Reimbursement for Perkins Loan Cancellations

We all recognize as laudable federal law that provides Perkins Loan forgiveness for qualified borrowers who serve in public service fields such as teaching, nursing, and the military, but Congress has not funded the loan forgiveness program since 2010. Colleges and universities have been on the hook for these loan cancellations.

Now, the U.S. Department of Education has announced it will reimburse colleges and universities for these forgiven loans, the total for which over the last 10 years totals about $300 million. Though the Department has not released details, it has promised a letter “later this year” that will flesh out the details.

Higher Education Act Reauthorization

Higher Education Act Reauthorization continues to churn behind closed doors, with congressional staffers trying to iron out differences between the competing Republican and Democrat priorities. It is possible that the House Committee on Education and Labor, chaired by Rep. Bobby Scott (D-VA), will produce a bill with the hope of having it on the floor by the end of the year. It remains to be seen if it will be a bi-partisan effort.

As I’ve mentioned before, Sen. Lamar Alexander (R-TN), chairman of the Senate Health, Education, Labor and Pensions Committee, would desperately like to see a reauthorization pass before he retires in 2020. However, stumbling blocks with ranking minority member Sen. Patty Murray (D-ME) remain, prominently Title IX.

The Budget

As reported last month, the House budget, which was very generous to student aid programs, was passed before the new spending caps were put into place. Senate Republicans also have different spending priorities. The bottom line: Senate Democrats were informed last week the Labor-HHS-Education bill would be funded at the same level as 2019, or $11 billion less than the House-passed bill.

While previously Senate budget writing for Labor-HHS-Education has been bipartisan, the meeting for mark-ups was cancelled until further notice. As pleased as we were with the House budget, we may well be disappointed in the Senate version. Avoiding cuts may be a victory.

Borrower Defense

The drafting and negotiation of Borrower Defense to Repayment regulations has not been a straight path. A quick history: Very few claims had been made under the broad regulations implemented during the Clinton administration, but the fall of Corinthian Colleges in 2015 demonstrated the need for enhanced borrower defense.

The final regulations produced by the Obama Administration had the objective of providing recourse to students who took out federal loans to attend for-profit institutions. They created a structure difficult for all schools to operate under, including creating a broader standard for “misrepresentation” that no longer included intent, and potentially burdensome institutional financial disclosure requirements.

The Trump administration put those final regulations on hold while conducting another round of negotiations, but a federal court ruled the delay violated federal administrative procedure rules, putting the Obama regulations back in play.

The new Trump administration regulations will go into effect July 1, 2020, and are the product of extensive negotiations that reflect the potential negative impact of the Obama regulations on private, non-profit institutions. The statute of limitations is now three years and group claims are no longer allowed. Additionally claimants no longer need be in active default to file a claim.

Potentially confusing for claimants are the three different regulatory standards that will apply, based on when students took out their federal loans.

Prior to July 1, 2017 – the original Clinton Administration regulations apply.
July 1, 2017 to June 30, 2020 – students are subject to the Obama Administration regulations.
After July 1, 2020 – The new regulations apply.

Admissions and the Department of Justice

For the last two years the Department of Justice (DOJ) has been conducting an investigation into the National Association for College Admission Counseling’s (NACAC) Code of Ethics and Professional Practice that could may impact admissions practices at our institutions.

In response to the DOJ’s investigation, NACAC announced a proposal to delete several provisions from its code of ethics DOJ believes constitute unlawful restrictions on competition in violation of federal antitrust laws:

• Preclude institutions from providing exclusive incentives to early decision applicants;
• Bar the recruitment of students who have committed to another college unless the students initiate an inquiry; and
• Prohibit the recruitment of transfer students unless the students initiate contact.

These changes that NACAC hopes will satisfy DOJ and avoid litigation, pertain to collective behavior. Individual campuses can develop and execute recruiting and admissions practices as they see fit. However, you will risk running afoul of DOJ if you cooperate with other institutions to continue these kinds of practices.

