DEEPER DIVE: ED PUBLISHES FINAL ACCOUNTABILITY FRAMEWORK

On June 29, the Department released the unofficial Student Tuition and Transparency System (STATS) and Earnings Accountability final rule (Final Rule). The Final Rule implements the earnings accountability framework detailed in OB3. It will end Direct Loan eligibility for programs that fail to meet certain earnings benchmarks and, under a new administrative capability standard, will end all Title IV eligibility (including Pell Grants) for institutions with a significant number of programs that consistently fail to meet the earnings benchmarks over time.

Based on our initial review of the 641-page package, AACS has prepared initial thoughts in the form of FAQs that are intended to guide members as they consider implications of the Final Rule for their institutions. We will continue to review the Final Rule carefully as we move to the next phase of our advocacy.

When is the Final Rule effective?

The Final Rule will become effective July 1, 2027, with the exception of provisions at 34 CFR Part 685, which simply require institutions to agree to be subject to the earnings accountability framework established in the Final Rule. Certain aspects of the Final Rule will be delayed for programs preparing students for tip-based professions, including cosmetology, barbering, and certain wellness programs (detailed below).

Under the Final Rule, institutions have the choice of reporting data to ED according to the requirements of the Financial Value Transparency and Gainful Employment (FVT/GE) Rule, which remains on the books, or of reporting data under the reduced requirements of the Final Rule. If an institution reports under the FVT/GE Rule, the Department will presume the institution has forgone the optional early implementation of the Final Rule. This means the institution’s GE programs would be subject to the FVT/GE Rule prior to July 1, 2027, including sanctions under that framework. Reporting under either the FVT/GE Rule or the Final Rule is due to the Department no later than October 1, 2026.

Does the Final Rule apply to nondegree programs? 

Yes. The Final Rule will apply the earnings accountability framework to nondegree programs, using the Higher Education Act’s “gainful employment” language as statutory justification, even though OB3 specifically excluded nondegree programs.

How does the Final Rule delay for programs preparing students for tip-based professions work?

The earnings accountability provisions of the Final Rule will have at least a one-year delayed implementation for programs that prepare students for employment in tip-based professions, including most cosmetology, barbering, and wellness programs. This delay is intended for earnings from such programs to be measured using data from the 2026 tax year or later, allowing for OB3 “No Tax on Tips” policy to be reflected in the Earnings Premium calculation. Programs subject to the tip-based delay are listed in Table 5.22 of the Final Rule (see page459).

Will ED continue to publish earnings information for programs subject to the tip-based delay? 

Yes. Programs subject to the tip-based delay will not be designated as “passing” or “failing” the Earnings Premium test, nor will such programs be subject to sanctions under the Final Rule. That being said, during the delay, ED will continue to publish earnings data for these programs for informational purposes.

What happens to the tip-based delay if Congress does not extend No Tax on Tips past December 31, 2028?

In the preamble to the Final Rule, the Department acknowledges that the “No Tax on Tips” policy is currently set to expire after tax year 2028. ED believes that Congress will likely extend the provision or make it permanent. However, in the event the policy does expire, the Department stated it would continue to apply the accountability framework to programs subject to the tip-based delay and will “revisit the issue of data quality” at that time.

When will sanctions first apply to beauty, barbering, and wellness programs? 

In general, ED states the Earnings Premium test will first be calculated in early 2027, applying to the 2027-2028 award year and requiring warnings following the first Earnings Premium test results. Programs could become designated as low-earnings outcome programs beginning in the 2028-2029 award year, if such programs fail the Earnings Premium test in both 2027 and 2028. In the absence of a successful appeal, such programs would lose Direct Loan participation following completion of the eligibility termination procedures established by the Final Rule. We expect programs that fail the new administrative capability standard could lose all Title IV eligibility (including Pell Grants) in the 2029-2030 award year, the year following the Department’s designation of such programs as low-earnings outcome programs.

While not entirely clear based on the Final Rule, we expect cosmetology, barbering, and wellness programs subject to the tip-based exception (discussed above) would benefit from an implementation timeline delayed by at least one year. In other words, we anticipate the earliest such programs would be subject to warnings requirements would be following determinations made during the 2028-2029 award year. We anticipate such programs would not be designated low-earnings outcome programs until the 2029-2030 award year, at earliest, meaning the loss of Direct Loan eligibility would not attach until after that designation. We expect the loss of all Title IV eligibility (including Pell Grants) would not impact such programs until the 2030-2031 award year, at earliest. Impacts of the Final Rule on programs requiring cohort aggregation due to a small number of program completers will be delayed even further.

If a program does not receive Direct Loans, will the program still be subject to the potential loss of all Title IV eligibility (including Pell Grants) under the new administrative capability standard? 

No. The Final Rule exempts programs from the accountability framework’s sanctions when those programs have not received Direct Loans for the five most recently completed awards years or if an institution voluntarily agrees to forego disbursing Direct Loans to students in that program for at least five years. This means that such programs would not be at risk of losing all Title IV eligibility (including Pell Grants) under the new administrative capability standard, even if such programs are deemed to have “low-earning outcomes.”

Does the Final Rule change the comparator group for nondegree programs?

No. As in the proposed rule, the Final Rule has the effect of comparing both the earnings of students who completed a bachelor’s degree in aerospace engineering and the earnings of students who completed a nondegree program in cosmetology, barbering, or wellness to the same median earnings of working high school graduates. AACS asked ED to adopt a proportional comparator group for nondegree programs (i.e., individuals without a high school diploma or equivalent), but the Department declined to adopt this suggestion.

Does the Final Rule include an alternate earnings appeal process?

No. The Final Rule provides a narrow appeals process, applicable only when institutions believe ED made an error in calculating the Earnings Premium. The Department declined to provide an alternate earnings appeal, meaning institutions are not expected to have an opportunity to demonstrate that the Department’s calculations fail to consider regional, demographic, or other income-based disparities.

Does the Final Rule make adjustments for part-time work or wage discrimination?

No. The Final Rule does not contemplate a mechanism to account for the impact of part-time work or wage discrimination on the earnings of program completers, both of which impact graduates of cosmetology, barbering, and wellness programs at rates disproportional to the general population.

Does the Final Rule make any accommodations for geographic earnings disparities?

No. The Department declined to provide any accommodations to account for regional or statewide disparities in earnings, such as those between rural and urban areas within a state.   

Did AACS’s advocacy work? 

Undoubtedly. ED spent page after page of the Final Rule preamble specifically addressing comments submitted by AACS membership. While the Final Rule represents a mixed outcome for cosmetology, barbering, and wellness programs, there is no question the victories for our sector were secured thanks to the tireless efforts of the AACS membership. Without our shared commitment and tireless advocacy from all of you, we would not have secured the delay and other improvements to the Final Rule. Much work remains ahead, and we will navigate the next steps in our advocacy together to protect our schools and students.

LETLOW PREVAILS IN LOUISIANA

What You Need to Know  

Rep. Julia Letlow (R‑LA) is poised to become Louisiana’s next senator after defeating State Treasurer John Fleming (R) in last weekend’s runoff election. The contest followed last month’s primary, in which both Letlow and Fleming advanced after incumbent Senator and HELP Committee Chair Bill Cassidy (R‑LA) lost support from President Trump and failed to make the runoff. Given Louisiana’s strong Republican lean, Letlow is widely expected to win the November general election.

Why This Is Important  

During her time in the House, Letlow has shown a strong and sustained interest in education policy. A former university administrator, she currently serves on both the House EdWorkforce Committee and the Labor‑HHS‑Education Appropriations Subcommittee and has been supportive of the beauty, barber, and wellness sector. While committee assignments for the next Congress are still months away, Letlow would be a natural candidate for the Senate HELP Committee and could quickly emerge as a key voice in the Senate on education and workforce issues affecting the community.

CONGRESS ENTERS THE SUMMER DOLDRUMS

What You Need to Know 

Congress is headed into the August recess with just ten legislative days left and little to show for it. Key priorities remain stuck amid mounting tensions between congressional Republicans and the White House. President Trump has refused to sign bipartisan housing affordability legislation due to Congress’s inability to pass his preferred election reform legislation, while House conservatives have derailed the must‑pass defense bill unless those election provisions are included. At the same time, lawmakers remain divided across both chambers on major items, including online children’s safety legislation and annual government funding.

Why This Is Important 

With time running out, Congress is on track for another stopgap funding bill before September 30, pushing final decisions into the post‑election lame duck session. The lack of legislative wins is also adding to political pressure, as Republicans struggle to show progress on core issues like affordability. House Republicans are eyeing a third reconciliation package to demonstrate momentum, but it faces long odds in the Senate and is unlikely to become law. With internal divisions growing and the calendar shrinking, the window for meaningful action is quickly closing before lawmakers leave Washington for campaign season.

RULING FREEZES RISE “PROFESSIONAL DEGREE” DEFINITION

What You Need to Know 

On May 1, the Department published the Reimagining and Improving Student Education (RISE) final rule in the Federal Register. Multiple impacted groups challenged the rule in court, and the cases were later consolidated. On June 24, a federal district court in DC ruled on the consolidated cases, requiring ED to freeze implementation of certain elements of the “professional degree” definition. During the freeze, to comply with the court’s order, the Department will expand the list of professional degree programs to include those named in the Department’s June 29 Electronic Announcement.

Why This Is Important 

Physician Assistant, Physical Therapy, Occupational Therapy, Registered Nurse, Nurse Anesthetist, and Nursing Practice are among the professions included in the new, expanded list. Representatives for each of these professions carried out an extensive advocacy campaign on Capitol Hill, in the courts, during the public comment period, and with their own stakeholders. While the majority of AACS members are not directly impacted by this court ruling, the Department’s response to the ruling serves as a meaningful reminder of the power of vigorous, multi-prong advocacy from the regulated community. As our members know, AACS has taken an equally involved role in advocacy related to ED’s new accountability framework and will continue to fight for wins for our membership at every opportunity.

The U.S. Department of Education issued its final Student Tuition and Transparency System (STATS) and Earnings Accountability rule, implementing the low-earning outcomes accountability framework enacted by Congress in the Working Families Tax Cuts Act (WFTCA), also known as the One Big Beautiful Bill Act (OBBBA). The official version of the Final Rule will be published in the Federal Register soon, but the unofficial version of the Final Rule is available here and the fact sheet here.

The Final Rule reconciles the new earnings threshold authorized under OBBBA with existing earnings accountability measures in the Financial Value Transparency and Gainful Employment regulations. All Direct Loan participating programs, in every sector, are subject to the same transparency and earnings accountability metric.

In the preamble of the rule, defending the extension of the WFTCA earnings threshold to undergraduate certificates, the Department continues to assert its “gainful employment” authority, dismissing arguments by CECU and others that “gainful employment” simply means employed for pay, and is a descriptor of the employment, not of the degree or certificate program.

The preamble also argues that the Department was within its authority to incorporate new administrative capability standards “for purposes of qualifying institutions of higher education for participation in title IV, HEA programs.” This statement defends a provision inserted during negotiations that would prohibit the use of all Title IV funds, including Pell, at institutions with more than 50 percent of students receiving federal aid in failing programs at that institution.

The Final Rule did not modify the earnings threshold comparison groups to address part-time work, gender disparities, geographic or cost-of-living variation, or to measure undergraduate certificate completers to a younger cohort, measures CECU argued for in public comment. On each, the Department rested primarily on the statutory text of WFTCA as prohibiting these modifications.

Similarly, the Department dismisses all arguments for abiding by the Master Calendar, again citing its interpretation of the WFTCA and case law on the Administrative Procedure Act.

There are some meaningful changes to the final regulation when compared against the proposed rule.

No Tax on Tips Delayed Implementation: The Department will delay implementation of the program eligibility consequences for certain programs that prepare students for employment in occupations where a majority of workers receive tipped income, in order to use reported earnings from the tax years when the “No Tax on Tips” policy is in effect, which begins with the 2026 tax year. Programs such as cosmetology, barbering, massage therapy, and similar occupations will receive at least a one-year delay before accountability consequences apply. During this period, the Department will continue to publish earnings information, but these programs will not be considered to have either passed or failed the earnings test. This change does not incorporate an adjustment for unreported income, but it provides at least one year for reported incomes to increase in these fields due to the new tax-advantaged treatment of up to $25,000 in tip income.

Lowered Benchmark for Small Graduate Cohorts: In § 668.2(b)(3), where ACS same-state, same-field data for graduate programs are unreliable (fewer than 16 sampled individuals), the threshold is now set to $1, which functionally exempts those graduate programs rather than holding them to another benchmark. The Department estimates roughly 2,650 graduate programs are affected. That is a comparison-group change favorable to certain graduate programs, but it does nothing for undergraduate degrees and certificate programs. The cohort expansion process was also simplified (2-digit CIP aggregation removed, capped at 4-digit), but that concerns how the completer pool is built, not the benchmark group.

Programs not participating in Direct Loans: In the Final Rule, the Department exempts an institution from the automatic loss of Title IV eligibility if the institution does not currently participate in the Direct Loan program and has not participated in the Direct Loan program for the five most recently completed award years.

In addition, under the Final Rule, the Department also exempts a program from automatic loss of Title IV eligibility if the program is not yet determined to be a low-earning outcome program and the institution and the Department agree to amend the institution’s program participation agreement to prevent students from borrowing Direct Loans for the program for a period of at least five years.

Programs exclusively serving individuals with disabilities: The Final Rule exempts institutions from the program eligibility consequences if they exclusively serve individuals with documented disabilities, as defined under 34 CFR 300.8.

The Department reduced the STATS reporting requirements by approximately 30 percent by eliminating several reporting elements that are already collected through existing Department data systems. Institutions must begin submitting STATS data by October 1, 2026, with annual reporting each October thereafter.

The provisions implementing the statutory changes take effect on July 1, 2026. Certain additional provisions become effective on July 1, 2027, although institutions may choose to implement them early. Programs subject to the GE regulations that do not elect early implementation will remain subject to the 2023 GE regulations, including all applicable program eligibility consequences, until July 1, 2027.

