Washington Update is a monthly newsletter written by Powers Higher Education Specialist Sharon Bob that summarizes the latest Congressional and Department of Education updates in education policy. Click here for a PDF.
Senate Democrats Send Letter to President Urging Expansion of Student Loan Forgiveness to More Parent PLUS Borrowers
On September 12, 2022, Democratic Senators Chris Van Hollen (D-MD), Robert Menendez (D-NJ), Sherrod Brown (D-OH), Tammy Duckworth (D-IL), Brian Schatz (D-HI), Alex Padilla (D- CA), Cory Booker (D-NJ), and Tina Smith (D-MN) sent a letter to President Joe Biden urging the Administration to consider borrowers with Parent PLUS Loans in any administrative changes and executive actions undertaken to improve the federal student loan programs and provide loan forgiveness. The letter urges the President to provide $20,000 in loan forgiveness to Parent PLUS Loan borrowers whose dependents received Pell Grants. The letter pointed out that 3.6 million Parent PLUS Loan borrowers currently hold about 10 percent of all federal student loan debt. Further, Parent PLUS Loan borrowers are often among the lowest income families receiving Pell Grant funds and are typically parents of students attending Historically Black Colleges and Universities (HBCUs).
A copy of the letter is found at: https://static.politico.com/02/65/1bc912404803ada4253aa03497cc/letter-to-president-biden-to-incorporate-parent-plus-borrowers-in-student-loan-relief-efforts-9.11.22_final.pdf.
House Education Committee Republicans Send Letter to Chairman Scott Requesting Hearing to Discuss President’s Authority to Provide Student Loan Cancellations
On August 7, 2022, House Republicans, led by Ranking Member of the House Education and Labor Committee Virginia Foxx (R-NC), sent a letter to Chairman of the House Education and Labor Committee Bobby Scott (D-VA) demanding an oversight hearing to discuss President Biden’s legal authority for the student loan relief plan. The letter said: “This is not a harmless policy; this is a deliberate decision to appease a small but loud special interest group at the expense of the people who work hard to keep this nation strong.” The Republican lawmakers are requesting Federal Student Aid (FSA) Chief Operating Officer Richard Cordray, General Counsel Lisa Brown, and Under Secretary James Kvaal to testify during the hearing. The letter also stated that they have sent letters to Secretary of Education Miguel Cardona, but have received only ‘paltry responses’.”
A copy of the letter is found at: https://republicans-edlabor.house.gov/uploadedfiles/loanactionslettertorcs_final_.pdf.
Bill Introduced by Senator Scott to Make Institutions Responsible to Pay Back Percentage of Borrowers’ Loans if Borrowers Defaulted on Payments
On August 4, 2022, Senator Rick Scott (R-FL) introduced a bill titled, Changing Our Learning, Loans, Endowments, and Graduation Expectations (The College Act), which would make institutions responsible to pay back a percentage of borrowers’ loans if they defaulted on their payments and would require the Department of Education to post data from public institutions, such as six-year graduation rates, cost to graduate, and job or advanced degree placement.
Senator Scott said that state and federal leaders have “failed managing” public institutions of higher education, which has resulted in “decades of failed policy,” including many borrowers having “mountains of student debt.”
Senator Scott said: “Now, these same leaders are claiming that the answer to our higher education problems is massive and unconditional student loan debt forgiveness. It’s choosing to treat a symptom when we can cure the disease. If we want results that improve student performance, boost post-graduation job placement and keep tuition affordable, we need to do the hard work of actually holding colleges and universities responsible for the outcome of their students and accountable to the American taxpayer.”
A copy of the Senator’s press release is found at: https://www.rickscott.senate.gov/2022/8/sen-rick-scott-introduces-college-act-to-hold-universities-accountable-for-skyrocketing-tuition-costs.
President Signs into Law Changes Made to the VA 85/15 Rule
On August 26, 2022, President Joe Biden signed into law S. 4458, Ensuring the Best Schools for Veterans Act of 2022, which made changes to certain 85/15 Rule requirements. Specifically, the new law contains certain provisions which:
- Exempt accredited schools from 85/15 requirements if their GI Bill student enrollment is lower than 35 percent of the total student population;
- Exempt programs with less than 10 supported students enrolled;
- Classify students on a repayment plan completed no later than 180 days from the end of the term, quarter, or semester as non-supported; and
- Allows schools found to be non-compliant with the 85/15 Rule to apply for a review of that determination by the Under Secretary for Benefits and the Secretary of Veterans Affairs.
