Washington News Brief

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

ED announces resumption of pre-COVID-19 verification requirements for the 2022-2023 award year

According to a Federal Register Notice releases on Sept. 1, 2021 and a Dear Colleague letter (GEN-21-06) released on Sept. 1, 2021, the Department of Education’s verification requirements for the 2022-2023 award year will revert to the 2021-2022 requirements that were in effect prior to the release of the Department’s July 13, 2021, Dear Colleague letter (GEN-21-05) announcing the verification waiver for the 2021-2022 award year, except that verification of high school completion is no longer required in verification groups V4 and V5. The July 13, 2021, DCL waived verification except for the Identity/Statement of Educational Purpose and High School Completion Status under tracking groups V4 and V5 in order to focus on identity and fraud.

ED reminds institutions that removing the high school completion status requirement from the verification process in the 2022-2023 award year has not removed or altered an institution’s obligation under 34 C.F.R. § 668.16(p) to evaluate the validity of a student’s high school diploma. The 2021-2022 waiver will continue to be in effect for the remainder of the 2021-2022 application year.

A copy of the Dear Colleague is found at: https://fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2021-09-01/2022-2023-award-year-fafsar-information-be-verified-and-acceptable-documentation

A copy of the Federal Register Notice is found at: https://www.govinfo.gov/content/pkg/FR-2021-09-01/pdf/2021-18864.pdf

FSA sends reminder to institutions to continue to identify and prevent fraud

On Sept. 2, 2021, Federal Student Aid (FSA) sent an announcement reminding institutions of their responsibilities to identify and prevent identity fraud, which remains a “key goal of the student aid verification process.” In reference to recent news articles that reported that some institutions in California have detected atypical enrollment patterns that suggest attempts to obtain financial aid fraudulently, FSA recommends that institutions:

• Be on the lookout for unusual FAFSA and/or enrollment patterns that may suggest fraud;
• Conduct required identity verification and any additional identity verification if necessary; and
• Immediately report suspected fraud to the OIG Hotline at 1-800-MIS-USED.

A copy of the announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-09-02/reminder-identity-verification-ea-id-general-21-54

Four House Republicans send letter to Secretary Cardona opposing mass cancellation of student loan debt

On Sept. 8, 2021, four House Republicans wrote a letter to Secretary of Education Miguel Cardona opposing mass cancellation of federal student loans. In the letter, Congressmen Ted Budd (R-NC), Warren Davidson (R-OH), Scott Perry (R-PA), and Barry Loudermilk (R-GA) wrote that they were concerned with the recent hiring of Toby Merrill, the Department of Education’s new Deputy General Counsel, and her assertion made when working for the Harvard Law School’s Project on Predatory Student Lending that the Department possesses the legal authority required to grant broad student loan debt forgiveness.

The congressmen argued that the Secretary has limited authority to provide mass cancellation of student debt. They concluded that mass cancellation of student loan debt would not only be a clear violation of the separation of powers but would be an “affront to the millions of borrowers who responsibly repaid their loan balances.”

A copy of the letter is found at: https://budd.house.gov/uploadedfiles/budd-merrill_doe_loan_cancelation_letter.pdf

FSA announces an upcoming Federal Update webinar

On Sept. 10, 2021, Federal Student Aid (FSA) announced an upcoming Federal Update webinar on Sept. 28, 2021, at 1:00 PM. The webinar will provide information about recently approved guidance from the Department of Education and Federal Student Aid, including statutory and regulatory updates related to the Title IV programs.

A copy of the announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2021-09-10/live-internet-webinar-federal-update-sept-28-2021-webinar

House Education and Labor Committee approves the education portion of the FY 2022 Budget Reconciliation legislation

On Sept. 10, 2021, the House Education and Labor Committee voted 28 to 22, along party lines, on the education portion of the FY 2022 Budget Reconciliation legislation. On Sept. 9, 2021, the House Education and Labor Committee began consideration of the measures included in the FY 2022 Budget Reconciliation legislation. The House and Senate-passed FY 2022 Budget Resolution provided reconciliation instructions for nearly all of the standing committees, including the House Education and Labor Committee. All House Committees were directed to report their reconciliation measures by Sept. 15, 2021.

The next step will be for the House Budget Committee to combine the various House Committee bills into a reconciliation package. The package will then advance to the House Floor for a vote. It is not clear whether there is sufficient support in the House to pass the legislation.

