Washington News Brief

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

President Trump signs Executive Order expanding apprenticeships

On June 12, 2017, Secretary of Labor Alexander Acosta addressed the issue of workforce development at President Trump’s first meeting with a fully confirmed Cabinet. Secretary Acosta delivered a presentation on the importance of expanding apprenticeships and the need for all federal agencies to support the Administration’s apprenticeship initiative. He distributed a memorandum to each member of the Cabinet.

The memorandum is found at:
https://www.whitehouse.gov/sites/whitehouse.gov/files/docs/workforce-development-memorandum.pdf

A press statement was issued on June 12, 2017 and is found at: https://www.whitehouse.gov/the-press-office/2017/06/12/statement-press-secretary-workforce-development-week

On June 15, 2017, President Trump signed an Executive Order to expand apprenticeships in America. Implementing the Executive Order will cost $200 million to be funded out of existing Department of Labor money and will be used to fund many of the 6 million jobs that are currently open. The Executive Order directs the Secretary of Labor to work with the Secretaries of Education and Commerce to consider proposing regulations that promote the development of apprenticeship programs by third parties. The third parties may include trade and industry groups, companies, nonprofit organizations, unions, and joint labor-management organizations. The regulations should include an assessment of whether to determine how qualified third parties may provide recognition to high quality apprenticeship programs; establish guidelines that qualified third parties should follow to ensure that apprenticeship programs they recognize meet quality standards; provide that any industry-recognized apprenticeship program may be considered for expedited and streamlined registration under the registered apprenticeship program the Department of Labor administers; and establish review processes for considering whether to deny the expedited and streamlined registration or to terminate the registration of an apprenticeship program.

A copy of the executive order is found at: https://www.whitehouse.gov/the-press-office/2017/06/15/presidential-executive-order-expanding-apprenticeships-america

A copy of the White House Fact Sheet is found at: https://www.whitehouse.gov/the-press-office/2017/06/15/president-trump-leads-workforce-development

Bipartisan bill introduced in House to create demonstration project for competency-based education programs

On June 8, 2017, Congressman Jared Polis (D-CO) introduced H.R. 2859, Advancing Competency-Based Education Act of 2017, a bill to amend the Higher Education Act of 1965 to establish demonstration projects for competency-based education. The bill was co-sponsored by Congressman Luke Messer (R-IN). Both serve on the House Committee on Education and the Workforce. The House passed a similar bill in 2014, but the Senate did not take up the bill.

H.R. 2859 would grant statutory and regulatory flexibility to participants in a demonstration project for competency-based education. The bill would require an annual evaluation of each competency-based education program in the project to measure quality, student progress toward degrees, and the students’ ability to pay off their loans and find employment after graduation. It also would require accrediting agencies to establish standards for competency-based education. Information from the project could be used in the reauthorization of the HEA discussions.

House and Senate Democrats send letter detailing opposition to ED’s student loan servicing plans

On June 12, 2017, 136 House and Senate Democrats sent a letter to Secretary of Education Betsy DeVos opposing the Department of Education’s plans to overhaul the federal student loan servicing procurement process. They believe that the Department’s plans will harm borrowers and put taxpayers at risk. They expressed fear that the Department’s policy choices will undermine the Department’s ability to hold loan servicers accountable particularly because of ED’s decision to select a single company to manage the student loan payments of all federal student loan borrowers.

A copy of the House Democrats’ letter is found at: https://www.help.senate.gov/imo/media/doc/061217%20-%20Bicam%20Dem-DeVos%20Servicing%20Letter%20%20final.pdf

Four Senate Democrats send letter to Secretary DeVos urging her to implement the Borrower Defense to Repayment rules

