ED Announces Over One Million 2024-2025 FAFSA Forms Successfully Submitted

On January 8, 2024, the Department of Education announced that it has received over one million applications from students using the redesigned 2024-2025 FAFSA form.  The announcement stated that the 2024-2025 FAFSA is now available for students and families 24 hours a day, seven days a week.

Secretary of Education Miguel Cardona said:  “The fact that over a million students were able to complete the Better FAFSA during its brief soft launch period underscores our commitment to making applying for college financial aid simpler and easier than ever before.”  The press release went on to state that the improvements made to the 2024-2025 FAFSA form expands eligibility for federal student aid and provides a streamlined user experience for students and families.  Students and families now have the ability to retrieve tax information directly from the Internal Revenue Service (IRS).

A copy of the press release is found at: https://www.ed.gov/news/press-releases/us-department-education-announces-over-1-million-2024-2025-fafsa-forms-successfully-submitted-and-form-now-available-247-students-and-families?utm_source=Iterable&utm_medium=email&utm_campaign=campaign_8729403_nl_Afternoon-Update_date_20240109&cid=pm&source=&sourceid=.

ED Announces the Withholding of Payments for Three Student Loan Servicers

On January 5, 2023, the Department of Education announced it was withholding payments to three student loan servicers as part of its efforts to hold servicers accountable.  The Department concluded that Aidvantage, EdFinancial, and Nelnet all failed to meet contractual obligations to send timely billing statements to a combined total of 758,000 borrowers for the first month of repayment.  As a result of identifying these errors, the Department is withholding payments of $2 million from Aidvantage, $161,000 from EdFinancial, and $13,000 from Nelnet, amounts based on the number of borrowers impacted by these errors.

Secretary of Education Miguel Cardona said:  “Today’s actions make clear that the Biden-Harris Administration will not give student loan servicers a free pass for poor performance and missteps that jeopardize borrowers.”

A copy of the press release is found at:  https://www.ed.gov/news/press-releases/biden-harris-administration-takes-additional-action-hold-student-loan-servicers-accountable-failing-meet-contractual-obligations.

FSA Introduces 2024-2025 FAFSA Issue Alerts Page

On January 5, 2024, Federal Student Aid (FSA) introduced a 2024-2025 FAFSA Issue Alerts page, which will keep the financial aid community informed about any issues that occur during the soft launch of the Free Application for Federal Student Aid (FAFSA).  The Department said it will monitor site performance, conduct pauses for maintenance, and make updates to improve the user experience for students and families.

Stakeholders should bookmark the page for regular status updates and resources.

A copy of the 2024-2025 FAFSA Issue Alerts page is found at: https://fsapartners.ed.gov/knowledge-center/topics/fafsa-simplification-information/2024-25-fafsa-issue-alerts#.

Education Department Releases Proposed Changes to the Regulations for Accreditation, State Authorizing Agencies, and Other Policy Areas

On January 2, 2024, the Department of Education released a series of issue papers proposing changes to the regulations for accreditation, state authorizing agencies, distance education, return of Title IV funds, and cash management.  A committee representing 15 constituent groups met on January 8-11, 2024, to review the Department’s proposals.

A press release issued by the Department said it wants to make sure accrediting and state authorization agencies are holding institutions accountable.  James Kvaal, Under Secretary of Education, said:  “The Biden-Harris Administration remains committed to ensuring that higher education institutions and programs are held accountable for delivering on their promise of a better future for students and our financial aid programs are helping students accomplish their goals.”

A copy of the press release is found at:  https://www.ed.gov/news/press-releases/biden-harris-administration-takes-next-steps-rulemaking-strengthen-institutional-quality-and-program-integ.

Information on the negotiators and issue papers are found at: https://www2.ed.gov/policy/highered/reg/hearulemaking/2023/index.html?src=rn.

ED Releases Fall 2023 Regulatory Agenda

Recently, the Department of Education released its Fall 2023 Unified Agenda of Regulatory and Deregulatory Actions, which indicates that the Office of Postsecondary Education and the Office of Federal Student Aid have several items that are in the proposed rule or final rule stages impacting the federal student aid programs.