The following provisions relate to higher education:

• The bill amends Title VII of the Higher Education Act (HEA) to establish a new $55 billion tuition-free community college program, called the America’s College Promise program, that provides funding for the 2023-2024 through 2027-2028 (5 years) award years. Beginning with the 2023-2024 award year, the Department of Education would award grants to states and eligible Tribal Colleges and Universities (TCUs) based on a formula.
• The bill amends Title VII of the HEA to establish a $9 billion retention and completion grant program that would award grants to states and TCUs receiving an America’s College Promise grant (see above).
• The bill amends Title VII of the HEA to establish a $22 billion program to award tuition assistance grants to eligible Black Colleges and Universities (HBCUs), Hispanic-Serving Institutions (HSIs), and other similar type institutions.
• The bill amends eligibility for grants, loans, and work assistance provided under Title IV of the HEA for award years 2022-2023 through 2029-2030 for Deferred Action for Childhood Arrivals (DACA) or Temporary Protected Status (TPS) program participants.
• The bill increases the maximum Pell Grant by $500 in each award year for the 2022-2023 through 2029-2030 award years.
• The bill would count periods of deferment for active duty in the armed services toward time necessary to qualify for public service loan forgiveness.

The proposed revision of the 90/10 rule and the proposal to eliminate short-term loan eligibility to be replaced with short-term job training Pell Grants for select institutions were not included in the bill.

A copy of the text of an amendment in the nature of a substitute that was offered by Chairman Bobby Scott (D-VA) is found at: https://edlabor.house.gov/imo/media/doc/ANS%20to%20the%20Committee%20Print%20Offered%20by%20Mr.%20Scott.pdf

Department of Education Chief Data Officer blogs on results from HEERF reporting

On Sept. 13, 2021, the Department of Education’s Office of the Chief Data Officer Brent Madoo and Chris Bennett released a blog post titled “Drawing Insights from the Higher Education Emergency Relief Fund (HEERF) for 2020,” which provided information covering Coronavirus Aid, Relief, and Economic Security (CARES) Act spending from between March 13, 2020, and December 31, 2020.

Some of the insights as to how HEERF supported students directly include the following:

• Institutions reported that 8.1 million students or 54 percent of all eligible students at the institutions that received HEERF grants received emergency financial aid grant support through HEERF.
• From the student portion of HEERF in 2020, institutions awarded $6.1 billion in emergency financial aid grants, or more than $750 per student recipient.
• About 65 percent of HEERF emergency financial aid grant student recipients attended public institutions.
• Of the HEERF financial aid grant recipients, 94 percent were undergraduates and 6 percent were graduate students.
• Among the undergraduate students, 61 percent were Pell Grant recipients.

Some of the insights as to how HEERF supported institutions include the following:

• The greatest portion of the institutional funds, at least $1.7 billion, was used to cover reimbursements of tuition, housing, room and board, and other fee refunds.
• From the institutional portion of the HEERF funds, institutions awarded at least $287 million in additional emergency financial aid grants directly to students.
• $802 million were used for online technology and training, including software and training for distance learning and laptops and tablets for students.
• $85 million were used for additional student supports, including food service and off-campus housing.
• $30 million were used for tuition discounts.
• $397 million were used for other purposes.

A copy of the blog post is found at: https://content.govdelivery.com/accounts/USED/bulletins/2f109ee

Senate confirms James Kvaal for Under Secretary of Education

On Sept. 14, 2021, the Senate voted 58 to 37 to confirm James Kvaal for Under Secretary of Education, which represents the top higher education policy role. Nine Republicans joined all of their Democratic colleagues to vote for Mr. Kvaal’s nomination. With his confirmation complete, Mr. Kvaal will be sworn in as Under Secretary of Education.
Secretary of Education released a statement following the confirmation saying:

“James Kvaal, the nation’s new Under Secretary of Education, has a deep understanding of the strengths, needs, and challenges in postsecondary education. This is critical at a time when increasing college access, affordability, and completion is key in helping America build back better. With this confirmation, the Biden Administration and the American people gain a dedicated and distinguished public servant with strong expertise in higher education who will always put students first.”

A copy of the press release is found at: https://www.ed.gov/news/press-releases/statement-secretary-miguel-cardona-confirmation-james-kvaal-under-secretary-education

FSA COO Cordray outlines student aid priorities

A number of publications reported that on Sept. 16, 2021, Chief Operating Officer (COO) of Federal Student Aid (FSA) Richard Cordray addressed the participants at the 2021 Education Finance Conference where he described his priorities. Mr. Cordray talked about four issues where the challenge of helping to finance higher education has been altered by the COVID-19 pandemic. First, FSA is implementing two new laws about accessing federal student aid that will be a “sea change in the process for approximately 19 million students and families who fill out this essential form each year.” Mr. Cordray also pointed out that they are seeing the negative effects of the pandemic on enrollment and there is much concern because the downward trend seems to be continuing this year.