On June 8, 2017, Senators Elizabeth Warren (D-MA), Patty Murray (D-WA), Sherrod Brown (D-OH), and Dick Durbin (D-IL) sent a letter to Secretary of Education Betsy DeVos urging her to fully implement the Borrower Defense to Repayment regulations as expected on July 1, 2017. The letter noted that in a June 6, 2017 hearing in the U.S. District Court for the District of Columbia, a U.S. Department of Justice attorney representing the Department of Education indicated that the Department was “studying its options with regard to the effective date” for this rule. The letter also stated that media reports on June 5, 2017, said that “the Administration has been eyeing further delays…as it considers opening new negotiated-rulemaking sessions to rewrite the regulations. The four Senators also argued that the delay of the rules would violate the Administrative Procedures Act (APA) and the Higher Education Act (HEA). The Senators said that “in order to ensure the Department does not override the interests of stakeholders, the APA and HEA prohibit the Department from unilaterally amending or delaying a final rule except through a new negotiated rulemaking or in very narrow circumstances.”

A copy of the letter is found at: https://www.warren.senate.gov/files/documents/2017-6-8_Letter_to_DeVos_re_Borrower_Defense.pdf

House Democrats send letter to House Appropriations Subcommittee to push for maintaining subsidized Direct Loans

On June 6, 2017, almost 50 members of the House Democratic Caucus sent a letter to the House Appropriations Subcommittee on Labor, Health and Human Services, Education and Related Agencies urging the Subcommittee to maintain the subsidized Direct Loan program. “The subsidized Stafford Loan program has proven to make college more affordable for low-income students. Ending the availability of this loan will increase college costs by thousands of dollars per student borrower.”

A copy of the letter is found at: https://courtney.house.gov/sites/courtney.house.gov/files/Final%20signed%20Stafford.pdf

Senator Warren asks Senator Alexander to hold hearing on future FSA COO nominee

On June 2, 2017, Senator Elizabeth Warren (D-MA) sent a letter to Senator Lamar Alexander (R-TN), Chairman of the Health, Education, Labor and Pensions Committee, requesting that he hold a hearing on the future FSA chief operating officer (COO) who will replace the former FSA COO James Runcie, who recently resigned. Senator Warren acknowledged that the position did not require Senate confirmation; however, in light of the problems cited by Mr. Runcie in his letter of resignation and the fact that the new FSA COO will be responsible for a trillion-dollar student loan portfolio, Senator Warren believes the Senate should review the scope and risk of the problems cited by Mr. Runcie.

A copy of the Senator’s letter is found at: https://www.warren.senate.gov/files/documents/2017_06_02_Alexander_Letter_Runcie.pdf

Senator Elizabeth Warren launches “DeVos Watch” to oversee management of student aid programs

On May 31, 2017, Senator Elizabeth Warren (D-MA) launched a “DeVos Watch” that will provide information on how Secretary of Education Betsy DeVos is managing the federal student aid programs. Senator Warren said in a video released on the website that the website will raise questions and concerns by “shining a light on the Department of Education’s actions” and gather information about the management of the student aid programs.

The website found at: https://www.warren.senate.gov/devoswatch/ includes links to the video released by the Senator, Senator Warren’s press releases, and an op-ed written by the Senator, which was published on CNN.com.

Secretary of Education issues statement on Regulatory Reform Task Force Progress Report

On June 22, 2017, Secretary of Education Betsy DeVos announced the release of the Department’s first Progress Report developed by the Regulatory Reform Task Force as required by President Trump’s Executive Order 13777. The Regulatory Reform Task Force is made up of political appointees and career civil servants and the public can read its progress report on the Department’s website. Secretary DeVos said: “The Regulatory Reform Task Force has been hard at work over the last few months cataloging over 150 regulations and more than 1,700 pieces of policy guidance on the books at the Department of Education.” The Task Force has been tasked with making recommendations as to which regulations should be repealed, modified or kept in an effort to protect students.

The Report states that the Office of Postsecondary Education (OPE) plans to convene meetings with higher education associations as well as conduct hearings on regulatory relief to gather ideas. In reviewing and analyzing the rules, the Report notes that OPE has already identified GE and BDR for review and plan on commencing negotiated rulemaking proceedings for both sets of rules.

