Washington News Brief

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

NCES releases data on completion rates and financial aid

In December 2017, the National Center for Educational Statistics (NCES) released completion rate data in a report titled “Graduation Rates for Selected Cohorts, 2008-2013; Outcome Measures for Cohort Year 2008; Student Financial Aid, Academic Year 2015-2016; and Admissions in Postsecondary Institutions, Fall 2016.” The report found that almost 60 percent of students who enrolled in four-year public institutions and seeking a bachelor’s degree in 2010 graduated within six years. For students who were seeking a bachelor’s degree at a non-profit institution, the 150 percent completion rate was over 65 percent and for students who were seeking a bachelor’s degree at a for-profit institution, the 150 percent completion rate was 26 percent.

For bachelor’s degree seeking students, American Indian and Alaska Native students had a 150 percent completion rate of 38.8 percent, the lowest on-time completion rate. African-American students had a 150 percent completion rate of 39.7 percent. Hispanic students had a 150 percent completion rate of 54.4 percent. White students had a 150 percent completion rate of 59.5 percent.

In 2015-2016, about 83 percent of the students received some type of financial aid. The percentage of students receiving Pell Grants was substantially higher at four-year for-profit institutions (65 percent) than at public four-year institutions (36.6 percent) and private nonprofit four-year institutions (31.5 percent). Borrowing was also higher at four-year for-profit institutions (72.9 percent) than at public four-year institutions (46.5 percent) and private nonprofit institutions (58.1 percent).

See: https://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2017150rev

Senator Warren asks IGs at ED and SSA to review ED’s use of earnings data for the loan discharge process

On Jan. 2, 2018, Senator Elizabeth Warren sent a letter to the Department of Education’s (ED) and the Social Security Administration’s (SSA) Inspectors General asking about the use of the earnings data from the Social Security Administration to determine the amount of debt relief for successful borrower defense claims. The Department obtained these federal earnings data through an information exchange agreement with the Social Security Administration. On Dec. 20, 2017, Secretary of Education Betsy DeVos announced that ED was using the earnings from gainful employment programs to determine the amount of debt relief borrowers would receive from an approved borrower defense to repayment claim.

Senator Warren asked the IGs to review the use of the data, claiming that the use of the data may violate the Department of Education’s information exchange agreement with the Social Security Administration since the information exchange agreement explicitly and exclusively allows the data to be used only for the gainful employment rule. Senator Warren said:

“I am troubled by the Department’s potential misuse of federal earnings data acquired from SSA through an information exchange agreement in order to determine the amount of loan relief for defrauded students. There is no evidence of a new data exchange agreement between the Department and SSA for use in borrower defense determinations, nor has there been a revision to the gainful employment exchange agreement.”

The text of Senator Warren’s letter is included in a press release found at: https://www.warren.senate.gov/files/documents/2018_1_2%20Letter%20to%20ED%20SSA%20IGs….pdf

House Education and the Workforce Committee reprints a Wall Street Journal article describing “Today’s College Students”

On Jan. 6, 2018, the House Education and the Workforce Committee posted a blog that reprinted a Wall Street Journal article titled, “Today’s College Students Aren’t Who You Think.” The article pointed out that today’s students are not “18-year-olds living in cramped dorm rooms,” but men and women who are often working part-time. The article also indicated that about 40 percent of the 17.5 million undergraduates are enrolled in two-year institutions and the vast majority of college students are not enrolled in Ivy League institutions, but attend institutions that admit nearly anyone who applies. Further, with many students changing majors or programs, most students take longer to complete their four-year program. One main reason why students take longer to finish is that many students change schools and the credits do not transfer.

A copy of the blog with the article is found at: https://edworkforce.house.gov/news/documentsingle.aspx?DocumentID=402385

NCES releases data on tuition, fees and degrees

On Jan. 9, 2018, the National Center for Education Statistics (NCES) released “First Look Report” on postsecondary institutions and cost of attendance for 2016-2017. The report found that the average tuition and fees at four-year public institutions between 2014-2015 and 2016-2017 rose by more than 5 percent; that the average tuition and fees at four-year nonprofit institutions rose by about 5 percent, and that the average tuition and fees at proprietary institutions rose by about 1 percent. Additional findings are:

• During the 2016-2017 academic year, there were 6,760 Title IV institutions in the United States and other jurisdictions; 2,918 were four-year institutions; 1,995 were two-year institutions; and the remaining 1,847 were less-than-two-year institutions.
• About 3.3 million students received degrees or certificates at four-year degree-granting institutions and more than 58 percent received a bachelor’s degree. Bachelor’s degrees were received by about 64 percent of the 1.9 million students at public institutions; about 53 percent of the 1.1 million students at nonprofit institutions; and about 42 percent of the 286,000 students at proprietary institutions.
• About 27 million individual students were reported. Of the 27 million students, about 23.1 million were undergraduates and 3.8 million were graduate students.

