Washington News Brief

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

Department releases update to College Scorecard

On Sept. 28, 2017, the Department of Education released an update to the College Scorecard, which tracks institutional statistics, such as earnings and loan repayment rates, so that students and parents can make informed decisions about college. This year’s update allows students and parents to make side-by-side comparisons.

A link to the College Scorecard is found at: https://collegescorecard.ed.gov/

Department releases official FY 2014 Cohort Default Rates

On Sept. 27, 2017, the Department of Education released Official FY 2014 Cohort Default Rates. The cohort default rate increased slightly to 11.5 percent from 11.3 percent. Compared to last year, the cohort default rate for public postsecondary schools stayed at 11.3 percent; the cohort default rate for private nonprofit schools increased from 7.0 percent to 7.4 percent; and the cohort default rate for proprietary schools increased from 15.0 percent to 15.5 percent.

A copy of the Electronic Announcement, which includes a briefing, is found at: https://ifap.ed.gov/eannouncements/092717CDRNationalBriefingsFY14.html

A copy of the Department’s press release is found at: https://www.ed.gov/news/press-releases/us-department-education-releases-national-student-loan-fy-2014-cohort-default-rate

President signs S. 1866, the Hurricanes Harvey, Irma, and Maria Education Relief Act of 2017 into law

On Sept. 29, 2017, President Trump signed into law S. 1866, the Hurricanes Harvey, Irma, and Maria Education Relief Act of 2017, which provides the Department of Education with the authority to assist institutions of higher education affected by or enrolling students affected by recent hurricanes Harvey, Irma, and Maria. The Department will now be permitted to waive a requirement that colleges match SEOG and FWS funds. The bill also requires the Department to reallocate remaining campus-based funds to colleges located in areas damaged by the hurricanes. The Department announced on Sept. 29, 2017 that it has already reallocated excess SEOG funds to schools “directly affected by the 2017 hurricanes.” The Department said that it would provide information about complying with the required allocation of FWS funds to hurricane-affected schools in the near future.

The Electronic Announcement of Sept. 29, 2017 is found at: https://ifap.ed.gov/eannouncements/092917UpdateInfoRelate20172018SupplementalCampusBasedFunds2017Hurricanes.html

Department updates waivers and modifications under the HEROES Act

On Sept. 29, 2017, the Department of Education published a Notice in the Federal Register issuing updated waivers and modifications of statutory and regulatory provisions governing the Federal student financial aid programs under the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act). The waivers and modifications assist individuals who are performing qualifying military service during a war or other military operation, or national emergency; reside or are employed in an area that is declared a disaster area by any Federal, State, or local official in connection with a national emergency; or suffered direct economic hardship as a direct result of a war, or other military operation, or national emergency.

A copy of the Electronic Announcement is found at: https://ifap.ed.gov/eannouncements/092917UpdatedWaivModofStatRegProvHEROESAct.html

A copy of the Federal Register Notice: https://ifap.ed.gov/fregisters/attachments/FR092917UpdatedWaiversAuthoUnderHEReliefOpportforStudentsAct2003HEROESAct.pdf

On Oct. 17, 2017, the Department of Education republished the Notice in the Federal Register, which now includes the definitions of terms used in the document.

A copy of the republished Notice is found at: https://www.gpo.gov/fdsys/pkg/FR-2017-10-17/pdf/2017-22489.pdf

ED provides additional information about the wind-down of the Federal Perkins Loan Program

On Oct. 6, 2017, the Department of Education issued a Dear Colleague letter (GEN-17-10) providing additional information on the wind-down of the Federal Perkins Loan Program as provided in the Perkins Loan Program Extension Act of 2015 (P.L. 114-105). GEN-17-10 describes the expiration of the authority to make new loans and subsequent disbursements. It reminds institutions that “No Perkins Loan disbursements are permitted after June 30, 2018, under any circumstances.” It also describes the distribution of assets and loan assignment procedures.

A copy of the Dear Colleague letter is found at: https://ifap.ed.gov/dpcletters/GEN1710.html

ED announces 2018-2019 FAFSA email campaign launch

On Oct. 12, 2017, Federal Student Aid (FSA) issued an Electronic Announcement indicating that on Oct. 16, 2017, it will begin to send emails to 2017-2018 FAFSA filers who have not yet submitted a 2018-2019 FAFSA. The goal is to make customers aware that the 2018-2019 FAFSA is available. In January 2018, students who are renewal eligible, but have still not submitted a 2018-2019 FAFSA form, will receive an email reminder as they have in prior years.

