Below are the Washington DC updates in education policy that happened in August.

Congress On August Recess

 The House of Representatives and the Senate are in recess for the traditional month-long August recess.  The Senate reconvenes on September 5, 2023, and the House reconvenes on September 12, 2023.  Prior to adjourning, the Senate Appropriations Committee passed its version of the FY 2024 Labor, Health and Human Services, Education, and Related Agencies Appropriations Act by a vote of 26 to 2.  However, the House Appropriations Committee never attempted to markup its education package, although the bill passed through the Subcommittee on July 14, 2023, by voice vote.  Upon returning from the August recess, Congress will have to pass a short-term Continuing Resolution (CR) to ensure the federal government will continue to run at the start of the October 1, 2023 fiscal year.

Foxx and Cassidy Threaten ED with Subpoena After it Ignores Repeated Congressional Requests

On July 27, 2023, House Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC) and Senate Health, Education, Labor, and Pensions Committee Ranking Member Bill Cassidy, MD (R-LA) blasted Secretary of Education Miguel Cardona for stonewalling multiple requests for a member-level briefing on the Biden Administration’s plans to return student loan borrowers to repayment.  The Members are now reviewing legal options to secure answers from the Department of Education. A copy of their press release is found at: https://edworkforce.house.gov/news/documentsingle.aspx?DocumentID=409460.

House Education and the Workforce Subcommittee Holds Hearing on Lowering College Costs

On August 27, 2023, the House Education and the Workforce Subcommittee on Higher Education held a hearing titled, “Lowering Costs and Increasing Value for Students, Institutions, and Taxpayers.”  The hearing examined how a market-based approach to accountability can help lower college costs, hold institutions accountable, and provide students and taxpayers with a greater return on their investment.  Subcommittee Chairman Burgess Owens (R-UT) opened the hearing by stating that college has become a requirement “thrust” upon high school students and often, the results of the college investment do not live up to the students’ expectations.  He argued that restoring the value of a four-year college education requires structural reform of the Higher Education Act.  Subcommittee Ranking Member Frederica Wilson (D-FL) stated that a college degree is the surest path to the American dream, especially for students from disadvantaged backgrounds.  She said that increased regulation over higher education will save students money and prevent them from spending on “worthless” degrees.  She commended the Department of Education for its work around the new gainful employment regulations and efforts to forgive student loans.

Senate Democrats Send Letter to Federal Student Loan Servicers Seeking Answers on Returning Borrowers to Repayment

On July 19, 2023, Senate Democrats, led by Elizabeth Warren (DMA), sent a letter to the four federal student loan servicers asking a series of questions on their plans to assist borrowers return to repayment.  The Senators voiced their concern in the letter that most loan servicers have had little engagement with borrowers over the last three years during the COVID-19 pandemic and were not prepared to support borrowers once payments resumed because of staffing challenges and funding challenges by Federal Student Aid (FSA). A copy of the letter is found at: https://www.warren.senate.gov/oversight/letters/senators-warren-blumenthal-brown-markey-menendez-van-hollen-seek-answers-from-federal-loan-servicers-on-plans-to-support-borrowers-ahead-of-student-loan-payment-restart.

Senate Appropriations Committee Releases Text and Committee Report for FY 2024 Labor, Health and Human Services, Education, and Related Agencies Appropriations Act

On July 29, 2023, the Senate Appropriations Committee released the legislative text and Committee Report for the FY 2024 Labor, Health and Human Services, Education, and Related Agencies Appropriations Act.  The bill was voted out of Committee by a vote of 26 to 2.  Appropriators skipped the Subcommittee markup for the bill.  The bill includes the following provisions:

  • Sets the maximum Pell Grant award at $7,645, an increase of $250 over last year’s level.
  • Provides $900 million for the Federal Supplemental Educational Opportunity Grant program, a decrease of $10 million from the FY 2022 enacted level, and $1.22 billion for Federal Work-Study, a decrease of $10 million below last year’s level.