Second, FSA is beginning to prepare for what may be a significant new phase for the Federal Family Education Loan (FFEL) program. Because of the pause in collections, times are challenging for guaranty agencies who hold FFEL portfolios and many are exiting the program leaving fewer guaranty agencies to bear a larger share of the remaining FFEL loans. He noted that this is not sustainable and FSA is looking for a resolution.

Third, Mr. Cordray said that the federal student loan payment pause has been challenging for the Federal Direct Loan program, especially when it comes to communicating mixed messages to borrowers as a result of many “false starts.” Mr Cordray also said that FSA is working to increase federal student loan servicing performance and accountability. “Some servicers have decided to exit the program rather than contend with these new realities,” he said.

Fourth, he said that restarting monthly student loan payments next February for tens of millions of borrowers, after almost a two-year pause, will be a “unique and unprecedented” task for the Department. He noted that many borrowers will not be eager to return to repayment when they have been led to believe or hope that there will be student loan forgiveness.

FSA announces designation of the U.S. Treasury as an entity that may use FAFSA data

On Sept. 16, 2021, Federal Student Aid (FSA) announced the designation of the U.S. Treasury under section 483(a)(3)(E) of the Higher Education Act of 1965, as an entity that may use Free Application for Federal Student Aid (FAFSA) data. Under section 483(a)(3)(E) of the HEA, data collected through the FAFSA may only be used for the application, award, and administration of HEA, Title IV program aid, State aid, or aid awarded by eligible institutions or entities designated by ED.

This designation permits institutions of higher education (IHEs) to use FAFSA data to aid in the administration of the Child Tax Credit and Economic Impact Payments. However, institutions should limit FAFSA data use to only the necessary data and method required to inform their student population and, if needed, verify eligibility for the Child Tax Credit or Economic Impact Payment.

A copy of the announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-09-16/designation-us-department-treasury-under-section-483a3e-higher-education-act

GAO concludes that FSA is understaffed

On Sept. 20, 2021, the Government Accountability Office (GAO) released a publication titled, “Higher Education: Office of Federal Student Aid is Beginning to Identify and Address Its Workforce Needs,” concluding that FSA is understaffed. From FY 2010-2019, the Direct Loan volume increased 450 percent and the number of borrowers increased 150 percent, but the number of staff increased only 6 percent. As a result, a workforce assessment showed that FSA did not complete about 20 percent of its workload in FY 2020.

FSA began addressing the staffing shortage during the last fiscal year by increasing its hiring and prioritizing hiring for certain critical positions. It also reorganized 15 offices that reported to the chief operating officer into five new offices that report to a deputy chief operating officer, as well as a temporary office focused on building Next Gen, the new student loan servicing system.

A copy of the GAO report is found at: https://www.gao.gov/products/gao-21-542r

Senate ready to vote to consider Chopra nomination to serve as director of the CFPB

On Sept. 21, 2021, the Senate voted to discharge the nomination of Rohit Chopra out of the Senate Banking, Housing, and Urban Affairs Committee to serve as the next Director of the Consumer Financial Protection Bureau (CFPB). The vote, along party lines, was 49 to 48. The vote clears the way for a floor vote. Mr. Chopra previously served as CFPB’s Student Loan Ombudsman from 2010 to 2015 before being confirmed as a commissioner on the Federal Trade Commission (FTC), a position held since May 2018.

Consumer groups urge Education Secretary to forgive the student loan debt of public servants

On Sept. 22, 2021, more than 200 consumer and public interest groups sent a letter to Secretary of Education Miguel Cardona urging him to forgive the student loan debt of public servants. The letter also says that the Department of Education must also guaranty that any and all charges to the Public Service Loan Forgiveness Program (PSLF) are both retroactive and prospective.

A copy of the letter is found at: https://protectborrowers.org/wp-content/uploads/2021/09/FINAL-SIGNERS-Coalition-PSLF-RFI-Letter.pdf

FSA provides update on ED’s implementation of the STOP Act

On Sept. 23, 2021, Federal Student Aid (FSA) provided a brief update on the Department of Education’s implementation of the Stop Student Debt Relief Scams Act (STOP Act) of 2020. On Sept. 10, 2021, ED published a notice in the Federal Register discussing policies for third-party access to students’ financial aid records. ED issued a reminder that the criminal penalties associated with the STOP Act only apply to those who access systems for the purposes of “obtaining criminal advantage or private financial gain, or in furtherance of any criminal or tortious act.”