A copy of the Electronic Announcement is found at: https://ifap.ed.gov/eannouncements/101217FAFSA201819EmailCampaignLaunch.html

The FTC, 11 states, and the District of Columbia announce crackdown on student loan debt relief scams

On Oct. 13, 2017, the Federal Trade Commission (FTC), 11 states, and the District of Columbia announced that they had filed 36 suits and other legal actions against companies accused of making false promises of debt relief and collecting illegal fees from student loan borrowers. The FTC action, which is called “Operation Game of Loans,” is coordinated with state attorneys general and includes five new cases filed against 30 defendants in which the FTC alleges that debt relief firms “used deception and false promises” such as charging consumers illegal upfront fees, falsely promising to help cut or forgive student loan debt, and pretending to be affiliated with the federal government and loan servicers.

A copy of the FTC statement is found at: https://www.ftc.gov/news-events/press-releases/2017/10/ftc-state-law-enforcement-partners-announce-nationwide-crackdown

52 House members request support from the Department of Education for student loan borrowers in Puerto Rico and U.S. Virgin Islands

On Oct. 16, 2017, 52 House members, led by Representatives José E. Serrano (D-NY), Nydia Velázquez (D-NY), Stacey Plaskett (VI-At-Large), and Jenniffer González-Colón (PR-At-Large), sent a letter to Secretary of Education Betsy DeVos urging her to do more to help student loan borrowers in Puerto Rico and the U.S. Virgin Islands that have been affected by Hurricanes Maria and Irma. Congressman Serrano said: “The Department must live up to its obligations to provide borrowers with as much assistance as possible as they rebuild their lives and communities.” Congresswoman Velázquez said: “Ensuring graduates, teachers and students can secure forbearance on their student loans would be one important step in helping alleviate hardship facing these U.S. citizens.” The letter stated that “the Department has made little to no effort to provide any administrative reprieve to the islands’ large population facing student loan repayment notices as they cope with the loss of loved ones, the destruction of their homes, work layoffs and furloughs.” They also are seeking an interest-free mandatory administrative forbearance to “ensure borrowers are not adversely affected during this difficult time.”

A copy of the press release and letter is found at: https://serrano.house.gov/media-center/press-releases/serrano-vel-zquez-plaskett-gonz-lez-col-n-send-letter-urging-devos

Chairman Hensarling praises Secretary DeVos’ decision to end ED’s relationship with the CFPB

An Oct. 16, 2017 article in The Hill reported that on Oct. 15, 2017, House Financial Services Committee Chairman Jeb Hensarling (R-TX) sent a letter to Secretary of Education Betsy DeVos praising her for ending the Department’s partnership with the Consumer Financial Protection Bureau (CFPB). Chairman Hensarling said that her decision was “necessary and appropriate” to curb CFPB’s “overreach into the education field.” On Aug. 31, 2017, Kathleen Smith, Acting Assistant Secretary, Office of Postsecondary Education, and Dr. A. Wayne Johnson, Chief Operating Officer, Federal Student Aid, sent a letter to Richard Cordray, Director of the CFPB, notifying him of the Department’s intent to terminate two Memoranda of Understanding (MOUs) between the Department of Education and the CFPB regarding the sharing of information in connection with oversight of federal student loans.

A copy of the article in The Hill is found at: http://thehill.com/policy/finance/355647-hensarling-praises-devos-decision-to-end-partnership-with-consumer-bureau

Secretary DeVos releases statement on President’s Task Force on Apprenticeship Expansion

On Oct. 16, 2017, Secretary of Education Betsy DeVos released a statement on the announcement of new members to the President’s Task Force on Apprenticeship Expansion. Secretary DeVos said: “Apprenticeships have the potential to offer America’s students the hands-on education needed for today’s in-demand jobs, and expanding these opportunities will prepare them for success in the 21st century economy.”

A copy of the statement is found at: https://www.ed.gov/news/press-releases/secretary-devos-releases-statement-presidents-task-force-apprenticeship-expansion

FSA sends alert regarding cyber extortion/threat

On Oct. 16, 2017, Federal Student Aid (FSA) issued an alert about a new type of cyber extortion/threat. Under the new type of threat, criminals are seeking to extort money from school districts and other educational institutions on the threat of releasing sensitive data from student records. The alert reminded educational institutions that they are required to notify the Office of Federal Student Aid (FSA) of data breaches via email pursuant to the Gramm Leach Bliley Act and the agreements made as a Title IV participant.