CECU is reviewing the final regulatory text and accompanying materials and will provide members with additional analysis.

Following two week-long negotiated rulemaking sessions, extensive negotiations, multiple revised drafts of regulatory text, and numerous caucuses with the Department of Education, the Accreditation, Innovation, and Modernization (AIM) Committee reached consensus on proposed regulatory changes affecting accreditation, institutional oversight, innovation, governance, and related higher education policies.

All negotiators voted in favor of the final consensus package except for the negotiator representing students, student loan borrowers, or groups representing them, Magnus Noble, and the negotiator representing veterans and U.S. military service members or groups representing them, Julie Howell, both of whom abstained from the final consensus vote.

Because the Committee reached consensus, the Department is bound to use the consensus regulatory text in its forthcoming Notice of Proposed Rulemaking (NPRM). Following the NPRM and the public comment period, the Department is expected to publish final regulations by November 1, 2026, with the regulations scheduled to take effect on July 1, 2027.

The final consensus package includes significant revisions and clarifications across multiple areas of accreditation policy, including issues related to accreditor governance and independence, substantive change and transfer of accreditation processes, branch campuses and additional locations, shared facilities and services, innovation and direct assessment programs, institutional quality assurance expectations, and the application of accreditation standards in accrediting decisions. The negotiations also included extensive discussions regarding First Amendment obligations, academic freedom, intellectual diversity, institutional mission, and student outcomes.

CECU extends our sincere thanks to Jeffrey Bodimer of Post University for serving as the primary negotiator representing proprietary institutions. As both a CECU member representative and negotiator, Jeffrey provided thoughtful leadership, deep subject matter expertise, and strong advocacy for proprietary institutions throughout the negotiations.

CECU provided recaps of each day of negotiations on our blog and will continue reviewing the final consensus language closely. We will provide members with the final language, along with additional analysis and implementation considerations, as the rulemaking process moves forward.

The U.S. Department of Education has released its Final Rule implementing the Workforce Pell Grant program authorized under the One Big Beautiful Bill Act (OBBBA). The Final Rule follows the Department’s Accountability in Higher Education and Access Through Demand-driven Workforce Pell (AHEAD) negotiated rulemaking process conducted in late 2025 and early 2026. Most provisions are scheduled to take effect July 1, 2026.

The Final Rule establishes the regulatory framework for the Workforce Pell Grant program, which expands Pell Grant eligibility to certain short-term, workforce-focused postsecondary programs designed to prepare students for in-demand careers, including fields such as healthcare, skilled trades, transportation, public safety, and technical occupations.

The Final Rule establishes requirements governing institutional eligibility, program approval, reporting, and oversight for Workforce Pell participation.

In our comments on the NPRM, CECU outlined several recommendations to better align the proposed rule with the law and support students and institutions. These include establishing a consistent and transparent appeals process across states, ensuring flexibility to protect low-income students from unintended financial harm, and removing provisions that exceed statutory requirements and may limit innovation or access. CECU will join the Department on a stakeholder call regarding the rule at 10:30 a.m. today and is reviewing the Final Rule for these issues. CECU will continue to keep members informed.

Why It Matters for Career Schools

The Final Rule expands federal Pell Grant eligibility to many programs commonly offered by career education institutions. At the same time, the rule establishes a new federal oversight and compliance structure tied specifically to Workforce Pell participation. Institutions will need to carefully evaluate operational requirements, reporting obligations, approval processes, and implementation timelines before pursuing participation.

Institutions considering Workforce Pell participation should begin reviewing program eligibility, workforce alignment documentation, state approval processes, and implementation timelines under the finalized framework.

Department Files Motion to Dismiss in Borrower Defense Lawsuit

On Tuesday, the U.S. Department of Education filed a Motion to Dismiss in the lawsuit over the Borrower Defense to Repayment (BDR) regulations, (CCST vs. US Dept of Ed). Their motion argues that because Congress put the Trump BDR Rule back in place in the One Big Beautiful Bill Act, the regulation cannot be challenged anymore under the Administrative Procedures Act.

We are working with legal counsel to prepare and file a Response opposing the Motion, after which the Department will file a Reply by early July. This phase of the case will likely determine whether we succeed in applying the Fifth Circuit opinion to prevent the never-ending waves of affirmative BDR claims schools are otherwise forced to process and respond to on an ongoing basis. Your support of this lawsuit has prevented the Biden BDR Rule from going into effect up to this point—please take a moment to donate here to make sure the lawsuit can continue.

The Higher Education Accreditation Wars Are Heating Up – Washington Monthly 

The Education Department, under Secretary Linda McMahon, is not only seeking more open and competitive accreditation. It’s also trying to change what accreditors examine, how they judge institutions, and how federal pressure should be applied.

AACS Announces New Executive Director – AACS

The American Association of Career Schools (AACS) announced the appointment of John D. Russell, JD, as the organization’s new Executive Director. Russell joins

GOVERNMENT RELATIONS HIGHLIGHTS

• Reconciliation 2.0: Senate Begins Process for DHS Funding
• House Advances WIOA Reauthorization: Bipartisan Path Unclear
• Fed Nomination Complication: Confirmation Faces Committee Roadblock
• AIM Rulemaking Progresses: First Session Highlights Sharp Divisions
• FAFSA Fraud Detection Expands: Real‑Time Screening Launches April 26
• DEEPER DIVE: ED Issues Proposed Rule on Accountability Framework

RECONCILIATION 2.0 TEED UP IN SENATE

What You Need to Know 

Congress is moving ahead with a two‑track plan to resolve funding for the US Department of Homeland Security (DHS). Under this approach, the House would pass a bill funding most DHS operations, while Senate Republicans separately pursue funding for the rest of DHS’s functions (i.e., ICE and Customs and Border Protection) through the budget reconciliation process. The next step is expected this week when the Senate votes on a budget resolution. Notably, the resolution does not direct any other committees to contribute language, signaling an effort to keep the bill narrowly focused on DHS. Once both the House and Senate adopt the budget resolution, Republicans would be able to advance a reconciliation bill using a simple majority vote in the Senate.

Why This Is Important 

While GOP leaders have emphasized a narrow approach, extremely tight margins heighten the risk that additional policy or funding provisions could be added to secure critical votes. Some House Republicans have already pushed for a greater role in shaping the reconciliation bill, raising questions about whether the package could expand. That said, if the Senate limits instructions in the budget resolution, it restricts what can be added later in the process. Because budget reconciliation has been used previously to enact major changes to education programs, including OB3 last year, AACS will continue monitoring developments closely and flag any provisions that may affect our community.

HOUSE COMMITTEE CONSIDERS WIOA

What You Need to Know 

Congress last reauthorized the nation’s primary workforce development law, the Workforce Innovation and Opportunity Act (WIOA), in 2014, when a politically divided Congress passed the measure with broad bipartisan support that President Obama signed it into law. Since then, multiple attempts at reauthorization have stalled. Most recently, Congress included a bipartisan WIOA reauthorization in a December 2024 funding deal, which collapsed after opposition from then President‑elect Trump. Restarting the process, the House EdWorkforce Committee passed a partisan reauthorization bill on Tuesday, now titled the Stronger Workforce for America Act of 2025. While the bill mirrors elements of the 2024 bipartisan proposal, it includes some provisions likely unacceptable to Democrats. These include codifying the Trump Administration’s plan to transfer oversight of workforce programs from ED to the US Department of Labor, along with significant funding reductions across most WIOA programs.

Why This Is Important 

With midterm elections approaching fast, the bill’s prospects from here are murky. The Senate HELP Committee, led by Chairman Bill Cassidy (R‑LA) and Ranking Member Bernie Sanders (I‑VT), has shown less enthusiasm for pursuing a comprehensive overhaul than House lawmakers. Instead, Senator Cassidy has favored narrower, piecemeal workforce legislation. That said, Congress is expected to return during the lame duck session to address must‑pass funding legislation. As in 2024, a renegotiated WIOA compromise could ultimately be attached to a broader funding package, creating another opportunity for enactment.

FED CHAIR NOMINEE FACES CONFIRMATION HEARING

What You Need to Know 

On Tuesday, Federal Reserve Chair nominee Kevin Warsh testified before the Senate Banking Committee, emphasizing the Fed’s independence from the White House. President Trump nominated Warsh, a former Federal Reserve governor, earlier this year to replace current Chair Jerome Powell. Powell has been a frequent target of criticism from President Trump over interest rate policy, and the US Department of Justice has opened an investigation into Powell related to renovations at the Federal Reserve’s Washington campus. Those actions have added political tension to the confirmation process.

Why This Is Important 

While Warsh is expected to receive broad Republican support and could attract some moderate Democrats on the Senate floor, his nomination faces a major hurdle in committee. Senator Thom Tillis (R‑NC), a member of the Senate Budget Committee who is retiring, has publicly opposed what he views as political pressure on the Federal Reserve and has declined to support advancing the nomination until the investigation of Powell is dropped. Without Tillis’s vote, the committee could deadlock, delaying a full Senate vote. As a result, Chair Powell could remain in office until the investigation concludes or a compromise is reached.

AIM RULEMAKING SESSION ONE WRAPS

What You Need to Know 

On April 17, negotiators concluded session one of the Accreditation, Innovation, and Modernization (AIM) negotiated rulemaking committee. AIM negotiators walked through ED’s 151-page draft regulations, in some cases engaging in spirited and politicized discussion of the language. Key topics included, among other things, accreditor standard updates that would require academic freedom protections to extend to faculty regardless of viewpoint; a requirement for accreditor internal controls to ensure accreditor compliance with antitrust laws; revisions to accreditor substantive change processes; and ED discretion in revoking Title IV-eligibility in the event an accreditor made an error in rendering an adverse accreditation decision.

Why This Is Important 

ED made minor changes to the draft language over the course of the week based on the negotiations, but these changes were largely structural, rather than substantive. Whether the committee will achieve consensus at the conclusion of session two remains to be seen. In the absence of consensus, ED would be free to craft a proposed rule as the agency chooses. If the committee reaches consensus, ED would be bound to adopt the consensus language for purposes of the proposed rule.

FRAUD DETECTION UPDATE TO FAFSA FORM

What You Need to Know 

According to an April 15 Electronic Announcement, beginning April 26, the FAFSA form will include an imbedded “real-time fraud detection capability.” The automated screening will sort applicants into fraud risk categories. The Electronic Announcement does not appear to clarify the sorting criteria. Those in the “high-risk” category will be asked to confirm their identity by presenting government-issued identification live, on camera, via a mobile or tablet device. ED will also screen all previously submitted 2026–27 FAFSA forms using the automated system. This evaluation will be based on data already provided to ED, with no additional interaction required by applicants.

Why This Is Important 

This Electronic Announcement is the latest in ED’s continued attention to fraud detection, as further detailed in June and August 2025 Electronic Announcements, which highlight the issue from ED’s perspective. In ED’s view, these efforts are “driven by the need to respond to the significant scale of recent fraud activity[.]”

DEEPER DIVE: ED ISSUES PROPOSED RULE ON ACCOUNTABILITY

On Monday, ED issued the “Student Tuition and Transparency System (STATS) and Earnings Accountability” notice of proposed rulemaking (NPRM), which follows the AHEAD Committee’s negotiated rulemaking sessions completed earlier this year. The AHEAD Committee was tasked with developing draft regulations to implement the changes to the Pell Grant program and the new accountability measures adopted by Congress in OB3 that President Trump signed into law on July 4, 2025.  Because the Committee achieved consensus, meaning that no negotiators objected to the proposed draft, ED was obligated to issue an NPRM that advances the consensus language.

The AACS membership and other interested parties by now are familiar with the concerns raised by the NPRM. Notably, in OB3, Congress directed ED to develop accountability regulations for undergraduate degree programs, graduate degree programs, and graduate certificate programs, but it pointedly excluded undergraduate nondegree programs. ED nevertheless has extended the new accountability framework to include undergraduate certificates, like most cosmetology, barber, and wellness programs. ED’s data suggests that nearly all such programs are projected to fail the accountability framework’s requirements, with the significant majority of programs facing the potential loss of Title IV eligibility and continued viability.

If implemented as drafted, the NPRM would compare the median earnings reported by a program’s working completers 3-4 years after graduation with the median earnings of all working adults aged 25-34 holding just a high school diploma in either the state where the school is located or, in some cases, nationally. As a result, the framework would establish the same comparative earnings expectation for a 1,000 hour undergraduate cosmetology certificate as a bachelor’s degree program in an advanced and highly-compensated field.

The NPRM also fails to account for well-known weaknesses in earnings reported for cosmetology, barber, and wellness program completers. The NPRM provides no adjustments for wage discrimination in fields predominated by women and minorities as compared to the total adult workforce; no accounting for the disproportionate rate of part-time employment in the cosmetology, barber, and wellness industries; and no solution for the problem of un- and under-reported income arising from cash transactions and tips.

Finally, the NPRM fails to account for earnings disparities within a state. Median earnings for completers from most schools located in rural and exurban regions will be compared with earnings reported for all working adults statewide. In states where large urban and higher-wage jurisdictions skew statewide data, the rural school and its completers suffer from this structural disadvantage, which the NPRM does not address.

The NPRM provides that programs that fail the NPRM’s earnings accountability test in one year must issue warning notices to students. Any program that fails the test in two out of three consecutive years is deemed a low earning outcome program and would lose eligibility for Direct Loans. A program that is deemed a low earning outcome program in two out of three consecutive years would lose all Title IV eligibility, including Pell Grants.

All comments to the NPRM must be submitted to ED through the regulations.gov portal no later than May 20. ED must review the comments and will either modify the regulations as a result of the comments or explain why it chose not to do so.  Final regulations are expected to be issued by the end of June for implementation on July 1, 2027, other than select provisions that Congress mandated become effective as of July 1, 2026.

AACS urges all members to submit thoughtful comments that challenge the NPRM and to offer constructive alternatives. We must mobilize as a community to have our voices heard.

The Department of Education has released a Notice of Proposed Rulemaking (NPRM) as part of the AHEAD negotiated rulemaking process. This proposal introduces a new Accountability Framework that would change how program outcomes are evaluated for Title IV eligibility.

