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Federal Update – Jan. 5

Federal Update – Jan. 5

KEY DEVELOPMENTS

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AACS Files GE Lawsuit

AACS filed its complaint against the Department and Secretary Miguel Cardona, in U.S. District Court for the Northern District of Texas, Fort Worth Division. AACS is joined as plaintiff in this suit by DuVall’s School of Cosmetology LLC, an AACS member school in the district.

Negotiated Rulemaking Committee on Program Integrity and Institutional Quality

The Department has released six issue papers across a range of categories in preparation for the upcoming Negotiated Rulemaking on Program Integrity and Institutional Committee meeting taking place January 8 through 11.

New Bill Makes For-Profit Colleges Eligible to Participate in Short-Term Pell

The House Education and Workforce Committee passed the Bipartisan Workforce Pell Act, which would extend the Federal Pell Grant program to include short-term programs. The legislation advances to the House for consideration.

GAINFUL EMPLOYMENT LAWSUIT

On Friday, December 22, 2023, AACS filed its complaint against the US Department of Education and Secretary Miguel Cardona, in US District Court for the Northern District of Texas, Fort Worth Division. AACS is joined as plaintiff in this suit by DuVall’s School of Cosmetology LLC, an AACS member school in the district. A committee of AACS leaders and the legal team at Duane Morris wrote that the complaint challenges “…the latest attempt by the United States Department of Education…to impose arbitrary, capricious, and unconstitutional new requirements on institutions of higher learning which, at a minimum, threatened institutions’ ability to recruit new students and…jeopardize their very existence.”

We will continue to keep you updated as the complaint progresses through the legal process.

CONGRESSIONAL HEADLINES

Short-Term Pell

The House Education and Workforce Committee passed the Bipartisan Workforce Pell Act, which would extend the Federal Pell Grant program to include short-term programs. The legislation now advances to the House for consideration. The Bipartisan Workforce Pell Act would allow students to receive a “Workforce Pell Grant” to attend short-term programs at any institution (including for-profit institutions) that satisfies certain eligibility requirements. Programs with at least 150 “clock hours” of instruction, but less than 600 hours would be eligible. The Department would begin awarding short-term Pell grants starting on July 1, 2025, for the 2025-2026 school year.

The eligibility requirements would include the following:

·    Approval from a state workforce board that the program’s curriculum satisfies the requirements of high-skill, high-wage or in-demand industries;

·    Approval from an accreditor that the program meets other standards such as providing a recognized postsecondary credential;

·    Additional approval from the Department.

Opposition to SAVE Plan 

The House passed H.J. Res. 88, which blocks the implementation of President Biden’s SAVE income-driven student loan repayment plan. The resolution provides that –

“Congress disapproves the rule submitted by the Department of Education relating to ‘Improving Income Driven Repayment for the William D. Ford Federal Direct Loan Program and the Federal Family Education Loan (FFEL) Program’ (88 Fed. Reg. 43820 (July 10, 2023)), and such rule shall have no force or effect.”

The Senate recently voted against an identical resolution, S.J. Res. 43. President Biden has indicated that he would veto any resolution that blocks the implementation of his student loan forgiveness policies.

DEPARTMENT HEADLINES

Student Loan Forgiveness

The Biden Administration announced that it had approved $4.8 billion in student loan forgiveness. The debt relief was provided through two sources:

·    $2.2 billion for nearly 46,000 borrowers through fixes to IDR that will provide borrowers with an accurate count of progress toward forgiveness and address longstanding concerns with misuse of forbearance. Including today’s numbers, the Biden-Harris Administration has now approved almost $44 billion in IDR relief for nearly 901,000 borrowers.

·    $2.6 billion for 34,400 borrowers through PSLF. This includes borrowers who have benefited through the limited PSLF waiver and ongoing regulatory improvements to the programs. This brings total relief through PSLF up to $53.5 billion for almost 750,000 borrowers since October 2021. By contrast, only about 7,000 borrowers had received forgiveness through these programs at the start of the Biden-Harris Administration.