President signs two-year budget deal –

President Trump signed a sweeping two-year budget agreement on Aug. 2 that lifts the federal borrowing limit and increases spending. The threat of default was removed for the 2020 elections, and the new law suspends the debt ceiling through July 2021.

Budget deal some good news for higher ed –

There is some good news for higher education in this agreement, specifically related to increases in federal grant programs included in the House FY 2020 spending bill. Here’s a recap:

• Increases the Pell Grant maximum by $150 to $6,345
• Increases the Supplemental Educational Opportunity Grant (SEOG) total by $188 million to $1 billion
• Increases Federal Work Study by $304 million to $1.4 billion
• Increases TRIO by $100 million to $1.1 billion
• Increases GEAR UP by $35 million to $395 million.

There’s a “but.” The new, lifted cap is still $10 billion less than what was allocated in the House bill for “non-defense spending.” The Senate will start writing its spending bills in September, with $10 billion less to work with. It’s not yet clear where it will reduce spending to fall within the cap.

Higher Education Reauthorization Act update –

Time is running out for getting the Higher Education Act Reauthorization drafted, introduced, and passed by Congress this year, especially with other issues – like health care – creating the potential of crowding it out.

However, staff continue to work on the bill and you never know when it might suddenly pop out. With that in mind, our colleagues at NAICU are being very vigilant in monitoring any developments. Most recently they’ve become very concerned with what appears to be a bipartisan initiative to permit extending Federal Pell Grant eligibility to certain short-term programs, such as certificates. We fear prospective students will expend Pell Grant funding on these programs of dubious quality, depriving them of resources to attend an independent college or university.

Title IX –

The White House had set a September deadline for final Title IX regulations. That informal deadline has slipped to October, which, considering there were more than 100,000 responses to the proposed regulations, still seems unrealistic.

NAICU staff have been told that when the regulations are finally published, they will include a long period for implementation, giving campuses lead-time to adapt.

Supreme Court to Hear DACA Case –

During its upcoming term which starts in October, the U.S. Supreme Court will rule on the legality of the Trump Administration’s actions regarding the Obama-era Deferred Action for Childhood Arrivals (DACA) program.

The Court will actually be consolidating three different cases in which federal judges blocked the administration from terminating the DACA program, though DACA had been created by Executive Order.

By South Carolina law, DACA students are not permitted to receive support from state scholarship and grant programs.

Those of us associated with independent higher education in South Carolina should be very pleased with the results of the 2019 session of the SC General Assembly.

The final version of the budget delivered to the governor includes the full $1.6 million increase requested by the Tuition Grants Commission – the full request has not been funded in recent memory. This increase raises the individual tuition grant to a maximum of $3,450 from $3,300. And that is “recurring” money, meaning it is now automatically built into all future state budgets. The Higher Education Excellence Enhancement Program (HEEEP) will receive its largest increase ($2.9 million) in many years. Unfortunately the CHE Needs-based Grants Program $1.6 million increase did not survive — about 16 percent of that would have been passed on to the Tuition Grants Program.

Regarding higher education funding you’ll hear about $44 million in the budget going to public universities in return for keeping tuition flat, though they will be permitted to increase tuition to cover increases in pension and health care costs. Nevertheless, House Ways and Means Chairman Murrell Smith has contacted the public universities and urged them to approve tuition increases of no more than one per cent for the 2019-2020 academic year. It should also be noted that the deal’s cap applies only to mandatory tuition and fees, meaning those charges paid by every student – other fees like room and board can increase.

Despite optimism at the beginning of session, the House and Senate were unable to agree on significant legislation regarding higher education and K-12 education. The Higher Education Opportunity Act (S.298), an element of which would have provided for predictable increases to the Tuition Grants Program, was unable to make it through the Senate. On the last day of session Rep. Brian White introduced this legislation in the House. While having no impact this year, the introduction is important as the legislation now can have a life of its own in the House next year.