View the Official Notice Here

At a high level, the proposed framework would:

• Introduce a new Earnings Premium metric, comparing the median earnings of program completers to a benchmark group
• Require programs that do not meet the benchmark to issue student warnings after one year of failing, and lose access to federal student loans after repeated failures
• Expand the application of these measures across all Title IV programs, including the inclusion of undergraduate non-degree programs

If implemented, these changes could impact:

• Title IV eligibility
• Student access to financial aid
• Institutional reporting and compliance requirements

Based on the Department’s current projections, a significant number of programs could be affected. For example, approximately 92.5% of cosmetology programs are projected to fail under the current methodology.

At the same time, career-focused institutions continue to play a critical role in student success and workforce development, including strong completion and employment outcomes across many program areas.

Public Comment Period (Now Open – May 20)

The proposed rule is currently open for public comment, which is a standard part of the rulemaking process. This provides an opportunity for institutions, organizations, and individuals to share feedback directly with the Department of Education before the rule is finalized. This is an effective way for schools to ensure their real-world experiences and student outcomes are considered as part of the final rule.

How to Submit a Public Comment

If you choose to participate, comments are most helpful when they are:

• Specific to your institution, programs, and students
• Supported by real data and examples
• Written in your own voice, rather than using template language
• Focused on how the proposed rule would function in practice

Representation at Hill Day 2026

Aria O’Connell, our Business Development Manager, recently attended Hill Day with AACS to advocate for our sector of education where it matters most. Aria shared her reflection below.

“Last week, I had the opportunity to attend Hill Day in Washington, D.C. with the American Association of Career Schools (AACS), where school leaders and industry partners met with congressional offices and staff to advocate for our sector in higher education.

Over the course of two days, we participated in 8-10 intimate meetings with both House and Senate offices from our respective states. The goal of these conversations was to help staff better understand how current and proposed regulations from the Department of Education are actually impacting career schools, students, and the broader workforce.

The conversations I was part of centered around:

• Access to education for students pursuing career-focused programs
• The role of Title IV funding in supporting those students
• How the current proposed regulatory changes could impact enrollment at schools and ultimately affect the industries students enter

What stood out to me most was how meaningful and empowering it felt to have a voice in those conversations. Advocating alongside school owners and staff who are facing the same challenges as our clients reminded me that the work we do every day is part of something bigger than just being a third-party servicer. It was one of those moments where the purpose behind our work really clicked.

Across the board, congressional staff were engaged and receptive. They asked thoughtful questions and seemed genuinely interested in understanding how these policies play out beyond the data, in actual student outcomes and school operations.

Being part of those conversations gave me a deeper appreciation for the work you’re doing every day and the impact it has on your students and communities. It’s something I’ll continue to carry with me as we support you through what’s ahead.“

This morning, the US Department of Education released the unofficial draft of the Notice of Proposed Rulemaking (NPRM) for the Accountability Framework. The official version of the NPRM will be published in the Federal Register this coming Monday for public comment. The comment period will be open for 30 days, with comments due by Wednesday, May 20. 

As required by law, the proposed rule reflects the AHEAD negotiated rulemaking committee’s consensus language. But the Department is able to make changes to the final rule based on public comments the agency receives. We MUST mobilize as a community to influence the final rule.

AACS is still reviewing the NPRM in detail. At first glance, it is clear many of our concerns with the Accountability Framework remain. Importantly, in commentary to the NPRM, the Department acknowledges that OB3 did not include undergraduate certificate programs within the Accountability Framework’s scope. ED makes clear it intends to use the Higher Education Act’s “gainful employment” language as the statutory justification for applying the framework to undergraduate certificates.

Given the range of issues with both the NPRM and the historic gainful employment framework, it is essential that all AACS members as well as a broad array of graduates and industry stakeholders submit unique comments before the comment period ends on May 20. This is our opportunity to have our voices heard, and we must be loud and clear.

Anticipating this release, AACS scheduled two webinars to help school owners, industry partners, and graduates draft comments to this proposed rule. Please register now so you can be prepared to submit high-quality comments. Get ready to write your comments now!

Monday, Apil 20, 1:00 PM, ET: Comment Writing Roadmap Webinar for School Owners & Operators

Monday, April 27, 1:00 PM, ET: Comment Writing Roadmap Webinar for Industry Partners & Graduates

Monday, April 20, 1:00 PM, ET: Comment Writing Roadmap Webinar for School Owners & Operators

Monday, April 27, 1:00 PM, ET: Comment Writing Roadmap Webinar for Industry Partners & Graduates

The Department of Education has released its Notice of Proposed Rulemaking (NPRM) implementing new higher education accountability measures that were outlined in the One Big Beautiful Bill Act (OBBB) and that were addressed during the second negotiated rulemaking session of the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) Committee earlier this year. The new accountability rules will be applied universally across all sectors of higher education, not just proprietary schools, which represents a hard-fought victory for CECU and our member schools following years of advocacy to achieve across-the-board accountability in higher education.

CECU applauds the Department for applying the accountability requirements universally across all sectors. However, several unresolved issues we raised during the negotiated rulemaking session (and in our advocacy with the Department and Congress following the neg reg) were not addressed in the proposed regulatory text, including ensuring that the standards address:

• Regional variations in earnings
• The differences in annual earnings for part-time vs full-time workers
• Unearned or tipped income not included in IRS reporting
• Gender-based wage disparities
• Significant age differences between cohorts and the high school comparison group
• Inclusion of certificate earners in the “high school only” group earnings data in the American Community Survey

As CECU reviews the NPRM, we will share additional information with members and provide guidance to stakeholders on submitting public comments during the open comment period. The comment period will last 30 days.

Join our Government Affairs team on April 22, 2026, at 1:00 PM Eastern Time for our monthly Federal Policy Update webinar, which will include a discussion of this accountability NPRM and next steps for members. Register here!

Top News

More parents are done pushing college. 1 in 3 are now betting on trade school instead – Fortune

The fact that 35% of parents believe career and technical education is best suited for their children represents a major jump—from just 13% in 2019, according to Britebound. While parents still prefer traditional college for their kids, it’s much less so than in the past. The percentage of parents preferring it dropped to 58%—a 16 percentage point drop from 2019.

The Bipartisan Roots of Trump’s One Good Education Reform – Washington Monthly

Even with that erosion of strictness, however, Do No Harm represents an overall advance. For the first time in American history, every college program that takes federal money will be held accountable for some level of performance.

Member Preview of NASFAA’s Comments on Pell Grant Provisions of OBBBA – NASFAA

NASFAA is pleased to share a draft of its response to the Department of Education’s (ED) request for comments on its proposed regulations to implement the Pell Grant changes from the One Big Beautiful Bill Act (OBBBA), which were negotiated by the AHEAD rulemaking committee. NASFAA hopes our members will use these comments to inform their own comments, which are due to ED on April 8, 2026.

Resources for Workforce Pell Implementation – CTE Policy

Workforce Pell requires significant reporting that can only be accessed through strong alignment between education and labor market data. Without this data infrastructure, many programs will not even be able to apply for Workforce Pell, and access may be uneven across states and populations.

Veteran Education Benefits – Politico

(Subscription needed) Sens. Martin Heinrich (D-N.M.), Jim Banks (R-Ind.) and Tammy Duckworth (D-Ill.) are introducing legislation to boost the books and supplies stipend under the Post 9/11 GI Bill program, Mackenzie writes in. The Veteran Education Assistance Adjustment Act would raise the stipend to $1,500.

Utah congressman challenges ‘failing’ assumption that U.S. higher education system is built around 4-year degrees – Deseret News

Utah Rep. Mike Kennedy can’t be accused of being an opponent of degree-granting higher education institutions. In an effort to “level the playing field,” Kennedy has introduced the TECH Act (Transforming Education through College and Hands-On Training Act). The proposed legislation extends eligibility for several existing federal grant programs to qualified technical schools.

Education News

Judge orders UPenn to provide list of Jewish employees sought by Trump administration – NBC News

It requested, among other things, lists of school groups and organizations “related to the Jewish religion,” including personal contact information for Penn employees in those groups.

‘Potentially Existential’: Higher Ed Denounces Proposed Federal Funding Strings – Inside Higher Ed

The General Services Administration’s proposed certification requirements would also ban aiding “illegal aliens” or facilitating “terrorism,” using wording that organizations say could restrict free speech and academic freedom. Universities found in violation of the new requirements could lose federal funding.

More colleges get delay on submitting new admissions data – Higher Ed Dive

Institutional members of two higher education groups — the Association of American Universities and the Association of Independent Colleges and Universities in Massachusetts — will now have until April 14 to submit the data.

Cal State’s new framework promises jobs or grad school path for all students – EdSourced

The CSU system pledges to link every student to a career job or a clear path to graduate school. CSU leaders say academic and career advising will be closely connected as a new Student Success Framework rolls out.

What are community college bachelor’s degrees and how much do their graduates earn? – Brookings

Community college bachelor’s (CCB) graduates earn $4,000-$9,000 more annually than associate degree holders from the same institutions and fields, but about $2,000 less than graduates from traditional four-year colleges.

Top Colleges Release Their Admissions Decisions—Here Are The Admissions Rates For The Class Of 2030 – Forbes

After years of political clashes and PR crises, Columbia, in particular, saw Early Decision applications fall 6.4% for the Class of 2030, continuing a multi-year downward trend that reflects the university’s ongoing struggles with campus tensions and administrative fallout.

The Fortress Falls: What Princeton’s Budget Cuts Signal for the Rest of Higher Ed – The Edu Ledger

University President Dr. Christopher Eisgruber has warned publicly that more reductions are coming, and that the institution must prepare for a prolonged period of financial constraint unlike anything it has experienced in a generation.

Financial Aid and Student Loan News

Access Denied: How 40% of Americans Are Locked Out of the Private Student Loan Market – Protect Borrowers

By forcing these students to depend upon an exclusionary private market, the changes Congress made in the OBBBA will force our most vulnerable students to either give up on higher education or take on even more expensive, predatory forms of debt to pay for college.

• Millions of student-loan borrowers risk being driven into a ‘shadow’ market of costly private lenders, a new report says – Business Insider

Student Loan Forgiveness Just Got Much More Expensive For 88,000 Borrowers – Forbes

Last week, in conjunction with the wind-down of the SAVE plan, the Trump administration made a significant change to PSLF Buyback that may make those required lump-sum payments significantly more costly for SAVE plan borrowers pursuing student loan forgiveness.

Apply by April 23, 2026, for Designation as a Title III Institution and Waiver of the Non-Federal Share Requirement for FWS and FSEOG – FSA

We provide the following information regarding the designation of Title III status for institutions and the resulting waiver of the non-federal share requirements for the Federal Work-Study (FWS) and Federal Supplemental Education Opportunity Grant (FSEOG) programs.

Workforce Issues

Wyden, Blackburn Reintroduce Bipartisan Legislation to Address Health Care Workforce Shortages – U.S. Senate Committee on Finance

U.S. Senator Ron Wyden, D-Ore., and U.S. Senator Marsha Blackburn, R-Tenn., today introduced bipartisan legislation to address the growing shortage of health professionals. The Health Workforce Innovation Act would provide federal support for innovative, community-led partnerships to educate and train more health care workers, especially in rural and underserved communities.

Mike Rowe says data center electricians earning $260K are getting ‘poached’ like pro athletes — without college degrees – Yahoo! Finance

Data center electricians are earning around $260,000 a year, Rowe told Fox Business, citing a recent visit to a Texas-based data center. The skilled trades are in high demand while simultaneously facing labor shortages.

Toughest Job Market for College Graduates: Which Degrees Face the Biggest Challenges – Investopedia

On the flip side, the college majors with lowest unemployment rates were nutrition science majors (0.4%) followed by construction services majors (0.7%). Special education, civil engineering, and animal and plant sciences majors all have unemployment rates of just 1%.

Amid tough job market for young Americans, Fed Chair Powell tells students not to despair – CBS News

Federal Reserve Chair Jerome Powell has a message for young Americans looking for work in a tough job market: Don’t be deterred, even as job creation remains weak and the threat of artificial intelligence looms.

TruVideo Provides No-Cost Software to Help Train the Next Generation of Service Technicians – Press Release

TruVideo, the leading provider of AI-powered video and messaging communication technology for the transportation industry, announced a new initiative to support technician education by offering its platform to qualifying trade schools at no cost. The platform also provides instructors with a structured way to review student performance.

An Earn-and-Learn Model Closes Skills Gap (Case Study) – The Chronicle of Higher Education

Hudson County Community College created an associate-degree program in partnership with Eastern Millwork Inc., a local company that needed employees skilled in both woodworking and automation. The program offers students employer-paid education and on-the-job experience, plus a guaranteed salary upon graduation.

AI New4s

AI Is Higher Ed’s Front Door: The New Model Has Arrived – CER

By Brent Ramdin, Chief Executive Officer, EducationDynamics

AI is now the first gatekeeper, and it is grading your institution before a prospect ever clicks to your site. If you want to be found and chosen, stop relying on the old playbook and start earning authority with a unified brand strategy across your entire digital footprint.

CSU Releases Findings After Conducting the Largest and Most Comprehensive Survey on Artificial Intelligence in Higher Education – Press Release

What is also clear from the results is that adoption of AI is not without concern. While engagement is high, respondents are taking a cautious approach to AI use, not entirely trusting AI’s accuracy and expressing the importance of verifying AI outputs. There is also a near universal demand for transparency, ethical use, and responsible regulation of AI.

Top News

CECU Files Amicus Brief Challenging the Gainful Employment Rule

CECU filed a friend-of-the-court (amicus) brief with the Fifth Circuit in support of the lawsuit challenging the Biden Gainful Employment Rule. The plaintiffs–including the Ogle School, Tricoci University of Beauty Culture, Duvall’s School of Cosmetology, and the American Association of Cosmetology Schools–initially lost in the district court but have appealed that ruling to the Fifth Circuit. CECU argued that our entire sector has suffered for years from regulatory whiplash and destabilizing uncertainty that can only be resolved by a definitive ruling from the Court prohibiting the Department from going beyond its statutory authority.

