Washington News Brief

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

Higher education groups send letter to House and Senate Appropriations committee leaders urging them to protect Pell Grant spending and to restore year-round Pell Grants

On Oct. 21, 2016, over 30 student advocacy and higher education groups sent a letter to House and Senate Appropriations Committee leaders urging them to protect Pell Grant funding and to restore year-round Pell Grants. “Raiding Pell to fund other programs would exacerbate student debt and limit opportunity for the very students who most need a college education to advance in our economy and society.” The letter goes on to state: “As you make decisions on funding levels in the FY 2017 omnibus bill, we urge your leadership to reject any and all efforts to take funding from the Pell Grant program.”

A copy of the letter is found at: http://www.ticas.org/sites/default/files/pub_files/pell_coalition_letter_october_2016.pdf

President signs into law H.R. 5985 that supports Veterans impacted by ACICS’ loss of recognition

On Sept. 29, 2016, President Obama signed H.R. 5985 into law (P.L. 114-228). On Sept. 19, 2016, the Senate passed H.R. 5985, the Department of Veterans Affairs Expiring Authorities Act of 2016, by a vote of 89-0, and on Sept. 13, 2016, the House passed the bill by voice vote. The bill includes a provision allowing GI Bill education benefits to continue to flow to student veterans for up to 18 months after the Department of Education withdraws the recognition of the accrediting agency of its schools. H.R. 5985 passed the House on Sept. 13, 2016. The bill mirrors existing 18-month protections for students who receive Title IV funds from the Department of Education.

Senator Carper releases report highlighting harm to student veterans caused by closure of for-profit institutions

On Oct. 21, 2016, Senator Tom Carper (D-DE) released a report titled, “Education Denied: The Importance of Assisting Veterans Harmed by School Closures,” that showed that a “significant” impact on veterans and families resulted from the closure of ITT Tech and Corinthian Colleges. According to the report, ITT Tech and Corinthian Colleges received more than $1 billion combined from taxpayers through the Post-9/11 GI Bill since 2009 and that, since 2013, almost 9,000 veterans were pursuing their education at the now-closed institutions. While the Department of Education has discharged student loans from those schools that closed, there is no comparable protection for student veterans utilizing Post-9/11 GI Bill benefits. The report recommended that Congress and the Department of Veterans Affairs should take steps to ensure that comprehensive relief is available to veterans and their families when schools abruptly close so that they do not permanently lose their benefits.

According to Senator Carper’s press release of Oct. 21, 2016: “Our nation’s veterans have earned their GI Bill benefits and they deserve to attain a high-quality education. It is unfathomable to me that these brave men and women, who volunteered to serve their country in a time of war, are now being left in the lurch by some of the largest recipients of Post-9/11 GI Bill taxpayer dollars.”

A copy of the press release is found at: http://www.carper.senate.gov/public/index.cfm/pressreleases?ID=748CEC10-2B05-4677-9009-F788282FB040. A link to the report is included in the press release.

Senator Murray sends letter to Secretary King requesting restoration of Pell Grant eligibility to students who had attended Corinthian Colleges and ITT Tech; Congressman Messer follows with similar letter

On Oct. 6, 2016, Senator Patty Murray (D-WA), Ranking Member of the Senate Committee on Health, Education, Labor and Pensions, sent a letter to Secretary of Education John B. King, Jr., asking him to restore Pell Grant eligibility to students whose schools closed while they were in attendance, such as Corinthian Colleges and ITT Tech. Senator Murray pointed to Sec. 437(c)(3) of the Higher Education Act (HEA), that would give the Department the statutory authority to restore Pell Grant eligibility to low-income students who were unable to complete a program due to the closing of their school.

A copy of Senator Murray’s letter to the Secretary is found at: http://www.help.senate.gov/ranking/newsroom/press/higher-ed-sen-murray-urges-dept-of-education-to-use-authority-to-restore-pell-grant-eligibility-to-students-impacted-by-closures-of-itt-tech-and-corinthian-colleges

On Oct. 11, 2016, Congressman Luke Messer (R-IN) sent a similar letter to Secretary King reiterating that the Secretary had the authority to “reset or restore Pell Grant benefits to any students who were unable to complete a course of study at an institution because of closure of the institution” under Section 437(c)(3) of the HEA.

