Below are the Washington DC updates in education policy that happened in October 2023.
President Signs Short-Term Spending Bill for FY 2024
On October 1, 2023, President Joe Biden signed a continuing resolution (CR) that will keep the federal government funded through November 17, 2023. This offers Congress additional time to work through the appropriations process for FY 2024.
Senate and House Republicans Send Letter to GAO Requesting Review of ED’s Work to Return Borrowers to Repayment
On September 20, 2023, Senate Health, Education, Labor, and Pensions Committee Ranking Member Bill Cassidy (R-LA) and House Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC) sent a letter to the Government Accountability Office (GAO) requesting a review of the Department of Education’s work to return federal student loan borrowers to repayment. “The Fiscal Responsibility Act of 2023 mandated that the student loan payment pause end on August 30, 2023, and that borrowers return to repaying their federal student loans.” The letter goes on to say: “Yet we have received no indication that the Department is prepared for this historic effort.”
The letter also says that the Department announced a 12-month on-ramp period to allow borrowers to forego payments without any statutory and regulatory consequences for delinquency and default, but that the Department’s “repeated mixed messages raise questions about the incentives borrowers have to avoid repayment of their loans and about the costs of these actions to taxpayers.”
A copy of the press release, including the text of the letter, is found at: https://www.help.senate.gov/ranking/newsroom/press/ranking-member-cassidy-chairwoman-foxx-seek-information-on-return-to-student-loan-repayment.
House Education and the Workforce Committee Passes CRA Resolution to Overturn SAVE Plan
On September 14, 2023, the House Education and the Workforce Committee met in executive session to consider House Joint Resolution 88, along with 8 other pieces of legislation. H.J. Res. 88 uses the Congressional Review Act (CRA) to overturn the Department of Education’s new Saving on A Valuable Education (SAVE) income-driven repayment (IDR) plan. The CRA allows the House of Representatives and Senate to nullify federal rules by a simple majority vote.
It was reported that during the debate Committee Republicans blasted the new repayment plan as a backdoor loan forgiveness program that provides wasteful subsidies to millions of borrowers at the expense of taxpayers. However, Committee Democrats said that the SAVE plan is the most affordable student loan repayment plan in our nation’s history.
The Committee reported H.J. Res. 88 favorably to the House by a 23 to 19 vote. The bill now goes to the House of Representatives for its consideration.
ED Announces an Additional $9 Billion in Student Debt Forgiveness for 125,000 Borrowers
On October 4, 2023, the Department of Education announced that another $9 billion in student debt has been forgiven for 125,000 borrowers through fixes to the income-driven repayment (IDR) plan and the Public Service Loan Forgiveness (PSLF) plan and granting automatic relief for borrowers with total and permanent disabilities. The announcement states that with these cancellations, the total approved debt cancellation by the Biden-Harris Administration is $127 billion for almost 3.6 million Americans.
Secretary of Education Miguel Cardona stated: “For years, millions of eligible borrowers were unable to access the student debt relief they qualified for, but that’s all changed thanks to President Biden and this Administration’s relentless efforts to fix the broken student loan system.”
A copy of the press release is found at: https://www.ed.gov/news/press-releases/biden-harris-administration-announces-additional-9-billion-student-debt-relief.
On October 4, 2023, Chairman of the House Committee on Education and the Workforce Virginia Foxx (R-NC) released a statement rebuking the Biden Administration’s attempt to saddle taxpayers with $9 billion in unpaid student loan debt:
“The Department of Education acts as if hardworking taxpayers are both willing and able to foot a tab worth billions of dollars that they do not owe. Either the Department is blissfully ignorant of its binding legal constraints, or it is purposefully evading Congress’ approval and pushing forward with its own illegal charade – the latter is the obvious answer. Hardworking taxpayers deserve much better than this.”
A copy of the press release is found at: https://www.publicnow.com/view/2063E00441CC7B9B72FBD0906A9D4DB297C81331.
ED Releases Issue Paper and Identifies Non-Federal Negotiators to Create a Path to Debt Relief
On September 29, 2023, the Department of Education released an issue paper laying out its initial set of policy considerations to create a path to debt relief for student borrowers in need. The paper identifies five questions about distinct categories of affected borrowers for which the Department is seeking feedback. The debt relief issue paper was discussed at the first meeting of the Student Loan Relief Committee, which was scheduled to take place October 10 and 11, 2023. The Committee is comprised of non-federal negotiators from 14 affected constituency groups, as well as a negotiator from the Department. The Committee will also meet in November and December.