The Committee Report includes the following provisions:

  • Student Aid Administration: The Committee recommends $2,183,943,000 for the Student Aid Administration account, which includes an increase in funding to support increased costs associated with servicing Federal student loans, largely related to the resumption of Federal student loan payments starting in September 2023 and helping borrowers enter repayment.
  • FAFSA Family Farm Impact Study: The new Student Aid Index (SAI) formula included in the FAFSA Simplification Act (P.L. 116-260) requires students applying for Federal student aid to report the net worth of the farms on which their family resides, which could have an impact on the eligibility of students to qualify for Federal student aid.  The Committee urges the Department to conduct a study to thoroughly understand the impact of the new requirement for students to report the farms their families live on as assets for purposes of applying for Federal student aid.
  • Return of Title IV funds: The Committee continues to encourage the Department to pursue efforts to simplify and streamline the Return of Title IV Funds process for institutions of higher education and students.
  • Return to Repayment: The Committee directs the Secretary to provide monthly briefings to the Committees on Appropriations and the Committees on Education and the Workforce of the House of Representatives and on the Committee on Health, Education, Labor, and Pensions of the Senate on progress related to the implementation of Title IV of division B of the Fiscal Responsibility Act of 2023 (P.L. 118-5) for Federal student loans during FY 2024. The briefings should include information on borrower status, metrics on communications with borrowers, and any changes to communications with borrowers based on data or behavioral economics assumptions.
  • State-Based and Non-Profit Servicing Organizations: The Committee continues to note that many State-based and non-profit servicing organizations have demonstrated specialized experience in helping struggling borrowers and continues to encourage the Department to ensure such organizations have a role in any new Federal student loan servicing environment.
  • Pell Grant Restoration and Prison Education Program: The Committee continues to recognize the significance of restoring Pell Grant access for incarcerated individuals and the impact that it will have on reestablishing effective prison education programs across the country, and ultimately reducing recidivism rates and saving taxpayer dollars by reducing the overall costs of incarceration.  Given that regulations for the new Prison Education Program are expected to be finalized during FY 2024, the Committee directs the Department to continue the Second Chance Pell Pilot program as the Department finalizes implementation of the full Pell Grant reinstatement.
  • Experimental Site Initiatives: The Committee encourages the Department to pilot activities to support and encourage accelerated, cost-effective, 3-year bachelor’s degree programs, such as the “College in 3” project.

  The bill will advance to the Senate floor when the Senate returns from recess. A copy of a summary of the bill is found at: https://www.appropriations.senate.gov/news/majority/bill-summary-labor-health-and-human-services-education-and-related-agencies-fiscal-year-2024-appropriations-bill.  

House Republicans’ FY 2024 Budget Proposal Reduces Education Spending

On July 14, 2023, the House Labor, Health and Human Services, Education, and Related Agencies Appropriations Subcommittee forwarded its FY 2024 appropriations bill to the full Committee after passing the bill by voice vote.  However, the House Appropriations Committee never attempted to markup the bill before the House recessed.  This suggests that the House Republicans may not have the votes to pass the bill through Committee nor the House floor. The bill provides $147 billion for programs under the jurisdiction of the Department of Education, Department of Labor, and the Department of Health and Human Services.  The funding level is $60.3 billion (or 29 percent) below the FY 2023 enacted level and $73 billion below the President’s budget request. The bill would maintain funding for Pell Grants at the maximum of $7,395, the same as provided in FY 2023.  It would also eliminate Federal Supplemental Educational Opportunity Grants and Federal Work-Study funding. Ranking Member Rosa DeLauro (D-CT) called the proposal a Republican attempt to “end public education.” A copy of Congresswoman DeLauro statement is found at: https://democrats-appropriations.house.gov/news/statements/ranking-member-delauro-statement-at-the-subcommittee-markup-of-the-2024-labor-health.  

FSA Publishes Dear Colleague Letter on FAFSA Simplification Act Changes

On August 4, 2023, Federal Student Aid (FSA) published a Dear Colleague Letter (DCL) summarizing changes to the FAFSA [Free Application for Federal Student Aid] resulting from the FAFSA Simplification Act.  The DCL summarizes the changes resulting from the new law that have previously been implemented and explains the final changes to the need analysis formulas, the calculation of Pell Grant awards, the move from Expected Family Contribution (EFC) to Student Aid Index (SAI), and the use of tax information that the Department is implementing beginning with the 2024-2025 award year.  The Department said that it will make significant and extensive changes to the FAFSA form and process for the 2024-25 award year to implement these statutory changes.  In addition to the Dear Colleague Letter, the Department also published a Questions and Answers document clarifying elements of the upcoming changes. A copy of the DCL, which includes the Question and Answers, is found at: https://fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2023-08-04/fafsa-simplification-act-changes-implementation-2024-25.  