A copy of the alert is found at: https://ifap.ed.gov/eannouncements/101617ALERTCyberAdvisoryNewTypeCyberExtortionThreat.html

Attorneys General from 17 states and the District of Columbia file a lawsuit against the Secretary of Education for refusing to enforce the gainful employment rule

On Oct. 18, 2017, Attorneys General from 17 states and the District of Columbia filed a lawsuit against Secretary of Education Betsy DeVos for delaying the gainful employment rule. The Department of Education “failed to engage in notice and comment rulemaking, failed to provide a justification for its actions, acted arbitrarily and capriciously and in excess of statutory jurisdiction, authority or limitations, and withheld or unreasonably delayed agency action, which all violate the Administrative Procedure Act (APA). In a press release, Maryland Attorney General Brian Frosh, who led the lawsuit with Pennsylvania Attorney General Josh Shapiro, said: “The Department of Education is again eliminating crucial protections for student borrowers.” The complaint asked the U.S. District Court for the District of Columbia to declare the Department’s delay notices unlawful and to order the Department to implement the gainful employment rule.

A copy of the press release is found at: http://www.marylandattorneygeneral.gov/press/2017/101717.pdf

ED further delays borrower defense to repayment rules; advocates challenge ED’s delay of BDR rules

On Oct. 24, 2017, the Department of Education published an Interim Final Rule in the Federal Register delaying the effective date of the borrower defense to repayment (BDR) rules until July 1, 2018, which were originally expected to go into effect on July 1, 2017. The Department stated that because of pending litigation, ED is providing an immediate delay until the current legal challenge of the rules is resolved. The Department asserted in the Interim Final Rule: “Given the legal uncertainty, maintaining the status quo is critical.” On May 24, 2017, the California Association of Private Postsecondary Schools (CAPPS) filed a Complaint and Prayer for Declaratory and Injunctive Relief in the U.S. District Court for the District of Columbia challenging the final regulations on borrower defense to repayment, and the litigation is still ongoing. CAPPS is challenging particularly those provisions of the rules pertaining to the standard and process for the Department to adjudicate borrower defense claims, requirements pertaining to financial responsibility standards, provisions requiring proprietary schools to provide warnings about their students’ loan repayment rates, and prohibitions against institutions including arbitration or class action waivers in their enrollment agreements with their students. In light of the pending litigation, previously, on June 16, 2017, the Department of Education published a notice in the Federal Register partially delaying the effective dates of certain provisions of the final regulations until the legal challenge was resolved. In the Oct. 24, 2017 Interim Final Regulations, the Department stated that “[p]ostponing the final regulations avoids the cost that institutions would incur in making these changes while the final regulations are subject to judicial review.”

The Department also stated that it is continuing to process borrower defense claims under the existing regulations so that borrowers may continue to apply for the discharge of all or a part of their loans. Under the existing rule, 34 C.F.R. § 685.206(c), the borrower may assert as a defense against repayment, any act or omission of the school that would give rise to a cause of action against the school under applicable state law.

In addition, the Department also issued a Notice of Proposed Rulemaking (NPRM) in the Oct. 24, 2017 Federal Register, proposing a further postponement of the borrower defense to repayment rules until July 1, 2019, but will accept public comments until Nov. 24, 2017 before finalizing the delay. The Department stated that the further delay ensures that there is adequate time to conduct negotiated rulemaking and, as necessary, develop revised regulations.

A copy of the Interim Final Rule is found at: https://www.gpo.gov/fdsys/pkg/FR-2017-10-24/pdf/2017-22851.pdf

A copy of the NPRM is found at: https://www.gpo.gov/fdsys/pkg/FR-2017-10-24/pdf/2017-22850.pdf

As reported in Politico, on Oct. 27, 2017, Public Citizen and the Project on Predatory Student Lending at Harvard Law School, on behalf of former students of for-profit institutions who claim they were defrauded by their schools, filed an amended complaint in the case that challenges the Department’s decision to further delay the borrower defense to repayment rules. The group filed a first complaint last June 2017 when the Secretary made her initial decision to delay the implementation of the rules.