School Notification Process Under the 1994 and 2016 Borrower Defense to Repayment Regulations (34 C.F.R. 685.206(c) and 34 C.F.R. 685.222) – FSA

The U.S. Department of Education (ED) has resumed adjudicating borrower defense to repayment applications that are not impacted by the Sweet v. McMahon settlement. The 1994 and 2016 regulations require ED to notify institutions of all borrower defense to repayment applications filed by their former or current student borrowers and provide an optional opportunity for the schools to respond before adjudication.

Reminder: Comments Due Soon on Workforce Pell NPRM

The Department of Education’s proposed rule on Workforce Pell under the AHEAD framework is open for public comment, with submissions due on or before April 8, 2026. All stakeholders should review the proposal and submit comments to ensure their voice is reflected before the rule is finalized. Comments can be submitted directly through Regulations.gov.

Sharing Work on Workforce Pell: How Scholars Can Submit Comments on Newly Proposed Regulations – PEER Center

The statute outlines a two-step process for institutions seeking to have their programs approved: first, approval from the governor of the institution’s state after confirming the program meets certain criteria, and second, approval from the Secretary of the U.S. Department of Education. Governors will determine whether programs are approved on a few criteria.

Cyberattacks on Higher Education Institutions Underscore Urgency of Regulatory Compliance – McGuireWoods

According to a report from Comparitech, ransomware gangs claimed credit for 251 attacks on educational institutions in 2025, and more than 3.96 million educational records were breached that year, up from 3.11 million in 2024.

Setting Minimum Standards for Instructional Spending Can Protect Students’ Tuition Dollars – The Century Foundation

Instructional spending requirements can also help ensure that public investment in higher education supports student learning, rather than funding advertising costs or the bottom lines of for-profit college owners and investors.

Education News

The Gatekeepers Are Failing: Why We Must Reform Higher Education Accreditation. – RealClear Education

Because accreditor approval is the prerequisite for colleges to access federal student aid, whoever controls the accreditation rules effectively controls key elements of American higher education policy. AIM is the administration’s bid to wrest some control from the accreditation guild and limit its abuses of power.

Why the Proposed Legislative Takeover of Kentucky State University Should Alarm Every Public Institution in the U.S. – The Edu Ledger

The bill triggers a five-year state of financial exigency, granting the administration the extraordinary power to terminate any employee — including tenured faculty — with only 30 days’ notice. The proposed actions present a dangerous precedent for state legislatures looking for a path to close or limit the effectiveness of historically Black colleges and universities across the country.

How States Are Rewiring Higher Education For The Modern Economy – Forbes

To rebuild public trust, higher education must move beyond simply tracking graduation rates and start measuring true economic mobility. Students, employers and taxpayers all need a clear return on investment (ROI).

Iran warns US college campuses in Middle East could become ‘legitimate targets’ – The Hill

Iran on Sunday said it would begin treating American college campuses in the Middle East as “legitimate targets” for its military after it said U.S.-Israeli strikes earlier this week hit Isfahan University of Technology and Tehran University of Science and Technology.

What Public Records Reveal About College Football’s Spending – Inside Higher Ed

Thanks to the records requests, he can tell you that 38 universities spent $2.8 million on fireworks at home games, and that the University of Mississippi spent the most at $212,480.

A Faster Degree — or an Inferior One? – The Chronicle of Higher Education

(Subscription needed) The three-year degree now emerging might be more accurately called a “reduced-credit bachelor’s degree,” as many programs lop off about a quarter of the credits. Sixty institutions are part of the College-in-3 Exchange, a collective sharing ideas about reduced-credit degrees and advocating for recognition of those degrees by accreditors.

Financial Aid and Student Loan News

Education Department To Notify Thousands Of Borrowers That They Qualify For Automatic Forgiveness Today – Investopedia

Today, about 164,000 federal student loan borrowers will be notified of automatic loan forgiveness eligibility. About 41,000 borrowers who applied for loan discharge between June 23, 2022, and Nov. 16, 2022, but did not attend one of the colleges identified for misconduct, will not be eligible for automatic forgiveness.

Weaponization of Student Aid Is the Next Frontier – Inside Higher Ed

This spring, we will likely see one of the most dangerous attempts to assert ideological control over the higher education sector: the weaponization of federal student financial aid.

State Loans Could Help Fill the Graduate School Affordability Gap – Third Way

Thirteen states have established loan programs to support residents’ postsecondary education. In five others, students can access loans from private companies that specialize in student lending for residents, though these are not formally affiliated with state governments or agencies.

2026–27 Final Funding Authorizations for the Campus-Based Aid Programs – FSA

A school will not receive a 2026–27 final funding authorization amount for a Campus-Based program that is more than its request for funds made for that program on the Fiscal Operations Report for 2024–25 and Application to Participate for 2026–27 (FISAP) previously submitted to the U.S. Department of Education (ED).

FSA Seeks Volunteers to Provide Input on Partner Services – FSA

Federal Student Aid (FSA) is seeking volunteers who are involved in the administration of Title IV financial aid and are interested in providing feedback, ideas, and expertise on FSA partner products and services.

Workforce Issues

WORKFORCE SHIFT: Young electricians earning $260K WITHOUT college debt (Video) – Fox Business

CEO of mikeroweWorks Foundation Mike Rowe joins ‘Varney & Co.’ to warn of a skilled labor crisis, highlight $200K trade jobs without college debt and discuss how AI could fuel a blue-collar boom.

Skilled-Trades Demand Growing Faster Than Professional Roles – Advanced Manufacturing

With data centers, power sites and other large-scale facilities cropping up to support the rapid growth of AI, a high volume of skilled workers are needed to run them.

AI is creating a surge in demand for HVAC technicians, other skilled labor: Randstad – Facilities Dive

It’s now more time-consuming to hire an HVAC professional and an electrician than a software developer, the report says. The average hiring time for a skilled worker is 56 days, compared to 54 days for a tech worker.

AI anxiety: Fears over new tech drives surge in trade school enrollment as students seek hands-on careers – Tampa Bay 28

The U.S. Bureau of Labor Statistics projects a massive skilled-worker shortage on the horizon, with a shortfall of nearly 649,300 workers each year in fields like welding, construction, and plumbing.

Providers Face ‘Extreme Shortage’ of Paramedics, EMTs in Rural Michigan – U.S. News

Despite the state investing millions of dollars in grants to train workers, staff shortages that began at the onset of the COVID-19 pandemic continue to strain EMS agencies, especially in rural communities.

AI News

Students Embrace AI but Fear False Accusations – Inside Higher Ed

A new survey finds that most students use AI to support learning—not to complete full assignments—but many worry about being wrongly accused of misuse.

Female students show higher AI adoption rates, challenging traditional tech trends – Devdiscourse

The study reveals that prior experience with AI is the single strongest predictor of future use. Students who had more familiarity with AI tools were significantly more likely to continue using them, with each increase in experience sharply raising the probability of adoption.

Pre-published this morning, the Department of Education provided notice of intent to establish the Accreditation, Innovation, and Modernization (AIM) Committee (Committee). The Committee will consider draft regulations amending the regulations for the Secretary’s recognition of accrediting agencies and related institutional eligibility regulations (34 CFR parts 602  and 600).

The notice lists ten topics the proposed rule is meant to address. Other than catch-all and technical amendments, the Department will consider:

• Amendments to streamline recognition of accrediting agencies for the stated purpose of increasing competition among accrediting agencies while increasing institutional choice between accreditors;
• Amendments to emphasize criteria and standards requirements that effectively focus on student achievement and outcomes, high educational quality, and high-value programs while removing requirements that are anticompetitive and increase costs;
• Amendments to require all accrediting agencies and associations to have standards that consider program-level student achievement and outcomes data to improve such outcomes without reference to race, ethnicity, or sex;
• Amendments ensuring accrediting agency procedures for taking action on noncompliance findings resulting from the Office of Civil Rights investigations under Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.) or Title IX of the Education Amendments Act of 1972 (20 U.S.C. 1681 et seq.) provide for expeditious resolution and actions;
• Review of the role that accrediting agency standards have played in promoting violations of Federal law, including unlawful discrimination by member institutions under the guise of accreditation standards for diversity, equity, and inclusion and adoption of appropriate regulatory safeguards to prevent such violations of federal law;
• Determination of whether the current regulations in 34 CFR 602.18 and other regulations should be clarified or expanded to ensure that the use of new learning models and innovative program delivery approaches by accredited institutions is not impeded by accreditation standards or accrediting agency decisions;
• Amendments to emphasize accreditation standards encouraging intellectual diversity amongst faculty in furtherance of academic freedom, intellectual inquiry, and student achievement; and,
• Amendments to the standards governing when an accrediting agency is deemed separate and independent from any related, associated, or affiliated trade association or membership organizations.

Read the Department’s press release here.

Call for Negotiator Nominations

The call for nominations includes twelve constituencies including a representative for proprietary institutions. The deadline for nominees is 30 days after official publication – so roughly the end of February (we will provide an update when the notice is officially published). CECU will be nominating interested and qualified members to serve as the sector’s negotiators.

To be considered for negotiator, the nominee should be able to serve, in-person for the entirety of the two sessions detailed below.

The Committee will meet in-person at the Department in Washington, DC, for two sessions on the following dates: Session 1: April 13-17, 2026; and Session 2: May 18-22, 2026. Each day will begin at 9 am and end at 4 pm with an hour break each day at noon.

Details for the nomination application can be found here.

If you are interested in serving or nominating a negotiator, please fill out the form here. If you have questions, please contact SVP for Legislative and Regulatory Affairs, Jordan Wicker, at Jordan.wicker@career.org.

Earlier today, the  AHEAD  negotiated rulemaking committee reached consensus on proposed institutional accountability regulations that combine portions of the FVT/GE rule with the Do No Harm framework from the One Big Beautiful Bill Act.  AACS is deeply disappointed with this outcome. The US Department of Education’s continued failure to meaningfully account for the realities of the beauty, barber, and wellness education sector is unacceptable.

Throughout the negotiations, AACS consistently raised substantive concerns with negotiators about how graduate earnings are measured and reported for cosmetology and related professions. Unfortunately, the rule that reached consensus does not adequately consider several critical factors that materially affect reported income data for our graduates. The framework that now advances to the notice-and-comment part of the rulemaking process continues to rely on narrow and incomplete earnings that fail to capture real-world outcomes for our graduates.

Equally troubling is the Department’s decision to abandon earlier language that would have preserved Pell Grant eligibility for all students attending programs that failed the Department’s flawed metric. The revised approach represents a significant step backward and places students at risk of losing access to financial aid.

AACS remains firmly opposed to any accountability system that fails to recognize the unique characteristics of licensure-based, service-driven professions—and that once again specifically targets AACS schools. As always, we will advocate aggressively—through every means necessary, including but not limited to regulatory engagement, formal comments, litigation, and lobbying—to protect our schools, our students, and the communities they serve. We insist on being treated fairly.

We appreciate the time, expertise, and commitment of the many AACS members who supported this effort and engaged alongside AACS throughout the negotiated rulemaking. We will provide a more detailed summary of the institutional accountability framework that reached consensus next week. As always, we will keep you informed as the Department moves forward in finalizing these regulations and we evaluate all available options.

This is not the end of the fight, and we are ready for what’s next. We will need the help of every AACS member to mobilize in supporting our efforts to push back against this unjust rule.

In advance of the AHEAD Negotiated Rulemaking session scheduled for next week, the US Department of Education released its initial set of proposed regulatory changes to implement the accountability provisions of the One Big Beautiful Bill Act (OB3). The proposed changes attempt to harmonize the statutory requirements in OB3 with the existing FVT/GE regulations. ED is thus proposing a single set of accountability requirements that would apply equally to virtually all Title IV-eligible programs offered at all institutions. The new accountability rubric will be known as the “Student Tuition and Transparency System” or “STATS.”

ED’s proposal comprises several significant provisions, which include:

• Eliminating the current regulations imposing the debt-to-earnings metric for GE programs
• Extending the earnings premium measure mandated in OB3 to include undergraduate certificate programs
• Modifying the program-level penalty for failing the earnings premium measure to the loss of Direct Loan eligibility for two years, rather than the loss of all Title IV eligibility for three years as provided in current regulations (i.e., failing programs would lose access to Direct Loans but would retain access to Pell Grants)
• Extending the earnings premium provisions to programs offered at institutions located in Puerto Rico and other US territories
• Revising the methodology for determining programmatic cohorts for programs with small enrollments
• Streamlining the reporting and student warning requirements

The Department proposes many significant regulatory changes, organized by topic below. Regulatory section references are to Title 34 of the Code of Federal Regulations.

AACS is deeply engaged in the rulemaking process, and AACS leadership will stay in close touch with our sector’s negotiators next week as they advocate for the best possible regulatory outcome for our schools.

Topic 1: Accountability Technical and Conforming Changes

• Section 668.43(d)(1) – The proposal would eliminate the current July 1, 2026 target date for ED to establish a website providing information about institutions and their programs.
• Section 668.43(d)(1)(i)(B) – The Department would calculate the median time for full-time and part-time students to complete the program.

Topic 2: General Definitions, Cohort Construction and Comparison Groups

• Section 668.2(b) – ED proposes to modify its approach to determining the cohort of students for whom earnings would be measured by revising the definition of “cohort period.” This would begin by only looking at the earnings of students who competed during a single award year. The initial, single-year cohort would be the fourth award year prior to the calendar year for which the most recent earnings data is available. AACS understands this to mean that, if the most recent year for which earnings data is available were CY 2024, the initial, single-year cohort would be made up of students who completed during the 2019-20 award year. The Department proposes to expand the cohort, as required, in accordance with the following schedule:
• If the initial, single-year cohort has fewer than 30 completers, ED would expand the cohort for the program, one year at a time, until it reaches the 30 completer threshold. The Department would include up to four additional award years in this expansion.
• If the cohort still includes fewer than 30 students, ED would expand the cohort to include all programs within the same 4-digit CIP code and credential level, beginning with an initial, single-year cohort (2019-20) and expanding sequentially as necessary through the eighth prior award year (2015-16).
• If the cohort still includes fewer than 30 students, ED would expand the cohort to include all programs at the 2-digit CIP code and credential level, beginning once again with the initial, single-year cohort (2019-20) and expanding sequentially as necessary through the eighth prior award year (2015-16).