The Negotiated Rulemaking Committee on Student Loan Debt Relief reached consensus on forgiveness measures related to Gainful Employment and Cohort Default Rates, and will include these provisions in its proposed rule. The Department voted on each section of the proposed regulatory text, as it held its final session of the Negotiated Rulemaking Committee today. The proposed rule will include a waiver for students who attended Gainful Employment programs closed due to high debt-to-earnings rates or low median earnings. Additionally, the Secretary may waive the borrower’s obligation to repay the balance on a Federal Family Education Loan (“FFEL”) for loans received for attendance at an institution that lost its eligibility to participate in any title IV, HEA program because of its cohort default rate. As the negotiated rulemaking sessions have concluded, the Department will next publish its proposed rule in the Federal Register for public comment. We will continue to provide updates once the Department publishes its proposed text, and will alert Membership to the public comment period.

Negotiated Rulemaking Committee:Program Integrity and Institutional Quality

The Department has released six issue papers across a range of categories in preparation for the upcoming Negotiated Rulemaking on Program Integrity and Institutional Committee meeting taking place January 8th through 11th. The topics include: the Secretary’s recognition of accrediting agencies, institutional eligibility including state authorization as a component of eligibility, program requirements for distance education, return of Title IV funds, cash management including timely student disbursements, and eligibility requirements for TRIO program participation.

The committee will be comprised of non-federal negotiators from 15 constituency groups. The primary negotiator representing proprietary institutions on the Rulemaking Committee is Jillian Klein. Ms. Klein is the senior vice president of government and external affairs for Strategic Education. David Cohen, Five Towns College and APC Board of Directors, is the alternate for the Rulemaking Committee.

A copy of the proposed regulatory text is available here. Updates on the student debt relief rulemaking process will be posted here.

Title IX

Rep. Lois Frankel (D-FL) and Rep. Mark Takano (D-CA) drafted a letter to Secretary Cardona to request that the Department provide an update on its publication of the final Title IX rule. A total of 65 Members signed the letter. The final Title IX rule has been delayed twice, once in May and then again this October. As stated in the letter, “students across the country have lived under former President Donald Trump’s Title IX policies that weakened protections for sexual assault and harassment survivors and sowed confusion about the extent of students’ protections against sex discrimination, including discrimination on the basis of sexual orientation, gender identity, and sex characteristics.”

In addition to the letter, the House Oversight Committee held a hearing on the final Title IX rule. It is expected that a final rule will be released in March.

FAFSA Soft Launch

The Department has started the soft launch of the 2024-25 FAFSA form, where the form will be available for periods of time over the coming days while it monitors site performance and respond in real time to any potential issues impacting the applicant experience. During the soft launch the Department will be initiating pauses to the site, during which time the form will not be available while our team makes improvements. As explained below, students and families will have ample time to complete the 2024-25 FAFSA, and do not need to rush to fill out the form immediately when the soft launch period opens.

IPEDS Report

The National Center for Education Statistics released its latest the Integrated Postsecondary Education Data System (IPEDS) report. IPEDS gathers information annually from U.S. college, university, and technical and vocational institutions eligible to participate in any of the Title IV federal student financial aid programs. The Secretary provided the following statement in following the release of the report:

“The U.S. Department of Education has issued a comprehensive report on the most effective and lawful strategies for promoting equal opportunity and diversity on our college campuses, and we will continue to support efforts to promote equity in higher education. This data also shows that unfortunately still far too many students never make it to commencement day and that institutions must do more to raise the bar for student success and equitable outcomes. For the United States to thrive and compete in the 21st century, we need a higher education system that provides students of all backgrounds with opportunities to reach their potential, cultivate their talents, and contribute to our country.”

Department Announcements

The FSA Partner and School Relations Center will allow for COD School Testing for the 2024–25 award year from Jan. 8, 2024, through Dec. 13, 2024. COD School Testing will provide organizations with an opportunity to test Federal Pell Grant (Pell Grant), Teacher Education Assistance for College and Higher Education (TEACH) Grant, and William D. Ford Federal Direct Loan (Direct Loan) business processes and system software with the COD System prior to the transmission and processing of actual production data using COD Common Record XML Schema Version 5.0b. Organizations that wish to participate must submit the “COD School Testing 2024–25 Sign-Up Document” to the FSA Partner and School Relations Center.” The sign-up document is posted on the COD website’s Home page under the “COD Resources” link.

The Department published an electronic announcement providing additional information for individuals without a social security number (SSN) to successfully create their StudentAid.gov account, which will allow the individual to access and sign the FAFSA form. Individuals who do not possess an SSN (who fail the SSA match), as well as individuals who fail the TransUnion® verification processes will be required to complete the StudentAid.gov account creation process specifically developed for those without an SSN.