White House Announces Student Loan Pause Extension Through December 31 and Targeted Debt Cancellation
On August 24, 2022, the Biden-Harris Administration announced a final extension of the pause on student loan repayment, interest, and collections through December 31, 2022. Borrowers should plan on resuming payments in January 2023. The press release noted that “[w]hile the economy continues to improve, COVID cases remain at an elevated level, and the President has made clear that pandemic-related relief should be phased out responsibly so that people do not suffer unnecessary financial harm.” Also released were two legal memoranda offering legal opinions from the Department of Education and the Department of Justice supporting the authority of the President to discharge federal student loans.
The White House also announced that it plans to address the financial harms of the pandemic by smoothing the transition back to repayment and helping borrowers at highest risk of delinquencies or default once payments resume. This will be accomplished by providing targeted student debt cancellation to borrowers with loans held by the Department. Borrowers with an annual income during the pandemic of under $125,000 (for individuals) or under $250,000 (for married couples or heads of households) who received a Pell Grant in college will be eligible for up to $20,000 in debt cancellation. Borrowers who met those income standards during the pandemic but did not receive a Pell Grant will be eligible for up to $10,000 in relief. The Department will be announcing further details on how borrowers can claim this relief in the weeks ahead. ED expects that almost 8 million borrowers may be eligible to receive relief automatically because relevant income data is already available to the Department.
According to a Fact Sheet released by the White House, the Biden Administration estimates that its new plan will eliminate all federal student loan debt for 20 million borrowers, while 90 percent of the relief will be going to borrowers earning less than $75,000 annually. The Biden Administration expects 43 million borrowers to receive some level of forgiveness under the plan. In terms of eligibility, the Biden Administration notes that current students are eligible for forgiveness as long as their loans originated before July 1, 2022.
The announcement indicated that the Department is also proposing a rule to create a new income-driven repayment plan that will substantially reduce future monthly payments for lower- and middle-income borrowers. The proposal would protect more income from loan payments. It will cut in half, from 10 percent to 5 percent of discretionary income, the amount that borrowers have to pay each month on their undergraduate loans, while borrowers with both undergraduate and graduate loans will pay a weighted average rate. It would also raise the amount of income that is considered nondiscretionary income and therefore protected from repayment. The proposed rule would also forgive loan balances after 10 years of payments instead of 20 years under many current income-repayment plans for borrowers with original loan balances of $12,000 or less. The proposed income-driven repayment plan will be published as a Notice of Proposed Rulemaking (NPRM) in the Federal Register in the next few days, and the public will have 30 days to comment.
A number of news reports, including NASFAA’s “Today’s News,” announced that based on a White House briefing, applications for loan forgiveness are expected to be available by mid-October. Once an application is completed, the borrower can expect to see the loan adjusted in 4-6 weeks. Borrowers are also advised to apply by November 15, 2022, in order to receive relief before the payment pause expires on December 31, 2022. According to NASFAA, borrowers can request refunds for any federal student loan payments made since March 13, 2020, when the first repayment pause was announced. Refunded payments will increase borrowers’ loan balances that may be subject to cancellation.
Secretary of Education Miguel Cardona said: “Earning a college degree or certificate should give every person in America a leg up in securing a bright future. But for too many people, student loan debt has hindered their ability to achieve their dreams – including buying a home, starting a business, or providing for their family. Getting an education should set us free; not strap us down!”
A copy of the press release from the Department of Education is found at: https://www.ed.gov/news/press-releases/biden-harris-administration-announces-final-student-loan-pause-extension-through-december-31-and-targeted-debt-cancellation-smooth-transition-repayment.
A copy of the legal memorandum released by the Department of Education supporting the Department’s authority for the student loan discharges is found at: https://www2.ed.gov/policy/gen/leg/foia/secretarys-legal-authority-for-debt-cancellation.pdf.
A copy of the legal memorandum released by the Department of Justice supporting the Department of Education’s authority for the student loan discharges is found at: https://www.justice.gov/olc/file/1528451/download.
A copy of the Fact Sheet released by the White House is found at: https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/24/fact-sheet-president-biden-announces-student-loan-relief-for-borrowers-who-need-it-most/.
Chairman of the House Education and Labor Committee Bobby Scott (D-VA) said: “President Biden is providing unprecedented relief for America’s student loan borrowers.” He went on to say: “We must also remember that, while debt cancellation is good news for those who currently hold student loans, it does not solve the underlying problems that caused the student debt crisis in the first place: the exorbitant cost of college, the declining purchasing power of the Federal Pell Grant, and our flawed student loan system.”
A copy the FAQs on “One-Time Student Loan Debt Relief” is found at: https://studentaid.gov/debt-relief-announcement/one-time-cancellation.