Finally, though it is not entirely clear, it appears ED would use earnings from a single calendar year without regard to whether the cohort has been expanded to include completers from multiple award years, which is a change from the existing regulation.

• Section 668.2(b) – The Department would revise the definition of “earnings threshold” to be consistent with the terminology in OB3.
• Section 668.2(b) – The proposal clarifies the definition of “institutional grants and scholarships” and would delete definitions for “qualifying graduate program” and “substantially similar program.”

Topic 3: Student Tuition and Transparency System (STATS): Metric Calculation

• Section 668.403(b)(1) [formerly 668.404] – Consistent with OB3, the earnings premium measure would be based on the median earnings of program completers who are working, rather than both working and non-working student completers as provided in current regulations.
• Section 668.403(b)(3) – ED would publish annual earnings thresholds through Dear Colleague Letters or other guidance, rather than in the Federal Register.
• Section 668.404(c) – Student completers would be excluded from the earnings premium measure if they were enrolled in any institution during the calendar year in which the Department obtained earnings information. This is a change from current regulations, which apply the exclusion only if the student was enrolled on a full-time basis.
• Section 668.407 – ED proposes to rescind the regulations regarding the student acknowledgement process, asserting that the institutional warning process mandated by OB3 would provide sufficient information to students.

Topic 4: Student Tuition and Transparency System (STATS): Reporting Requirements

• Section 668.406 [formerly 668.408] – ED proposes to reduce the amount of information that institutions must report to the agency.

Topic 5: Earnings Accountability and Student Warnings

• Section 668.602 – The proposal would eliminate references to debt/earnings rates. But it would retain the current provision that a program passes the earnings accountability criteria if it does not fail the earnings premium measure in two out of any three consecutive award years.
• Section 668.603(a) – A program that fails the earnings premium measure in two out of any three consecutive years is a “low-earning outcome program” that would lose its Direct Loan eligibility upon completion of the termination action following any appeal.
• Section 668.603(b) – ED’s proposal would provide every low-earning outcome program the right for a full appeal under Subpart G, even if the institution is provisionally certified. The only basis for appeal would be an assertion that the Department made a mistake in the calculation of the earnings premium measure.
• Section 668.603(c) – A low-earning outcome program would lose its Direct Loan eligibility for two years, rather than three years as provided in current regulations.
• Section 668.604(b)(2) – If the institution has a low-earning outcome program, it would not be allowed to add a new program sharing the same 4-digit CIP code at the same credential level during the failing program’s two-year loss of eligibility.
• Section 668.605 – Institutions would be required to provide student warnings regarding any program for any year in which the program fails to meet the earnings premium measure as determined by the Department

GOVERNMENT RELATIONS HIGHLIGHTS

Holiday Recess: Healthcare subsidies and funding still in limbo
Rulemaking Progress: Consensus on Workforce Pell
ED Streamlines E-App: Reporting Burdens Reduced for Institutions
FAFSA Update: New low earnings indicator from ED

CONGRESS OUT LIKE A LAMB?

What You Need to Know 

Despite promises to restore normal governance following the longest shutdown in US history just a month ago, Congress remains mired in disputes over federal funding and healthcare. The House is expected to adjourn for the year later this week, as is the Senate, though senators are still trying to come to agreement on a minibus spending package that could include the Defense and Labor-HHS-Education bills.

Why This Is Important 

Congress continues to struggle to find its footing after the shutdown. Though the Senate should be able to get the National Defense Authorization Act to the President’s desk later this week, both Speaker Johnson and Leader Thune cannot seem to find consensus on other legislative items – often within their own conferences. The extension of Affordable Care Act subsidies seems to have failed, meaning that millions of Americans will face skyrocketing healthcare premiums for 2026. When they return, Congress must finalize the remaining appropriations bills before January 30 or risk a partial government shutdown.

AHEAD COMMITTEE REACHES CONSENSUS

What You Need to Know  

Week one of the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) negotiated rulemaking concluded December 12. During the first week, the Committee’s negotiations focused on draft regulatory language to implement the Workforce Pell Grant provisions created under OB3.

Why This Is Important  

Because the committee reached consensus on Workforce Pell, the proposed rule is expected to reflect the draft language. The AHEAD Committee will reconvene on January 5 for the second week of negotiations, addressing the future of FVT/GE and the new Do No Harm accountability framework created under OB3. AACS is staying actively involved engaged in the neg reg at every step of the process.

E-APP REPORTING SIMPLIFIED

What You Need to Know 

On December 7, the Department implemented changes to the Electronic Application (E-App). This is the online system Title IV-eligible institutions use to submit applications for school eligibility, recertifications of school eligibility, and other program participation changes. The changes simplify the range of data that institutions are required report as part of their E-App submissions. Notably, institutions are now no longer obligated to provide personal information for the executive officers of their owner entities or for more than two school officials. Additionally, rather than uploading evidentiary documentation, the E-App now allows institutions to self-certify compliance with certain ED requirements, including those related to gainful employment, satisfactory academic progress, admissions, and R2T4.

Why This is Important 

ED released an Electronic Announcement that details each of the E-App updates. These changes follow the December 2023 E-App migration to Partner Connect. As part of that migration, the Department significantly expanded the information that institutions are required to disclose as part of an E-App submission. The December 7 simplifications walk back some of these disclosure requirements.

NEW FAFSA “LOWER EARNINGS” INDICATOR

What You Need to Know 

As of December 7, the FAFSA form now flags institutions whose graduates earn less than high school graduates in the same state. ED determines “lower earnings” status by comparing an institution’s median earnings for undergraduate completers—four years post-graduation—to the median earnings of high school graduates ages 25–34. For institutions with multi-state locations or predominantly out-of-state students, the comparison is made against national high school earnings data. A Department spreadsheet lists all institutions identified under this metric.

Why This is Important 

The indicator appears only to first-year undergraduate students after FAFSA submission and does not affect Title IV eligibility. However, it may influence enrollment decisions for flagged institutions. Nearly all Title IV schools fall within the scope of this measure, except those in certain US territories, institutions offering only graduate-level programs, or those lacking sufficient earnings data. AACS is closely tracking and staying in touch with ED about its rollout of these unexpected changes.

A significant development came out of the US Department of Education yesterday that will impact our sector and schools.

Beginning December 7, the FAFSA form now indicates which institutions of higher education have graduates with “lower earnings” compared to the earnings of high school graduates. A Department spreadsheet lists each of the lower earning institutions.

The Department states that the lower earnings indicator is informational only and has no impact on Title IV eligibility or participation. The Department determined an institution is lower earning if the institution’s undergraduate completer median earnings, four years after graduation, are less than the median earnings of high school graduates (ages 25-34) in the same state. If the institution has locations in multiple states or if most of the first-year undergraduate students are from out of state, the Department will compare the institution’s completer median earnings to those of high school graduates nationally, instead.

Virtually all institutions are included within the scope of the lower earnings indicator, with exceptions for those located in certain US territories, those offering exclusively graduate-level credentials, and those with no published median earnings data for the applicable years.

The lower earning indicator will only be shown to first-year undergraduate students following submission of the FAFSA. The indicator reads “Some of Your Selected Schools Show Lower Earnings.” Students are then given the option to view charts showing their selected institutions’ completer median earnings compared to the applicable high school graduate earnings, with lower earning institutions displayed in red. A trashcan icon next to the word “Remove” appears alongside each lower earnings institution chart. Clicking on the trashcan deletes that institution from the student’s list of FAFSA selected schools.

The median earnings for each institution are calculated based on College Scorecard earnings data for undergraduate completers during 2014-15 and 2015-16 (measured in 2019 and 2020). To account for inflation, these earnings are adjusted to June 2025 dollars. The median earnings for high school graduates are calculated based on the American Community Survey 5-year estimates from 2019 and 2020, also adjusted to June 2025 dollars. The Department indicated the agency will continue to update the lower earnings indicator as more recent earnings data becomes available.

The lower earnings indicator differs in several key ways from similar accountability metrics under the FVT/GE Rule and the new Do No Harm framework under OB3. Most notably, the lower earnings indicator is calculated at the institution level, rather than the program level. Additionally, unlike other accountability metrics, the lower earnings indicator applies only to undergraduate programs.

AACS will continue to monitor this issue for our members, especially as ED begins its work this week on the AHEAD negotiated rulemaking to determine how it will approach institutional accountability frameworks for FVT/GE and Do No Harm

Funding Talks Stall: Congress Shows Little Urgency Post-Shutdown
Republican Margin Tightens: Greene Departure Adds Pressure
AHEAD Committee Convenes: ED Set to Launch Key Accountability Talks

BACK TO FUNDING INERTIA ON CAPITOL HILL

What You Need to Know 

Despite the longest government shutdown in US history, Congress has made little progress on passing the nine remaining appropriations bills needed to fund the government beyond January 30. While there have been discussions in the Senate for weeks about a potential “minibus” package—including Defense, Labor-HHS-Education, and several other bills—formal consideration has yet to begin. With the holiday recess approaching, consensus remains elusive.

Why This Is Important 

Even if the Senate advances a package, the House is unlikely to act before January and is expected to push for changes. The House Appropriations Committee has proposed funding levels aligned with the President’s agenda, creating a sharp contrast with the Senate’s bipartisan approach. Failure to pass and sign these bills by January 30 could trigger a partial shutdown that could again include ED.

HOUSE REPUBLICAN MAJORITY NARROWS

What You Need to Know  

Representative Marjorie Taylor Greene (R-GA) announced she will resign from Congress on January 5 following public criticism of various Trump Administration policies. Once a close ally, President Trump labeled her a “traitor.” Her departure will temporarily reduce the GOP majority to a single vote until a special election fills the seat in mid-February.

Why This Is Important  

The razor-thin majority heightens risk for Republicans if additional resignations or vacancies occur. Democrats, who faced several vacancies due to deaths earlier this year, have nearly completed their special elections. Meanwhile, Republican Matt Van Epps won a special election in Tennessee yesterday in a closer than expected result, despite the district’s strong Trump lean, signaling potential electoral vulnerability for the GOP.

AHEAD NEG REG BEGINS NEXT WEEK

What You Need to Know 

The Department will convene the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) negotiated rulemaking next week. The committee will meet on December 8–12 and January 5–9. Jeff Arthur, Chief Regulatory Officer at ECPI University, has been appointed to serve as the primary negotiator representing proprietary institutions. Ryan Claybaugh, Chief Operating Officer of Paul Mitchell Advanced Education, has been appointed to serve as the alternate negotiator for proprietary institutions. Aaron Lacey, co-chair of Thompson Coburn’s higher education practice group, will represent private nonprofit institutions.

Why This is Important 

The AHEAD committee is expected to address, among other topics, the future of FVT/GE, the new Do No Harm accountability framework, and Workforce Pell. AACS will remain actively engaged throughout the process to ensure member interests are represented.

The U.S. Department of Education announced that Secretary McMahon has appointed five new members to the National Advisory Committee on Institutional Quality and Integrity (NACIQI), the federal advisory body that evaluates accrediting agencies and makes recommendations to the Secretary of Education on federal recognition of accreditors.

The new members are:

• Robert Eitel, President of the Defense of Freedom Institute and former senior Education Department official
• Joshua Figueira, Deputy General Counsel and Managing Director of the Office of Compliance, Risk, and Legal Affairs at Brigham Young University Idaho
• Dr Jay Greene, Senior Research Fellow in Education Policy at the Heritage Foundation
• Dr Steven Taylor, Policy Director and Senior Fellow for Economic Mobility at Stand Together Trust
• Emilee Reynolds, Undergraduate Student at Western Carolina University and practicing paramedic, serving as the student representative

CECU has close relationships with several of the new appointees and praises the Department for appointing experienced, capable individuals to this important committee. These appointments arrive at a pivotal moment: the Administration has identified accreditation reform as a key focus area and has recently issued several actions intended to reshape the accreditation system, including expanding options for institutions seeking to change accreditors, lifting the moratorium on new accrediting agencies, and signaling greater scrutiny of accreditor performance and student outcome expectations.

Because the committee reviews petitions for accreditor recognition and monitors accreditor effectiveness, its composition offers an early indication of how the Department may approach its reform agenda. The newly appointed members will contribute to deliberations on accreditor accountability, standards, and oversight as the Department advances its broader efforts to modernize quality assurance.

The Department also announced that NACIQI’s next public meeting will be held on December 16, 2025, where recognition petitions and policy matters will be considered. View the agenda and registration information here.

The American Association of Career Schools (AACS) is pleased to share that we have joined forces with Ogle School Management and Tricoci University of Beauty Culture to continue the legal fight against the U.S. Department of Education’s Gainful Employment (GE) rule.

Together, the parties have retained former U.S. Solicitor General Paul Clement and the law firm Clement & Murphy PLLC to file an appeal of the district court’s decision in the U.S. Court of Appeals for the Fifth Circuit.

This coordinated effort reflects our shared commitment to:

• Defend students’ access to high-quality career, beauty, barber, and wellness education
• Challenge what we believe are unlawful and unworkable aspects of the GE rule
• Protect institutions that serve nontraditional, low-income, and working adult students

While we cannot predict the outcome of the appeal, AACS remains committed to using every available avenue—legal, legislative, and regulatory—to advocate for fair, consistent, and transparent accountability standards that do not unfairly target our sector or harm the students we serve.

We will continue to keep our members updated as the appeal progresses and as key milestones occur in the Fifth Circuit.

Government Reopens: Longest Shutdown in History
Next Funding Fight: Senate Eyes Minibus for Education Appropriations
More ED Reshuffling: New Interagency Agreements Announced
RISE Rulemaking Ends: Consensus Reached
AHEAD is Ahead: Major Regulatory Changes Likely to Impact Sector

LONGEST SHUTDOWN IN US HISTORY

What You Need to Know 

Congress passed legislation last week that ended the longest government shutdown in US history. The deal funds most of the government through January 30 and includes full-year appropriations for three of the twelve spending bills. It also reverses reductions-in-force that occurred during the shutdown and prohibits additional staffing cuts until late January.

