Below are the Washington DC updates in education policy that happened in September.
House and Senate Republicans Send Letter to Secretary of Education Asking Questions on Methodology Used in Determining IDR Forgiveness
On September 7, 2023, House Education and the Workforce Committee Chairman Virginia Foxx (R-NC) and Senate Health, Education, Labor, and Pensions Committee Ranking Member Bill Cassidy (R-LA) sent a letter to Secretary of Education Miguel Cardona requesting details on the Department of Education’s methodology in determining which student loan borrowers qualify for forgiveness under the new Income-Driven Repayment (IDR) program. The letter referenced the Department’s recent announcement that 804,000 borrowers would receive a total of $39 billion in loan cancellations following adjustments to the IDR program’s qualification standards.
The lawmakers are seeking information as to what legal authority the Department used to justify changing the qualification standards that allowed these borrowers to become eligible for the IDR program. They also asked questions on what type of status counted as a qualifying month for the purposes of the discharge, what status did not count as a qualifying month, and other questions. They are seeking answers by September 31, 2023.
A copy of the press release that includes the text of the letter is found at: https://edworkforce.house.gov/news/documentsingle.aspx?DocumentID=409506.
Congressional Republicans Introduce Resolution to Overturn SAVE Plan
On September 5, 2023, Congresswoman Lisa McClain (R-MI) and House Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC) introduced a Congressional Review Act (CRA) resolution to overturn the Department of Education’s final regulations implementing the new Saving on A Valuable Education (SAVE) plan, which implements the Biden Administration’s new income-driven repayment plan. Senate Health, Education, Labor, and Pensions Committee Ranking Member Bill Cassidy (R-LA), Senators John Thune (R-SD) and John Cornyn (R-TX), and 12 other Senate Republicans introduced a similar resolution in the Senate.
Ranking Member Cassidy and his colleagues released a press release calling the SAVE plan “reckless” and stating the plan will result in a majority of borrowers in not having to pay back “even the principal on their loans.” They also argued that the SAVE plan could cost taxpayers as much as $559 billion and will encourage borrowers to take on student loan debt.
A copy of the Senators’ press release is found at: https://www.help.senate.gov/ranking/newsroom/press/ranking-member-cassidy-thune-cornyn-colleagues-introduce-cra-to-overturn-bidens-newest-student-loan-scheme.
Congresswoman McClain and Chairwoman Foxx released a press release stating that the SAVE plan will leave “mountains of debt at the feet of taxpayers while absolving millions of borrowers of their loans.” The press release goes on to state: “Biden’s administration knows what it’s doing is illegal but it’s pushing forward anyway.”
A copy of the press release is found at: https://edworkforce.house.gov/news/documentsingle.aspx?DocumentID=409506.
Senate and House Democrats Send Letter to President Biden Urging Swift Action on Federal Student Loan Forgiveness Plan on Anniversary of Original Announcement
On August 23, 2023, Senate and House Democrats, led by Senate Majority Leader Chuck Schumer (D-NY) and Elizabeth Warren (D-MA), sent a letter to President Biden urging him to swiftly carry out the Department of Education’s plan to cancel federal student loan debt under the Higher Education Act through the negotiated rulemaking process. The Democrats said they were concerned that as the federal student loan payment pause ends and borrowers begin to repay their loans in October, delinquencies and defaults will spike without additional relief. The letter noted that it has been exactly one year since the Biden Administration announced its original plan to create a federal student loan forgiveness plan that was struck down by the Supreme. Court.
A copy of the letter, which includes the text of the letter, is found at: https://www.warren.senate.gov/oversight/letters/warren-pressley-leader-schumer-padilla-warnock-omar-clyburn-wilson-lead-over-75-lawmakers-urging-president-biden-to-swiftly-deliver-student-loan-debt-cancellation-for-43-million-americans.
ED Kicks Off the “SAVE on Student Debt” Week of Action
On September 12, 2023, the Department of Education announced that it was kicking off its “SAVE on Student Debt” Week of Action with events across the country and 100 participating organizations joining in. These events support borrowers who are returning to repayment by providing information about available resources from the Department, including encouraging them to take advantage of the new Saving on A Valuable Education (SAVE) income-driven repayment (IDR) plan and other debt relief programs.
A copy of the press release is found at: https://www.ed.gov/news/press-releases/100-groups-join-%E2%80%9Csave-student-debt%E2%80%9D-outreach-campaign-reaching-more-18-million-americans.
ED Announces More than 4 Million Student Loan Borrowers are Enrolled in the New SAVE Plan
On September 5, 2023, the Department of Education announced more than 4 million student loan borrowers are enrolled in the Biden-Harris Administration’s new Saving on A Valuable Education (SAVE) income-driven repayment (IDR) plan. Additionally, the Department has received more than 1.6 million IDR applications through StudentAid.gov since July 30, 2023, and nearly one million of those applications are for the SAVE plan.
