By Sharon Bob

Former Vice President Biden is Elected 46th President

On January 20, 2021, President Joe Biden will be sworn in as the 46th President and Kamala Harris will be sworn in as Vice President.

The election was bad news for pollsters, pundits, and the media and despite spending record amounts of money on campaigns and running against a President with low approval ratings, the Democrats significantly underperformed their predicted results.  There was no “blue wave,” and Biden was forecasted to win the Presidency more convincingly.  Nevertheless, the Senate Democrats now hold the majority of 50-50 now that Vice-President-Elect Kamala Harris has been sworn into office and is able to cast the tie breaker vote.  House Democrats experienced a net loss of seats, an outcome no one predicted.  Democrats won 222 seats to Republican’s 213.  Democrats flipped three seats and Republicans flipped fourteen seats, including one held by a Libertarian.  Nevertheless, the Democrats control the House, the Senate and the Presidency.

What Does a Democratic Control of Congress Mean in the 117th Congress?

On January 6, 2021, the Democrats won control of the Senate when Rev. Raphael Warnock defeated Senator Kelly Loeffler and Jon Ossoff defeated Senator David Perdue, in dual runoff races that were unresolved from the November election.  Democrats and Republicans will both have 50 seats in a 100-seat body.  Once President-Elect Joe Biden and Vice President-Elect Kamala Harris were sworn into office, Vice President Harris has the ability to cast a vote to break any 50-50 tie.  Her role as the tiebreaker and the authority to recognize who speaks on the Senate floor will afford the Democrats control of the Senate, albeit minimum control.

House Democrats experienced a net loss of seats: Democrats won 222 seats to Republican’s 213.  A majority vote in the House requires 218 votes to pass a bill.  The margin is slim and assumes that the Democrats will be united on any bill that is up for a vote.  The leaders on the House Education and Labor Committee will remain Congressman Bobby Scott (D-VA) as Chairman and Congresswoman Virginia Foxx (R-NC) as Ranking Member.

Since Democrats will be recognized as the majority party in the Senate, Senator Chuck Schumer (D-NY) is now the Senate Majority Leader and Senator Mitch McConnell (R-KY) is the Minority Leader.  The Committees will be chaired by Democrats, and top Republican Committee Senators will assume Ranking Member positions on Committees.  Senator Patty Murray (D-WA) will be the Chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee.  Senator Murray has long been a proponent of college affordability and is extremely opposed to the Title IX regulations that were published in 2019.  The retirement of former Senator Lamar Alexander (R-TN) means that the HELP Committee would have a new top Republican Ranking Member.

The Senate also has to decide how many seats on each committee the majority and minority members have before they finalize committee membership.  It is likely that each Committee will have one additional member from the Democratic majority side.

Senator Bernie Sanders (D-VT) will become Chair of the Senate Budget Committee, Senator Patrick Leahy (D-VT) will become Chair of the Senate Appropriations Committee, and Senator Sherrod Brown (D-OH) will become Chair of the Senate Banking, Housing, and Urban Affairs Committee.

The slim margin that the Democrats have in Congress means that it will be difficult for the Democrats to pass any major legislation, like the reauthorization of the Higher Education Act.  Generally, bills are subject to the filibuster rule on the Senate side, which allows senators to indefinitely delay a final vote unless there are at least 60 votes to override the filibuster.  Therefore, Democrats will need to work across the aisle to pursue significant policy changes.  However, a special kind of legislation, called budget reconciliation, is not subject to the filibuster rule and requires a simple majority of 51 percent to pass.  Budget reconciliation is a process for considering tax, spending, and debt limit-related legislation.  Budget reconciliation, like the stimulus bill that passed in December, which included changes to the financial aid programs, can be used to push through policy changes as long as the changes meet the “Byrd Rule”.  The “Byrd Rule” prevents any legislation from being included in a budget reconciliation bill that does not have a budgetary effect and is unrelated to spending or taxes.

As the majority party in both the Senate and House, the Democrats will be able to set the tone and set the agenda.  Further, the Senate Democrats will be able to confirm all of President-Elect Biden’s cabinet choices and judicial nominations that require Senate approval.  However, with a narrow majority in the Senate and a smaller majority in the House, Democrats will have little room for defections and will have to remain united to pass legislation or to approve President Biden’s nominations.

What Was Accomplished During the Lame Duck Session?

There were three main issues that needed to be addressed during the lame duck session:  finalizing a COVID-19 package, finalizing appropriations for fiscal year 2021, and helping student loan borrowers who face the loss of COVID-relief benefits for federal student loans that include relief from payments and a pause in the interest accrual, on January 31, 2021. Only the first two issues have been addressed.  We expect President Biden to extend the COVID-19 relief for borrowers soon after his inauguration.