A copy of the announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-09-23/update-stop-student-debt-relief-scams-act-stop-act-implementation#

A copy of the Federal Register notice is found at: https://www.govinfo.gov/content/pkg/FR-2021-09-10/pdf/2021-19536.pdf

FSA distributes FY2018 official cohort default rates

On Sept. 27, 2021, Federal Student Aid (FSA) distributed the FY 2018 official cohort default rate (CDR) notification packages. On Sept. 29, 2021, the Department of Education released the FY 2018 cohort default rates. The FY 2018 cohort default rate is 7.3 percent with public institutions having a cohort default rate of 7 percent, private nonprofit institutions having a cohort default rate of 5.2 percent, and proprietary institutions having a cohort default rate of 11.2 percent. The cohort default rates are down from last year’s FY 2017 cohort default rate with percentages in that cohort being 9.3 percent for public institutions, 6.7 percent for private nonprofit institutions, and 14.7 percent for proprietary institutions.

A copy of the Sept. 27, 2021 announcement is found at https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-09-27/fy-2018-official-cohort-default-rates-distributed-sept-27-2021

A copy of the Sept. 29, 2021 announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-09-29/national-default-rate-briefing-fy-2018-official-cohort-default-rates

ED releases list of members for the Negotiated Rulemaking on Affordability and Student Loans committee

On Sept. 28, 2021, the Department of Education’s Office of Postsecondary Education released the list of the members for the upcoming negotiated rulemaking on Accountability and Student Loan committee. The Department will be reviewing and updating regulations on closed school discharge, interest capitalization, Public Service Loan Forgiveness, borrower defense to repayment, pre-dispute arbitration, and income-driven repayment plans.
Information on negotiated rulemaking can be found at: https://www2.ed.gov/policy/highered/reg/hearulemaking/2021/index.html

Senate rejects Continuing Resolution after House passes short-term Continuing Resolution

On Sept. 28, 2021, the Senate rejected a motion for cloture and ended debate on H.R. 5305, the Extending Government Funding and Delivering Emergency Assistance Act, by a vote of 48 to 50. All Republicans opposed the short-term Continuing Resolution (CR). On Sept. 21, 2021, the House passed H.R. 5305, by a vote of 220-211. The short-term CR would extend funding for the federal government through December 3, 2021. The bill would also raise the debt limit to avoid a default when the Department of Treasury reaches the limit of its borrowing authority. The CR now goes to the Senate, which needs at least 10 Republicans to pass. If the bill does not pass the Senate, the House and Senate Democrats will have to come up with another plan to keep the federal government open past the start of the fiscal year on October 1, 2021, while avoiding a debt default.

CFPB announces a Consent Order with Better Future Forward, Inc. regarding Income Share Agreements

The Consumer Financial Protection Bureau (CFPB) announced a Consent Order with Better Future Forward, Inc. (BFF), which provides funding to students to finance their higher education through Income Share Agreements (ISA). The ISA requires students to pay a percentage of their income for a set period of time or until they reach a payment cap. CFPB found that BFF engaged in deceptive acts and practices by claiming ISAs were not loans. According to CFPB, BFF was misleading students because ISAs are credit products subject to federal consumer protection laws. CFPB said that the company was denying students important information required of loans such as disclosure statements required under Regulation Z. In addition, CFPB found that the BFF’s payment cap mechanism imposed a prepayment penalty in violation of the Truth in Lending Act.

A copy of the Consent Order is found at: https://files.consumerfinance.gov/f/documents/cfpb_better-future-forward-inc_consent-order_2021-09.pdf

Congress clears CR to avert a government shutdown

Congress averted a government shutdown by passing a Continuing Resolution (CR) that will keep the federal government open until Dec. 3, 2021.

CFPB Director selects leader of Enforcement Division

Director of the Consumer Financial Protection Bureau (CFPB) Rohit Chopra selected Eric Halperin, a former U.S. Justice Department of Justice official during the Obama Administration, to lead CFPB’s Division of Enforcement. Mr. Halperin worked in the Department’s Civil Rights Division from 2010 to 2014. He also worked at the Center for Responsible Lending.

NC-SARA data show enrollment surge in distance education

According to an Annual Report from the National Council for State Authorization Reciprocity Agreements (NC-SARA), student enrollment in exclusively distance education saw a significant increase in 2020 due to institutions offering courses virtually that would have normally been offered on-campus. Around 5.8 million college students were enrolled only in distance education in SARA-participating institutions in fall 2020, nearly double the number of students who were exclusively enrolled the previous year.

Among the findings, 66.5 percent of the total number of students who were exclusively enrolled in distance education were at public institutions; 23.4 percent of the total number of students who were exclusively enrolled in distance education were at private, nonprofit institutions; and 10.1 percent of the total number of students who were exclusively enrolled in distance education were at for-profit institutions.