The press release is found at: https://www.ed.gov/news/press-releases/secretary-devos-issues-statement-regulatory-reform-task-force-progress-report

The progress report is found at: https://www2.ed.gov/documents/press-releases/regulatory-reform-task-force-progress-report.pdf

Secretary delays certain provisions of the Gainful Employment provisions

On June 30, 2017, Secretary of Education Betsy DeVos announced that institutions will have additional time to comply with certain provisions in the Gainful Employment rules. A Federal Register Notice of June 30, 2017, will delay until July 1, 2018, the requirements to implement 34 C.F.R. § 668.412(d) and (e), which would require institutions to include the GE disclosure template or link in their GE program promotional materials and to directly distribute the disclosure template to prospective students. On the same day, Electronic Announcement #106 was issued explaining that certain provisions in the GE rules would be delayed until July 1, 2018.

Institutions must implement 34 C.F.R. § 668.412(c), by July 1, 2017, which is providing a completed disclosure template on its GE program web pages.

A copy of the Federal Register Notice is found at: https://www.gpo.gov/fdsys/pkg/FR-2017-07-05/pdf/2017-14186.pdf

A copy of the Secretary’s press release is found at:
https://www.ed.gov/news/press-releases/devos-presses-pause-burdensome-gainful-employment-regulations

A copy of Electronic Announcement #106 is found at: https://ifap.ed.gov/eannouncements/063017GEEA106ExtensionComplDateEnhancDisclosures.html

Department publishes notice seeking input on regulations that may be appropriate for repeal, replacement, or modification

On June 22, 2017, the Department of Education published a notice in the Federal Register seeking input on regulations that may be appropriate for repeal, replacement, or modification. This notice is issued in accordance with Executive Order 13777, Enforcing the Regulatory Reform Agenda, issued by President Trump on Feb. 24, 2017, which directed federal agencies to establish task forces “to alleviate unnecessary regulatory burdens.” Last month, Acting Under Secretary James Manning wrote to a number of Senators who inquired about the President’s regulatory task force that the Executive Order would be “carried out through a collaborative effort by both political and career staff.” The request is part of that directive. Comments are due no later than Aug. 21, 2017.

A copy of the notice is found at: https://www.gpo.gov/fdsys/pkg/FR-2017-06-22/pdf/2017-13157.pdf

A copy of Acting Under Secretary’s letter of May 31, 2017 is found at: https://bloximages.newyork1.vip.townnews.com/newsadvance.com/content/tncms/assets/v3/editorial/3/b5/3b5c2874-4d45-11e7-9ab1-bfada1844eb3/593aef5c5280d.pdf.pdf

Department announces its intention to establish rulemaking committees for BDR and GE; effective date delayed

On June 14, 2017, Secretary of Education Betsy DeVos announced the Department of Education’s intention to establish negotiated rulemaking committees on Borrower Defense to Repayment (BDR) and Gainful Employment regulations. Due to pending litigation challenging BDR rules, the Department is postponing the effective date of BDR pursuant to section 705 of the Administrative Procedures Act. While negotiated rulemaking occurs, the Department will continue to process applications under the current Borrower Defense to Repayment rules. As part of the Department’s regulatory review of its regulations, the Department will conduct negotiated rulemaking on Gainful Employment rules. “As the Department worked on implementing this regulation, it became clear that, as written, it is overly burdensome and confusing for institutions of higher education.

A copy of the announcement is found at: https://www.ed.gov/news/press-releases/secretary-devos-announces-regulatory-reset-protect-students-taxpayers-higher-ed-institutions?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=

A notice will be published in the Federal Register on June 16, 2017. The final rule delaying the effective dates is found at: https://s3.amazonaws.com/public-inspection.federalregister.gov/2017-12562.pdf?utm_campaign=pi%20subscription%20mailing%20list&utm_source=federalregister.gov&utm_medium=email

It is uncertain whether Liberty University President Falwell will be leading a task force to roll back higher education regulations

It was reported on June 8, 2017 in POLITICO that President of Liberty University Jerry Falwell, Jr. will not be leading a higher education task force for President Trump. Earlier this year, President Falwell had announced that he was asked by President Trump to head a task force to examine “overreaching regulation” and “micromanagement of universities” by the Department of Education.