The Department also released a list of the individuals who serve on the negotiating committee, which is found at: https://www2.ed.gov/policy/highered/reg/hearulemaking/2023/student-loan-debt-relief-committee-list.pdf?utm_content=&utm_medium=email&utm_source=govdelivery&utm_term=.
A copy of the press release, which includes the link to the issue paper, is found at:
ED Releases Final Regulations on Gainful Employment
On September 27, 2023, the Department of Education announced that it released final regulations that strengthen the Gainful Employment (GE) rule and establish a new Financial Value Transparency (FVT) framework giving students in all programs detailed information about the net costs of postsecondary education programs and the financial outcomes they can expect. “It will also help prospective students understand the potential risks involved in their program choices by requiring them to acknowledge viewing this information before enrolling in certificate or graduate programs whose graduates have been determined to face unaffordable debt levels.”
Secretary of Education Miguel Cardona said: “Today’s final rules answer President Biden’s call to hold colleges accountable for rising costs and protect students from unaffordable college debt.” The Department estimates that the final rules will protect nearly 700,000 students annually who would otherwise enroll in one of almost 1,700 low-performing programs.
Under the Debt-to-Earnings ratio, the annual amount a typical graduate needs to devote to their student loans must be equal to or less than 8 percent of annual earnings, or equal to or less than 20 percent of their discretionary earnings, which are their annual earnings above 150 percent of the federal poverty guideline for a single individual).
The new earnings premium test would require at least half of the program graduates to have higher earnings than a typical high school graduate in their state’s labor force who never enrolled in postsecondary education.
Programs will be assessed separately on each of the Debt-to-Earnings and earnings premium metrics. If a program fails either metric in a single year, they will be required to provide warnings to current and prospective students that their program could be at risk of ineligibility for federal funding. If a program fails the same metric in two of three consecutive years, it will no longer be eligible to participate in federal student aid programs.
The final rule also contains a new Financial Value Transparency (FVT) framework, which “will give all students the most detailed information ever available about the cost of postsecondary programs, and the financial outcomes they can expect.” A significant change from the initial proposal is that, while information will be collected and shared for all students in all programs, only prospective students in certificate and graduate programs would be required to acknowledge that a program has a high debt burden. Undergraduate degree programs are excluded from the acknowledgement requirement. The FVT framework will use the same metrics as the gainful employment framework: annual and discretionary debt-to-earnings (D/E) and the “earnings premium” (EP). The FVT rules relate exclusively to transparency. No penalties or sanctions are associated with the FVT regulations.
A copy of the press release is found at: https://www.ed.gov/news/press-releases/biden-harris-administration-announces-landmark-final-rules-protect-consumers-unaffordable-student-debt-and-increase-transparency?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=.
The final rules were published in the Federal Register at:
The press release announced that the GE accountability and FVT reporting provisions will go into effect on July 1, 2024. According to the press release, the first official financial outcome rates will be published in early 2025, and the first year that programs may become ineligible for federal student aid programs is 2026.
On September 27, 2023, House Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC) issued a press release criticizing the Department’s rule. “For an agency that purports to serve the needs of veterans, minorities, and other disadvantaged students, the Department’s announcement today is steeped in hypocrisy,” she said. “It has proven time and again that it would rather march to the beat of its own bureaucratic drum than work to foster both accountability and transparency in postsecondary education. Unfortunately, that means attacking proprietary institutions through flawed and arbitrary regulations while giving a pass to the thousands of low-value programs at institutions serving the vast majority of students.”
A copy of the press release is found at:
On September 28, 2023, Ranking Member of the House Education and the Workforce Committee Bobby Scott (D-VA) released a statement saying: “The Gainful Employment rule is a critical tool to address low-quality career programs that frequently leave graduates with crushing debt and no meaningful career prospects.”
A copy of the press release is found at: https://bobbyscott.house.gov/media-center/press-releases/scott-applauds-biden-protecting-students-taxpayers-low-quality.
FSA Distributes FY 2020 Official Cohort Default Rates
On September 25, 2023, Federal Student Aid (FSA) distributed the FY 2020 official cohort default rate (CDR) notification packages to all eligible domestic and foreign schools. The period for appealing the FY 2020 official CDR begins on October 5, 2023, for all schools.
A copy of the announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2023-09-25/fy-2020-official-cohort-default-rates-distributed-sept-25-2023#.
On September 29, 2023, Federal Student Aid (FSA) released the National Default Rate Briefing for FY 2020 official cohort default rates. As expected, the FY 2020 cohort default were significantly impacted by the pause on federal student loan payments, and no borrowers with ED-held loans entered repayment. The FY 2020 Official National Rate calculated on August 5, 2023, is 0.0 percent. This is a 100 percent decrease from FY 2019 Official National Rate of 2.3 percent.
