower defense to repayment claims for individuals who attended ITT Technical Institute (ITT). These borrowers will receive 100% loan discharges, resulting in about $500 million in loan relief. The announcement said that this brings total loan cancellation under borrower defense by the Biden administration to $1.5 billion for about 90,000 borrowers.
Secretary of Education Miguel Cardona said: “Our action today will give thousands of borrowers a fresh start and the relief they deserve after ITT repeatedly lied to them.” The borrower defense claims that were approved this week cover two categories of claims submitted by borrowers who attended ITT: their likelihood of employment prospects and their ability to transfer credits. “This is the first approval of a new category of borrower defense claims by the Department since January 2017.”
A copy of the press release is found at: https://www.ed.gov/news/press-releases/department-education-announces-approval-new-categories-borrower-defense-claims-totaling-500-million-loan-relief-18000-borrowers?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=
Department of Education confirms Title IX protects students from discrimination based on sexual orientation and gender identity
On June 16, 2021, the Department of Education’s Office of Civil Rights (OCR) issued a Notice of Interpretation indicating that it will enforce Title IX’s prohibition on discrimination on the basis of sex to include discrimination based on sexual orientation and discrimination based on gender identity. The Department’s interpretation is based on the U.S. Supreme Court decision in Bostock v. Clayton County, issued one year ago in which the Supreme Court recognized that it is impossible to discriminate against a person based on their sexual orientation or gender identity without discriminating against that person based on sex.
A copy of the press release is found at: https://www.ed.gov/news/press-releases/us-department-education-confirms-title-ix-protects-students-discrimination-based-sexual-orientation-and-gender-identity
ED holds public hearings on negotiated rulemaking sessions
On June 21 and June 23-24, 2021, the Department of Education held public hearings for interested parties to comment on the rulemaking agenda where negotiated rulemaking committees will prepare proposed regulations for programs authorized under Title IV of the Higher Education Act. The Department previously proposed an extensive and diverse list of suggested topics including change of ownership and change in control of institutions of higher education, certification procedures for participation in the Title IV programs, standards of administrative capability, ability to benefit, borrower defense to repayment, discharges for borrowers with a total and permanent disability, closed school discharges, discharges for false certification of student eligibility, income contingent repayment plans, the Public Service Loan Forgiveness Program, mandatory pre-dispute arbitration and prohibition on class action lawsuit provisions in institution’s enrollment agreements, financial responsibility for participating institutions of higher education, gainful employment, and Pell Grant eligibility for prison education programs. The Department has stated that it was interested in comments on regulations that would address gaps in postsecondary outcomes, such as retention, completion, student loan repayment, and loan default, and they would give specific consideration to disparate impacts by income, race/ethnicity, gender, and other demographic characteristics.
During the course of the three days, many of the commenters addressed the need for one simplified and streamlined Income-Driven Repayment plan including one that is more affordable; support for reinstatement of the gainful employment regulations that are reflective of all types of institutions of higher education; greater transparency in the Public Service Loan Forgiveness program; and issues related to borrower defense to repayment rules.
Public written comments can be submitted to the Department by July 1, 2021. The Department anticipates that the negotiated rulemaking committees will convene in late summer 2021 with formal notices of proposed rulemakings being released April through July 2022.
Several media reports state that Senator Warren is behind effort to stall James Kvaal’s nomination as next Under Secretary of Education
On June 22, 2021, several media reports indicated that Senator Elizabeth Warren (D-MA) is the unnamed Senator who has placed a hold on the nomination of James Kvaal to serve as the next Under Secretary at the Department of Education. According to the media reports, Senator Warren’s hold is the latest escalation of pressure on the Biden administration from progressives who want to see more aggressive and quicker action on student loan debt. For several months, Senator Warren and Senate Majority Leader Chuck Schumer (D-NY) have been publicly lobbying President Biden to use executive action to cancel $50,000 of student loan debt per borrower. Media reports said that Senator Warren’s $50,000 student loan cancellation proposal is not the reason for the hold on the nomination, but instead, she is seeking concessions on how the Department runs the student loan program and is negotiating a range of reforms including the administration of the loan program.
Senators Warren, Schumer, along with 60 House and Senate Democrats, send letter to President urging him to extend federal student loan payment pause
On June 23, 2021, Senator Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY), along with more than 60 House and Senate Democrats, sent a letter to President Joe Biden urging him to extend the pause on payments and interest accrual for federally-held student loans. The pause is currently set to retire on Sept. 30, 2021. The letter urges the President to extend the pause by at least six months through March 31, 2022, or until the economy reaches pre-pandemic employment levels, whichever is longer.
A copy of the letter is found at: https://www.warren.senate.gov/imo/media/doc/Letter%20to%20Biden%20re%20extension%20of%20payment%20pause%20final%206.23.21%20final.pdf
FTC sends checks to people who lost money to student loan debt relief scheme
On June 25, 2021, the Federal Trade Commission (FTC) issued a press release announcing that it was returning checks totaling more than $316,000 to 10,689 people who lost money to a student loan debt relief scheme. In a complaint first announced in March 2020, the FTC alleged SLAC (also called Aspyre), Navloan, and Student Loan Assistance Center, and their owner, Adam Owens, falsely told consumers that, for an upfront fee of $699, and a monthly fee of $39, the defendants would permanently lower or eliminate student loan debt. In reality, the payments could change every year and the loan forgiveness was not guaranteed for any consumer.
As part of a settlement with the FTC, the defendants agreed to pay funds, which are being used to send payments to affected consumers.
A copy of the press release is found at:https://www.ftc.gov/news-events/press-releases/2021/06/ftc-sends-checks-people-who-lost-money-student-loan-debt-relief
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