OIG Issues Letter Amending Guide for Financial Statement Audits of Proprietary Schools to Address the 90/10 Rule

On July 31, 2023, the Office of Inspector General (OIG) sent a letter to certified public accountants amending the March 2023 Guide for Financial Statement Audits of Proprietary Schools and For Compliance Attestation Examination Engagements of Proprietary Schools and Third-Party Servicers Administering Title IV Programs (“Guide”) to address recent regulatory changes to the 90/10 rule.  On October 28, 2022, the Department of Education published final regulations in the Federal Register amending 34 C.F.R. § 668.23, “Non-Federal revenue (90/10).”  The final regulations implemented amendments to sections 487(a) and (d) of the Higher Education Act of 1965, as amended (HEA), made by the American Rescue Plan Act of 2021.  Per section 487(a) of the HEA, proprietary schools must derive not less than 10 percent of their revenue from sources other than Federal education assistance funds that are disbursed or delivered to or on behalf of a student to attend the school.  The statutory change requires that schools count all Federal education assistance funds as Federal revenue in their 90/10 calculation.  The final regulations also amend which non-Federal funds can be counted when determining compliance with the 90/10 rule. The final 90/10 rule applies to proprietary school fiscal years beginning on or after January 1, 2023. A copy of the CPA-23-01 letter is found at: https://oig.ed.gov/sites/default/files/document/2023-07/cpa-23-02_revised_9010_revenue_calculation_testing_and_example_footnote.pdf.

ED Plans to Discharge $130 Million in Student Loan Debt for Borrowers who Attended CollegeAmerica

On July 25, 2023, the Biden-Harris Administration announced it will discharge $130 million in student loan debt from 7,400 borrowers who enrolled at CollegeAmerica in Colorado between January 1, 2006 and July 1, 2020.  The Department of Education found that CollegeAmerica’s parent company, the Center for Excellence in Higher Education (CEHE), made widespread misrepresentations about the salaries and employment rates of its graduates, the programs it offered, and the terms of a private loan product it offered.  The announcement said that the Department used evidence provided by Colorado Attorney General Phil Weiser, who led a multi-year investigation and lawsuit against CEHE and its leadership.  Borrowers will receive this debt relief regardless of whether they have filed a borrower defense to repayment application. A copy of the press release is found at:  https://www.ed.gov/news/press-releases/biden-harris-administration-approves-130-million-group-discharge-7400-borrowers-colorado-locations-collegeamerica-0.  

ED Holds Public Hearing on the Federal Student Loan Forgiveness Plan

On July 18, 2023, the Department of Education held a public hearing on its federal student loan forgiveness plan as the Biden Administration attempts to move its proposed federal student loan forgiveness plan through the negotiated rulemaking process.  Advocates, experts, and other stakeholders were able to voice their support and concerns.  The Biden Administration announced its intent to use the Higher Education Act, as amended, to implement its federal student loan relief plan after the Supreme Court struck down its initial plan to use the HEROES Act to discharge federal student loans. Under Secretary of Education James Kvaal provided opening remarks by stating that the Biden Administration will not stop fighting for student loan borrowers and they will use every tool available to them to provide borrowers with relief.  Mr. Kvaal said that the Department’s goal is to provide debt relief to middle- and working-class borrowers who have been left with debts that are unreasonable and unacceptable.  He said that the Department will work as quickly as possible to create a new federal student loan forgiveness plan. Most of the commenters were organizations and individuals who favor broad student loan forgiveness.  Once the Department considers the feedback from the public hearing and any written comments, which were due July 20, 2023, the Department will publish a notice in the Federal Register that announces the topics that it intends to discuss during negotiated rulemaking.  A request will also be made for nominations for non-federal negotiators.  

ED Releases State-By-State Data on Impact of Income-Driven Repayment Plan Adjustments

On July 18, 2023, the Department of Education released state-by-state data on the number of borrowers who are eligible for automatic loan relief under adjustments made to payments that qualify under income-driven repayment (IDR) plans.  On July 14, 2023, the Department announced that it started to notify 804,000 borrowers who have a total of $39 billion in federal student loans that their debt will be automatically discharged in the coming weeks.  (See article below.)  The data shows how many borrowers and the total amount of relief in each state and territory as a result of the action. A copy of the announcement is found at:  https://www.ed.gov/news/press-releases/biden-harris-administration-releases-state-state-data-39-billion-loan-forgiveness-804000-borrowers-result-fixes-income-driven-repayment-plans.  