A copy of the report is found at: https://nces.ed.gov/pubs2017/2017075rev.pdf

Five Senate Democrats ask FSA COO for additional information on the proposed prepaid card pilot program

On Jan. 10, 2018, Senators Richard Blumenthal (D-CT), Richard Durbin (D-IL), Elizabeth Warren (D-MA), Jack Reed (D-RI), and Sherrod Brown (D-OH) sent a letter to Dr. A. Wayne Johnson, Chief Operating Officer of the Department of Education’s Office of Federal Student Aid (FSA), requesting additional information on a proposed pilot program that would disburse federal student aid through a prepaid card product. On Nov. 29, 2017, FSA revealed at the FSA Conference that it is considering an evolution in FSA through what it calls the Next Generation (“Next Gen”) Financial Services Environment. Dr. Johnson indicated that they were developing a pilot project to develop a new way to disburse student aid to students by using a prepaid card product. The Senators’ letter said: “While we support efforts to improve the financial aid distribution process, we have serious concerns about your proposal given the poor track records of such cards in the past.” They expressed concern about how the Department would “safeguard students’ personal and financial information from fraud, data breach, and misuse.” The Senators asked that Dr. Johnson provide answers to almost two dozen questions by Jan. 30, 2018 so that they could better understand the proposed pilot program using prepaid cards.

A copy of the press release that includes the text of the letter is found at: https://www.blumenthal.senate.gov/newsroom/press/release/blumenthal-senators-press-education-departments-fsa-chief-for-details-on-student-loan-disbursement-prepaid-card-pilot-program

Department releases analysis of borrower defense claims

On Jan. 11, 2018, at the end of the second session of negotiated rulemaking for borrower defense to repayment regulations, the Department of Education released a detailed breakdown of the more than 100,000 borrower defense to repayment claims it has received since 2015. The breakdown is provided on claims per state, claim status, and changes over time. The Department found that prior to 2015, it received fewer than 10 claims, but since 2015, it receives on average more than 4,000 claims per month. The majority of the 135,050 claims, or 58 percent, were in adjudication as of Oct. 30, 2017. Another 18 percent were in intake, 2 percent were in post-review, and 22 percent were completed.

The Borrower Defense Claims Analysis is found on the negotiated rulemaking website at: https://www2.ed.gov/policy/highered/reg/hearulemaking/2017/borrowerdefense.html

Second session of neg reg on borrower defense to repayment winds down

On Jan. 11, 2018, the second session of the negotiated rulemaking committee tasked with revising the borrower defense to repayment regulations concluded with no consensus reached on any of the major issues that have been raised in proposed language by the Department of Education. The third and final session of rulemaking is scheduled for the week of Feb. 12, 2018.

Issue papers and meeting summaries are found at: https://www2.ed.gov/policy/highered/reg/hearulemaking/2017/borrowerdefense.html

Five Senate Democrats urge NACIQI to review for-profit to non-profit conversions

On Jan. 11, 2018, Senators Elizabeth Warren (D-MA), Sherrod Brown (D-OH), Patty Murray (D-WA), Richard Durbin (D-IL), and Richard Blumenthal (D-CT) sent a letter to the Chair and Vice-Chair of the Department of Education’s National Advisory Committee on Institutional Quality and Integrity (NACIQI) urging them to review the issue of for-profit institutions that convert to nonprofit institutions at its upcoming meeting on Feb. 7, 2018. The letter stated: “Given NACIQI’s unique ability to recommend guidelines and practices for federally recognized accrediting agencies in accordance with their responsibilities under the Higher Education Act, NACIQI has a responsibility to address how agencies should consider changes in ownership and other transactions at its February meeting.” The letter urged NACIQI to ensure that conversion approval processes are significant factors in NACIQI’s qualitative reviews of accrediting agencies.