A copy of Congressman Messer’s press release regarding the letter is found at: https://messer.house.gov/media-center/press-releases/rep-messer-urges-dept-of-education-to-restore-pell-grant-eligibility-to

Senator Warren sends letter to ED arguing that ED is collecting on loans despite promise to forgive loans

On Sept. 29, 2016, Senator Elizabeth Warren (D-MA) sent a letter to Secretary of Education John B. King, Jr. advising him of new data uncovered by an investigation conducted by her staff relating to the treatment of students who had attended Corinthian Colleges. The data suggest that instead of “focusing on getting these students the relief that they are entitled to under the federal law, the Department’s student loan bank – working with its loan servicers and debt collectors – is instead intentionally collecting on debt that it knows may be eligible for discharge.” The letter says that of the almost 80,000 former students who are eligible for debt relief, less than 4,000 have had their loans forgiven. The letter goes on to say: “It is unconscionable that instead of helping these borrowers, vast numbers of Corinthian victims are currently being hounded by the Department’s debt collectors – many having their credit slammed, their tax refunds seized, their Social Security and Earned Income Tax Credit (EITC) payments reduced, or their wages garnished – all to pay fraudulent debts that, under federal law and the Department’s own policies, are likely eligible for discharge and thus, invalid.” Senator Warren concluded that instead of pushing the victims into debt collection, the Department should be standing up for these students.

A copy of Senator Warren’s letter is found at: http://www.warren.senate.gov/files/documents/2016-9-29_Letter_to_ED_re_Corinthian_data.pdf

ED announces requirements for new federal loan servicing system

On Oct. 26, 2016, the Department of Education announced that FSA had issued the next phase of its procurement to acquire a single servicing platform to support the management of loan repayment for those with student loan debt serviced by the Department of Education. Under the procurement, one entity will be selected to provide the single servicing platform. A single servicing platform will increase cost efficiencies, improve communications to borrowers, improve oversight of vendors, and provide a common borrower experience. The Department anticipates the servicing contract will be awarded by February 2017.

The announcement is available at: http://www.ed.gov/news/press-releases/us-department-education-announces-requirements-new-federal-loan-servicing-system

ED announces deadline for challenging the draft debt-to-earnings ratios

On Oct. 23, 2016, the Department of Education issued Electronic Announcement #94 announcing that beginning Oct. 24, 2016, institutions will have 45 days to submit challenges to certain underlying loan data used to calculate the draft debt-to-earnings ratios. The final day to challenge is Dec. 7, 2016.

A copy of the Electronic Announcement is found at: https://ifap.ed.gov/eannouncements/102116GEAnnounce94DraftDEChallengePeriod1024to120716.html

ED announces upcoming release of SSA earnings data

On Oct. 7, 2016, the Department of Education released Electronic Announcement #91 that provides information about the upcoming distribution of earnings information obtained from the Social Security Administration (SSA). SSA earnings data will be provided by the NSLDS by program, sorted by CIP code and Credential Level.

A copy of the Electronic Announcement is found at: https://ifap.ed.gov/eannouncements/100716GEAnnounce91SSAEarningsDataRel.html

ED issues notice seeking third-party comments concerning the performance of accrediting agencies under review

On Oct. 14, 2016, the Department of Education issued a notice in the Federal Register seeking written third-party comments concerning the performance of accrediting agencies under review by the Secretary. The review includes the application for an expansion of scope for the Accrediting Bureau of Health Education Schools (ABHES).

A copy of the Federal Register is found at: https://www.gpo.gov/fdsys/pkg/FR-2016-10-14/html/2016-24893.htm

ED announces maximum Pell Grant award for 2017-2018

On Sept. 30, 2016, the Department of Education issued a notice that the maximum Pell Grant award for the 2017-2018 award year will be $5,920. The White House announced it on Sept. 29, 2016. The Pell Grant Payment and Disbursement Schedules will be available by mid-October.