Ranking Member of the House Education and Labor Committee Virginia Foxx (R-NC) said after the announcement that the Department of Education is extending the student loan repayment moratorium for a fifth time and forcing taxpayers to pay for certain borrowers to receive $10,000 in loan “forgiveness”: “Confusion reigns in the Biden administration – borrowers have no clear guidance and taxpayers are forced to pay for a bill they shouldn’t owe. This is wrong, unfair, and irresponsible.” She went on to say: “This is a slap in the face to those who never went to college, as well as borrowers who upheld their responsibility to taxpayers and paid back their loans. It’s a signal to every freshman stepping foot on campus to borrow as much as they can because taxpayers are picking up the tab.”
A number of press reports noted that not all Congressional Democrats were as enthused by the loan forgiveness plan. Several Democrats said that a more targeted relief program addressing the root problems of college affordability should have been prioritized over one-time cancellation while others worried about the messaging of taking an executive action rather than working through the legislative process to provide relief to student borrowers.
A copy of Chairman Scott’s press release is found at: https://bobbyscott.house.gov/media-center/press-releases/scott-statement-on-biden-student-loan-announcement.
A copy of Ranking Member Foxx’s press release is found at: https://republicans-edlabor.house.gov/news/documentsingle.aspx?DocumentID=408490.
NOTE: Many questions have been generated after President Biden’s announcement, including which loans are eligible and how the relief would be implemented. As updates are made, they will be found on the Federal Student Aid website found at: https://studentaid.gov/debt-relief-announcement/one-time-cancellation.
White House Launches New PSLF Resources and Urges Borrowers to Apply under Temporary Waiver
On August 18, 2022, the White House launched a new website to highlight the benefits of the Public Service Loan Forgiveness (PSLF) program’s temporary waiver and is reminding borrowers that the window to participate is winding down. The website provides borrowers with testimonials and scenarios in which individuals would qualify for the program’s expansion. The temporary waiver is set to expire on October 31, 2022.
The website can be found at: https://www.whitehouse.gov/publicserviceloanforgiveness/?utm_source=www.pslf.gov.
ED Approves $1.5 Billion in Debt Relief for 79,000 Borrowers Who Attended Westwood Colleges
On August 30, 2022, the Department of Education announced that it will discharge all remaining federal student loans for borrowers who enrolled at Westwood College between January 1, 2002 and November 17, 2015 when it stopped enrolling new borrowers prior to closing in 2016. Based on the evidence related to Westwood College, the Department determined that the school engaged in widespread misrepresentation about the value of its credentials for attendees’ and graduates’ employment prospects such that all borrowers who attended during that period were entitled to a full loan discharge. The Department’s actions will result in $1.5 billion in loan discharges for 79,000 borrowers, regardless of whether they have applied for a borrower defense discharge.
A copy of the press release is found at: https://www.ed.gov/news/press-releases/education-department-approves-15-billion-debt-relief-79000-borrowers-who-attended-westwood-college.
ED Announces Over $10 Billion in Forgiveness Under PSLF
On August 23, 2022, the Department of Education announced that it has approved more than $10 billion in federal student loan debt relief for over 175,000 borrowers in 10 months through the Public Service Loan Forgiveness (PSLF) program. The announcement follows changes that the Department made to the PSLF program in October 2021, which modified certain rules to make it easier for public servants with federal student loans to have their debts cancelled. “For far too long, teachers, nurses, veterans, government employees, and countless others dedicated to serving our country found PSLF to be nothing more than an empty promise, and before President Biden took office, only 7,000 borrowers ever managed to qualify. Today’s announcement that we’ve surpassed $10 billion in forgiveness for more than 175,000 public servants shows that the Biden-Harris administration’s efforts to cut red tape are turning the Public Service Loan Forgiveness program from a promise broken to a promise kept.”
A copy of the press release is found at: https://www.ed.gov/news/press-releases/thanks-temporary-changes-us-department-education-announces-public-service-loan-forgiveness-surpasses-10-billion-debt-relief.
ED Terminates Federal Recognition of ACICS
On August 19, 2022, the Department of Education announced that colleges currently accredited by the Accrediting Council for Independent Colleges and Schools (ACICS) will now be required to fulfill additional operating conditions for continued participation in the federal student aid programs because of the Department of Education Deputy Secretary Cindy Marten’s final decision to deny an appeal filed by ACICS to remain a federally recognized for federal student aid purposes.