Under the SAVE plan, a single borrower who makes less than $15 an hour will not have to make any payments, and borrowers earning above that amount will save more than $1,000 a year on their payments compared to other IDR plans. Borrowers will also never see their balance grow due to unpaid interest as long as they keep up with their required payments.
Secretary of Education Miguel Cardona said: “Millions of borrowers are already benefitting from enrollment in the SAVE plan, and I’m thrilled to see so many Americans submitting applications every day so they, too, can take advantage of the most affordable student loan plan in history.”
A copy of the press release is found at: https://www.ed.gov/news/press-releases/biden-harris-administration-announces-more-4-million-student-loan-borrowers-are-enrolled-new-save-plan.
ED Publishes Notice Inviting Nominations for Federal Student Loan Forgiveness Rulemaking
On August 31, 2023, the Department of Education published a Notice in the Federal Register announcing the establishment of a negotiated rulemaking committee to develop regulations related to federal student loan forgiveness under section 432(a) of the Higher Education Act, as amended, which relates to the modification, waiver, release, or compromise of federal student loans. The Notice included the dates the committee will meet: October 10-11, 2023; November 6-7, 2023; and December 11-12, 2023.
The Department invited nominations for both primary and secondary negotiators to serve on the committee from 14 different key constituencies. Nominations were accepted until September 14, 2023.
A copy of the Notice is found at: https://fsapartners.ed.gov/knowledge-center/library/federal-registers/2023-08-31/negotiated-rulemaking-committee-negotiator-nominations-and-schedule-committee-meetings.
Secretary of Education Miguel Cardona said in a press release issued by the Department of Education: “When the Supreme Court ruled against the Biden-Harris Administration’s student debt relief plan, we did not waste a moment opening up a new pathway to debt relief.”
A copy of the Department of Education’s announcement is found at: https://www.ed.gov/news/press-releases/biden-harris-administration-seeks-nominations-non-federal-negotiators-continue-rulemaking-process-student-debt-relief.
Biden-Harris Administration Approves $72 Million in Borrower Defense Discharges for Over 2,300 Borrowers who Attended Ashford University
On August 30, 2023, the Biden-Harris Administration announced the approval of $72 million in borrower defense to repayment discharges for more than 2,300 students who applied for relief from loans they took out to attend Ashford University. The approval resulted from a review by the Department of Education of evidence presented by the California Department of Justice during a successful lawsuit brought against Ashford University and its parent company, Zovio, Inc., which resulted in a judgment against both entities in March 2022. Based on the evidence, the Department concluded that Ashford University and Zovio made numerous misrepresentations during the period March 1, 2009, through April 30, 2020.
The press release also said that “[t]he Department will also review the evidence to examine whether members of Ashford’s management and leadership took actions that violated Federal laws or regulations and threatened the integrity of the federal student financial aid programs. If the evidence shows that they did, the Department may pursue appropriate remedies to enforce those rules.”
A copy of the press release is found at: https://www.ed.gov/news/press-releases/biden-harris-administration-approves-72-million-borrower-defense-discharges-over-2300-borrowers-who-attended-ashford-university.
FSA Releases New Quarterly Reports on the Federal Student Loan Program to the FSA Data Center
On August 30, 2023, Federal Student Aid (FSA) released new quarterly reports on the federal student loan program to the FSA Data Center. The reports included key data about federal student aid programs as of June 30, 2023. As of June 30, 2023, about 43.4 million recipients had $1.63 trillion in outstanding federal student loans. This is an increase of almost $17 billion in the outstanding loan balance and almost 600,000 in the number of student loan recipients since last year.
As a result of COVID-19 flexibilities that continued through the end of August, the reports stated that the number of recipients in repayment status has fallen sharply since March 2020. More than 27 million Direct Loan recipients, with about $1.1 trillion in outstanding loans, were in forbearance status as of June 30, 2023. Only 300,000 Direct Loan recipients had opted out of the payment pause, and were in repayment status as of June 20, 2023, compared to 18.1 million recipients in repayment in March 2020.
The reports also noted that, in September 2022, Income-Driven Repayment (IDR) enrollment among Direct Loan borrowers decreased for the first time since public reporting began 9 years ago. The decrease is expected to be temporary.
Finally, the reports included updated data on Direct Loan defaults finding that the number of cumulative borrowers in default continues to decrease, with 4.5 million borrowers currently being in default compared to about 4.8 million borrowers one year ago.
A copy of the announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2023-08-30/federal-student-aid-posts-new-quarterly-reports-fsa-data-center.
