Search
Close this search box.

Federal Update – April 17

Federal Update – April 17

GOVERNMENT RELATIONS HIGHLIGHTS

  • DCL on 100% Certification Rule: C
  • Department Discretion in Enforcing 100% Certification Rule: The Office of Federal Student Aid released guidance stating that the Department will use discretion and consider the impact of circumstances beyond schools’ control– particularly for the period between July 1, 2024 and January 1, 2025 – before enforcing any punitive measures for failure to comply with the newly revised 100% Program Length Certification Rule.
  • Fifth Circuit Grants Preliminary Injunction of BDR Rule: The three-judge Fifth Circuit panel ruled in favor of the Career Colleges and Schools of Texas (CCST) in CCST v. Cardona, and granted a preliminary injunction of the new Borrower Defense to Repayment (BDR) rule.

DEAR COLLEAGUE LETTER ON 100% PROGRAM LENGTH CERTIFICATION RULE

What You Need to Know

The Department of Education, Office of Federal Student Aid published a “Dear Colleague Letter” that provides additional guidance on the treatment of existing GE programs under the newly published 100% Certification Rule, which takes effect as of July 1, 2024. The guidance provides that students enrolled in GE programs as of June 30, 2024 will be eligible to continue to receive their current federal student aid awards until their completion, transfer, or withdrawal from their respective program. Students who enroll on July 1, 2024 or after this date, will be subjected to the federal aid awards in accordance with the clock hours of the revised program. Below is additional information for institutions following the implementation of the 100% Certification Rule for institutions with programs consisting of (i) more than 600 clock hours; (ii) between 300 and 599 clock hours; and (iii) below 300 clock hours.

Programs above 600 Clock Hours

  • The Department states that “it will permit institutions to continue offering a program after the implementation date of the regulation that exceeds the applicable maximum length for students who were enrolled in the program prior to the effective date of the regulatory change. For such existing GE programs, institutions will be allowed to continue to serve through completion students who enroll in the program on or before June 30, 2024, under the provisions of the 150% Certification Rule.”
  • Students who enroll in the program on or after July 1, 2024, will receive prorated Pell Grant amounts based on the state’s minimum clock hour requirements. AACS Members should use caution in following the Department’s guidance on this point: this is different than previous guidance published by the Department and is contrary to AACS’ earlier understanding of this issue. The Department may later change its position on this.
  • Once all “legacy students” – students enrolled prior to July 1, 2024 – have completed the program, the institutions must then report the revised program length to the Department through Partner Connect.

Short-Term Programs

  • For students at short-term programs – consisting of less than 600 clock hours, 16 semester hours, or 24 quarter hours – prior to July 1, 2024, the students will be allowed to continue to receive Pell Grants and Campus-based funds until the student completes, transfers, or withdraws from the program.
  • For students who enroll on July 1, 2024 or after, the students will no longer be eligible to participate in the Federal Pell Grant and Campus-based programs, but would remain eligible, at the institution’s option, to participate in the Direct Loan program under § 668.8(d)(3).

Below 300 Clock Hour Programs

  • Programs that are required by the new rule to drop below 300 clock hours, 8 semester hours, or 12 quarter hours will no longer meet the regulatory definition of an eligible educational program for purposes of an institution’s Title IV program participation.
  • For students enrolled as of June 30, 2024, they will remain eligible for Title IV aid until the student withdraws, transfers or graduates from the program.
  • Students enrolling on or after July 1, 2024, will not be eligible for Title IV aid.

This guidance follows the Department’s April 9, 2024 announcement that it will use discretion – particularly for the period between July 1, 2024 and January 1, 2025 – before enforcing any punitive measures for failure to comply with the newly revised 150% Certification Rule. AACS previously provided membership with a communication regarding its analysis of this guidance. We are continuing to analyze the impact of this “Dear Colleague Letter” and will provide membership with additional information on this topic.

Why This is Important to You

The “Dear Colleague Letter” from the Department of Education clarifies the financial aid eligibility of currently enrolled students and new student enrollments for GE Programs starting on July 1, 2024. The Department reiterated prior guidance that institutions may temporarily offer two versions of the same program concurrently. It also provided guidance on the type and timing of reporting that institutions will be required to provide to the Department.

For more information:

Dear Colleague Letter.

ADDITIONAL GUIDANCE ON 100% CERTIFICATION RULE

What You Need to Know

The Office of Federal Student Aid released guidance stating that the Department will use discretion – particularly for the period between July 1, 2024 and January 1, 2025 – before enforcing any punitive measures for failure to comply with the newly revised 100% Certification Rule. AACS has continued to voice its concerns to the Department over the last several months that many of our member institutions will not be able to restructure their programs to comply with the new rule by its effective date of July 1, 2024. In its announcement, the Department stated that it understands these concerns and the challenges outside the control of institutions that may “affect their ability to comply with the following provisions of the regulations by the date they become effective.”