Why This Is Important 

The shutdown’s impact was felt nationwide, and the pain grew more acute in early November. The compromise includes full-year funding for the US Department of Agriculture, ensuring that SNAP benefits remain funded even if another shutdown were to occur. Congress now faces the challenge of passing the remaining nine appropriations bills before the January 30 deadline.

LABOR-HHS-EDUCATION APPROPRIATIONS ON DECK

What You Need to Know  

The Senate is expected to consider a “minibus” spending package that could include the Defense and Labor-HHS-Education appropriations bills – and possibly the Transportation-HUD, Commerce-Justice-Science, and Interior bills as well. So far, Senate negotiations have been largely bipartisan, ignoring President Trump’s proposed deep spending cuts. If the Senate passes the package, it’s unclear whether the House will accept it as-is or push for changes. The House Appropriations Committee has advanced bills more closely aligned with the President’s agenda.

Why This Is Important  

House Republicans included language in their FY2026 Labor-HHS-Education bill that would block ED from implementing FVT/GE. The Senate version does not include this provision. AACS would like to see Congress pause FVT/GE while the Department develops new institutional accountability regulations under the new Do No Harm framework. AACS encourages you to reach out to your elected officials to encourage them include the House language that blocks FVT/GE as they finalize the Labor-HHS-Education bill.

NEXT STEPS ON ED REORGANIZATION

What You Need to Know 

On Tuesday, the US Department of Education announced plans to transfer several of its offices to other federal agencies, advancing President Trump’s April executive order to dismantle ED. Certain components of ED’s operations will be jointly managed with the US Departments of Labor, State, Health and Human Services, and Interior. This move mirrors the July interagency agreement between ED and the Labor on workforce development programs.

Why This Is Important 

While closing the Department outright would require congressional approval, the Trump Administration is pursuing an alternative approach: interagency agreements to jointly manage ED offices and programs. Whether this structure will work in practice remains to be seen, but it may be a bumpy road for institutions and students alike.

CONSENSUS IN RISE NEG REG

What You Need to Know 

On November 6, negotiators concluded the second and final session of the Reimagining and Improving Education (RISE) negotiated rulemaking committee. The committee focused on student loan limits, repayment, and rehabilitation provisions outlined in OB3. The most closely watched discussion related to the definition of “professional degree,” which will impact federal loan caps across postgraduate programs. For example, the Department estimates that the draft language definition of “professional degree” includes 44 programs, covering 47% of doctoral professional students.

Why This is Important 

Negotiators reached consensus on all 17 topics the committee addressed. This means the proposed rule will reflect the draft language upon which consensus was reached. Due to the government shutdown, ED has not yet posted the final draft language to its negotiated rulemaking resource website. We hope that ED will post the drafts in the coming weeks. During negotiations, the Department stated that the proposed rule would be forthcoming in early 2026 for public notice-and-comment.

AHEAD NEG REG COMING UP

What You Need to Know 

The Department will convene the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) negotiated rulemaking after Thanksgiving. The committee will meet on December 8–12 and January 5–9. Jeff Arthur, Chief Regulatory Officer at ECPI University, has been appointed to serve as the primary negotiator representing proprietary institutions. Ryan Claybaugh, Chief Operating Officer of Paul Mitchell Advanced Education, has been appointed to serve as the alternate negotiator for proprietary institutions. Aaron Lacey, co-chair of Thompson Coburn’s higher education practice group, will represent private nonprofit institutions.

Why This is Important 

The AHEAD committee is expected to address, among other topics, the future of FVT/GE, the new Do No Harm accountability framework, and Workforce Pell. AACS will be actively engaged at every step of the AHEAD process.

DEEPER DIVE: WHAT IS CONSENSUS?

The RISE Committee reached consensus on all draft language discussed during negotiations. When negotiators reach consensus, ED is bound to use the draft language in the proposed rule. The only exceptions to this requirement are if the Department reopens the negotiated rulemaking process or provides a written explanation to negotiators explaining why the Department has decided to depart from the agreed-upon language. In the absence of consensus, the Department would be free to propose its preferred language in the proposed rule. For this reason, even when negotiators are not entirely on board with draft language, negotiators may feel compelled to agree to reach consensus because of the predictability consensus provides.

After neg reg concludes, ED then shifts to the notice-and-comment phase of rulemaking. This is when the Department publishes draft rules in the Federal Register for a public comment period, at which time AACS and our member institutions can provide substantive comments to ED. Accordingly, notice-and-comment will be the next step for the rules negotiated during RISE.

The U.S. Department of Education announced this afternoon that it is taking additional steps consistent with President Trump’s March 20, 2025, Executive Order Improving Education Outcomes by Empowering Parents, States, and Communities. The Department has entered into six new interagency agreements with four federal agencies to restructure how key education programs are administered.

Under the new agreements, the Office of Postsecondary Education (OPE) and the Office of Elementary and Secondary Education (OESE) will shift major program administration responsibilities to the Department of Labor. Through a new Postsecondary Education Partnership, the Department of Labor will take on a greater role in administering most postsecondary education grant programs while the Department of Education retains oversight. Through a new Elementary and Secondary Education Partnership, the Department of Labor will assume a greater role in administering major K-12 programs, also under the oversight of the Department of Education.

The Department of the Interior will take on a greater administrative role for Indian Education programs through a new Indian Education Partnership, serving as a central point of contact for Tribes and Native students. The Department of State will administer Fulbright–Hays international education and foreign language programs through an International Education and Foreign Language Studies Partnership.

Two additional partnerships with the Department of Health and Human Services (HHS) will shift specific responsibilities there. Under the Foreign Medical Accreditation Partnership, HHS staff will evaluate whether accreditation standards for foreign medical schools are comparable to United States standards and will oversee the work of the National Committee on Foreign Medical Education and Accreditation. Under the Child Care Access Means Parents in School Partnership, HHS will administer the CCAMPIS program, including grant competitions and technical assistance.

These actions build on an earlier workforce development partnership with the Department of Labor that shifted administration of key career and adult education grant programs to the Department of Labor while the Department of Education retained statutory responsibilities.

The new agreements do not change the status of the Office of Federal Student Aid and the administration and servicing of federal financial aid.

Help our schools and students by blocking the Gainful Employment (GE) rule!

Even during the government shutdown, Congress continues work on the Fiscal Year 2026 appropriations process. The House-passed Labor, Health and Human Services, and Education (LHHS) appropriations bill includes critical language that would block the enforcement and implementation of the Gainful Employment (GE) rule. Unfortunately, the Senate version does not.

The recently passed One Big Beautiful Bill Act includes the “Do No Harm” framework, which imposes new federal institutional accountability requirements on degree programs – but not on certificate programs. If the GE rule remains in place, it will create two conflicting regulatory systems. This inconsistency will lead to confusion, increased administrative burdens, and unnecessary harm to schools and students.

Now is the time to act. Members of Congress are negotiating the final version of the LHHS bill. We need your voice to ask Congress to include the House language, which would temporarily suspend the GE rule.

It’s as easy as clicking a button, literally. By clicking here, you can visit the AACS Action Center where by following the instructions, your message will be automatically sent to your elected officials.

Thank you for standing up for our schools and students. If you have any questions or need assistance, contact us at info@myaacs.org.

CECU is pleased to announce that our nominees, Jeff Arthur, Chief Regulatory Officer at ECPI University, and Ryan Claybaugh, Chief Operating Officer at Paul Mitchell Advanced Education, have been appointed to serve on the U.S. Department of Education’s Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) negotiated rulemaking committee. Arthur will serve as the primary negotiator representing proprietary institutions of higher education, with Claybaugh serving as the alternate.

Both are tremendous picks to represent the sector. Arthur has over 41 years of leadership in higher education management and financial aid administration. He is widely respected as both a policy expert and student advocate. Claybaugh is a dynamic and results-driven executive with extensive experience in multi-site operations, regulatory compliance, and educational innovation within the beauty and career education sectors.

The AHEAD Committee will negotiate regulatory language related to:

• Institutional and program accountability, including loss of Direct Loan eligibility for programs with persistently low earnings outcomes and Financial Value Transparency/Gainful Employment.
• Program eligibility for the proposed new Workforce Pell Grant for students enrolled in 8–15 week programs that lead to a recognized credential or degree, are approved by the state governor, and demonstrate strong outcomes.
• Limitations on Pell Grant eligibility for students whose costs are fully covered by other grant/scholarship aid, or with a Student Aid Index greater than twice the maximum Pell Grant.
• Other provisions in Public Law 119-21 that take effect upon enactment or on July 1, 2026, July 1, 2027, or July 1, 2028.

The committee will meet in-person over two multi-day sessions:

• Session 1: December 8–12, 2025, 9:00 a.m. to 12:00 p.m. and 1:00 p.m. to 4:00 p.m. Eastern
• Session 2: January 5–9, 2026, 9:00 a.m. to 12:00 p.m. and 1:00 p.m. to 4:00 p.m. Eastern.

CECU will work closely with Arthur and Claybaugh throughout the rulemaking process to support their participation and ensure the sector’s perspective is effectively represented.

GOVERNMENT RELATIONS HIGHLIGHTS

Shutdown Fallout Grows: Senate eyes multi-bill package
RISE Session Two Underway: Graduate and professional degree definition at play
Election Day Takeaway: Off-year elections signal pushback against Republicans

LONGEST SHUTDOWN IN US HISTORY

What You Need to Know 

The government shutdown has now surpassed the 2018 shutdown, officially becoming the longest in American history. The House of Representatives has remained out of session since late September, while the Senate continues to vote on the same stalled resolution. The effects of the prolonged shutdown are becoming increasingly visible, with millions losing access to SNAP benefits and growing delays at airports due to staffing shortages.

Why This Is Important 

While a resolution is not yet imminent, bipartisan negotiations in the Senate appear to be progressing. Discussions so far suggest a potential package that could combine several appropriations bills with a short-term continuing resolution for the rest of the federal government. To secure Democratic support, the package may include some sort of vote on extending Affordable Care Act subsidies, though passage of that policy in the House remains uncertain.

RISE NEG REG RESUMES

What You Need to Know  

This week, the Reimagining and Improving Student Education (RISE) Committee reconvened for its second session of negotiated rulemaking. The committee, which first met in early October, is focused on student loan limits, repayment, and rehabilitation provisions outlined in OB3. A key point of discussion has been the definition of “professional degree,” which carries implications for federal loan caps across graduate programs.

Why This Is Important  

This is the first of two major rulemaking efforts underway. The second, led by the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) Committee, is expected to address Pell Grant eligibility, accountability measures under the Financial Value Transparency and Gainful Employment Rule and implementation of the Do No Harm framework under OB3. AHEAD is scheduled to meet in December and January, with both committees expected to finalize rules that could take effect as early as mid-2026

ELECTION DAY INDICATES PUSHBACK AGAINST TRUMP

What You Need to Know  

Democrats scored sweeping victories in yesterday’s off-year elections around the country. The headline-grabbing upset came in New York City, where self-identified socialist Zohran Mamdani (D) defeated former Governor Andrew Cuomo (I) to become mayor. In the two closely watched gubernatorial contests, Democrats Abigail Spanberger (VA) and Mikie Sherrill (NJ) both won decisively. Meanwhile, California voters repealed the state’s nonpartisan redistricting commission, clearing the way for Democrats to redraw congressional maps and potentially place several Republican incumbents in more competitive districts ahead of next year’s midterms.

Why This Is Important  

Off-year elections often favor the party out of power. Republicans face structural advantages due to the national congressional maps, and a pending Supreme Court case that could impact Democratic representation in the South. Whether Democrats are able to build yesterday’s results into a 2026 wave, or whether Republicans will be able to retain legislative power in Washington, remains to be seen.

GOVERNMENT RELATIONS HIGHLIGHTS

Shutdown Stalemate: House remains MIA, Groundhog Day in the Senate
Shutdown Fallout: ED Hit by second wave of layoffs
FSA Systems Stay Online: Basic FSA services remain online

SHUTDOWN THROUGH THANKSGIVING?

What You Need to Know 

The government shutdown has now entered its fourth week with no signs of resolution. This shutdown is now the second longest in history, surpassing the length of the 1995 shutdown. Speaker Mike Johnson (R-LA) continues to keep the House out of session, stating he will reconvene only after the Senate passes a continuing resolution. The Speaker’s stance has drawn growing frustration from both Democrats and some Republicans.

Why This Is Important 

Senate Majority Leader John Thune (R-SD) has brought the same Republican funding proposal to the floor eleven times, each failing to advance. Because the shutdown has dragged on for so long, the House will need to pass a new continuing resolution soon; the House-passed resolution that the Senate keeps voting down has a funding end date that is quickly approaching. With negotiations stalled, President Trump’s direct involvement may be necessary to break the impasse. However, Republican leadership has kept him at arm’s length so far, and he remains focused on foreign affairs.

ANOTHER RIF DECIMATES ED

What You Need to Know 

On October 11, Office of Management and Budget Director Russell Vought announced a new round of reductions-in-force (RIF) across federal agencies in response to the ongoing government shutdown. While full details remain unclear due to limited agency operations, initial reports indicate that the US Department of Education was hit with approximately 400 additional layoffs.

Why This Is Important 

This latest round of cuts brings ED’s workforce down to roughly 2,000 employees, half its size at the beginning of the year. This round appears to have targeted the Office of Postsecondary Education, among many other functions at the Department. A federal judge in California issued a temporary restraining order blocking the RIFs through the end of the month. The Supreme Court has granted the Trump Administration with broad discretion in managing federal personnel, so the RIFs at ED will likely be permissible. The long-term implications for ED operations remains uncertain, but this round of RIFs will certainly diminish agency’s already strained capacity.