Legislation which sought to make widespread changes to K-12 education (H.3758, South Carolina Career Opportunity and Access for All Act) passed the House but stalled in the Senate (S.419). The General Assembly included teacher salary increases in the state budget, which will characterized as education reform. Should this legislation come back next year, we’ll continue to press for the provision that includes independent higher education in any review of dual enrollment.

Another legislative victory was the passage of S.314, which creates an individual income tax credit for each clinical rotation for which a physician, an advanced practice nurse, or physician assistant serve as the preceptor for a medical school-required clinical rotation. This law will create an incentive for medical professionals to work with nursing students.

It can also be a victory when a bill doesn’t pass. Legislation (S.7) to increase the liability limit for a public agency from $600,000 to $2 million, passed the Senate but did not make it through the House. This bill may have also affected the cap on not-for-profits, including independent colleges and universities.

If you have any questions regarding legislative impacts on higher education in South Carolina, please contact Jeff Perez, SCICU President and CEO, at 803-799-7122.

On the federal front, as so often happens, there’s good news and bad news.

The good news is support in the House of Representative for student financial aid…

The bad news is the House passed the so-named “Equality Act,” which, while it may have laudable intent, would have very negative consequences for numerous SCICU institutions.

Federal funding for student aid has made a great start, but still has far to go.

Earlier this month the U.S. House Appropriations Subcommittee on Labor-HHS-Education released its FY 2020 spending bill, and it includes much good news for student aid:

• Increases the Pell Grant Maximum by $150 to $6,345
• Increases the Supplemental Educational Opportunity Grant (SEOG) by $188 million to $1 billion
• Increases Federal Work Study by $304 million to $1.4 billion
• Increases TRIO by $100 million to $1.1 billion
• Increases GEAR UP by $35 million to $395 million

This is a very important first step, but it’s just that. The bill must be approved by the Appropriations Committee, followed by the full House. The Senate will write its version of student aid funding in June.

Also clouding the impact of the potential student aid funding increases is that they’re subject to sequestration. Unless Congress raises the statutory spending caps for FY 2020 and FY 2021 laid out in the Budget Control Act of 2011, student aid funding would be cut along with other “discretionary” spending.

Last week the House approved an LGBT rights bill, “The Equality Act” (H.R. 5), which could have the effect of prohibiting students at single-sex institutions from receiving federal tuition assistance, and could be construed so as to render the institutions illegal.

While H.R. 5 has passed the House, it is not likely to do so in the Senate. It is opposed by Senate Republicans (and President Trump), and Senate Democrats are not united behind the bill.

Title VI currently forbids discrimination on the basis of race, color, or national origin against recipients of federal financial assistance – H.R. 5 would add “sex” to that list. Title VI lacks the exemptions contained in Title IX that allow for single-sex institutions, and H.R. 5 would not insert similar exemptions into Title VI.

The Equality Act also adds “sex” (including sexual orientation and gender identity) to the list of protected characteristics in Title II of the Civil Rights Act of 1964. It also expands the definition of “place of public accommodation” to include “any establishment that provides a good, service, or program,” which could be interpreted to include single-sex private colleges and universities, as well as religious institutions with admissions policies contrary to the spirit of The Equality Act.

While the sponsors have assured NAICU (National Association of Independent Colleges and Universities) that their intention is not to close down single-sex institutions, they have not inserted the exemptions to safeguard them. Specific language in the bill provides that it would even supersede the Religious Freedom Restoration Act of 1993.

If you have any questions regarding federal legislative impacts on higher education in South Carolina, please call Jeff Perez, SCICU president and CEO, at 803-799-7122.

In recent days, the state budget and the crossover deadline had the attention of legislators in the SC General Assembly.