A copy of the Department’s announcement is found at: https://ifap.ed.gov/eannouncements/093016AwardYearMaximumPellGrantAnnounced20172018.html

OIG warns FSA of potential FSA ID fraud

On Sept. 26, 2016, the Department of Education’s Office of Inspector General (OIG) sent a Final Management Information Report to the Office of Federal Student Aid (FSA) warning the FSA of the potential misuse of the FSA ID by third parties. The FSA ID was implemented in May 2015 to provide a modernized login process and to improve security for FSA websites, such as FAFSA on the web. Until May 2015, the FSA personal identification number (PIN), a four-digit number used in combination with the user’s Social Security number, name, and birth date, was used as the electronic signature that provided access to FSA websites. The OIG Report documented the recurring issues it found with the FSA ID.

A copy of the Report is available at: http://www2.ed.gov/about/offices/list/oig/alternativeproducts/x21q0001.pdf

Department unveils database of contracts between colleges and banks

On Oct. 30, 2016, the Department of Education released a database containing the agreements between colleges and universities and banks. The program integrity regulations published on Oct. 30, 2015, effective July 1, 2016, included a provision that required colleges to post contracts with banks and financial institutions online. The Department’s database centralizes the list of contracts.

The Cash Management Electronic Announcement #3 is found at: https://ifap.ed.gov/eannouncements/093016CashMgmtEA3TitleIVCreditBalanceContractURLs.html

ED extends invitation to participate in the loan counseling experiment

On Oct. 3, 2016, the Department of Education issued an electronic announcement extending the invitation to institutions to participate in the loan counseling experiment announced in the Federal Register on Aug. 15, 2016.

The College Board issues 2016 “Trends in Student Aid” and “Trends in College Pricing”

On Oct. 26, 2016, the College Board released its 2016 “Trends in Student Aid” and “Trends in College Pricing.” The latter shows moderate increases in published tuition and fees ranging from 2.2 percent to 3.6 percent across all sectors between 2015-2016 and 2016-2017. According to the report, “tuition and fees are still rising at a faster rate than the financial and family income needed to cover costs.” The “Trends in Student Aid” found that in 2015-2016, loans from federal and nonfederal sources combined constituted 36 percent of the funds used by undergraduates and grants constituted 55 percent of the funds used by undergraduates. Further, federal education tax credits and deductions reach more students than subsidized and unsubsidized Direct Loans combined and reach almost twice as many students as Pell Grant recipients. Total federal loans to graduate students increased by 34 percent between 2005-2006 and 2010-2011, but declined by 17 percent between 2010-2011 and 2015-2016. Average debt for borrowers entering repayment in 2013-2014 with only graduate school debt was $45,890, compared with $19,650 overall.

Copies of the two reports are available at: https://trends.collegeboard.org/college-pricing

TICAS report indicates that loan debt for class of 2015 has increased

The Institute for College Access and Success (TICAS) issued a new report on loan debt from the Class of 2015, which indicated that 68 percent of graduating seniors had student loans with the average debt of $30,100. The percentage of graduating students with student loans was about the same for the Class of 2014, but the average debt rose by 4 percent from last year. According to the report, almost one-fifth or 19 percent of the debt load was private education loans and 47 percent of undergraduates with private education loans did not use the maximum amount of federal loans available.

The report showed that state averages for debt at graduation in 2015 ranged from $18,850 to $36,100. High-debt states are concentrated in the Northeast and Midwest, with low-debt states located in the West.

The report offered the following recommendations:

• Reduce the need to borrow by increasing Pell Grants;
• Help keep loan payments manageable by simplifying and improving the income-driven repayment (IDR) plan;
• Help students and families make informed choices through better data and consumer information (i.e., College Scorecard, net price calculators, shopping sheet, and loan counseling);
• Strengthen college accountability with risk sharing and incentives to improve student outcomes, enforcing policies that complement risk sharing, and ending eligibility for the worst performers; and
• Reduce risky private loan borrowing.