ED CLARIFIES AGENCY SERVICES AVAILABLE DURING GOVERNMENT SHUTDOWN

What You Need to Know 

In a recent Electronic Announcement, ED provided details on FSA’s operations during the ongoing government shutdown. The Announcement explained plans for communications, customer service contact centers, training events, and the operations of various processing systems, like G5, the E-App, FAFSA, and COD.

Why This Is Important 

Institutions will continue to be able to draw down Title IV aid during the lapse in appropriations, with ED anticipating a “minimal impact on students, borrowers, schools, lenders, and guaranty agencies[.]” In general, ED’s processing systems remain up and running, but school submissions will not be reviewed by ED until the government reopens.

GOVERNMENT RELATIONS HIGHLIGHTS

Washington Standstill: No progress on funding stalemate
No Deal, No Movement: Filibuster stymies resolution of shutdown
RISE Committee Convenes: ED begins OB3 rulemaking
Court Sides with ED: GE rule stands for now
Loan Pause Skews Default Data: ED releases FY2022 rates

SHUTDOWN HITS WASHINGTON

What You Need to Know 

The shutdown of the federal government has now stretched into its second week, leaving hundreds of thousands of federal employees furloughed or working without pay. Under federal law, agencies must halt all non-essential operations when Congress fails to pass funding legislation. So far, negotiations between Congress and President Trump have stalled, with no clear path to resolution.

Why This Is Important 

At ED, approximately 95% of staff outside of FSA have been furloughed. While Pell Grants and Direct Loans remain operational for now, if the shutdown were to extend for a prolonged period, FSA operations could eventually suffer. The longest shutdown in US history was 35 days in 2018, though that was only a partial shutdown and did not impact ED because the agency was fully funded at the time. President Trump and OMB Director Russell Vought have signaled that additional layoffs may be forthcoming across the federal workforce, potentially compounding the effects of the Department’s previous cuts and raising concerns about long-term capacity at the agency

CONGRESS REMAINS STUCK

What You Need to Know 

Efforts to resolve the government shutdown remain stalled in the Senate, where Republicans lack the votes to pass a funding bill on their own due to the filibuster and the defection of Senator Rand Paul (R-KY). Despite needing eight Democratic votes to advance a continuing resolution, GOP leadership has yet to engage in substantive negotiations. Senate Majority Leader Thune continues to hold show votes on two competing proposals, neither of which has sufficient votes to clear the 60 vote threshold needed to pass, signaling no immediate path forward.

Why This Is Important 

The House remains out of session, with Speaker Johnson (R-LA) refusing to reconvene unless a deal materializes. Tensions have escalated as the Speaker has refused to swear in newly elected Representative Adelita Grijalva (D-AZ). Once Grijalva is formally seated, Republicans will have an even tinier majority, and she is expected to provide the pivotal 218th signature to facilitate the release of the Epstein Files. The political standoff continues to deepen, with no resolution in sight and House Republicans far from Washington. 

RISE NEG REG KICKS OFF

What You Need to Know 

On September 29, the Reimagining and Improving Student Education Committee (RISE) convened for the first of two sessions of negotiated rulemaking. The RISE Committee took up issues related to student loan limits, repayment, and rehabilitation based on requirements set forth in the One Big Beautiful Bill Act (OB3). The Department’s draft regulatory language, as introduced to the RISE Committee, closely mirrored language included in the legislation in most instances. Negotiators also addressed and vigorously debated the definition of “professional degree.” The RISE Committee will reconvene November 3-7.

Why This Is Important 

Though many expected the negotiated rulemaking to be postponed due to the ongoing government shutdown, the RISE Committee persisted with in-person sessions. ED stated that the rulemaking had been deemed essential in order to meet deadlines prescribed by OB3. The Department also shared that it is exploring deviating from master calendar requirements in order to meet the statutory deadlines required by OB3, meaning that new regulations could go into effect as soon as mid-2026.

GE LITIGATION DISMISSED

What You Need to Know 

On October 2, a federal district court ruled in favor of the Department’s request for summary judgment in AACS’s lawsuit challenging FVT/GE. The court found that “gainful employment” means programs must meet specific tests on how much graduates earn compared to their debt and to others in similar jobs.

Why This Is Important 

For now, FVT/GE remains in effect. AACS is examining opportunities to appeal the decision. In light of new accountability rules under OB3, ED plans to review and possibly update FVT/GE during upcoming negotiated rulemaking sessions scheduled for December and January. AACS will share additional details regarding a potential appeal as they become available.

ED DISTRIBUTES 2022 CDRs

What You Need to Know 

On September 22, the Department distributed fiscal year 2022 official cohort default rates to all eligible institutions. As anticipated, the 2022 rates were significantly impacted by the pause on federal student loan payments that began in early 2020.

Why This Is Important 

Although virtually all institutions had a cohort default rate of 0.0% for fiscal year 2022, beginning in 2026, cohort default rates will take into consideration borrowers who entered repayment in 2023 and defaulted in 2023, 2024, and 2025. As a reminder, ED resumed collections on defaulted loans on May 5. Under the HEA, institutions will lose eligibility for federal student assistance programs if their CDR exceeds 40% for a single year or 30% for three consecutive years.

Yesterday, October 2, 2025, Chief U.S. District Judge Reed O’Connor in Texas ruled in favor of the U.S. Department of Education in the lawsuit challenging the Gainful Employment Rule. Judge O’Connor agreed to the Department’s request for summary judgement. In simple terms, the court agreed with the Department’s view that “gainful employment” means programs must meet specific tests on how much graduates earn compared to their debt and to others in similar jobs, based on the law’s wording.

This decision keeps the Gainful Employment Rule active for now, after two key reporting deadlines passed this week. It’s a final call at this court level, but AACS and the other schools are likely to appeal to the Fifth Circuit Court of Appeals. Meanwhile, the Department plans to review and possibly update the rule during upcoming talks in December and January, tied to new accountability rules from the One Big Beautiful Bill Act.

Our AACS Government Relations Committee has been working non-stop—gathering facts, building strategies, and meeting with key stakeholders and officials—to keep you informed on this important issue. Our legal team is poring over the 30-page ruling and exploring every option, including an appeal. We’ll share more details soon. Thank you for your patience and support as we navigate this together.

To give you a clearer picture of what this ruling means in practice, our legal partners at Duane Morris have prepared a preliminary summary and analysis, which you will find below.

Legal Overview, Summary & Analysis

There was widespread disappointment with yesterday’s ruling, in which Judge O’Connor decided in favor of the government in the Gainful Employment (“GE”) case. A copy of the opinion is available here. The decision is still under detailed review, but a brief summary and analysis are provided below.

The court began by addressing the Loper Bright issue, that is, whether the Department even had the authority to issue the GE rule. Consistent with its prior ruling on Ogle’s motion for a preliminary injunction, the court again accepted the government’s definition of “gainful,” meaning “‘profitable,’ advantageous,’ or ‘lucrative.’” The court did not wrestle with several of the statutory interpretation arguments that we made, apparently because it found that the phrase “gainful employment” is so unambiguous that no further statutory analysis is necessary. This, of course, stands in contrast to several other district court decisions that have found the phrase to be ambiguous— and prior positions of the Department— decisions that this judge acknowledged but “is not bound to follow.”

Next, the court turned to (some of) our arbitrary and capricious arguments. The court seems to have accepted the government’s arguments and studies without any critical analysis. Put another way, the judge accepted the government’s characterizations of its studies and findings at face value and, as a result, held that the GE rule is not arbitrary. The judge barely—if at all—dealt with the internal contradictions and counter-evidence we identified in the administrative record. The judge did not even acknowledge, for example, our argument that the government withheld data that it later used to justify the GE rule.

Finally, the court rejected our First Amendment and Due Process arguments. Consistent with the remainder of the opinion, the court did not address many of the arguments in our briefing, including the principal case we cited in support of our First Amendment argument. The court simply said that First Amendment challenges to federal funding conditions are not permitted as a matter of law. On the Due Process piece, the court effectively added language into the GE rule that does not appear therein.

AACS can appeal this as a matter of right. A notice of appeal is due within 60 days. We are evaluating our options with our legal and GR teams to ensure that we are doing everything possible to get to the right outcome for our students and members.

As of midnight, the federal government has officially shut down following Congress’ failure to pass appropriations by the start of the new fiscal year. Under federal law, agencies and departments cannot operate without enacted appropriations, thus triggering furloughs and the suspension of non-essential services.

According to a contingency memo released by ED Secretary McMahon over the weekend, it is expected that 95% of ED staff outside of FSA will be furloughed. Additional essential staff will remain at FSA to manage the distribution of Pell Grants and Direct Loans, which have mandatory appropriations. In addition, it is possible that the Trump Administration uses this shutdown to permanently eliminate additional agency staff beyond the reductions in force that have already occurred this year.

Two days of the RISE negotiated rulemaking session, focused on changes to the loan program made by OB3, have already occurred this week. Contrary to the notice in the Federal Register earlier this week, the RISE neg reg is continuing in person for now despite the shutdown but could get paused before this week’s deliberations conclude.

While the timeline for a resolution remains uncertain, a prolonged shutdown could eventually disrupt institutional cash flow and delay grant processing. We will continue to monitor developments closely.

GOVERNMENT RELATIONS HIGHLIGHTS

• Shutdown Looms Over Washington: Democrats demand spending concessions
• IRS Unveils Tip Deduction Form: No Tax on Tips schedule released
• Additional ED Rulemakings Possible: ED continues aggressive regulatory push
• Harvard Sanctioned: ED Places Institution on HCM1 Status

CONGRESS BARRELS TOWARD SHUTDOWN

What You Need to Know 

A government shutdown is becoming increasingly likely next Wednesday. Republicans, backed by President Trump, are pushing for a short-term continuing resolution to extend current funding levels through November 21. Democrats, frustrated by the Administration’s refusal to implement current spending laws, are demanding that Republicans come to the table to negotiate.

Why This Is Important 

Unlike OB3, which passed with only Republican support, Senate Republicans need at least seven Democratic votes to overcome a filibuster and advance any appropriations bill or continuing resolution. So far, Senate Democrats remain united. President Trump initially agreed to meet with House Minority Leader Hakeem Jeffries (D-NY) and Senate Minority Leader Chuck Schumer (D-NY) to negotiate a compromise – only to subsequently cancel the meeting—further escalating the likelihood of a shutdown.

NO TAX ON TIPS GUIDANCE RELEASED

What You Need to Know 

On Monday, the Internal Revenue Service published a draft regulation of the new Schedule 1-A form in the Federal Register, which will be used by taxpayers to deduct tips. The “No Tax on Tips” provision, originally a campaign pledge by President Trump and enacted as part of OB3, will be in effect for tax years 2025 through 2028. It allows eligible employees and self-employed individuals to deduct up to $25,000 annually, regardless of whether they itemize deductions. The benefit phases out for high-income taxpayers.

Why This Is Important 

Public comments on the draft Schedule 1-A will be accepted through October 23, 2025, with a public hearing scheduled for the same day. The proposed regulation outlines a broad range of professions eligible under the No Tax on Tips provision, including barbers, hairdressers, cosmetologists, manicurists, waxing technicians, makeup artists, skincare specialists, and massage therapists.

ED PUBLISHES REGULATORY UPDATES

What You Need to Know 

Earlier this month, ED made two updates to the Unified Agenda, the federal government’s report outlining planned regulatory actions. The first, titled Title IV Eligibility Issues, proposes changes to rules governing institutional ownership, aiming to eliminate requirements that disproportionately affect faith-based and for-profit institutions and hinder efficient mergers, sales, and transfers in higher education. The second update, Accreditation Issues, seeks to clarify the flexibility that institutions have to change accreditors without prior ED approval and to remove other regulatory barriers that limit the entry of new accrediting agencies.

Why This Is Important 

The Unified Agenda does not always contain accurate information, with agencies often missing deadlines for publishing rules included on the list. For example, ED has not formally noticed either of these rulemakings, yet they are included on the Unified Agenda; conversely, ED has noticed the RISE and AHEAD negotiated rulemakings – the former starting next week – yet neither is included on the Unified Agenda. Accordingly, it will be important to wait for formal notice from the Department on the Title IV and accreditation rulemakings to understand the agency’s precise priorities. ED already has an incredibly active slate of regulations planned for finalization by November 1, 2026.

ED PLACES HARVARD UNIVERSITY ON HCM1

What You Need to Know 

In yet another escalation of the battle between Harvard University and the Trump Administration, ED placed Harvard on heightened cash monitoring (HCM1) last week. Schools may be placed on HCM1 based on a variety of compliance issues, including concerns regarding a school’s administrative capability or financial responsibility, delinquent annual audits, and severe program review findings. According to an ED press release, ED placed Harvard on HCM1 due to financial responsibility issues, finding, among other things, that Harvard is “in violation of Title VI of the Civil Rights Act, which prohibits discrimination based on race, color, and national origin.”

Why This Is Important 

Harvard must post a $36 million irrevocable letter of credit or provide other financial protection acceptable to ED. Harvard will also be required to cover all initial federal financial aid disbursements from its own coffers, which will later be reimbursed by ED, to “ensure Harvard is spending taxpayer funds responsibly.” In the press release, ED warns that Harvard has potential to lose access to Title IV funds entirely due to noncompliance with requests from ED’s Office of Civil Rights.

GOVERNMENT RELATIONS HIGHLIGHTS

• Packed September for Congress: Funding deadlines, confirmations, and document disputes await
• OB3 Comments Due Thursday: ED seeks input ahead of fall neg reg sessions
• Deeper Dive: Rescissions and ED Programs: White House weighs new cuts as fiscal year deadline looms

CONGRESS RETURNS NEXT WEEK TO CONFLICTING PRIORITIES

What You Need to Know  

Congress returns to Washington on Tuesday, September 2 from its August recess. The House adjourned early last month amid internal GOP disagreements over the release of the Epstein Files, and bipartisan pressure is mounting on the Trump Administration to release additional documents. Meanwhile, the Senate faces growing urgency to confirm a backlog of Trump Administration nominees. These issues will compete for attention alongside critical legislative deadlines.