While the extension of borrower relief for student borrowers due to the COVID-19 pandemic was dropped from the bipartisan agreement, two objectives were accomplished along with a mini-HEA reauthorization bill.  On December 27, 2020, President Trump signed into law H.R. 133, the Consolidated Appropriations Act for FY 2021, which reflects the bipartisan agreement of $900 billion on coronavirus relief and the $1.4 trillion appropriations bill for FY 2021.  H.R. 133 also includes modifications to the Higher Education Act, as amended, which is a modified version of the Free Application for Federal Student Aid (FAFSA) Simplification Act (S. 2667), sponsored by Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander (R-TN) and Senator Doug Jones (D-AL).  With just a few weeks left in Congress, Senator Alexander hoped to get a FAFSA simplification bill passed during the lame duck session before retiring in January, which he managed to accomplish with no time to spare.

The Consolidated Appropriations Act for FY 2021 sets the maximum Pell Grant at $6,495, an increase of $150 over the FY 2020 level.  The bill provides $880 million for the FSEOG program and $1.2 billion for the FWS program.  It is not unusual for spending bills to include policy provisions unrelated to funding, but H.R. 133 represents a significant piece of legislation for higher education.

Some of the provisions included in the higher education section of the bill, derived from the FAFSA Simplification Act, are described below.  Most of the provisions will begin on July 1, 2023 for the 2023-2024 award year, and constitute a mini-reauthorization bill:

  • FAFSA: The bill streamlines and reduces the number of questions on the FAFSA from 108 to 23 to 35 depending on whether the student is a dependent or independent.
  • Need Analysis/Pell Grant Eligibility: The bill uses the concept of a Student Aid Index (SAI) to replace the Expected Family Contribution (EFC).  The SAI would determine eligibility for all forms of Title IV aid except for the maximum and minimum Pell Grant awards, which would be based on the student’ dependency status, the number of parents in the household, and family income as a percentage of the federal poverty level.
  • Drug Convictions: The bill eliminates the suspension of the federal student aid eligibility for applicants with drug-related convictions.
  • Selective Service Registration: The bill removes the requirement that male students must register with the Selective Service before the age of 26 in order to be eligible for federal student aid.
  • Subsidized Usage Limit Applies (SULA): The bill repeals the 150 percent limitation on lifetime subsidized loan eligibility.
  • Pell Grants for Incarcerated Students: The bill restores Pell Grant eligibility for incarcerated individuals.  However, proprietary institutions would not be eligible to award or receive Pell Grants on behalf of incarcerated individuals.
  • Data Sharing: The bill adds questions to the FAFSA where the applicant and others whose information is provided on the FAFSA provides consent for the data sharing between the IRS and ED that was authorized in the FUTURE Act.

Here are some of the COVID-19 relief provisions of H.R. 133:

  • The bill provides $82 billion for an Education Stabilization Fund, where about 82 percent or $23 billion will be directed toward institutions of higher education using the same Higher Education Emergency Relief Fund (HEERF) model established in the CARES Act. In addition to the $20 billion allocated through the formula for nonprofit institutions of higher education, the bill provides $1.7 billion or 7.5 percent of the overall higher education funding to minority-serving institutions and an additional $113.5 million or 0.5 percent of the overall higher education funding for institutions with the greatest unmet need related to the pandemic.  Unlike the CARES Act, the bill does not require that 50 percent of an institution’s funds must be spent on emergency grants for students.  Instead, it requires institutions to spend the same amount on student grants as they were required to spend under the CARES Act.
  • An additional 3 percent or $681 million would be set aside for for-profit institutions, using the same formula used to distribute the $20 billion to non-profit institutions. The bill specifies that funds received by for-profit institutions would only be allowed to be used for emergency grants for students.
  • The allowable uses of funds are more flexible than in the CARES Act, with institutions permitted to use their funds to defray expenses associated with COVID-19, including lost revenue, reimbursements for expenses already incurred, technology costs associated with the transition to distance education, faculty and staff training, and payroll. Institutions may also use the funds to carry out student support activities authorized by the HEA or to provide emergency grants to students (including those enrolled exclusively in distance education).  The grants may be used to cover any component of the cost of attendance or for emergency costs that arise due to COVID-19, including tuition, food, housing, health care, and childcare.
  • The expanded allowable uses for funds would apply to both new HEERF funds and unspent CARES Act However, institutions would still be required to adhere to the 50/50 institutional/student share split for unspent CARES Act funds.
  • The bill does not contain any student eligibility requirements; however, institutions are required to prioritize grants to students with exceptional financial need, such as those with Pell Grants.