ED Takes Action Against Five Schools for Disbursing Federal Student Aid to Students Enrolled in Unaccredited Programs
On August 24, 2023, the Department of Education announced settlement agreements with five law schools after a Federal Student Aid (FSA) investigation revealed the institutions improperly disbursed Title IV funds to students enrolled in unaccredited Master of Laws (LL.M.) programs. The five schools are Albany Law School, Atlanta’s John Marshall School of Law, Brooklyn Law School, New England – Boston, and New York Law School. Almost $2.9 million in ineligible disbursements were made to 92 students across the five schools between July 2017 and June 2022.
A copy of the press release is found at: https://www.ed.gov/news/press-releases/us-department-education-takes-action-against-five-schools-disbursing-federal-student-aid-students-enrolled-unaccredited-programs.
Office of Enforcement Reminds Institutions to Ensure that their Programs are Accredited Before Disbursing Federal Funds
On August 24, 2023, the Federal Student Aid (FSA) Office of Enforcement released an announcement reminding schools to ensure their programs are accredited before disbursing Title IV funds. The announcement said the bulletin is being issued following an investigation into Master of Laws (LL.M) programs at free-standing law schools, which revealed that five schools improperly disbursed Title IV funds to students enrolled in unaccredited LL.M. programs. (See article above.)
A copy of the announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2023-08-24/fsa-enforcement-bulletin-august-2023-following-enforcement-investigation-federal-student-aid-reminds-schools-ensure-programs-are-properly-accredited-disbursing-funds#.
FSA Announces Posting of New School Reports to FSA Data Center
On August 18, 2023, Federal Student Aid (FSA) announced new posts on its FSA Data Center including the Award year (AY) 2021-2022 90/10 Report to Congress, Schools on Heightened Cash Monitoring, School Fines imposed during Fiscal Year (FY) 2022, and the Top Ten School Audit Findings and School Program Review Findings during FY 2022 with companion report.
- The AY 2021-2022 90/10 Revenue Percentages report shows the revenue percentage for 1,622 proprietary schools based on their most recent fiscal year with end dates between July 1, 2021, and June 30, 2022. Three of the 1,622 institutions identified in the report failed to derive at least ten percent of their revenues from sources other than Title IV.
- The recent report identifies 416 institutions receiving Title IV funds under HCM, with almost half (207) of the institutions being for-profit institutions. Of the 416 institutions, 376 are on HCM1 and 40 are on HCM2.
- The FY 2022 School Fine Report identifies 18 institutions that were assessed a total of $2,564,528. The two largest fines imposed in FY 2022 were $670,000 assessed against the University of Texas at San Antonio and $475,000 assessed against the University of North Georgia, which were the result of two audits conducted by the Office of Inspector General (OIG) concerning violations of campus security requirements. Other fines were assessed for violations of the ban on incentive compensation, violations of the campus security requirements, and failures to report IPEDS information to the Department.
The FY 2022 School Fine Report, FY 2022 Top Ten School Audit Findings and Top Ten School Program Review Findings, and the FY 2022 companion report are hosted on the FSA Data Center’s School Data page at: https://studentaid.gov/data-center/school/fines-and-findings.
A copy of the announcement is found at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2023-08-18/federal-student-aid-posts-new-school-reports-fsa-data-center.
ED Announces Launch of Updated Income-Driven Repayment (IDR) Application Tool
On August 22, 2023, the Department of Education announced that it has fully launched its updated income-driven repayment (IDR) application tool on https://studentaid.gov/, and that student loan borrowers can now officially enroll in the Saving on a Valuable Education (SAVE) plan. The plan is part of the Biden-Harris Administration’s efforts to make college more affordable.
The Department also announced a nationwide outreach campaign called “SAVE on Student Debt” in collaboration with leading grassroots organizations.
Secretary of Education Miguel Cardona said: “Starting today, millions of borrowers can reduce their monthly student loan bills by enrolling in the SAVE plan, the most affordable repayment plan in history.”
Some of the benefits of the SAVE plan include:
- More than 1 million additional low-income borrowers will qualify for a $0 payment;
- 70% of borrowers who were on an IDR plan before the payment pause would stand to benefit from the SAVE plan’s new provision that borrowers who pay what they owe on this plan will no longer see their loans grow due to unpaid interest;
- Borrowers will see their total payments per dollar borrowed fall by 40%; and
- Black, Hispanic, American Indian and Alaska Native borrowers will see their total lifetime payments per dollar borrowed cut in half on average.
A copy of the press release is found at: https://www.ed.gov/news/press-releases/biden-harris-administration-launches-most-affordable-repayment-plan-ever-transforming-income-driven-repayment-cutting-undergraduate-payments-half-and-preventing-unpaid-interest-accumulation.