The relevant items at the proposed rule stage are:

  • Federal Student Loan Forgiveness: The Department plans to amend current regulations related to the Secretary’s compromise and waiver authority under the Higher Education Act to provide relief to federal student loan borrowers.  A Notice of Proposed Rulemaking (NPRM) is expected in May 2024.
  • Accreditation: The Department plans to amend current regulations associated with the standards related to the Secretary of Education’s recognition of accrediting agencies and accreditation procedures as a component of institutional eligibility for participation in the Title IV programs.  An NPRM is expected in October 2024.
  • State Authorization: The Department plans to change how colleges must be approved by state regulators in order to receive federal student aid.  An NPRM is expected in October 2024.
  • Return to Title IV: The Department plans to make changes to how colleges must calculate and return federal student aid when a student withdraws before the end of a term and ease the administrative burden on institutions.  An NPRM is expected in October 2024.
  • Cash Management: The Department plans to change federal regulations to ensure that students maintain timely access to student aid disbursed by institutions.  An NPRM is expected in October 2024.
FTC Sues Grand Canyon University for Deceptive Advertising and Illegal Telemarketing

On December 27, 2023, the Federal Trade Commission (FTC) announced that it had filed a lawsuit against Grand Canyon University (GCU) and Brian Mueller, the CEO of Grand Canyon Education (GCE) and President of GCU, for deceiving prospective 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 the complaint filed in federal court, the FTC said 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 for 60 credits.  “In reality, the school requires that almost all doctoral students take additional “continuation courses” that adds thousands of dollars in costs.”  The Department of Education reported that fewer than 2 percent of GCU’s doctoral program graduates completed their program within the cost advertised by GCU.

The complaint also said that despite operating for the profit of GCE and its investors, “the defendants deceptively marked the school as a nonprofit.”  GCU is recognized as a nonprofit by the IRS, State of Arizona, and the Higher Learning Commission (HLC).

In addition, the complaint said that the deceptive claims and abusive telemarketing calls violated the FTC and the Telemarketing Sales Rule, and the FTC asked the court to provide redress to consumers.

The FTC’s vote authorizing the staff to file the complaint was 3-0.

A copy of the press release is found at: https://www.ftc.gov/news-events/news/press-releases/2023/12/ftc-sues-grand-canyon-university-deceptive-advertising-illegal-telemarketing.

AACS Sues ED to Block GE Rule

As reported in various publications, on December 22, 2023, the American Association of Cosmetology Schools (AACS) filed a lawsuit in the Northern District of Texas suing the Department of Education to block the new gainful employment (GE) rule from taking effect on July 1, 2024.  AACS argued that the GE rule would jeopardize the “very existence” of cosmetology schools and that it uses flawed measures to determine whether graduates of their programs are gainfully employed.

The complaint said:  “The consequences of this misconceived Final Rule are dramatic.”  It was reported that the GE measurements of graduates earning more than the average high school graduates in their state as well as earning enough to repay their student loans would be failed by most cosmetology schools.  AACS argued that the regulation is arbitrary, and the Department overstepped its authority in adopting it.  One of its main complaints was that the rule’s debt-to-earnings ratio failed to properly track income for tipped workers like beauticians.

CFPB Publishes “Issue Spotlight:  Federal Student Loan Return to Repayment”

On January 5, 2024, the Consumer Financial Protection Bureau (CFPB) issued a report titled, “Issue Spotlight:  Federal Student Loan Return to Repayment,” which describes the concerns facing borrowers following the resumption of federal student loan repayment.  In monitoring borrowers’ experiences during the return to repayment, the report concluded:

  • Borrowers are frequently forced to wait on hold for more than an hour when calling their servicer, and many give up without receiving assistance.
  • Millions of income-driven repayment plan applications were submitted between August and October 2023. As of late October, servicers reported more than 1.25 million pending income-driven repayment plan applications with more than 450,000 of the applications pending for more than 30 days with no resolution.
  • Borrowers are receiving confusing bills from servicers. The bills are often inaccurate and untimely.  Errors include listing premature due dates before the end of the payment pause, inflating monthly payment amounts due to outdated poverty guidelines, or using the incorrect income when calculating a borrower’s new income-driven repayment plan payment.

A copy of the CFPB report is found at:  https://www.consumerfinance.gov/about-us/newsroom/cfpb-report-identifies-challenges-faced-by-borrowers-in-resumption-of-student-loan-payments/.

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