A copy of NC-SARA’s press release is found at: https://nc-sara.org/news-events/latest-nc-sara-report-shows-dramatic-rise-exclusively-distance-education-enrollment

FSA asks Financial Aid Administrators to look for AGI errors in 2022-2023 FAFSA

On Sept. 30, 2021, Federal Student Aid (FSA) announced that if FAFSA filers use the Internal Revenue Service (IRS) Non-Filer Portal (NFP), then subsequently file a 2020 tax return, then use the IRS Data Retrieval Tool (DRT) to transfer their tax information into the 2022-2023 FAFSA form, the system will incorrectly report an Adjusted Gross Income (AGI) of $1. The error could result in a lower Expected Family Contribution (EFC) and a higher Pell Grant award for students who would not otherwise be eligible. The announcement advises Financial Aid Administrators (FAAs ) to identify all instances of $1 AGIs for 2022-2023 FAFSA files and follow-up with applicants to resolve the issue.

On Sept. 30, 2021, FSA also advised FAAs about potential issues for the 2022-2023 FAFSA filers deriving income from unemployment benefits, which were made non-taxable by the American Rescue Plan (ARP). Tax filers who received unemployment benefits in 2020 and filed taxes prior to the March 11, 2021, enactment of the ARP will have a higher AGI on their original tax record compared to those who filed after the enactment of the ARP.

FSA said that it expects to see an issue with aid eligibility for some 2022-2023 filers as well as Income-Driven Repayment (IDR) applicants for whom loan payment amounts are based on 2020 tax information. FAAs are urged to work with applicants affected by the ARP who filed their taxes before March 11, 2021.
Copies of the two announcements are found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-09-30/irs-data-retrieval-tool-and-potential-inaccurate-1-adjusted-gross-income-2022-23-fafsa-form and https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-09-30/impact-american-rescue-plan-change-tax-treatment-unemployment-benefits-student-aid-eligibility-cycle-2022-23

Senate confirms Chopra to serve as Director of the CFPB

On Sept. 30, 2021, the Senate voted to confirm the nomination of Rohit Chopra to serve as the next Director of the Consumer Financial Protection Bureau (CFPB). The vote, along party lines, was 50 to 48. Mr. Chopra previously served as CFPB’s Student Loan Ombudsman from 2010 to 2015 before being confirmed as a commissioner on the Federal Trade Commission (FTC), a position held since May 2018.

House Education and Labor Subcommittee holds hearing on closed school discharges

On Sept. 30, 2021, the House Education and Labor Subcommittee on Higher Education and Workforce Investment held a hearing titled, “Protecting Students and Taxpayers: Improving the Closed School Discharge Process.” In her opening statement, Subcommittee Chair Frederica Wilson (D-FL) said that in the last decade, at least five large for-profit college chains have collapsed, leaving tens of thousands of students with significant loan debt, often without degrees. Chair Wilson said that in 2017, the U.S. Government Accountability Office (GAO) found that students who transferred their credits from for-profit schools to public schools lost 94 percent of their credits. For many students, applying for a full discharge of their federal student loans is often the best option because it reduces their financial burden and restores their eligibility for federal student aid. Chair Wilson said that the closed school discharge process should be simple to understand and easy to navigate for students, but GAO’s findings show that this is not the case.

In his opening statement, Subcommittee Ranking Member Gregory Murphy (R-NC) said that when a college closes, thousands of students are thrown out of their academic path, and are often left with thousands of dollars in debt. Congressman Murphy said that students deserve protection and should not face the financial burden of their debt when their school closes. He concluded that the best case scenario is when a school closes, students should have the option to continue their program at another college.

A copy of the GAO report titled “College Closures: Many Impacted Borrowers Struggled Financially Despite Being Eligible for Loan Discharges,” is found at: https://www.gao.gov/products/gao-21-105373

ED publishes an intent to establish neg reg on 90/10

On Oct. 4, 2021, the Department of Education published a notice in the Federal Register announcing its intention to establish a negotiated rulemaking committee to regulate 90/10. Section 2013 of the American Rescue Act of 2021 (ARP) amended Section 487(a)(24) of the Higher Education Act (HEA) to require that a proprietary institution derive at least 10 percent of its revenues from sources that are not federal education assistance funds. Section 2013(c)(2) of the ARP provides that regulations developed and published on 90/10 by the Department will not be effective until on or after January 1, 2023.

ED will be holding virtual public hearings in Oct. 2021 and would like to receive comments on or before November 3, 2021.