Although ACICS is no long a nationally recognized accrediting agency, the Department will provisionally certify ACICS-accredited institutions for continued participation in the federal student aid programs for up to 18 months from August 19, 2022. The 18-month provisional certification period allows institutions time to seek accreditation from another nationally recognized accrediting agency. During the 18-month provisional certification period, the Department will require the ACICS-accredited institutions to comply with additional conditions that are designed to protect students and safeguard taxpayer dollars. These conditions include additional monitoring, transparency, oversight, and accountability measures. Within 30 days of the notice, all ACICS-accredited institutions will be required to submit teach-out plans for helping students complete their academic programs elsewhere and submit information about recent and ongoing investigations to ensure that the Department is aware of key risks. All ACICS-accredited institutions will be required to provide disclosures to students on the loss of federal aid eligibility and to post a Letter of Credit.
Deputy Secretary Martin said: “Recognition by the Department must be reserved for agencies that adhere to high standards, just as accreditation by agencies must be reserved for institutions and programs that adhere to high standards.”
On its website, ACICS responded to the Department’s decision by indicating it was evaluating all of its options.
A copy of the press release is found at: https://www.ed.gov/news/press-releases/us-department-education-terminates-federal-recognition-acics-enhances-federal-aid-program-participation-requirements-acics-accredited-colleges.
ED Announces Implementation Efforts Surrounding “Fresh Start” Initiative
On August 17, 2022, the Department of Education released a Dear Colleague letter (GEN-22-23) and a Fact Sheet announcing updates to the “Fresh Start” initiative, which would enable defaulted borrowers to reenter repayment in good standing. Among other features, “Fresh Start” will enable 7.5 million borrowers with defaulted federal student loans as of May 31, 2022 to regain Title IV, HEA federal student aid eligibility, including Pell Grants and campus-based aid, to help them complete their credential or degree. The DCL noted that the guidance applies only when awarding aid to borrowers who are currently ineligible based solely on a prior Title IV loan default and who can qualify to have their eligibility restored. Eligible loans are those that entered default status prior to the start of the repayment pause on March 13, 2020.
FSA stated in the Dear Colleague letter that the following loan categories are eligible for Fresh Start: Direct Loans, FFEL loans, and Federal Perkins Loans. The Fresh Start initiative will remain available to previously defaulted borrowers for one year after the end of the federal student loan payment pause.
The guidance outlines the steps that institutions are required to follow if they receive an Institutional Student Information Record (ISIR) for a student who is eligible to take advantage of the Fresh Start initiative and defaulted before March 13, 2020. The DCL also addresses the restoration of Title IV eligibility for defaulted borrowers.
The Dear Colleague Letter also stated that for borrowers who defaulted on their federal student loans after March 2020 – mainly FFELP loans – borrowers are subject to different guidance. In that case, these defaulted borrowers are eligible for federal student aid effective March 12, 2021 with publication of Dear Colleague Letter GEN-21-03.
Information about restored eligibility is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2022-08-17/information-about-restored-aid-eligibility-under-fresh-start-initiative#.
Ranking Member of the House Education and Labor Committee Virginia Foxx (R-NC) issued a statement about Operation Fresh Start: “The Department’s so-called Operation Fresh Start plan gives delinquent student loan borrowers the keys to borrow even more without any assurance they can afford to do so. It’s literally the definition of insanity. It’s also wrong!”
A copy of the press release is found at: https://republicans-edlabor.house.gov/news/documentsingle.aspx?DocumentID=408485.
Education Department Announces it will Discharge All Remaining Federal Student Loans that Borrowers Received to Attend ITT Technical Institute
On August 13, 2022, the Department of Education announced that it will discharge all remaining federal student loans that borrowers received to attend ITT Technical Institute from January 1, 2005, through its closure in September 2016. The Department reached its decision based on extensive internal records, testimony received from ITT managers and recruiters, and first-hand accounts from borrowers. As a result, 208,000 borrowers will receive $3.9 billion in full loan discharges. This includes borrowers who have not yet applied for a borrower defense to repayment discharge.
Secretary of Education Miguel Cardona said: “It is time for student borrowers to stop shouldering the burden from ITT’s years of lies and false promises. The evidence shows that for years, ITT’s leaders intentionally misled students about the quality of their programs in order to profit off federal student loan programs, with no regard to the hardship this would cause.”
The Department also announced that it formally notified DeVry University that it is required to pay millions of dollars for approved borrower defense applications. DeVry can submit information and arguments for why it should not be required to pay these liabilities or request a hearing from the Department’s Office of Hearings and Appeals.