In recognition of this concern, the Department has implemented a number of defenses that an institution may raise if it is unable to comply with the rule on July 1, 2024. Examples of the defenses that an institution may raise include the following:

  • The inability to obtain approvals from States and/or accrediting agencies for changes in program length in order to comply with requirements under 34 CFR 668.14(b)(26);
  • The inability to obtain approvals for academic program changes to comply with the requirements related to licensure/certification under 34 CFR 668.14(b)(32);
  • The inability to obtain sufficient clarity from state licensing and certification entities about licensure and certification requirements; and
  • The inability to access and use the Department’s systems.

The Department further notes that it will use its discretion on a case-by-case basis. Additionally, it encourages all institutions to document, prior to July 1, 2024, the circumstances that prevent their compliance with any requirement by the regulations’ effective date.

AACS has maintained the position that the length of educational programs, regardless of industry, is the prerogative of institutions and the purview of accreditors. Institutions are in the best positions to determine appropriate program lengths and curricula.

Why This is Important to You

The delay in the enforcement (for the period between July 1, 2024 and January 1, 2025) of the 100% Certification Rule is helpful to institutions. However, the guidance indicates that institutions must affirmatively assert a defense and the Department must then grant the request in order for an institution to be exempt from punishment. This provides the Department with a large amount of discretion to decide whether to impose penalties on institutions.

Our public policy team continues to analyze this guidance and will discuss with AACS leadership the best path forward.

For more information on the Department’s announcement:

Certification Procedures Update

FIFTH CIRCUIT GRANTS PRELIMINARY INJUNCTION OF BDR RULE

What You Need to Know

the three-judge Fifth Circuit panel ruled in favor of the Career Colleges and Schools of Texas (CCST) in CCST v. Cardona, and granted a preliminary injunction of the new Borrower Defense to Repayment (BDR) rule. In its opinion, the Fifth Circuit stated, “CCST has met the criteria to satisfy a preliminary injunction, and the district court erred by concluding that CCST faced no irreparable harm. We REVERSE the district court’s judgment, REMAND, and instruct the district court to postpone the effective date of the borrower-defense and closed-school discharge provisions of the Rule pending final judgment as specified above.” The previous stay pending appeal will remain in effect until the District Court imposes the preliminary injunction.

CCST filed a lawsuit in the United States District Court for the Northern District of Texas seeking to have the U.S. Department of Education’s 2022 Borrower Defense to Repayment (BDR) final rule vacated and enjoined. CCST argued that the final rule creates unlawful processes, fails to serve any legitimate purpose under the Higher Education Act (HEA), and “represents enormous executive overreach” by the Biden administration in violation of the Department’s statutory authority and the Constitution’s separation of powers. Since then, the case has taken a number of twists, including a significant amount of media coverage, a transfer of venue, and most recently, an appeal to the U.S. Court of Appeals for the Fifth Circuit.

This decision represents a significant win for higher education, including for AACS member institutions. 

Why This is Important to You

The Fifth Circuit’s granting of the preliminary injunction prevents the implementation of the new Borrower Defense to Repayment (“BDR”) Rule, until the District Court makes its final determination on the lawsuit. This is significant as many of our institutions have expressed concern over the new BDR Rule. Until the case is decided, the enforceable rule is the 2019 BDR rule, enacted during the Trump administration.

Additionally, the Fifth Circuit held that there is “strong likelihood that the plaintiffs will succeed on the merits in demonstrating the Rule’s numerous statutory and regulatory shortcoming.” This indicates that CCST has a strong case toward invalidating the new BDR Rule once the case is heard in District Court. 

For more information on the complaint:

CCST Complaint

DEPARTMENT TESTIFIED ON FAILED FAFSA ROLLOUT

What You Need to Know

The trouble-ridden FAFSA rollout has been front and center in Congress, as the House Appropriations Committee and the House Education and Workforce Committee recently demanded answers from the Department of Education. The Department recently announced that approximately 30% of FAFSA forms are impacted by the processing and/or data errors. 

As stated by Subcommittee Chairman Burgess Owens in the House Education and Workforce Committee, Higher Education and Workforce Development Subcommittee hearing, “the Department of Education’s FAFSA rollout was mired in delays and dysfunction. Without accountability, the Department of Education’s botched implementation threatens to damage students, families, and institutions.” AACS applauds Rep. Owens for bringing this issue to the forefront as he works to protect all students.

