Washington News Brief

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

Ranking Member Foxx sends letter to Secretary Cardona regarding transition plan for student loan borrowers impacted by the loss of two student loan servicers

On July 23, 2021, Ranking Member Virginia Foxx (R-NC) sent a letter to Secretary Miguel Cardona regarding the recent announcements by two federal student loan servicers, Pennsylvania Higher Education Assistance Agency (PHEAA) and New Hampshire Assistance Foundation Network (NHHEAF), that they will not solicit a renewal of their servicing contracts with the Department of Education. The letter asks several questions including what borrowers are being told about the transition to new loan servicers. Congresswoman Foxx said the Secretary of Education owed the borrowers currently being serviced by PHEAA or NHHEAF “a transparent plan to ensure a smooth transition.”

A copy of the Congresswoman’s letter is found at: https://republicans-edlabor.house.gov/uploadedfiles/7.21.21_sec._cardona_ltr._re_nhheaf_final.pdf

House and Senate Education Committee leaders send letter to Secretary Cardona on loan repayment

On July 29, 2021, Ranking Member of the House Education and Labor Committee Virginia Foxx (R-NC) and Ranking Member of the Senate Health, Education, Labor and Pensions Committee Richard Burr (R-NC) sent a letter to Secretary of Education Miguel Cardona requesting that he restart monthly student loan payments on Oct. 1, 2021, when the current pause is expected to retire. In the letter, the House and Senate leaders asked Secretary Cardona to clarify whether the Department of Education planned to resume collection student loan payments this fall and to address the uncertainty over whether it will again extend the pandemic relief.

A copy of the letter is found at: https://republicans-edlabor.house.gov/uploadedfiles/7.29.21_r2r_ii.final.pdf

ED announces expansion of Second Chance Pell Grant

On July 30, 2021, the Department of Education announced that it would expand its Second Chance Pell experiment by inviting new institutions of higher education to participate in the program, which allows approved institutions to provide Pell Grants to incarcerated students. There are currently 131 institutions participating in the Second Chance Pell experiment, but based on the announcement, the Department will permit up to 200 two- and four-year colleges and universities to participate in the program. Applications will be open from July 30, 2021, to be accepted for the 2022-2023 award year and should be submitted no later than Oct. 28, 2021.

A copy of the announcement is found at: https://www.ed.gov/news/press-releases/us-department-education-announces-it-will-expand-second-chance-pell-experiment-2022-2023-award-year

Senate HELP Committee deadlocks on nomination of Catherine Lhamon as the next Assistant Secretary for Civil Rights at the U.S. Department of Education

On Aug. 3, 2021, the Senate Health, Education, Labor and Pensions (HELP) Committee met in executive session to vote on the nomination of Catherine Lhamon to serve as the next Assistant Secretary for Civil Rights at the U.S. Department of Education. The HELP Committee voted to advance the nomination by a tie vote of 11 to 11. Because the vote ended in a tie, Senate Majority Leader Chuck Schumer (D-NY) can move, under the Senate rules, to discharge the nomination from Committee for consideration by the full Senate. This action is likely to take place after the August recess.

The Republicans on the HELP Committee grilled her during the hearing held in July about her role as Assistant Secretary for Civil Rights during the Obama Administration when she was charged with enforcing the Obama Administration’s approach to campus sexual violence. The Republicans accused her of overreaching and acting beyond the Department of Education’s authority during the Obama Administration.

ED announces establishment of a negotiated rulemaking committee that will begin in October

On Aug. 6, 2021, the Department of Education announced that it will be establishing a negotiated rulemaking committee that will meet virtually beginning in October 2021 to rewrite regulations for Public Service Loan Forgiveness, income-contingent repayment plans, and borrower defense to repayment. Other issues subject to negotiation include closed school discharges, interest capitalization on federal student loans, mandatory pre-dispute arbitration and prohibition of class action lawsuits, Pell Grant eligibility for prison education programs, and total and permanent disability discharges.

The announcement indicated that ED was interested in receiving nominations from individuals or organizations that represent the perspective of historically underserved and/or low-income communities. The Department is also interested in two advisors to the committee, one to represent employers whose employees are eligible for Public Service Loan Forgiveness, and the other with expertise in research and analysis of higher education data. These are non-voting roles, which will provide technical assistance. The announcement also identified other individuals it sought as negotiators.

The deadline for the submission of nominees for the committee is by Aug. 31, 2021.