Finally, the Department also announced the approval of discharges for just under 100 borrowers who enrolled in the Medical Assistant or Medical Billing and Coding Program at Kaplan Career Institute’s Kenmore Square location in Massachusetts from July 1, 2011 to February 16, 2012 when the institution stopped enrolling new students. These are borrowers identified by Massachusetts Attorney General Maura Healey after an investigation found that the institution repeatedly lied about its job placement rates to borrowers. The location closed in February 2013.
The Department’s latest action brings the total amount of loan relief by the Biden-Harris Administration to almost $32 billion for 1.6 million borrowers.
A copy of the press release is found at: https://www.ed.gov/news/press-releases/education-department-approves-39-billion-group-discharge-208000-borrowers-who-attended-itt-technical-institute.
DHS Releases Final Rule Designed to Protect DACA from Legal Challenges
On August 30, 2022, the Department of Homeland Security (DHS) released a final rule designed to protect the Deferred Action for Childhood Arrivals (DACA) program from legal challenges. The program has not been able to accept new applications since a federal judge in Texas ruled in July 2021 that it was unlawful. The ruling is now under appeal. The final rule will formally replace a 2012 Executive Order from the Obama Administration issued to create DACA. It is set to go into effect October 31, 2022.
In an April 24, 2022 statement released by President Joe Biden, he called on Congress to pass legislation giving DACA recipients an avenue to become permanent citizens. Students covered under DACA cannot access federal financial aid programs, but they may qualify for in-state tuition or state financial aid programs.
To be eligible for the DACA program, unauthorized immigrants must have arrived in the United States before turning 16 and before June 15, 2007. The DACA recipients must be in school, have graduated from high school, have obtained a GED, or have been honorably discharged from the Coast Guard or Armed Forces. As of March 2022, DACA enrolled 611,270 immigrants.
A copy of the statement from President Biden is found at: https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/24/statement-by-president-joe-biden-on-strengthening-protections-for-dreamers/.
A copy of the final rule is found at: https://www.federalregister.gov/documents/2022/08/30/2022-18401/deferred-action-for-childhood-arrivals.
FTC Warns Student and Parent Borrowers Against Scammers Related to Student Loan Debt Forgiveness
On August 26, 2022, the Federal Trade Commission (FTC) issued a Consumer Alert warning student and parent borrowers that President Biden’s announcement about the extension of the federal student loan payment pause and the new federal student loan forgiveness plan has caught the attention of scammers. According to the Consumer Alert from the FTC, borrowers do not need to do anything or pay anybody to sign up for the new program at this time. The Consumer Alert states: “Nobody can get you in early, help you jump the line, or guarantee eligibility.”
A copy of the alert is found at: https://consumer.ftc.gov/consumer-alerts/2022/08/did-you-hear-about-student-loan-announcements-scammers-did-too.
FTC Sends More than $822,000 to Borrowers Deceived by Debt Relief Scam
On August 18, 2022, the Federal Trade Commission (FTC) announced it is sending 14,521 checks totaling more than $822,000 to borrowers who lost money to a student debt-relief scheme that operated under the name Student Advocates. The FTC alleged in a complaint filed in September 2018 that the operators of Student Advocates charged illegal upfront fees that they falsely claimed went toward consumers’ student loans. The defendants steered customers into high-interest loans to pay these fees. The FTC also alleged that the defendants made false promises that their services would permanently lower or even eliminate consumers’ student loan payments and debt balances.
A copy of the FTC press release is found at: https://www.ftc.gov/news-events/news/press-releases/2022/08/federal-trade-commission-sends-more-822000-students-deceived-student-advocates-debt-relief-scam.
ACICS Announces “Orderly Dissolution” of Operations Following ED’s Withdrawal of its Recognition
On September 6, 2022, the Accrediting Council for Independent Colleges and Schools (ACICS) announced that it will begin an orderly dissolution of the corporation following the August 19, 2022 Department of Education decision to withdraw its recognition. The ACICS announcement said it would not appeal the recent decision in court.
ACICS President and Chief Executive Officer Michelle Edwards said: “In its 110 years of service as an accreditor, ACICS has had the honor of working to advance educational excellence at independent, nonpublic careers schools, colleges, and organizations in the United States and abroad.” Ms. Edwards added: “We will continue to uphold those principles as we wind down our operations.”
There are currently 27 colleges accredited by ACICS, and they will have 18 months to find a new accreditor or else lose access to federal student assistance. ACICS said that it would work with the remaining accredited schools to “prepare for the transition.”
A copy of the ACICS announcement is found at: https://www.acics.org/news/acics-to-begin-an-orderly-dissolution-of-the-corporation-will-not-appeal-august-19-decision-from-the-department-of-education.