Secretary of Education Betsy DeVos released a statement that said:

In addition, this bill builds on our efforts to make the Federal Student Aid process more borrower-friendly from the very start by streamlining the FAFSA — for which Senator Alexander deserves great credit.  And I am so pleased to see Congress finally right the wrong in the 1994 Crime Bill by permanently restoring Pell eligibility for incarcerated students.  I have seen firsthand the transformative impact Second Chance Pell has had on the lives of individuals who are incarcerated, which is why I’ve continued to urge and encourage Congress to make the Department’s experimental program permanent.  This is a historic step, and I look forward to seeing Second Chance Pell grants continue to change lives for the better.”

As previously stated, the only issue not addressed in the stimulus bill was one pertaining to the federal student borrowers who will face loan repayments and interest rate accruals as of February 1, 2021.  The provision to extend the suspension in payments and interest rate accruals was removed from the bipartisan proposal before passage.  The Biden transition team promises to extend the COVID-19 relief to borrowers once he becomes President.  Currently:

  • More than 40 million borrowers had their interest rate adjusted to 0 percent and their payments suspended under the CARES Act.
  • 6 million borrowers opted to continue making payments during the forbearance period.
  • 8 million borrowers are taking advantage of the payment suspension period.

The American Council on Education (ACE) said:  “The economic circumstances of borrowers have scarcely changed and in fact the already high unemployment rate is likely to increase.  Bringing millions of Americans back into repayment in the thick of the crisis will cause additional financial hardship and force borrowers to make difficult decisions about their limited resources.”

Biden Administration in Transition

On December 22, 2020, President-Elect Joe Biden announced the nomination of Miguel Cardona as the next Secretary of Education.  Mr. Cardona is currently the Commissioner of Public Schools in Connecticut and has pushed to reopen schools.  All of the press articles note that he has moved rapidly through the state’s education leadership ranks having been an assistant superintendent for teaching and learning at Meriden Public Schools, a Connecticut school district with 9,000 students.  He began his career as a fourth-grade teacher and then served as a school principal for 10 years.  He is in favor of forgiving college debt and making community college free.

Ranking Member of the House Education and Labor Committee Virginia Foxx (R-NC) released a statement about Mr. Cardona’s nomination for Secretary of Education, which states:

“Unfortunately, President-elect Biden’s nomination of Miguel Cardona is a step in the wrong direction.  Nothing suggests he will lead the challenge to fight the status quo that currently traps too many kids in failing schools, saddles too many students with crippling debt, and shows too little concern for taxpayers.  We need someone who works for the interests of students above all else.  I intend to follow the Senate confirmation proceedings closely as we learn more about Miguel Cardona’s competency for the job.”

What is Biden’s Higher Education Policy Expected to be in 2021?

President-Elect Biden laid out his plans for higher education policies during his election campaign, so we know what his priorities are.  First, President Biden is committed to canceling $10,000 in student loans, although other Senators, such as Senators Elizabeth Warren (D-MA) and Chuck Schumer (D-NY) proposed cancelling up to $50,000 in student loan debt for all 42 million borrowers.  He is also committed to simplifying and improving the income-based repayment plan where borrowers making $25,000 or more would pay 5 percent of their monthly discretionary income toward their loans, which would be forgiven after 20 years of repayment.

President Biden promises to send money to states to make community college free for all students and eliminate tuition at four-year public colleges for families earning $125,000 or less.  The Biden plan would double the maximum value of the Pell Grant, and expanding Pell Grant eligibility to undocumented students.

We are also likely to see a “quick end” to the recently published Title IX federal gender-equity rules, which forced institutions to adopt a more courtroom-style hearing process where accusers are required to be cross-examined by someone representing the accused in a live hearing.

Finally, President Biden is expected to revise the Obama-era regulations on for-profit institutions, which had been rolled back under the Trump Administration.  But reinstituting regulations, like the gainful employment rules or borrower defense to repayment rules, will require a lengthy rulemaking process.  Another promise from the President Biden during his campaign would be to put forth legislation closing the 90/10 loophole that currently excludes from the calculation funding from VA benefits and the Department of Defense Tuition Assistance.

What Other Issues Does the Higher Education Community Face in 2021?

A number of issues face the higher education community and the Biden Administration in 2021.  Reportedly, President Biden’s Day One Agenda will be to reinstate the Deferred Action for Childhood Arrivals (DACA), the Obama-era program that gave temporary legal protections to young immigrants who were brought to the United States illegally as children.