A copy of the announcement is found at: https://www.ed.gov/news/press-releases/new-negotiated-rulemaking-committee-focus-student-loans-targeted-discharge-and-forgiveness-authorities

A copy of the notice in the August 10, 2021, Federal Register is found at:
https://www.govinfo.gov/content/pkg/FR-2021-08-10/pdf/2021-16953.pdf

Biden to extend freeze on student loan payments until January 31, 2022

On Aug. 6, 2021, the Biden Administration extended the final pause on federal student loan payments for borrowers until Jan. 31, 2022. The pandemic relief, which suspends monthly loan repayments and interest for 40 million students, had been set to expire on Sept. 30, 2021. The decision comes after top congressional Democrats have pressured the Biden Administration for months to continue pandemic relief until next year. The announcement said that the Department’s extension will allow borrowers to plan for the resumption of payments and reduce the risk of delinquency and defaults after the restart, and that the Department will continue its works to transition borrowers smoothly back into repayment, including by improving student loan servicing.

A copy of the announcement is found at: https://www.ed.gov/news/press-releases/biden-administration-extends-student-loan-pause-until-january-31-2022

ED releases new interpretation on the legality of state laws and regulations governing servicing of student loans

On Aug. 9, 2021, the Department of Education released a new legal interpretation that revises and clarifies its position on the legality of state laws and regulations that govern various aspects of the serving of student loans. The action will help states enforce borrower bill of rights or other similar laws to address issues with the servicing of federal student loans. “The proposed notice clarifies that while federal law does preempt state regulation in certain narrow areas, states can regulate student loan servicing in many other ways without being preempted by the federal Higher Education Act (HEA).”

ED’s action replaces a prior notice of interpretation posted in the Federal Register of March 12, 2018. The prior notice stated that the HEA preempted state efforts to regulate student loan servicers, a position uniformly rejected by the courts. The Notice of Interpretation included in the Aug. 12, 2021, Federal Register will help facilitate the close coordination between the Department and its State partners to further enhance both servicer accountability and borrower protections.

A copy of the announcement is found at: https://www.ed.gov/news/press-releases/new-interpretation-encourage-state-collaboration-student-loan-servicing?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=

The Notice in the Aug. 12, 2021, Federal Register is found at:
https://www.govinfo.gov/content/pkg/FR-2021-08-12/pdf/2021-17021.pdf

Senate passes $1.2 Trillion INVEST in America Act

On Aug. 10, 2021, the Senate passed, by a vote of 69 to 30, a scaled back version of President Biden’s proposed American Jobs Plan. The $1.2 trillion INVEST in America Act (H.R. 3684) passed without the amendment offered by Senators Tim Kaine (D-VA) and Robert Portman (R-OH) that proposed eliminating Federal student loans for students enrolled in short-term programs. The loan program would have been replaced with a Pell Grant program titled the Federal Pell Grant Job Training program, which would exclude students enrolled in for-profit institutions. H.R. 3684 includes $550 billion in new spending for initiatives related to roads, bridges, transit, climate resilience, and broadband. The bill also includes $550 million to support the creation and expansion of industrial research and assessment centers at institutions of higher education and at trade schools, community colleges, and union training programs, and to expand private activity bonds to include broadband and carbon capture projects.

FSA takes action on two institutions

On Aug. 10, 2021, the Department of Education’s office of Federal Student Aid (FSA) issued Final Program Determination letters to two institutions: RWM Fiber Optics, Inc. and Harrison College. In each instance, FSA identified more than $2.5 million in liabilities resulting from multiple violations by RWM and from the closing of Harrison College. FSA Chief Operating Officer Richard Cordray stated: “All institutions are expected to serve the best interests of their students, not serve themselves.”

A copy of the announcement is found at: https://www.ed.gov/news/press-releases/us-department-education-takes-action-student-aid-violations-and-school-closure

American Public Education to acquire Graduate School USA

On Aug. 11, 2021, American Public Education, Inc. (APEI), which owns the for-profit American Public University System, announced that it has signed an agreement to acquire substantially all of the assets of Graduate School USA, one of the leading providers of training to the federal government. Graduate School USA is a non-profit entity based in Washington, DC.

A copy of APEI’s press release is found at: https://www.prnewswire.com/news-releases/american-public-education-inc-apei-signs-agreement-to-acquire-graduate-school-usa-301353631.html

Senate agrees to consider Kvaal’s nomination in September

An article in Politico of Aug. 11, 2021, indicated that Senate Majority Leader Chuck Schumer agreed to take up the nomination of James Kvaal as Under Secretary of the U.S. Department of Education in September when the Senate returns from its recess. Senator Elizabeth Warren (D-MA) placed a hold on Kvaal’s nomination as she negotiated changes she wanted to see as to how the Department of Education managed its $1.6 trillion portfolio of federal student loans. Senator Warren released her hold on the nomination after she saw “substantial reforms” to the federal student loan programs that the Department of Education vowed to make.