A copy of the Federal Register notice is found at: https://www.govinfo.gov/content/pkg/FR-2021-10-04/pdf/2021-21505.pdf

ED holds five meetings of its Affordability and Student Loans neg reg committee

During the week of Oct. 4-8, 2021, the Department of Education held five meetings of its Affordability and Student Loans negotiated rulemaking committee, which has been formed to revise certain federal regulations. The committee considered improvements for granting total and permanent disability discharges, improving borrower access to closed school discharges, eliminating interest capitalization for certain capitalizing events, improving the Public Service Loan Forgiveness Program application process, determining employer eligibility and defining full-time employment for the Public Service Loan Forgiveness Program, improving the adjudication process for borrower defense to repayment claims, pre-dispute arbitration and class action waivers, creating a new income-driven repayment plan, and improving borrower access to false certification discharges.

Information on the Department’s neg reg process for 2021-2022 is found at: https://www2.ed.gov/policy/highered/reg/hearulemaking/2021/index.html

FTC holds a press conference announcing that bad actors at for-profit colleges will pay a price for breaking the law

On Oct. 6, 2021, the Federal Trade Commission (FTC) held a press conference and issued a press release announcing that it is “resurrecting its Penalty Offense Authority, found in Section 5 of the FTC Act to ensure that [for-profit institutions that are] bad actors pay a price when they break the law.” The FTC announced that it sent a Notice of Penalty Offenses to the 70 largest for-profit institutions based on enrollment and revenue. The FTC stated that it is working with the Department of Education and Department of Veterans Affairs on enforcement. During the press conference, the FTC stated that for-profit institutions that did not receive the notice are still subject to FTC oversight. The FTC also said it only had jurisdiction over for-profit entities but may bring enforcement action against nonprofit institutions that conduct business with for-profit entities.

A copy of the press release is found at: https://www.ftc.gov/news-events/press-releases/2021/10/ftc-targets-false-claims-profit-colleges

ED announces overhaul of Public Service Loan Forgiveness Program

On Oct. 6, 2021, the Department of Education announced that it will overhaul the Public Service Loan Forgiveness (PSLF) program using its authority granted under the Higher Education Relief Opportunities for Students Act of 2003 to temporarily suspend some of the current program requirements in order to help public service workers who have been impacted by the COVID-19 pandemic. According to the Department’s announcement, the Department will provide a time-limited waiver so that student borrowers can count payments from all federal loan programs or repayment plans toward forgiveness, including payments made on loans under the Federal Family Education Loan Program (FFELP) and the Perkins Loan Program.

According to the Fact Sheet released by the Department, the Department will:

• Implement a limited PSLF waiver to count all prior payments made by student borrowers toward PSLF, regardless of loan program.
• Simplify what it means for a payment to qualify for PSLF.
• Eliminate barriers for military service members to receive PSLF.
• Automatically help service members and other federal employees access PSLF.
• Review denied PSLF applications and identify and correct errors in PSLF processing.
• Improve outreach and communication with PSLF-eligible borrowers.
• Simplify the PSLF application process.
• Make long-term improvements to PSLF through rulemaking.
• Better communicate with borrowers as to what they need to know.

A copy of the announcement is found at: https://www.ed.gov/news/press-releases/fact-sheet-public-service-loan-forgiveness-pslf-program-overhaul

Congresswoman Virginia Foxx (R-NC), Ranking Member of the House Education and Labor Committee, and Congressman Greg Murphy (R-NC) sent a letter to Secretary of Education Miguel Cardona on Oct. 5, 2021, indicating they agree that there are problems with the PSLF program, but questioned the legality of the Biden Administration’s unilateral changes to it. Congresswoman Foxx sent a letter to Chairman of the House Education and Labor Committee Bobby Scott (D-VA) requesting a public hearing by the Committee to examine the Education Department’s unilateral action regarding the Public Service Loan Forgiveness program.

A copy of the letter to Secretary Cardona is found at: https://republicans-edlabor.house.gov/news/documentsingle.aspx?DocumentID=407764

A copy of Congresswoman Foxx’s letter to Chairman Scott is found at: https://republicans-edlabor.house.gov/uploadedfiles/pslf_fix_letter_to_rcs.pdf

ED establishes enforcement office

On Oct. 8, 2021, the Department of Education announced that it was establishing an Office of Enforcement within the Federal Student Aid. “The Office of Enforcement will strengthen oversight of and enforcement actions against postsecondary schools that participate in the federal student loan, grant, and work-study programs. The Department’s action restores an office that was first established in 2016 but was deprioritized in the Trump Administration.