The Department published an electronic announcement reminding institutions of their obligation to have its auditors evaluate and report on the accuracy of certain calculations performed by the institution in order to participate in federal student aid programs. The Department of Education’s (Department) regulations require institutions approved to participate in the federal student aid programs to have an independent certified public accountant substantiate every year the following calculations on an award year basis for the institution and/or its programs to remain eligible. The Department stated that it has become aware that some institutions are not ensuring that the required attestations are performed each year. Given the current confusion at institutions and in the audit community about the applicability of the attestation requirements, the Department does not plan to take action against an institution solely on the basis of the institution’s failure to have the rates substantiated timely by an independent auditor for award years ending on June 30, 2025 or earlier unless an institution has already been informed it needed to comply with these requirements and failed to do so.

As of December 17, 2023, the Department has expanded the features of FSA Partner Connect, the digital front door for all Federal Student Aid and partner engagement. In order to use the new features, users must have access to FSA Partner Connect. Users who need access to FSA Partner Connect must contact their organization’s Primary Administrator to complete that process.

The Office of Federal Student Aid (FSA) released new quarterly portfolio reports on its FSA Data Center website with key data and other information about the American student aid programs from September 30, 2023. As of September 2023, approximately 43.2 million unduplicated student loan recipients had $1.60 trillion in outstanding loans. More than 26 million ED-held recipients, with more than $1 trillion in outstanding loans, were in a repayment status as of September 2023, compared to about 400,000 recipients in September 2022 and 19.3 million recipients in September 2019.

The Department’s electronic announcement provides instructions to proprietary institutions on how they should report tuition assistance payments delayed as a result of the U.S. Army’s ArmyIgnitED system issues and the U.S. Department of Education’s (ED) treatment of such delayed payments for purposes of 90/10 enforcement. Notwithstanding Army Tuition Assistance payments delayed as a result of ArmyIgnitED system issues, institutions must calculate their 90/10 percentage, as required by the statute and applicable regulations, to include all Federal funds received in FY 2023 or 2024 that were used to satisfy tuition, fees, and other institutional charges and make all disclosures required by the Department for that calculation in its 90/10 note to its financial statements. In order to receive the enforcement relief outlined above, an institution must also disclose in its 90/10 note to the financial statements a revised 90/10 attestation that excludes the CY 2021 or 2022 late ArmyIgnitED payments received in FY 2023 or 2024 that were used to pay tuition, fees, and other institutional charges.

The Office of Federal Student Aid issued an enforcement bulletin reminding institutions of their obligation to establish and maintain appropriate compliance management systems and policies as part of the responsibilities required under their Program Participation Agreement (PPA) and to foster an overall culture of compliance to prevent violations and minimize harm to students and taxpayers. The bulletin does not represent a change in policy or an announcement of a new requirement. Instead, the bulletin is intended to reinforce the importance of robust compliance management systems for institutions participating in the Title IV programs.

The Department published a notice in the Federal Register requesting for a new information collection to collect programmatic and student information from institutions participating in the Second Chance Pell experience and Prison Education Programs (PEPs) for confined or incarcerated individuals. Since schools participating in the Second Chance Pell experiment have three years to transition their programs under the experiment to comply with the PEP requirements, the data collected for the experiment and the PEP provisions is almost identical.

Other Federal Agencies Headlines

The Federal Trade Commission has filed suit against Grand Canyon Education (GCE), Inc., Grand Canyon University (GCU), and Brian Mueller—the CEO of GCE and president of GCU—for deceiving prospective doctoral students about the cost and course requirements of its doctoral programs and about being a nonprofit, while also engaging in deceptive and abusive telemarketing practices. In a complaint filed in federal court, the FTC says that GCU and GCE told prospective students that the total cost of GCU’s “accelerated” doctoral programs was equal to the cost of just 20 courses (or 60 credits). In reality, the school requires that almost all doctoral students take additional “continuation courses” that add thousands of dollars in costs.

The Commission vote authorizing the staff to file the complaint was 3-0. The complaint was filed in the U.S. District Court for the District of Arizona.

If you have any questions about this update, please contact Ed Cramp, Kristina Gill, or Matthew Steinway.

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