A copy of the five Senate Democrats letter is found at: https://www.warren.senate.gov/files/documents/2018_01_11%20Letter%20to%20NACIQI%20re%20sectorial%20conversions%20of%20for-profits%20colleges%20to%20nonprofit%20status.pdf

Department updates cybersecurity compliance FAQs

On Jan. 12, 2018, Federal Student Aid’s Senior Advisor of Cybersecurity updated the Cybersecurity Compliance Frequently Asked Questions (FAQs) section of the Cybersecurity Compliance page. This guidance addresses some of the data security and breach questions raised during the 2017 FSA Training Conference. The FAQs address the data security requirements, what is a breach, and when to report a breach. It also addresses a question raised at the FSA Conference that taxes, tax transcripts, or any other documents with personally identifiable information may only be faxed or emailed if safeguarded. There must be physical and administrative safeguards to ensure that the data is only viewed or handled by authorized personnel with a need to know.

A copy of the updated FAQs is found at: https://ifap.ed.gov/eannouncements/attachments/CyberFAQ.pdf

Gallup and Strada survey finds that college students do not feel prepared for the workforce

On Jan. 17, 2018, Gallup and Strada Education Network released its 2017 survey titled, “Crisis of Confidence: Current College Students Do Not Feel Prepared for the Workplace,” which examined the perceptions of current students about preparation for the workforce and the career-related support they received from institutions. According to the report, only about one-third of current college students believe that they will graduate with the skills and knowledge they need to be successful in the workplace. Over half believe that their major will lead to a good job. Bill Hansen, President and Chief Executive Officer of Strada Education Network, said in a press release: “Students are telling us they feel underprepared to enter the workforce while employers bemoan the skills of recent graduates. That signals demand for new career advising and work-relevant learning models that support more successful transitions from education to employment.”

A copy of the report is found at: http://stradaeducation.gallup.com/reports/225161/2017-strada-gallup-college-student-survey.aspx?g_source=link_usafunds&g_campaign=item_211634&g_medium=copy

A copy of the press release is found at: http://www.stradaeducation.org/news/new-survey-reveals-crisis-of-confidence-in-workforce-readiness-among-college-students/

Senate HELP Committee holds hearing on reauthorizing the HEA

On Jan. 18, 2018, the Senate Health, Education, Labor and Pensions (HELP) Committee held a hearing titled, “Reauthorizing the Higher Education Act: Financial Aid Simplification and Transparency.” Chairman of the HELP Committee Lamar Alexander (R-TN) said: “This committee began thinking about reauthorizing the Higher Education Act four and a half years ago. Since then, we have had 18 hearings, which have produced a large number of mostly bipartisan proposals, ranging from simplifying student aid to improving the accreditation system. It is our goal for the committee to mark up a comprehensive set of recommendations and send them to the full Senate by early spring.” Senator Alexander continued: “The consensus that I see emerging is student focused: Simpler, more effective regulations to make it easier for students to pay for college and to pay back their loans; reducing red tape so administrators can spend more time and money on students; making sure a degree is worth the time and money students spend to earn it; and helping colleges keep students safe on campus.”

Ranking Member Patty Murray (D-WA) began her remarks by criticizing the Department’s implementation of the Every Student Succeeds Act, and she said that she believes that such actions may jeopardize the upcoming bipartisan negotiations on higher education. The HELP Committee has a history of bipartisan cooperation on some larger pieces of legislation, such as reauthorizing the Elementary and Secondary Education Act (ESEA), now the Every Student Succeeds Act. She said that she was hopeful that discussions can move forward, but the reauthorization process needs to be comprehensive and simplification cannot be used to eliminate various grant and loan programs that provide important services and support low-income students.

The witnesses described several proposals that have been increasingly discussed in recent years. One witness discussed the confusion resulting from award letters because they often leave out information on the cost of attendance and do not distinguish between grants and loans. Most of the witnesses proposed simplifying the current income-based repayment plans. One witness suggested that the federal government begin to use payroll withholding for loan repayments. Another witness suggested that the loan repayment period be longer than the traditional 10-year repayment plan as is done in other countries and defaulted borrowers should be automatically transferred to an income-based repayment plan with automatic payroll withholding.

In announcing that there will be another hearing on reauthorization to be held on Jan. 25, 2018 on access and innovation, Chairman Alexander stated: “As we continue to examine proposals to reauthorize the Higher Education Act, we should be looking at ways to make it easier for colleges to meet all students’ needs – whether that is in a traditional classroom, online classes, or other promising approaches.”