The Office of Enforcement will be led by Kristen Donoghue, who will report to FSA Chief Operating Officer Richard Cordray. Ms. Donoghue previously worked as the enforcement director of the Consumer Financial Protection Bureau (CFPB), where she led a 140-person office responsible for enforcement of federal consumer financial laws governing financial services companies including the largest banks in the country.

The Office of Enforcement will proactively identify and address major problems across institutions that pose widespread risks to students and taxpayers. The office will work closely with the Partner Participation and Oversight Office.

A copy of the announcement is found at: https://www.ed.gov/news/press-releases/us-department-education-establish-enforcement-office-within-federal-student-aid

A copy of the FSA announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-10-08/federal-student-aid-establish-enforcement-office-and-enhance-federal-and-state-oversight-partnerships

Foxx and Keller request information from ED on prolonged application delays for for-profit institutions converting to nonprofit status

On Oct. 15, 2021, Ranking Member of the House Education and Labor Committee Virginia Foxx (R-NC) and Congressman Fred Keller (R-PA) sent a letter to Secretary of Education Miguel Cardona raising concerns about delays in applications submitted by institutions of higher education to convert from proprietary institutions to nonprofit status or to undergo a change of ownership. The members wrote in their letter: “While we appreciate the Department working to improve the thoroughness of its review, there still appears to be a significant delay in that review. Further, this spring, an institution saw its post-transaction conversion request denied five years after its initial request was submitted to the Department.” The members sought information from the Department so that the members could assess the Department’s current capacity to process change of control applications in a timely manner.

A copy of the press release which includes the text of the letter is found at: https://republicans-edlabor.house.gov/news/documentsingle.aspx?DocumentID=407781

ED increases servicer performance, transparency, and accountability before loan payments restart

On Oct. 15, 2021, the Department of Education announced stronger standards for performance, transparency, and accountability for its student loan servicers aimed at protecting borrowers. Six loan servicing companies, Great Lakes, HESC/EDfinancial, MOHELA, Navient, Nelnet, and OSLA Servicing, will be held to these higher standards starting early next year. The new contract terms give Federal Student Aid (FSA) greater ability to monitor and address servicing issues as they arise.

Great Lakes, HESC/Edfinancial, MOHELA, Nelnet, and OSLA signed agreements to extend their services to December 2023. Navient also signed a contract extension, although the Department recently agreed to transfer the Navient portfolio to Maximus.

A copy of the announcement is found at: https://www.ed.gov/news/press-releases/us-department-education-increases-servicer-performance-transparency-and-accountability-loan-payments-restart

Senate Appropriations Committee releases text of the FY 2022 Labor, HHS, Education Appropriations Act

On Oct. 17, 2021, the Senate Appropriations Committee released a draft text of the Senate’s FY 2022 Labor, Health and Human Services, Education, and Related Agencies Appropriations Act. The Senate is far behind the House in beginning the appropriations process. It is not expected that it will be formally marked up but its spending levels will be used as a starting point for negotiating between the Senate and House. The bill includes the following:

• Sets the maximum Pell Grant award at $6,895, an increase of $400 over the FY 2021 enacted level. The funding is the same as provided in the House-passed bill and the President’s request.
• Establishes $905 million for the FSEOG program.
• Establishes $1.23 billion for the FWS program.

A number of statements were made in the committee report:

• The Committee is concerned by the significant number of institutions of higher education that in recent years have committed fraud, abuse, substantial misrepresentation, or other misconduct, or have abruptly closed. The Committee directs the Department of Education to develop procedures for holding executives, owners, and board members liable for such misconduct and closures.
• The Committee notes the Consolidated Appropriations Act, 2018, modified in FY 2019, provides institutions of higher education with clear authority to provide information from a student’s FAFSA to certain scholarship organizations, with the consent of the applicant, to help students apply for and receive student aid and state and federal means-tested benefits. These provisions have not been widely utilized because of lack of guidance from the Department. The Committee directs the Department to publish guidance on this provision within 90 days of enactment of this act.
• The Committee has been concerned about the low level of staffing in, and the utilization of, the Student Aid Enforcement Unit, which is critical to fighting fraud and abuse. The Committee supports the Department’s recent announcement to establish an Office of Enforcement within FSA to identify and address major problems across institutions of higher education that pose widespread risk to students and taxpayers. The Committee expects FSA to robustly staff this office and requests a briefing within 60 days.
• The Committee recognizes the significance of restoring Pell Grant access for incarcerated individuals and the positive impact that will result in reestablishing prison education programs across the country. The Committee encourages the Department to use the expertise and best practices from the Second Chance Pilot in its efforts to develop regulations for full Pell Grant reinstatement in the current negotiated rulemaking process.
• The Committee is concerned about the low rate of approval of Department of Defense (DoD) employees for PSLF. Accordingly, the Committee strongly supports the Department’s recent announcement to enter into data-matching agreements with other federal agencies, including DoD, to automatically give credit towards loan forgiveness and to identify borrowers who may also be eligible.
• The Committee continues to encourage the Department to pursue efforts to simplify and streamline the Return of Title IV Funds process for institutions of higher education and students.
• The Committee continues to require the Department to retain multiple contractors in the current and future student loan servicing environment, evaluate such contractors based on their performance, and hold such contractors accountable for noncompliance.