The hearing included higher education professionals, such as:

The panelists and Members from both sides of the aisle were vocal in expressing displeasure with the Department’s rollout efforts, with Representative Virginia Foxx (R-NC) stating, “This country deserves public leaders who fulfill their duties rather than shirk responsibilities and point the finger of blame at others. Now is the time for Secretary Cardona to explain his abysmal leadership to the American people. It is clear something needs to change.” All participants further expressed dismay with the Department’s inability to take accountability for the failed rollout, as Mr. Draeger shared, “I have yet to hear any sort of apology from the Department of Education and not even to schools but to students and families.” 

Meanwhile, in the House Appropriations Committee, Subcommittee on Labor, Health and Human Services, and Education hearing on President Biden’s FY 2025 Budget Proposal, Secretary Cardona acknowledged the Department’s shortcomings and reiterated “there’s nothing more important right now at the Department of Education. We’re working on this around the clock, because we want to make sure our students have information they need to make informed decisions.” The hearing included a contentious discussion concerning the proposed increase to the mandatory Pell add-on by $650 for a total maximum award of $8,145 for students attending public and nonprofit institutions (and excludes for-profit institutions). In defense of this provision, Secretary Cardona stated that he opposed public funding being distributed to for-profit institutions. As expected, Democratic Members largely supported this policy, as Republican Members expressed dismay for targeting a specific sector of the higher education industry.

As additional FAFSA errors and delays continue to arise, we expect Members of Congress – from both sides of the aisle – to continue to press the Department and Secretary Cardona for answers and resolutions.

Why This is Important to You

We have heard from a number of our members about the impact that the FAFSA rollout has had on schools’ administrative teams and students. This issue has been at the forefront of the higher education sector for the past several months. Members of Congress are pressuring the Department to quickly remedy the significant problems caused by the FAFSA rollout and to take accountability for the situation we currently face. We will continue to update membership on any developments concerning the FAFSA rollout.

In addition, this alert brings attention to a recent proposal that was included in President Biden’s FY 2025 Budget. This proposed budget does not have any binding effect on Congress, however, it provides another example of the Administration specifically targeting our sector.

For more information on these hearings: 

Higher Education and Workforce Development Subcommittee Hearing

Labor, Health and Human Services, and Education Subcommittee Hearing

STUDENT DEBT RELIEF PLAN

What You Need to Know

President Biden released a series of draft rules that will provide student debt relief to millions of borrowers. The rules will be formally published in the Federal Register on Wednesday, April 17, for a 30-day comment period. Additionally, the Department will publish a second draft rule focused on providing relief for borrowers experiencing hardship in the next couple of months. The draft rules are as follows:

  • Assistance for borrowers whose debt came from institutions or programs that lost access to Federal aid following a Secretarial action.*
  • Authorize relief for borrowers whose schools or programs faced similar situations but closed before the action was finalized.*
  • Assistance for borrowers whose programs closed and the Department determines their graduates had high levels of debt relative to earnings or insufficient earnings compared to a high school graduate.*
  • Automatic cancellation of up to $20,000 of the amount by which a borrower’s loans currently exceed what they owed upon starting repayment.
  • Forgiveness of the full amount by which a borrower saw their balance grow after entering repayment if the borrower is enrolled in any Income-Driven Repayment Plan and has annual income equal to or below $120,000.
  • Permit student debt forgiveness for borrowers with only undergraduate debt if they first entered repayment at least 20 years ago (on or before July 1, 2005), and borrowers with any graduate school debt would qualify if they first entered repayment 25 or more years ago (on or before July 1, 2000).
  • Authorize relief to borrowers identified by the Secretary who are otherwise eligible for relief under payment plans, including Saving on A Valuable Education (SAVE) and other IDR plans but have not successfully applied.
  • Authorize relief for borrowers eligible for forgiveness opportunities like closed school discharges, but have not successfully applied.

*Proposed rules aimed at helping borrowers who enrolled in low-financial-value programs or institutions.

Why This is Important to You

President Biden has continued to campaign on the promise of reducing the burden of student debt and ensuring that student loans are not a barrier to opportunity for students and families. While institutions will not be held responsible for the student loan discharge, we highlight these announcements as the Department has enacted a series of mechanisms to provide student loan debt relief. We will monitor the proposed rules once released in the Federal Register, and will reach out to membership about public comment opportunities.

For more information on this announcement:

President Biden Student Debt Relief Plan

For More Information

If you have any questions about this Update, please email info@beautyschools.org.

Related Posts

State Update – June 4

The first week of the June finds only 14 state legislatures actively meeting. Recent and upcoming legislative adjournments include Louisiana on June 3 and New York on June 6. 

Another four states – Arizona, Delaware, New Hampshire and Rhode Island – will be adjourning their respective 2024 legislative sessions at the end of the month.

Learn More >