ED Begins to Discharge Student Loans for 804,000 Borrowers Who Qualify for $39 Billion in Student Loan Relief
On August 14, 2023, after a federal judge rejected a legal effort to stop the action of the Department of Education, the Department announced the beginning of automatic discharges for 804,000 borrowers who qualify for $39 billion in student loan relief. These discharges are the result of fixes implemented by the Biden Administration to address historic failures in the administration of the federal student loan program, in which qualifying payments made under income-driven repayment (IDR) plans that should have moved borrowers closer to student loan forgiveness were not accurately accounted for. Borrowers are eligible for student loan forgiveness if they have accumulated the equivalent of 20 to 25 years of qualifying months.
Secretary of Education Miguel Cardona said: “Today, the Biden-Harris Administration is beginning to discharge loans for 804,000 borrowers who never received the forgiveness they rightfully earned through decades of payments.”
A copy of the press release is found at: https://www.ed.gov/news/press-releases/biden-harris-administration-begins-discharges-804000-borrowers-39-billion-automatic-loan-forgiveness-result-fixes-income-driven-repayment-plans.
Departments of Education and Justice Release Two Resources to Help Institutions Understand the Supreme Court’s Decision on Race and Admissions
On August 14, 2023, the Department of Education’s (ED) Office of Civil Rights and the Department of Justice’s Office of Civil Rights Division jointly released two resources to help colleges and universities understand the Supreme Court’s decision in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College and Students for Fair Admissions, Inc. v. University of North Carolina et. al. (collectively “SFFA”). These resources are designed to help colleges and universities as they work to lawfully pursue efforts to achieve a student body that is diverse across a range of factors, including race, without being noncompliant. The Department stressed that considerations of how an applicant’s race has affected their individual experience could still be considered.
On June 9, 2023, the Supreme Court held in SFFA that the consideration of race in the admissions practices of the University of North Carolina and Harvard College violated the Equal Protection Clause of the Fourteenth Amendment and Title VI of the Civil Rights Act of 1964, a law that prohibits discrimination on the basis of race, color, or national origin in programs or activities receiving federal financial assistance.
Secretary of Education Miguel Cardona said: “For higher education to be an engine for equal opportunity, upward mobility, and global competitiveness, we need campus communities that reflect the beautiful diversity of our country.”
The Department’s Questions and Answers resource “distills the Court’s core holding and offers examples of steps colleges and universities can lawfully take to achieve a student body that is diverse across a range of factors, including race and ethnicity,…” Beyond admissions, the Department’s guidance says that colleges can still legally work to diversify their student bodies through targeted recruitment efforts, including using race, and redoubling retention efforts aimed at supporting students of color once they are on campus.
A copy of the press release, which includes a link to a Dear Colleague letter and a questions and answers document, is found at: https://www.ed.gov/news/press-releases/advance-diversity-and-opportunity-higher-education-justice-and-education-departments-release-resources-advance-diversity-and-opportunity-higher-education.
Federal Judge Dismisses Lawsuit Blocking Department of Education from Carrying Out IDR Adjustments
On August 15, 2023, U.S. District Court for the Eastern District of Michigan, Northern Division, Judge Thomas Ludington issued an opinion dismissing the lawsuit filed by the Mackinac Center for Public Policy and Cato Institute challenging the Department of Education’s plan to provide account adjustments for borrowers who made payments under an Income-Driven Repayment (IDR) plan. The groups asserted in the original lawsuit that the Department did not have the authority to adjust accounts, which resulted in loan forgiveness for over 800,000 borrowers, that the new policy violates federal law because it did not go through the negotiated rulemaking process, and the opportunity for public comment was not offered. Judge Ludington ruled that the two groups lacked standing to challenge the IDR adjustments because they could not show they would be directly harmed by the loan forgiveness adjustments made by the Department.
On August 15, 2023, the conservative groups filed an appeal to the U.S. Court of Appeals for the Sixth Circuit.
FTC Cracks Down on a Pair of Loan Debt Relief Scams
On August 21, 2023, the Federal Trade Commission (FTC) announced that it was cracking down on two student loan debt relief schemes that sought to take advantage of consumers by promising deceptive loan forgiveness services. The FTC announced that it had filed a complaint against Express Enrollment LLC and Intercontinental Solutions LLC, two California-based companies preying on students seeking debt relief and collecting millions of dollars in illegal junk fees. The FTC alleged that these two companies falsely promised to lower or eliminate students’ loan payments, pretended to be affiliated with the Department of Education, and convinced students to stop communicating with their federal student loan servicers.
A copy of the press release is found at: https://www.ftc.gov/news-events/news/press-releases/2023/08/ftc-stops-scammers-charged-preying-students-seeking-debt-relief?utm_source=govdelivery.