Except for elite private, non-profit institutions where the admissions numbers are up, institutions that serve low-income students are generally not doing well.  In general, enrollment is trending downward, according to National Student Clearinghouse (NSC) research, which is alarming to many.  College enrollment fell 2.5 percent from a year ago, almost twice the rate of decline reported in 2019 and representing more than 460,000 students.

  • Undergraduate enrollment has slipped by 3.6 percent, compared to last year, a difference of more than 560,000 students with double digit decreases at community colleges and among first-time students;
  • Graduate enrollment was a bright spot with an increase of 3.6 percent, compared to last year;
  • Enrollment at primarily online institutions in the fall 2020 increased overall by 6.1 percent from last fall;
  • Undergraduate enrollment in for-profit institutions is up 3 percent over last fall, which is in stark contrast to a 9 percent decline in community college enrollment; and
  • Enrollment in four-year for-profit institutions rose by 4 percent, which is the only one to record undergraduate and graduate growth.

Enrollment from international students is down.  With borders closed, international flights limited, and COVID-19 continuing to spike, recruiters of international students across the country are grounded.  Colleges have an incoming class to fill, one that is more dependent on international students than ever.  While foreign students account for only about 6 percent of American higher education enrollments, they often pay higher out-of-state rates and cover the full cost of tuition.  International students contributed $48 billion to the American economy in 2018.  At the graduate level, international students are a critical piece of the talent pipeline.  Due to COVID-19, international student enrollments fell by 16 percent while enrollments of new first-year international students decreased by 43 percent.  Will international students be able to enroll more easily under the Biden Administration or will they go elsewhere, such as Canada or Britain?

Since last Spring, colleges and universities lost more than half a million jobs, the largest decline in the higher education work force since the federal government began collecting data.  Data from the U.S. Bureau of Labor Statistics suggest that 484,000 employees left the industry from February to September.  Certain workforce reductions have meant the elimination or cutting back of services at colleges across the country.  Further, certain degree offerings and sports programs are likely to be gone for good.  At the same time, other classes of employees have seen their workloads increase as institutions demand pre-pandemic productivity levels, fewer workers or not.

Declining tuition revenue was just the beginning of financial problems for colleges and universities as money for room and board, athletic programs and other services and fees began to dry up during the pandemic.  Private nonprofit colleges are slashing “sticker” prices to emphasize affordability and are trying new ways to recruit.  Amid the pandemic, dozens of colleges have announced tuition resets, tuition freezes, the elimination of student loans, or expanding scholarship programs.  Despite these efforts to attract students, college applications and federal financial aid applications for fall 2021 were lagging as compared to a year ago.  Meanwhile, colleges and universities are trying to find ways to bring more students back to campus.  Rising COVID-19 infections and death rates are prompting colleges and universities to adjust their calendars, including the elimination of spring and fall breaks to reduce student travel and the spread of COVID-19, and delaying the start of the spring semester to make it safer to have in-person instruction.

It is a stressful time for higher education with many colleges facing a deterioration of their finances due to reduced tuition and fees and auxiliary revenue, with international students going elsewhere, and money drying up on room and board revenue as institutions continue offering their courses online.  According to the December 28, 2020 The Wall Street Journal, colleges and universities are issuing record amounts of bonds to address their loss of revenue.  “Hoping to address possible shortfalls and take advantage of ultralow rates, universities have flooded the market with debt.”  “For the year through November, colleges and universities issued more than $41.3 billion in taxable and tax-exempt fixed-rate debt, including refinancing.”

What are the alternatives for colleges and universities that cannot find additional financing?  Eliminating certain majors and degree programs might help, but colleges that are less selective, underendowed, or located in rural or demographically declining areas now face pressures to either merge with larger institutions or close.  The year ahead for higher education can be tough.

Will There Be a Reauthorization of the Higher Education Act in 2021?

The Higher Education Act, as amended, initially expired in 2013, and has been extended every year with the goal of enacting a reauthorization of the HEA.  Last year, Senator Lamar Alexander (R-TN) sought to shepherd a reauthorization bill through the Committee on Health, Education, Labor and Pensions, which he led until January 2021.  But passage of a comprehensive reauthorization bill failed as a result of the COVID-19 pandemic, which prevented any opportunity to reauthorize the HEA.  Simplifying the FAFSA has been the Senator’s mantra for many years and the recent stimulus legislation takes several steps in the right direction.  While there is much disagreement between the Democrats and Republicans regarding spending and accountability measures, there has been common ground on issues such as FAFSA simplification, expanding the allowable uses of Pell Grants, and streamlining the process of direct data sharing between the IRS and the Department of Education.

Whatever happens, this should be an interesting year!

For more information, contact Higher Education Specialist Sharon Bob at Sharon.Bob@PowersLaw.com or 202-872-6772.

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