It appeared that the task of reviewing regulations was taken over by the staff at the Department of Education. On May 31, 2017, Acting Undersecretary of Education James Manning responded to a request for information on the task force made by Ranking Member of the Health, Education, Labor and Pensions Committee Patty Murray (D-WA) and said that within the Department, both political and career staff will work to implement President Trump’s Executive Order 13777, Enforcing the Regulatory Reform Agenda.

However, on June 11, 2017, the Chronicle of Higher Education reported that a White House official advised the Chronicle that Mr. Falwell will be involved with the task force and will be one of 15 college presidents on the task force. At this time, there is little information on the task force’s role, membership and timing.

A copy of Acting Under Secretary’s letter is found at: https://bloximages.newyork1.vip.townnews.com/newsadvance.com/content/tncms/assets/v3/editorial/3/b5/3b5c2874-4d45-11e7-9ab1-bfada1844eb3/593aef5c5280d.pdf.pdf

The earlier letter of Feb. 23, 2017 from Senator Patty Murray and others is found at: https://www.help.senate.gov/imo/media/doc/Falwell%20Task%20Force%20Letter%202-23-17.pdf

Secretary of Education announces plans to appoint Wayne Johnson as the next COO of FSA

On June 20, 2017, Secretary of Education Betsy DeVos announced plans to appoint Wayne Johnson as the next chief operating officer (COO) of Federal Student Aid (FSA). Mr. Johnson is the current chief executive officer and president of Reunion Financial Services and would replace James Runcie, who resigned last month following a dispute over whether he would testify before the House Oversight and Government Reform Committee, regarding improper loan payments.

Secretary DeVos said: “Wayne is the right person to modernize FSA for the 21st century. He actually wrote the book on student loan debt and will bring a unique combination of CEO-level operating skills and an in-depth understanding of the needs and issues associated with student loan borrowers and their families. He will be a tremendous asset to the Department as we move forward with a focus on how best to serve students and protect taxpayers.” Mr. Johnson held senior positions at VISA and Deloitte and began his own company, which captures credit card transactions in real time and alerts card holders to better manage their accounts. He wrote his doctoral dissertation on private student loan indebtedness.

A copy of the Secretary’s announcement is found at: https://www.ed.gov/news/press-releases/secretary-education-betsy-devos-announces-intent-appoint-dr-wayne-johnson-chief-operating-officer-federal-student-aid

On June 21, 2017, Chairman of the House Education and the Workforce Committee Virginia Foxx (R-NC) issued a statement of support for Wayne Johnson stating that the Committee hopes that “Dr. Johnson can work with Secretary DeVos to bring accountability and leadership to the office.”

A copy of Chairman Foxx’s statement is found at: https://edworkforce.house.gov/news/documentsingle.aspx?DocumentID=401778

Department releases guidance on implementing year-round Pell Grants

On June 19, 2017, the Department of Education released guidance as to how institutions should implement year-round Pell Grants, the provision included in the Consolidated Appropriations Act, FY 2017, signed into law by President Trump on May 5, 2017. P.L. 115-31 authorized the expansion of the Pell Grant program that will allow an eligible student to receive up to 150 percent of his/her scheduled Pell Grant award beginning with the 2017-2018 award year.

Secretary DeVos said in her press release: “This decision is about empowering students and giving them the flexibility and support needed to achieve their goals. Expanding access to the Pell program, so that students who need additional resources can graduate more quickly and with less debt, is the right thing to do.”