A copy of Senator Alexander’s press release is found at: https://www.alexander.senate.gov/public/index.cfm/pressreleases?ID=78AC102D-C820-4A18-A039-B002B2BC6176

FSA moves forward with plans to test FSA Payment Card Program

On Jan. 19, 2018, Federal Student Aid (FSA) published a Pre-Solicitation Notice announcing the anticipated release of a solicitation for contractor support for Federal Student Aid’s (FSA) Payment Card Program to facilitate FSA fund disbursements originated by participating schools. According to the Pre-Solicitation Notice, the Department will solicit offers from companies in late spring 2018 that would allow 25,000 students at as many as four colleges and university systems to directly access refunds of their federal student aid after covering tuition. The companies would contract with a bank and payment processing firm, as well as the participating colleges or universities. The purpose of the FSA Payment Card Program Pilot is to test, with a select number of schools, an FSA Payment Card “whereby federal student loan customers (“Customers”) will have a consistent, economically advantageous and timely method to receive FSA loan refunds.” The FSA Payment Card would be like a debit card, but the Department will prohibit the card provider from charging a wide range of fees, including an in-network ATM withdrawal fee, foreign transaction fees, overdraft fees, and account maintenance fees. Dr. A. Wayne Johnson, Chief Operating Officer for FSA, first announced plans for the FSA Payment Card on Nov. 29, 2017 at the FSA Training Conference.

The FSA Payment Card Program will have the following requirements:

• College students will sign up for the Payment Card Program through a mobile or online application;
• Schools would refund overages onto the Payment Card and communicate with the student about the funds’ status;
• Students would use the loan refunds and all other funds allocated to the Payment Card for everyday goods and services; and
• Students would have access to mobile self-service as well as call center assistance to resolve card-related issues.

A copy of the notice is found at: https://www.fbo.gov/index?s=opportunity&mode=form&id=caac84c91dc25bb98a5504a3045991cb&tab=core&tabmode=list&=

Department releases 2018 GE Disclosure Template

On Jan. 19, 2018, the Department of Education released the 2018 Gainful Employment (GE) Disclosure Template. Institutions will have until April 6, 2018, to update the disclosures for each of their GE programs using the 2018 GE Disclosure Template. Electronic Announcement #110 states that while the 2018 GE Disclosure Template is similar to last year’s template, there are some differences:

• Institutions are no longer required to disclose room and board charges in the template;
• The Unsubsidized loan interest rate will be prefilled based on the selected credential level;
• Institutions will not be required to disclose median earnings data in the template;
• Institutions must still disclose whether the program has failed the debt-to-earnings (D/E) rates measure within 30 days of receiving the final D/E rates from the Department. Once an institution has indicated that a warning is required, the output screen will be prepopulated with the student warnings;
• Institutions may add more than one accreditor job placement rate;
• The format for reporting licensure requirements was changed; and
• “Foreign Country” was added as an option in the list of States.

Comments in the press have noted that the Department is watering down the disclosure requirements because under the 2018 GE Disclosure Template, institutions would no longer have to disclose median earnings data or room and board charges.

A copy of the Electronic Announcement is found at: https://ifap.ed.gov/eannouncements/011918GEAnnounce110Rel2018GEDisclosureTemplate.html

GAO releases study on accreditation system

On Jan. 22, 2018, the Government Accountability Office (GAO) released a study titled, “Expert Views of U.S. Accreditation” (GAO-18-5), which examined the strengths and challenges of the current accreditation system. The GAO conducted interviews with some experts and reviewed the literature on accreditation. The experts said that the structure of the accreditation system is a strength because it allows an accreditor to conduct reviews that are tailored to various school types and the use of peer review by academic faculty and administrators offers the relevant expertise to assess academic quality and provide schools with feedback for improvement. However, some of the experts identified various challenges including how accreditors can effectively define and measure academic quality. Some experts stated that accreditors might hesitate to terminate a college’s accreditation even when there are serious problems identified because termination would adversely impact their schools’ eligibility for financial aid. The experts agreed that the dual role of accreditors, which is helping schools improve their performance and also making decisions that affect schools’ access to federal student aid programs, is a difficult balance.