A copy of the press release with the text of the Senate bill is found at: https://www.appropriations.senate.gov/news/majority/chairman-leahy-releases-remaining-nine-senate-appropriations-bills

FSA announces that registration is open for the 2021 Virtual Federal Student Aid Training Conference

On Oct. 18, 2021, Federal Student Aid (FSA) announced that registration is open for the 2021 Virtual Federal Student Aid Training Conference. The 2021 Virtual Federal Student Aid Training Conference will be held November 30, 2021, to December 2, 2021, and will be delivered virtually.

A copy of the announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-10-18/2021-virtual-federal-student-aid-training-conference-registration-now-open#

FSA Chief makes statement regarding loan servicer contracts

On Oct. 20, 2021, the Federal Student Aid Chief Operating Officer, Rich Cordray announced that FSA has approved the request for Maximus to assume the Navient loan servicing contract. FSA is confident that this decision is in the best interest of the 5.6 federal student loan borrowers who will be serviced by Maximus. FSA, Navient, and Maximus will communicate directly with borrowers about how this change affects them.

A copy of the announcement is found at: https://www.ed.gov/news/press-releases/statement-federal-student-aid-chief-operating-officer-rich-cordray-regarding-loan-servicer-contracts

FSA notifies institutions that federal share of Perkins Funds must be returned to ED

On Oct. 22, 2021, Federal Student Aid (FSA) issued an announcement that after the FISAP is filed by Oct. 1, 2021, the Department will notify all institutions that have cash in the institution’s Perkins Fund regarding the distribution of assets process. The notification will communicate the amount of funds, both the federal and institutional shares, that must be removed and returned to the Department and to the institution, respectively. Only the federal share the Department requests to be returned should be remitted through G5 by the deadline communicated in the notification.

A copy of the announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-10-22/perkins-loan-program-federal-perkins-loan-revolving-fund-distribution-assets-timeline-2021-22-and-reimbursement-perkins-loan-service-cancellations

Department holds public hearings on for-profit 90/10 rule

On Oct. 26-27, 2021, the Department of Education held two public hearings on regulatory changes to the 90/10 rule in preparation for negotiated rulemaking on the rule. The American Rescue Plan Act of 2021, signed into law in March 2021, broadened the 90 percent component to include all federal education benefit programs, such as Department of Defense Tuition Assistance and VA benefits, which will go into effect in 2023. Currently, the 90 percent cap includes only Title IV funds. Under the new law, if a for-profit institution fails to collect at least 10 percent of its revenue from nonfederal sources for two consecutive years, it loses its eligibility to participate in Title IV programs for at least two years.

Advocates of the change allege that bad-acting for-profit institutions have used deceptive practices to recruit military service members and veterans to their colleges and are applauding the change in the law. Both supporters and opponents of the new law have urged the Department to carefully define the statutory text in developing regulations.

FSA posts quarterly portfolio reports to FSA data center

On Oct. 26, 2021, Federal Student Aid (FSA) announced that it posted new quarterly portfolio reports on its FSA Data Center. The reports continue to reflect the pandemic flexibilities applied during the pandemic to borrower accounts. Some of the key findings are:

• As of June 30, 2021, the outstanding federal student loan portfolio is $1.59 trillion, representing 42.8 million student aid recipients. Direct Loans now represent 85 percent of the portfolio.
• As a result of the pandemic flexibilities for student loans, the number of recipients in repayment status has fallen sharply over the last 15 months. Less than 500,000 Direct Loan recipients were in repayment as of June 30, 2021, compared to 18.1 million recipients in March 2020.’With almost all federal student loan borrowers in forbearance, no Direct Loan borrowers entered default during this period.
• Borrowers are allowed to seek cancellation of their loans if their school misled them or engaged in illegal misconduct. In March 2021, the Department announced adoption of a streamlined approach to granting full relief rather than partial relief for approved borrower defense claims. The June report shows the impact, with processed discharges now totaling almost $1.1 billion, compared to $575 million in March 2021.

A copy of the announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2021-10-26/federal-student-aid-posts-quarterly-portfolio-reports-fsa-data-center

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.