A copy of the TICAS report is found at: http://www.ticas.org/content/pub/student-debt-and-class-2015

Center for American Progress releases report proposing alternative form of accreditation

On Oct. 6, 2016, the Center for American Progress released a report, “A Quality Alternative: A New Vision for Higher Education Accreditation,” that proposes an alternative gatekeeping structure. The report proposes establishing a streamlined, outcomes-focused alternative system for granting access to federal aid dollars. It focuses on outcomes in two specific areas: student results and the provider’s financial health. For both areas, minimum performance thresholds “must be set at ambitious levels that will be difficult for most educational providers to meet.” The outcomes measures will have to address two questions: (1) Do substantial numbers of students who enter an institution end up completing their programs; and (2) do the students who complete find enough success to justify their investment?

At a minimum, the outcome measures are:

• Student completion rate;
• Job placement rate;
• Earnings of graduates such as those making above a minimum threshold; and
• Federal loan repayment rate.

Measures of an organization’s financial health include:

• The number of days the institution could operate with no additional funds or without borrowing;
• The ratio of current assets to liabilities;
• The ratio of debts to assets; and
• The ratio of instructional, student support, and academic support expenses to total expenses.

Finally, the alternative system would create a new business model for third-party organizations that is more independent of institutions. Educational providers would not have to pay fees to a third-party. Instead, third-parties would receive performance-based payments from the federal government.

To access the report, please go to: https://www.americanprogress.org/issues/education/report/2016/10/06/145152/a-quality-alternative-a-new-vision-for-higher-education-accreditation/

During an event sponsored by the Center for American Progress, NASFAA reported in “Today’s News” that Under Secretary Ted Mitchell discussed how the Department of Education’s project, Educational Quality through Innovative Partnerships (EQUIP) program, could lead to innovation in accreditation of non-traditional higher education programs, such as boot camps. EQUIP allows eight applicants to participate in an experiment to allow students to use federal financial aid to attend programs run by colleges and nontraditional providers. A quality assurance entity is assigned to each applicant to serve as an alternative form of accreditation, with an emphasis on student outcomes as a measure of effectiveness.

An Aug. 16, 2016 press release about the EQUIP experiment is found at: http://www.ed.gov/news/press-releases/fact-sheet-ed-launches-initiative-low-income-students-access-new-generation-higher-education-providers

Google to incorporate Department’s College Scorecard in search engine

On Sept. 30, 2016, Google announced how it plans to incorporate data from the College Scorecard into it search engine results. When users search for an individual college, the search engine will display graduation rates, post-college earnings, and updated data on acceptance rate as well as undergraduate tuition and fees. “By surfacing this information directly in Search, people will have access to detailed information and data as they approach decisions about higher education.”

Susie DePianto, Google Senior Program Manager of Education Research, wrote in her blog post, “Now whether they’re looking for average tuition costs with financial aid, searching for a school with a high acceptance rate, or projecting how long it will take to pay off student loans based on the average salary after graduation, Google can provide the first step into deeper research online.”

A copy of the blog post is found at: https://blog.google/topics/education/helping-prospective-students-make-decisions-about-their-future/

Century Foundation releases report that is critical of guaranty agencies

On Sept. 29, 2016, the Century Foundation released a report, “Have Student Loan Guaranty Agencies Lost their Way?” authored by Robert Shireman and Tariq Habash. Mr. Shireman is a former Department of Education official who is currently advising Hillary Clinton’s presidential campaign. The report focused on the operating funds of two nonprofit guaranty agencies, Educational Credit Management Corporation (ECMC), and USA Funds, arguing that more could be done by the two agencies to provide counseling and legal assistance to borrowers “since the money held in trust by legacy student loan guaranty agencies belong to the public.”

In a statement from President of the National Council of Higher Education Resources (NCHER) James Bergeron: “The report misrepresents the important public mission of guaranty agencies, which is to provide a range of timely and effective financial awareness and outreach services and programs for students, families, schools and community organizations that help students gain access to and succeed at postsecondary education.”

A copy of the Century Foundation report is found at: https://tcf.org/content/report/student-loan-guaranty-agencies-lost-way/

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.