The experts offered four proposals for addressing the challenges:

• Modifying oversight roles and responsibilities: Some experts suggested that accreditors should be provided with some protections from legal action by schools and should allow the Department to set and enforce accreditation standards for student achievement.
• Strengthening communication and transparency: Some experts suggested sharing more accreditor information to help students, policymakers, and the public make informed decisions on investments in higher education.
• Using academic quality measures and expanding accreditation options: Some experts suggested increasing accreditors’ focus on student outcomes in assessments of quality.
• Changing the structure of the accreditation system: The literature suggested that new entities be established to set standards for assessing colleges’ academic quality.

A copy of the GAO Report (GAO-18-5) is found at: https://www.gao.gov/products/GAO-18-5

Chairwoman Foxx hopes PROSPER Act will be on the House floor soon

On Saturday, Jan. 24, 2018, House Education and the Workforce Chairwoman Virginia Foxx (R-NC) appeared on C-SPAN’s “Newsmakers” program where she said that she hoped that the Committee’s bill to reauthorize the Higher Education Act, H.R. 4508, the Promoting Real Opportunity, Success, and Prosperity through Education Reform Act (PROSPER Act), will be on the House floor “as soon as we possibly can.” H.R. 4508 was approved by the House Committee on Education and the Workforce on Dec. 13, 2017.

Notice issued in Federal Register seeking third-party comments on ACICS’ application for initial recognition

On Jan. 24, 2018, the Department of Education published a Notice in the Federal Register seeking comments regarding accrediting agencies, which will be on the agenda for the Spring 2018 National Advisory Committee on Institutional Quality and Integrity (NACIQI). Included with the list of accrediting agencies to be reviewed is the Accrediting Council for Independent Colleges and Schools (ACICS), which is seeking initial recognition. ACICS’ application for initial recognition will be considered at NACIQI’s Spring 2018 meeting. Written third-party comments are due by Feb. 16, 2018.

A copy of the Notice is found at: https://www.gpo.gov/fdsys/pkg/FR-2018-01-24/pdf/2018-01220.pdf

FSA COO steps down to head “Strategy and Innovation” office

On Jan. 25, 2018, the Department of Education announced that Dr. A. Wayne Johnson, Chief Operating Officer (COO) for Federal Student Aid (FSA), will step down to head the “Strategy and Transformation” unit, which will focus on the “delivery of financial aid to millions of students and their families.” The new unit will focus on implementing the Next Generation Processing and Servicing Environment and “bringing the customer servicing capabilities of FSA into the 21st century.”

James Manning, currently the Acting Undersecretary of Education, will serve as the interim head of FSA.

A copy of the announcement is found at: https://www.ed.gov/news/press-releases/secretary-devos-forms-new-strategy-and-transformation-office-fsa?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=

Senate HELP Committee holds third hearing on HEA reauthorization focusing on access and innovation

On Jan. 25, 2018, the Senate Health, Education, Labor and Pensions (HELP) Committee held its third hearing in the 115th Congress on reauthorizing the Higher Education Act, titled, “Reauthorizing the Higher Education Act: Access and Innovation.” In his opening statement, Chairman Lamar Alexander (R-TN) said Congress should create an environment that allows colleges to be as versatile as today’s students. “This is the digital age with remarkable inventions everywhere we turn, and so today we are looking at how the federal government can get out of the way so schools can innovate to meet the needs of all of today’s college students.” Ranking Member Patty Murray (D-WA) said: “I look forward to looking at ways to make college a reality for all our students who may not have access to the opportunities higher education can create…If we want to truly help students, we also need to hold colleges accountable for student performance…We need to make sure that we have strong guardrails for all programs to make sure that our students get a good quality education, instruction, and the right support.”

Both Senator Murray and Senator Elizabeth Warren (D-MA) spoke about students being targets of for-profit and online colleges. They both expressed concern that online courses may not be suited for low-income students because they lack outside support from faculty. The witnesses agreed that low-income students need a support system even on-campus. Senator Warren called for more information so that students can better know their options.

Much of the discussion was focused on the benefits of competency-based education (CBE) as many competency-based education programs are designed for nontraditional learners. Dual enrollment programs were also discussed since such programs are designed to increase access for low-income students. It was recommended that Congress should define CBE within current law in a way that correctly emphasizes learning outcomes and that differentiates distance education and correspondence courses.

A fourth hearing on reauthorization will be held by the HELP Committee on Jan. 30, 2018, on “Accountability and Risk to Taxpayers.”

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.