Education and Labor Departments renew efforts to help unemployed Americans pursue a postsecondary education

On Aug. 16, 2021, the Department of Education and the Department of Labor launched a program to help connect unemployment insurance (UI) beneficiaries access to postsecondary education. One of the actions taken by the Department of Education was to update prior guidance to financial aid administrators about their authority to exercise “professional judgment” for financial aid applicants and with that authority, they may adjust recently unemployed applicants’ income to zero. In addition, the Department of Labor will advise state workforce agencies that UI recipients may be eligible for postsecondary education funding like federal student aid. In addition, the Department of Education created a new landing page that states can share with UI beneficiaries to help them identify offerings at colleges that are also eligible training providers under the Workforce Innovation and Opportunity Act (WIOA).

Secretary of Education Miguel Cardona said: “I am heartened that through these changes, the U.S. Departments of Education and Labor are helping unemployed Americans have the chance to go back to school, gain new knowledge and skills, and access opportunity through higher education.”

A copy of the press release is found at: https://www.ed.gov/news/press-releases/education-labor-departments-renew-efforts-help-unemployed-americans-pursue-postsecondary-education

A copy of the updated guidance on “professional judgment” is found at: https://fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2021-01-29/update-use-professional-judgment-financial-aid-administrators-updated-aug-16-2021?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=

Chairman Scott urges ED to hold executives personally liable for the cost of closed for-profit institutions

On Aug. 17, 2021, Chairman of the House Education and Labor Committee Bobby Scott (D-VA) sent a letter to Secretary of Education Miguel Cardona urging him “to hold the executives of failed for-profit colleges and converted for-profit colleges individually responsible for liabilities of the institution to the federal government.” The letter said: “In recent years, when major for-profit college chains, such as Corinthian Colleges, Inc. or ITT Technical Institute, have closed under the weight of federal and state law enforcement investigations, it is the students and taxpayers that have borne the financial burden. Our students deserve better.” The letter asserts that “[t]he purpose of holding individuals accountable is to ensure not only that there is accountability for the matter at hand, but also that future misconduct is curtailed, either by the same individuals or others.”

A copy of the press release with the letter is found at: https://edlabor.house.gov/media/press-releases/chairman-scott-calls-on-education-department-to-hold-executives-personally-liable-for-the-cost-of-for-profit-school-closures

ED reopens application process for proprietary schools applying for HEERF funds

On Aug. 17, 2021, the Department of Education issued a Notice in the Federal Register, announcing that it was reopening the application process for proprietary schools to apply for Higher Education Emergency Relief Fund (HEERF) grants through Sept. 10, 2021. Applications will be accepted on a rolling basis with institutions having to submit both the new American Rescue Plan (ARP) application, along with the Required Proprietary Institution Certification (RPIC) form, for supplemental ARP awards.

A copy of the Federal Register Notice is found at: https://www.govinfo.gov/content/pkg/FR-2021-08-17/pdf/2021-17642.pdf

ED announces availability of agendas for 2021 Virtual Federal Student Aid Training Conference

On Aug. 17, 2021, the Department released the 2021 Virtual Federal Student Aid Training Conference agendas, session descriptions, presenter biographies, and resource center information. The Virtual Federal Student Aid Training Conference will be held from Nov. 30, 2021, to Dec. 2, 2021.

A copy of the announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-08-17/2021-virtual-federal-student-aid-training-conference-agendas-now-available-ea-id-general-21-47

ED announces federal student loan borrowers to receive automatic total and permanent disability discharges

On Aug. 19, 2021, the Department of Education announced that over 323,000 borrowers who have a total and permanent disability (TPD) will receive more than $5.8 billion in automatic federal student loan discharges. The changes will apply to borrowers who are identified through an existing data match with the Social Security Administration (SSA) starting in September 2021. The new data match with the SSA will remove the requirement for these borrowers to fill out an application before receiving relief. The Department has already removed the application requirement in 2019 for borrowers identified as eligible for a TPD discharge through its match with the Department of Veterans Affairs, but had not done so for those identified through the SSA data match.

In conjunction with the Department’s announcement, two other items related to TPD were announced. First, the Department will indefinitely extend the policy announced in March to stop asking borrowers to provide information on their earnings. Second, the Department will pursue the elimination of the three-year monitoring period required under the current regulations during the negotiated rulemaking process that will begin in October 2021.

According to Secretary of Education Miguel Cardona, “Today’s action removes a major barrier that prevented far too many borrowers with disabilities from receiving a total and permanent disability discharge that they are entitled to under the law.”

A copy of the announcement is found at: https://www.ed.gov/news/press-releases/over-323000-federal-student-loan-borrowers-receive-58-billion-automatic-total-and-permanent-disability-discharges.