ED Announces $39 Billion in Student Loan Forgiveness to Over 80,000 Borrowers

On July 14, 2023, the Department of Education announced that it will be notifying more than 804,000 borrowers that they have a total of $39 billion in Federal student loans that will be automatically discharged soon.  The forthcoming discharges result from a number of fixes implemented by the Biden-Harris Administration to ensure borrowers have an accurate count of the number of monthly payments that qualify toward student loan forgiveness under income-driven repayment (IDR) plans.  Borrowers are eligible for forgiveness if they have accumulated the equivalent of either 20 or 25 years of qualifying months. Secretary of Education Miguel Cardona said:  “For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress toward forgiveness.” A copy of the press release is found at:  https://www.ed.gov/news/press-releases/biden-harris-administration-provide-804000-borrowers-39-billion-automatic-loan-forgiveness-result-fixes-income-driven-repayment-plans. On July 14, 2023, Chairman of the House Education and the Workforce Committee Virginia Foxx (R-NC) said that today’s announcement from ED is “trampling the rule of law, hurting borrowers, and abusing taxpayers to chase headlines.”  Chairman Foxx went on to say:  “Biden’s student loan scam is far from over.  From day one, this administration has encouraged borrowers not to repay their loans and has expected taxpayers to foot the bill.  Today’s celebration of counting no payments is just the latest example of the ongoing delusion at the White House.” A copy of Chairman Foxx’s press release is found at: https://edworkforce.house.gov/news/documentsingle.aspx?DocumentID=409391. According to a University of Pennsylvania Budget Model released on July 17, 2023, the cost of the new income-driven repayment  plan will cost $475 billion over the next decade.  A copy of the brief is found at:  https://budgetmodel.wharton.upenn.edu/issues/2023/7/17/biden-income-driven-repayment-budget-update.  

FSA Issues FSA Enforcement Bulletin Addressing Nondisclosure Agreements Prohibiting Employees from Communicating with FSA

On July 13, 2023, the Office of Enforcement issued an FSA Enforcement Bulletin notifying institutions that despite any nondisclosure agreements that may have been signed by employees, former employees and other personnel, they are legally able to communicate with the Department of Education about any matter associated with their institutions’ administration of the Title IV programs.  FSA said that “any prohibition or limitation on personnel’s ability to do so would violate 34 C.F.R. § 668.24(f).” The FSA Enforcement Bulletin states that by signing a Program Participation Agreement (PPA), institutions agree to comply with the Title IV regulations.  34 C.F.R. § 668.24(f) requires institutions and their third-party servicers to cooperate with the Department regarding audits, investigations, program reviews, or other reviews authorized by law.  The rule states that such cooperation includes “providing reasonable access to personnel associated with the institution’s or servicer’s administration of the Title IV, HEA programs for the purpose of obtaining relevant information.”  The FSA Enforcement Bulletin states that using nondisclosure agreements that prevent personnel from communicating with the Department about the administration of Title IV programs violate the requirement to cooperate with the Department. A copy of the FSA Enforcement Bulletin is found at:  https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2023-07-13/fsa-enforcement-bulletin-july-2023-nondisclosure-agreements-prohibit-or-limit-employee-communication-us-department-education-violate-title-iv-regulations.

FSA Announces Availability of a Private Education Loan Information Topics Page

On July 6, 2023, Federal Student Aid (FSA) announced the availability of a Private Education Loan Information Topics page in FSA’s Knowledge Center to assist institutions by providing a repository for regulations, guidance, and other information.  The Topics page includes an updated version of the Private Education Loan Applicant Self-Certification form with an expiration date of 8/31/2025. This form must be provided by institutions and private educational lenders to enrolled students and parents seeking a private educational loan as of the date of this announcement. A copy of the announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2023-07-06/private-education-loans-form-and-topics-page#.

Federal Appeals Court Blocks Department of Education from Implementing Some of Its Borrower Defense to Repayment Rules

On August 7, 2023, the U.S. Court of Appeals for the Fifth Circuit issued an order blocking the Department of Education from implementing its final borrower defense to repayment rules that went into effect on July 1, 2023.  The court granted a request by Career Colleges and Schools of Texas (CCST) that sought a nationwide injunction against the new rules aimed at making it easier for student loan borrowers to have their loans discharged when their college or university misleads them or suddenly closes.  The order did not go into detail on the judges’ reasoning for granting the injunction, and set a date of November 6, 2023, for a three-judge panel to hear the case. In February, the Career Colleges and Schools of Texas sued the Department argued that its new standards for borrower defense to repayment claims was illegal.  CCST argued the rules unfairly penalize institutions of higher education when providing borrowers with debt relief.  In June, a federal district judge rejected the group’s request to immediately halt the new rules, which the group appealed to the 5th Circuit.  On July 20, 2023, the court issued an emergency order blocking the Department of Education from enforcing the rules against members of the Texas college group, but left the rules in place for the rest of the country.  The August 7, 2023 order reverses that policy and applies the injunction broadly. The Court’s order only applies to the borrower defense and closed-school discharge rules.  The Court’s order does not apply to all of the changes in the rules, such as the provisions regarding arbitration agreements, which went into effect on July 1, 2023.        

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