The big news — $2.2 trillion big -– is the “Coronavirus Aid, Relief, and Economic Security Act.” President Trump signed the emergency spending bill into law March 27th.

Thanks to a national advocacy effort of institutions and associations, independent higher education was included in the stimulus package, which provides $14 billion for higher education, to be distributed by the Secretary of Education based on enrollment. Of that $14 billion, $1 billion will be directed to HBCUs and other minority-serving institutions. Another $300 million is designated for smaller institutions.

There is also a “Maintenance of Effort” provision that requires states must maintain support for higher education and state need-based grant aid at an average of the previous 3 years.

The $14 billion more than doubles the $6 billion in last week’s Senate bill.

Again, I want to thank everyone who spoke on behalf of our colleges and universities.

FUTURE Act pressure –

Sen. Lamar Alexander (R-TN), chair of the Senate Committee on Health, Education, Labor and Pensions, continues to feel pressure to move the FUTURE Act, which secures $255 million in annual funding for HBCUs and minority-serving institutions (MSIs). This funding expired on September 30th. Though having sailed through the House, Sen. Alexander opposed passing the legislation on unanimous consent in order to create leverage to pass his scaled-back version of reauthorization of the Higher Education Act, in which he included the funding. Thirty-six Senate Democrats signed a letter to leadership in support of the legislation, which was co-sponsored by Sen. Tim Scott (R-SC).

Higher Education Reauthorization in the House –

And speaking of reauthorization, the House Committee on Education and Labor passed on Halloween on a party-line vote a mark-up of the majority version of reauthorization, known as the Affordability Act.

The bill now moves to the Ways and Means Committee, which must find how to pay for the bill, which has a price tag of $400 million over the next 10 years.

Some of the most notable provisions of the 1,000+ page bill include:

• Increases support of financial aid programs, for example increasing the maximum Pell Grant by $625 to $6,820.
• Removes the annual FAFSA filing requirement for Pell Grant recipients.
• Creates two repayment plans for federal student loans:
  • Fixed plans of 10, 15, and 20 years.
  • Income-based plan that captures 10% of income for 20 years, after which the balance is forgiven.
• Provides accreditation flexibility in the measures used to assess completion, progress toward completion and workforce participation.
• Creates a student unit record data system.
• Prohibits the U.S. Department of Education from enforcing the Trump Administration’s proposed Title IX rules.
• Adds to Clery Act reporting hazing and harassment incidents.
• Provides for free two-year college by mandating a 75/25 federal/state split of the costs.

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.