On Aug. 23, 2021, the Department of Education published final regulations in the Federal Register, amending the interim final regulations published on Nov. 26, 2019, which had provided TPD student loan discharges for veterans by removing administrative burdens that may have prevented total and permanently disabled veterans from obtaining discharges for their student loans by obtaining data from the VA. The Aug. 23, 2021, final regulations amend the interim final regulations by expanding the automatic discharge process for borrowers who are eligible for TPD loan discharge through their SSA data as well as through their VA data.

A copy of the Federal Register is found at: https://fsapartners.ed.gov/knowledge-center/library/federal-registers/2021-08-23/final-regulations-total-and-permanent-disability-loan-discharges

ED grants interest rate benefit for more than 47,000 service members

On Aug. 20, 2021, the Department of Education announced that the office of Federal Student Aid (FSA) has retroactively waived interest on loans held by more than 47,000 current and former active-duty service members. The action was made possible by a data-matching agreement with the Department of Defense (DOD) that substantially improves access to a student loan interest-waiver benefit for many service members with federal student loans.

Under the Higher Education Act, service members deployed to areas that qualify for imminent danger or hostile fire pay have no interest accrual on certain federal student loans that were first disbursed on or after Oct. 1, 2008. However, in the past, only a small proportion of eligible service members successfully accessed this benefit. Now ED is able to identify student loan borrowers who serve on active duty by matching records to DOD’s personnel records. As a result, ED can automatically provide the student loan interest benefit to eligible service members.

A copy of the announcement is found at: https://www.ed.gov/news/press-releases/us-department-education-grants-interest-rate-benefit-more-47000-service-members

ED releases announcement regarding the implementation of return of Title IV funds regulations

On Aug. 20, 2021, the Office of Postsecondary Education for the Department of Education released guidance on the implementation of the Return of Title IV regulations included in the Sept. 2, 2020, final regulations on distance education and innovation that went into effect on July 1, 2021. ED updated the Q&As under the “Return of Title IV Funds” topic on the Department’s Program Integrity Questions and Answers Information page to reflect the changes made in the final regulations.

A copy of the announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-08-20/implementation-return-title-iv-funds-r2t4-regulations-ea-id-general-21-50

ED outlines new methodology for borrower defense claims

On Aug. 24, 2021, the Department of Education announced that it was rescinding the borrower defense partial relief methodology instituted under former Secretary of Education Betsy DeVos. The notice provides a rationale for reversing the previous policy that limited relief under the borrower defense program. ED has decided that “…as of March 18, 2021, approved claims will be assessed using a rebuttable presumption of full relief. This approach aligns with the applicable regulations in that a borrower may ultimately be granted full, partial, or no relief.” An example included in the notice describes a borrower who made a borrower defense claim after taking out $25,000 in federal student loans to pay for a program at a college that misrepresented the total cost as $20,000. ED noted that it would not provide the borrower full relief of $25,000, but would issue partial relief of $5,000.

A copy of the announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-08-24/rescission-borrower-defense-partial-relief-methodology-ea-id-general-21-51

House passes the Senate’s Budget Reconciliation Resolution

On Aug. 24, 2021, the House of Representatives passed along party lines, by a vote of 220 to 212, the previously passed Senate Budget Reconciliation Resolution. The Resolution proposes a $3.5 trillion over a ten-year period and provides authorizing committees with a topline spending target. After the authorizing committees receive their reconciliation instructions, they will mark up bills that meet those spending targets. Each of the bills produced by the authorizing committees will be combined into one budget reconciliation package.

Previously, on Aug. 10, 2021, the Senate passed by a vote of 50 to 49, along party lines, a $3.5 trillion reconciliation bill that sets tax and spending priorities for the next year. The bill includes instructions to allow the House Education and Labor Committee and Senate Health, Education, Labor and Pensions Committee to create a new tuition free community college program, to increase Pell Grant funding, and to provide funding to states and institutions for new student success grants.

ED announces it will provide $1.1 billion in closed school discharges to borrowers who attended ITT

On Aug. 26, 2021, the Department of Education announced it will make $1.1 billion in closed school discharges available to an additional 115,000 borrowers who attended the now closed ITT Technical Institute (ITT). According to the announcement, this action extends relief to borrowers whose attendance at ITT overlapped with a period during which the institution engaged in widespread misrepresentations about the status of its financial health and misled students into taking private loans that were allegedly portrayed as grant aid. “ITT’s malfeasance drove its financial resources away from educating students in order to keep the school in business for years longer that it likely would otherwise have, resulting in debts that are being discharged starting today.” The majority of the ITT borrowers covered by today’s action did not enroll elsewhere during the three years after ITT’s closure, and they will not need to take further action to receive the closed school discharge.

A copy of the announcement is found at: https://www.ed.gov/news/press-releases/extended-closed-school-discharge-will-provide-115k-borrowers-itt-technical-institute-more-11b-loan-forgiveness

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.