A copy of the Secretary’s press release is found at: https://www.ed.gov/news/press-releases/secretary-education-betsy-devos-delivers-promise-year-round-pell-and-increased-flexibility-students

A copy of Dear Colleague letter GEN-17-06 providing guidance on the implementation of year-round Pell Grants is found at: https://ifap.ed.gov/dpcletters/GEN1706.html

Department restores IRS Data Retrieval Tool (DRT) for borrowers wishing to enroll in an income-repayment plan (IDR)

On June 2, 2017, the Department of Education announced that the IRS Data Retrieval Tool (DRT) is available for existing student loan borrowers who wish to enroll in an income-driven repayment plan (IDR). After shutting down the DRT because of security concerns, the Department has added new encryption protections that hide the applicants’ tax information. The Department also stated that the IRS will notify taxpayers by mail when their tax return is accessed using the DRT. The DRT will not be available for applying for financial aid until Oct. 1, 2017 for the 2018-2019 award year.

A copy of the Department’s announcement is found at: https://ifap.ed.gov/eannouncements/060217IRSDRTRestoredIDR.html

A copy of the Department’s press release is found at: https://www.ed.gov/news/press-releases/data-retrieval-tool-available-income-driven-repayment-plan-application?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=

Chairman of the Senate Committee on Health, Education, Labor and Pensions (HELP) Lamar Alexander (R-TN) said: “I’m glad to see that this helpful online tool is back up and running for the millions of student loan borrowers who rely on it to use their tax information already filed with the IRS to apply for income-driven repayment plans. But, there are still 20 million families unable to use the tool to help them apply for federal financial aid for college. I urge the Education Department to continue working on behalf of these students and families, and I will continue oversight in the Senate education committee until the tool is back online.”

Department delays Borrower Defense to Repayment and announces intent to establish neg reg committees for Borrower Defense to Repayment and Gainful Employment rules

On June 14, 2017, Secretary of Education Betsy DeVos announced her intention to establish rulemaking committees on Borrower Defense to Repayment (BDR) and Gainful Employment (GE) regulations. In addition, due to pending litigation challenging Borrower Defense to Repayment regulations, the Department will be delaying the effective date of the BDR rule pursuant to Section 705 of the Administrative Procedures Act.

On June 16, 2017, the Department of Education published a notice in the Federal Register announcing that it will delay the Borrower Defense to Repayment (BDR) rule, which was to go into effect on July 1, 2017. The delay is attributed to the May 24, 2017 filing of a complaint challenging the rule by the California Association of Private Postsecondary Schools (CAPPS). The Department stated that due to the pending litigation, justice requires the postponement of the BDR regulations. The Department announced that it would continue to process borrower defense claims under existing regulations.

Separately, the Department announced in another notice in the June 16, 2017 Federal Register its plan to establish negotiated rulemaking committees to review and revise The Gainful Employment regulations and the Borrower Defense to Repayment regulations. Two public hearings will be held in on July 10, 2017 and July 12, 2017. The Department anticipates beginning negotiated rulemaking for up to three sessions beginning in November or December 2017. If GE and BDR rules are finalized by Nov. 1, 2018, they would go into effect on July 1, 2019.

The Secretary said: “My first priority is to protect students. Fraud, especially fraud committed by a school, is simply unacceptable. Unfortunately, last year’s rulemaking effort missed an opportunity to get it right. The result is a muddled process that’s unfair to students and schools, and puts taxpayers on the hook for significant costs. It’s time to take a step back and make sure these rules achieve their purpose: helping harmed students. It’s time for regulatory reset.”

A copy of the Notice to delay BDR is found at: https://www.gpo.gov/fdsys/pkg/FR-2017-06-16/pdf/2017-12562.pdf

A copy of the Notice announcing intent to establish neg reg is found at: https://www.gpo.gov/fdsys/pkg/FR-2017-06-16/pdf/2017-12555.pdf

A copy of the Secretary’s announcement that she would be establishing negotiated rulemaking committees for BDR and GE is found at: https://www.ed.gov/news/press-releases/secretary-devos-announces-regulatory-reset-protect-students-taxpayers-higher-ed-institutions

Massachusetts Attorney General announces plans to file a lawsuit against the Secretary for delaying the BDR rule

On June 14, 2017, in response to the Secretary of Education Betsy DeVos’ announcement that the Department of Education would be delaying the implementation of the Borrower Defense to Repayment regulations, Massachusetts Attorney General Maura Healey announced that she will be filing a lawsuit against the Secretary to compel her to move forward on providing borrower relief to defrauded students.