A copy of the national cohort default rate briefing is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2023-09-29/national-default-rate-briefing-fy-2020-official-cohort-default-rates.
FSA Releases Guidance on the Temporary Process Schools Must Follow to Notify the Department of a Proposed Change in Ownership
On September 21, 2023, Federal Student Aid (FSA) released guidance to notify FSA of a proposed change in ownership (CIO). Effective July 1, 2023, schools are required to notify the Department of Education at least 90 days in advance of a proposed CIO and are required to notify enrolled and prospective students of the proposed CIO at least 90 days in advance of the proposed CIO.
The electronic announcement (GEN-23-77) provides guidance on the temporary process schools must follow to provide the 90-day notification. The process includes notifying the Department of the CIO via the Electronic Application for Approval to Participate in the Federal Student Aid Programs (E-App), the submission of state authorization and accrediting documents, copies of audited financial statements, and a copy of the student notification that was provided to the students.
The regulation became effective July 1, 2023, however, only schools with transactions closing on or after January 1, 2024, are subject to this 90-day notification requirement. Transactions that close on or after July 1, 2023, but before January 1, 2024, are relieved of the 90-day notice requirement.
A copy of the electronic announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2023-09-21/compliance-change-ownership-90-day-advance-notification.
FSA Releases Updated Federal Student Aid Estimator
On September 21, 2023, Federal Student Aid (FSA) announced the release of a newly revised Federal Student Aid Estimator that provides an estimate of the new Student Aid Index and revised federal Pell Grant eligibility calculation. The Federal Student Aid Estimator is a free online tool that provides students with early estimates of their eligibility for federal student aid. The actual and final federal aid amount will only be made available after a FAFSA is submitted and processed.
A copy of the announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2023-09-21/release-revised-federal-student-aid-estimator.
ED Approves $37 Million in Borrower Defense Discharges for Over 1,200 Students who Attended the University of Phoenix
On September 20, 2023, the Department of Education announced the approval of almost $37 million in borrower defense to repayment discharges for more than 1,200 students who enrolled at the University of Phoenix between September 21, 2012, and December 31, 2014, and applied for relief. The announcement indicated that a national ad campaign from the University of Phoenix misled prospective students by “falsely representing that its partnerships with thousands of corporations, including Fortune 500 companies, would benefit students by, for example, giving them hiring preferences at those companies.” The announcement stated that the Department found that no such hiring benefits existed for the University of Phoenix’s students.
The Department reviewed evidence obtained from the Federal Trade Commission (FTC) in its investigation into the University of Phoenix that was resolved through a $191 million action in 2019 as well as evidence obtained from the institution during the Department’s fact-finding process. The Department intends to initiate a recoupment proceeding against the University of Phoenix to seek repayment of the liabilities associated with these approved claims at a later date.
A copy of the announcement is found at: https://www.ed.gov/news/press-releases/biden-harris-administration-approves-37-million-borrower-defense-discharges-over-1200-students-who-attended-university-phoenix.
CFPB Announces Investigation of PHEAA Over Student Loan Bankruptcy Discharges
On September 19, 2023, the Consumer Financial Protection Bureau (CFPB) announced that it is investigating whether the Pennsylvania Higher Education Assistance Agency (PHEAA) illegally tried to collect on private education loans that were already discharged by bankruptcy courts. CFPB’s press release indicated that PHEAA argued that the CFPB lacks the authority to enforce federal bankruptcy law and that its guidance to servicers was based on “dubious” and “novel interpretations” of the law.
A copy of the CFPB press release is found at: https://protectborrowers.org/cfpb-rejects-effort-by-disgraced-student-loan-company-to-rob-borrowers-of-bankruptcy-rights/.
CFPB Report Finds College Tuition Payment Plans Can Put Borrowers at Risk
On September 14, 2023, the Consumer Financial Protection Bureau (CFPB) issued a report entitled, “Tuition Payment Plans in Higher Education,” which found that students face risk when they enter into agreements with colleges and universities to spread the upfront cost of tuition into several, interest-free loan payments. The report stated that many payment-plans have inconsistent disclosures and confusing repayment terms, which puts students at risk of missing payments, incurring late fees, and accumulating debt. The report also indicated that many institutions withheld transcripts from students as a debt collection tool, which can have severe consequences for students trying to begin their careers or finish their education.
A copy of the press release with a link to the report is found at: https://www.consumerfinance.gov/about-us/newsroom/cfpb-report-finds-college-tuition-payment-plans-can-put-student-borrowers-at-risk/.