The state budget is being debated in the Senate this week – the House, having already passed its version of the budget, is on furlough this week. The version which passed the Senate Finance Committee and sent to the Senate floor included the $1.6 million increase in funding for the Tuition Grants Program. It also includes additional funding for public universities, on the grounds that they keep mandatory tuition and fees flat next year. This arrangement does not cover non-mandatory fees, which are not paid by all students, nor room and board.

Last week the General Assembly hit the crossover deadline – any bills that hadn’t passed at least one house and moved to the other are functionally dead this year. But since we are in the first of a two-year legislative cycle, they can be resurrected next year.

So, which bills important to SCICU crossed over, and which didn’t? Speaker Lucas’ education bill H.3759 (SC Career Opportunity and Access for All) passed the House, but has encountered slow going in the Senate. Unfortunately, Sen. Sheheen’s Higher Education Opportunity Act (S.298) which, among other provisions, would have brought predictability to funding for the Tuition Grants Program, did not move out of the Senate.

Other bills that made the crossover which we are tracking include:

S.0007 (Malloy, Climer, Goldfinch, et al.) Passed Senate/ W&M
Increases liability limit for a public agency from $600,000 to $2 million (may affect cap on not-for-profits as well).
Status: Reported out of Judiciary Committee.

S.314 (Alexander) Passed Senate/W&M
Creates an individual income tax credit for each clinical rotation for which a physician, an advanced practice nurse, or physician assistant serve as the preceptor for a medical school-required clinical rotation.
Status: Passed Senate; referred to House Ways and Means Committee.

H.3577 (Allison, Taylor, Felder) Passed House/Education
Authorizes private and public institutions of higher education to offer alternate teacher certification programs.
Status: Carried over in the Education and Public Works Committee, awaiting amendments.

H.3936 (Davis, Daning, Chellis, et al.) Passed House/Education
Permits technical college students to be eligible for Palmetto Fellows Scholarships.
Status: Reported out of Education Committee.

H.3398 (Clary, Norrell, Loftis, et al.) Passed Both House and Senate
Makes permanent the Tucker Hipps Transparency Act, which requires public universities to report wrongdoings by fraternities and sororities.

We have received positive news from our friends at NAICU.

While there had been little optimism for progress on new regulations for Title IV student financial aid programs, the negotiated rulemaking committee created by the U.S. Department of Education was able to reach consensus after four months of deliberations. Negotiators recognized the importance of locking in compromises by reaching consensus and forcing the Department to publish proposed rules based on the agreed on language, which impact accreditation, distance learning, TEACH grants, Title IV eligibility of faith-based institutions, and more. If they had not reached consensus, the Department would have been free to publish regulations reflecting its own priorities.

Many thanks to Allen University President Ernest McNealey for his service on the committee.

The Department was for pushing for weakening regional accreditation, but faced considerable pushback from the committee, and agreed to compromise language that preserves the current system.

Another controversial Department of Education proposal would have allowed Title IV-eligible institutions to outsource up to 100 percent of their programs to non-Title IV-eligible providers via such contractual agreements. A compromise was reached whereby the Department agreed to retain current limits on the percentage of such written arrangements in return for changes that will allow accreditors to speed up the review and approval of these arrangements.

Other proposed changes before the negotiated rulemaking committee appeared to be aimed at reducing regulatory burden, including deleting the federal definition of credit hour and the regulations governing state authorization for distance education. Although NAICU has supported the elimination of such provisions, many negotiators argued that retaining these requirements was important for protecting consumers, and both of these provisions were preserved in modified form. Additionally, negotiators successfully argued against the inclusion of several proposals that would have hampered the discretion of institutions in determining what credits they accept from transfer students.

Negotiators also reached consensus on new rules for online and competency-based programs. The committee also agreed to a regulatory fix for current and future TEACH grant recipients who have experienced inadvertent grant-to-loan conversions. Finally, the committee agreed to several changes designed to improve faith-based institutions’ access to the Title IV programs and to define religious mission.