Earlier, Attorney General Healey announced that her office and Attorneys General from eight other states filed a motion to intervene in the case, California Association of Private Postsecondary Schools (CAPPS) v. Betsy DeVos. The case had been cited by the Department of Education in the Federal Register notice as an excuse to “dismantle the finalized Obama-era regulations that provide critical protections for federal student loan borrowers against misconduct by abusive schools and colleges, including for-profit companies.

A copy of the press release regarding intent to sue the Department is found at: http://www.mass.gov/ago/news-and-updates/press-releases/2017/2017-06-14-intent-to-sue-department-of-education.html

Groups hold different opinions on BDR rules

On June 13, 2017, the United Negro College Fund (UNCF) and the National Association for Equal Opportunity in Higher Education (NAFEO) wrote to Secretary of Education Betsy DeVos asking the Department to rewrite the Borrower Defense to Repayment rules. The groups argue that the BDR rule is too broad and could harm schools. They stated: “We request that the implementation of the borrower defense regulation be delayed and that the Department begin a new negotiated rulemaking process.

A copy of the letter is found at: http://images.uncf.org/production/fpa_letters/HBCU_Coalition_Ltr_on_Borrower_Defense_Reg_6.13.17.pdf

On June 9, 2017, nearly three dozen veterans groups sent a letter to the leadership of the House Education and the Workforce Committee and the Senate Health, Education, Labor, and Pensions Committee urging them to ensure that the Department of Education fully implements the Borrower Defense to Repayment regulations that go into effect on July 1, 2017.

A copy of the letter from the veterans groups is found at: https://static1.squarespace.com/static/556718b2e4b02e470eb1b186/t/5941642ce4fcb583b1563fde/1497457708858/Borrower+Defense+letter.June2016.pdf

Borrower advocates ask to intervene in CAPPS v. Betsy DeVos case

On June 15, 2017, Public Citizen and the Project on Predatory Student Lending at Harvard Law School asked a federal judge for permission to intervene in the case, California Association of Private Postsecondary Schools (CAPPS) v. Betsy DeVos. The motion was filed on behalf of two students who claimed to be defrauded by the New England Institute of Art. The students had wanted to sue the school but were unable to do so because of the arbitration clause in their enrollment agreement.

A copy of the motion to intervene is found at: http://www.legalservicescenter.org/wp-content/uploads/2012/10/Doc-22-Borrower-Motion-to-Intervene.pdf;
https://www.republicreport.org/wp-content/uploads/2017/06/AG-brief-motion-to-intervene-CAPPS-06-13-17.pdf

CAPPS files complaint challenging the Borrower Defense to Repayment rules

On May 25, 2017, the California Association of Private Postsecondary Schools (CAPPS) filed a complaint against the Department of Education in an attempt to block the implementation of the Borrower Defense to Repayment rules that go into effect July 1, 2017. CAPPS argued that the borrower defense provision in the statute was never intended to make the affirmative case for debt relief by student borrowers. CAPPS also argued that the Borrower Defense to Repayment rule creates a “seismic shift in multiple areas of higher education regulation without legal basis or reasonable justification.”

A copy of the complaint is found at:
https://www.republicreport.org/wp-content/uploads/2017/05/CAPPS-v-DeVos-complaint.pdf

Two men used IRS DRT in $12.7 million scam

On June 8, 2017, in the U.S. District Court for the Southern District of Indiana, two men were indicted on 23 federal charges related to the use of the IRS Data Retrieval Tool (DRT) to retrieve data for the FAFSA. It was reported in various newsletters that the two men obtained or attempted to obtain more than $12.7 million in tax refunds. The two men used the DRT to steal the identities of the taxpayers, filed false tax returns, directed the tax refunds to prepaid debit cards, and then used the prepaid debit cards to purchase money orders.

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.