Department releases names of negotiators for negotiated rulemaking for the borrower defense to repayment rules

On Oct. 25, 2017, the Department of Education released the names of the individuals it has chosen to participate in the negotiated rulemaking for the borrower defense to repayment rules. The first session will be held on Nov. 13, 2017 and is scheduled to conclude on Feb. 15, 2017.

For more information about negotiated rulemaking, go to: https://www2.ed.gov/policy/highered/reg/hearulemaking/2017/index.html

Department withdraws outdated subregulatory guidance

On Oct. 27, 2017, the Department of Education announced it will withdraw almost 600 out-of-date pieces of subregulatory guidance because each item has either been superseded by current law or is no longer in effect. “Removing these out-of-date materials will make it easier for schools, educators, parents and the public to understand what guidance is still in effect.” The Department’s Regulatory Reform Task Force, composed of career and non-career employees, analyzed Department regulations and guidance for possible repeal, modification or replacement. The Task Force identified hundreds of subregulatory documents that are ready to be withdrawn. The Task Force asked for the Department to conduct stakeholder outreach to solicit input on regulations and guidance that may be modified or eliminated, and as a result, the Office of Postsecondary Education (OPE) held two public hearings. Out of 1,171 documents, OPE has identified 398 out-of-date guidance documents for withdrawal.

A copy of the press release is found at: https://www.ed.gov/news/press-releases/department-education-withdraws-outdated-subregulatory-guidance

A copy of the report issued by the Regulatory Reform Task Force is found at: https://www2.ed.gov/documents/press-releases/regulatory-reform-task-force-progress-report-2.pdf

Chairman of the Health, Education, Labor and Pensions Committee Lamar Alexander (R-TN) applauded the Secretary’s efforts to withdraw out-of-date regulations and said in a press release of Oct. 27, 2017: “Everyone in Washington has a new idea for education – and each administration uses its power to pile new ideas on top of old. But Education Secretary DeVos instead has taken the time to weed out old guidance, for the benefit and clarity of our colleges and universities. The Senate education committee is beginning its work to reauthorize the Higher Education Act, and Secretary DeVos has given us exactly the right approach: Let’s weed the garden before we plant a new crop.”

NCES makes changes to IPEDS

The National Center for Educational Statistics (NCES) has made a number of changes to the Integrated Postsecondary Education Data System (IPEDS), which is used to measure student success rates. On Oct. 10, 2017, an NCES blog posting announced additional information being collected from institutions. The NCES blog posting indicated that in the past the success rates were based on traditional college students, that is, first-time, full-time degree- or certificate-seeking undergraduate students (FTFT), who generally enrolled right after high school. But many had argued that the FTFT graduation rate does not take into account part-time students and transfer students, groups that have outpaced traditional students. The new IPEDS Outcome Measures survey adds three new student groups:

• First-time, part-time students (FTPT), who attend less than full-time each term and who have no prior postsecondary attendance;
• Non-first-time students, or transfer-in students, who are enrolled full-time (NFTFT); and
• Non-first-time students, or transfer-in students, who are enrolled part-time (NFTPT).

The NCES blog posting also indicated that beginning with the 2017-18 Outcome Measures collection, the survey will include more groups (i.e., Pell Grant v. Non-Pell Grant recipients); a third award status point (4 years after entry); and the identification of the type of award (i.e., certificates, Associate’s and Bachelor’s).

A copy of the NCES blog post is found at: https://nces.ed.gov/blogs/nces/

College Board releases “Trends in College Pricing” and “Trends in Student Aid” reports

The College Board released its annual “Trends in College Pricing” and “Trends in Student Aid” reports that provide a snapshot of college costs and federal, state, institutional and private aid for the latest academic year. The “Trends in College Pricing” report examined the cost of higher education at nonprofit colleges and universities in the U.S. and found that the increase in average tuition and fees charged by public and private colleges rose between 2.9 percent and 3.6 percent this year, while inflation remained at about 2 percent.

The “Trends in Student Aid” report indicated that the annual borrowing for higher education declined in the 2016-2017 academic year for the sixth consecutive year going from $125.6 billion in the 2010-2011 academic year to $106.5 billion in the 2016-2017 academic year. In 2016-2017, federal grant aid declined by $2.1 billion from the prior year due to a reduction in the amount of Pell Grants. Total grant aid, which includes federal, state, institutional, and private and employer grants, totaled $125.4 billion in 2016-2017.

Copies of the report are available at: https://trends.collegeboard.org/

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.