Why This Is Important 

Most urgently, Congress has made little progress in passing the twelve appropriations bills that fund the federal government. The current federal fiscal year ends on September 30. Due to the Senate filibuster, appropriations bills must have the support of Senate Democrats, who have been cautious because the Administration and their Republican allies in Congress continue to pursue policies, such as rescissions, that undermine existing funding agreements. Congress is expected to need to pass a continuing resolution to avoid a government shutdown, which would keep current funding levels steady for now.

NEG REG PUBLIC COMMENTS DUE TOMORROW

What You Need to Know 

In advance of the two negotiated rulemaking committees planned for this fall and winter, ED is accepting public comments on proposed Title IV changes, including those required by the One Big Beautiful Bill Act (OB3). ED has extended the deadline to Thursday, August 28 at 11:59pm ET. As a reminder, the Reimagining and Improving Student Education (RISE) Committee will focus on student loan issues such as loan limits, repayment plans, institutional flexibility, and defaults. The Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) Committee will address accountability, Pell Grants, Do No Harm, and Workforce Pell eligibility. RISE will meet in September, October, and November. AHEAD will meet in December and January.

Why This Is Important 

Over 1,700 comments have already been submitted. AACS will submit its public comments by the deadline and has already nominated negotiators to represent the sector during rulemaking. AACS will remain engaged throughout the regulatory cycle to ensure our member interests are well represented.

DEEPER DIVE: WILL RESCISSIONS IMPACT ED PROGRAMS?

What You Need to Know  

In July, Congress narrowly passed a $9 billion rescissions package that targeted foreign aid and public media. This was the first successful rescission approved by Congress since 1999. For weeks, there has been speculation that the White House, led by Office of Management and Budget Director Russ Vought, is expected to submit additional recission packages to advance their mission of reducing government spending. Republicans expect another rescission request shortly after Labor Day, with rumors that it may include cuts to education programs. The scope of the package remains unclear, but in July, the Administration temporarily froze $7 billion in K–12 grants pending review. The funds were later released following bipartisan backlash and legal challenges. Any new rescissions could significantly impact federal education funding and program stability, though programs like Direct Loans and Pell Grants are not expected to be included.

Why This Is Important 

Confronted by congressional Republicans weary of additional cuts to popular programs, the White House is considering whether to advance “pocket rescissions” in the coming weeks. This legally dubious tactic, which has faced skepticism from Senate Appropriations Chair Susan Collins (R-ME) and others, would allow the White House to claw back already-appropriated funding without Congressional approval. Vought argues that rescissions requests submitted within 45 days of the end of the fiscal year can be effectuated regardless of congressional action because the funding “evaporates at the end of the fiscal year” under his interpretation of the 1974 Impoundment Control Act.

GOVERNMENT RELATIONS HIGHLIGHTS

• Despite Recess, Tensions Simmer: Congress departs with major funding issues unresolved
• ED Issues OB3 Guidance: DCL outlines immediate changes and delays
• ED Expands FAFSA Verification: New methods and DHS data match aim to curb identity fraud Neg Reg Public Comment Open: ED seeks input ahead of fall
• OB3 rulemaking sessions
• ED Publishes Nonpayment Rates: New report highlights borrower delinquency
• DEEPER DIVE Kent Confirmed: Former sector ally to oversee federal postsecondary policy

AUGUST RECESS UNDERWAY

What You Need to Know 

Congress has entered its annual August recess, with most members returning home to spend time with their constituents or traveling abroad on official trips. Lawmakers are scheduled to return to Washington on September 2. The recess follows a busy legislative period, but several key issues remain unresolved.

Why This Is Important 

The Senate adjourned without reaching agreements to unfreeze already-approved spending, confirm additional Trump Administration nominees, or set a baseline for FY2026 funding. This sets the stage for a high-stakes September as the end of the federal fiscal year approaches on September 30. Senate Democrats have signaled reluctance to engage in bipartisan negotiations if the Administration and their Republican allies in Congress pursue a second rescissions package that undermines existing funding agreements. The first rescissions package, passed in July, was the first successful effort to claw back already-approved funding since 1999, and the next rescissions package could propose negating funding for education programs.

ED ISSUES CLARIFYING GUIDANCE ON OB3

What You Need to Know 

President Trump signed the One Big Beautiful Bill Act (OB3) into law on July 4, setting in motion a sweeping overhaul of federal higher education policy. On July 18, ED issued a Dear Colleague Letter (DCL), which outlines certain OB3 changes that became effective upon enactment. The DCL addresses several loan repayment and forgiveness concepts in OB3, in addition to confirming that the statute delays implementation of the Biden Administration’s Borrower Defense to Repayment (BDR) and Closed School Loan Discharge (CSLD) regulations. As a result, the BDR regulations at 34 C.F.R. Part 685, Subpart D and the CSLD regulations at 34 C.F.R. § 685.214 that became effective on July 1, 2020, remain in effect for loans originated prior to July 1, 2035.

Why This Is Important 

We emphasize that, even though the Biden-era BDR rule has been sidelined, borrowers may still file claims, and ED still has a framework pursuant to which those claims are to be assessed and adjudicated. Similarly, the pre-Biden version of the CSLD rule continues to be in effect, and closed school discharges remain available to students. ED states that it will implement OB3 changes not addressed in the DCL by promulgating new regulations, beginning with negotiated rulemaking sessions scheduled for later this year.

ED CONTINUES ITS FOCUS ON FAFSA VERIFICATION

What You Need to Know 

Earlier this summer, ED stated that rates of identity fraud were causing harm to the federal student aid programs and that ED would be ramping up identity verification. Recently, ED published a Federal Register Notice, which details the FAFSA information schools and applicants will be required to verify, as well as the acceptable verification documentation for 2025-26 Award Year. The Notice provides two new methods schools may use for identity verification: (1) video calls between the student and institutional personnel; and (2) documentation that the student’s identity was verified by an approved third party. Relatedly, last week, ED issued another Federal Register Notice, announcing the re-establishment of a matching program between ED and the US Department of Homeland Security (DHS). This program enables ED to use DHS data to verify the immigration status of FAFSA applicants. The program is intended to ensure that only eligible non-citizens receive federal aid. ED is accepting public comments on the Notice through September 5, 2025.

Why This Is Important 

Given the recent stream of ED publications on identity verification, it is clear that this topic will continue to be a priority for this administration. We are aware that institutions are beginning to receive increased verification requests from ED. We suggest that institutions ensure their financial aid staff have a plan in place for responding to a potentially higher volume of verification requests than normal.

NEG REG PUBLIC COMMENT PERIOD REMAINS OPEN

What You Need to Know 

As we reported in July, ED announced plans to convene two new negotiated rulemaking committees to address Title IV changes, including those required by the OB3. The Reimagining and Improving Student Education (RISE) Committee will focus on student loan issues such as loan limits, repayment plans, institutional flexibility, and defaults. The Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) Committee will address accountability, Pell Grants, Do No Harm, and Workforce Pell eligibility. RISE will meet in September, October, and November; AHEAD will meet in December and January.

Why This Is Important 

ED continues to seek public input as it prepares draft proposals for both committees. Comments are due to ED no later than August 25. In addition to submitting comments, AACS will participate at every step of the process.

ED PUBLISHES NONPAYMENT RATES BY INSTITUTION

What You Need to Know 

On July 23, ED published a report that details the percentage of Direct Loan borrowers who entered repayment since January 2020 by institution and whose federal student loans were more than 90 days delinquent at the time of the data pull (mid-May 2025).

Why This Is Important 

This report follows earlier ED communications strongly encouraging Title IV-participating institutions to perform outreach to borrowers to remind them of their federal student loan obligations and options for managing their debt. Combined with the OB3’s focus on repayment, it is evident that loan delinquency and default will be an area of focus for the Trump Administration.

DEEPER DIVE…UNDER SECRETARY NICHOLAS KENT: WHAT SHOULD AACS SCHOOLS EXPECT AHEAD FROM ED?

What You Need to Know 

Before leaving Washington for the summer, the Senate confirmed Nicholas Kent as Education Under Secretary in a 50–45 vote. He was sworn in last week by Secretary McMahon and will oversee ED’s postsecondary, career and technical, adult education, and federal student aid programs. Kent previously served as Deputy Secretary of Education in Virginia under Governor Youngkin and held senior roles at CECU. He began his career in accreditation and is a first-generation college student and Pell Grant recipient. His background should give him fluency on the federal regulatory landscape and the challenges facing states, institutions, families, and students.

Why This Is Important 

Kent’s confirmation drew mixed reactions due to his ties to the for-profit sector, but many in the education community praised his experience in accountability and career-focused education. Kent was a critic of the gainful employment rule during the Biden Administration, and we hope that he will carry that critical eye into how the Trump Administration designs the new Do No Harm accountability framework mandated by OB3 and hopefully moves past gainful employment. In his welcome letter to ED employees , he noted his embrace of alternatives to traditional four-year degrees, “promoting vocational training, apprenticeships, and innovative credentials that align education with the in-demand needs of today’s workforce.” James Bergeron will return to his role as Deputy Under Secretary and continue to play a substantial role at ED, particularly around FSA and financial aid issues.

GOVERNMENT RELATIONS HIGHLIGHTS

• Congress Heads Into August Recess: Prepares for fall funding fight.
• ED Announces Two Rulemaking Committees: RISE and AHEAD panels to tackle OBBA implementation.

CONGRESS PREPARES TO LEAVE TOWN

What You Need to Know 

The Senate is set to adjourn this week for its traditional August recess. In its final days, the chamber is working to confirm remaining Trump Administration nominees, though more than 140 positions remain unconfirmed. Due to Democratic opposition and procedural rules, each confirmation requires significant floor time. On Thursday, the Senate Appropriations Committee will also mark up the Labor-HHS-Education appropriations bill. While unlikely to be enacted as written, the bill is expected to be relatively bipartisan and could serve as a framework for a year-end funding deal.

Why This Is Important  

When Congress returns after Labor Day, it will face a critical deadline: the end of the federal fiscal year on September 30. Lawmakers must reach a bipartisan agreement to fund the government and avoid a shutdown. The outcome of these negotiations will shape federal education funding and other key priorities heading into the fall.

ED ANNOUNCES RULEMAKING COMMITTEES

What You Need to Know  

ED announced plans to convene two new negotiated rulemaking committees to address Title IV changes, including those required by the One Big Beautiful Bill Act signed on July 4. The Reimagining and Improving Student Education (RISE) Committee will focus on student loan issues such as loan limits, repayment plans, institutional flexibility, and defaults. The Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) Committee will address accountability, Pell Grants, and provisions like Do No Harm, Gainful Employment, Financial Value Transparency, and Workforce Pell eligibility. RISE will meet in September/October and November; AHEAD will meet in December and January.

Why This Is Important 

ED is seeking public input as it prepares draft proposals for both committees. A virtual public hearing will be held on August 7 from 9 AM–Noon and 1 PM–4 PM ET. In addition to participating in the public hearing, AACS plans to submit a nominations for negotiators to serve on the rulemaking panels.

This morning, the U.S. Department of Education announced its intent to establish two negotiated rulemaking committees to examine the Federal student loan programs, and the other committee will consider changes to institutional and programmatic accountability, the Pell Grant Program, and other changes to the Title IV, HEA programs. The committees are fulfilling statutory requirements in conjunction with the passage of the One Big Beautiful Bill Act (OBBBA). The landmark legislation requires Federal agencies to promulgate regulations in establishing the framework for the administration’s new programs.

The proposed issues for negotiation include, but are not limited to:

• Changes in institutional and programmatic accountability measures, including the loss of Direct Loan eligibility for certain programs with low earnings outcomes for two out of three years, as well as Financial Value Transparency and Gainful Employment.
• Establishment of program eligibility requirements for a new Workforce Pell Grant for students enrolled in programs that last a duration of 8-15 weeks, are transferable to a recognized postsecondary credential or degree, are approved by the state governor, and have strong outcomes.

The Department is seeking input from a wide range of stakeholders and will hold a virtual public hearing on August 7, 2025, from 9:00 a.m. to 4:00 p.m.

CECU is reviewing the information and will provide members with additional details.

Your voice needs to be heard—and we’re calling for nominations!

CECU intends to nominate qualified individuals who have knowledge and experience in the topic areas listed by the Department for negotiated rulemaking. We urge all qualified individuals with experience and expertise in these topics to consider participating. Individuals interested in being considered should complete our brief form.

Individuals may nominate themselves or submit the name and contact information for someone else who they believe we should consider nominating. Previous experience as a negotiator is not required.

Representation by qualified negotiators is vital, CECU is especially interested in receiving nominations from individuals who represent the following constituencies:

• Proprietary institutions of higher education.
• U.S. military service members, veterans, or groups representing them.
• Private nonprofit institutions of higher education.
• Students who are currently enrolled and receiving assistance from the Title IV, HEA programs.

Please complete the form by August 4, 2025, to be considered. All nominations must be submitted to the Department of Education 30 days after the official publication in the Federal Register.

CONGRESS TO CONSIDER RECISSION PACKAGE

What You Need to Know

This week, Congress is considering a Trump Administration proposal to rescind $9.4 billion in previously-approved funding. The package would formalize cuts made by DOGE earlier this year to USAID, PBS, and NPR. While the House has passed the measure, it faces resistance in the Senate from moderates concerned about the scope of the reductions. The package must be approved by Friday, July 18 by both chambers, or it will be deemed rejected, and the funds will have to be spent.

Why This Is Important

Senate Democrats have warned that passage of the rescission package would jeopardize any chance of a bipartisan agreement on FY2026 appropriations. It remains unclear whether Senate Majority Leader Thune has the votes to advance the measure. President Trump has framed the vote as a test of loyalty to his priorities, adding political pressure to an already contentious debate.

ED TAKES FIRST STEPS ON OBBBA IMPLEMENTATION

What You Need to Know

President Trump signed the One Big Beautiful Bill Act (OBBBA) into law on July 4, setting in motion a sweeping overhaul of federal higher education policy. The law makes the most significant changes to HEA programs in nearly two decades. ED will need to conduct rulemakings to conform its regulations with the new law. The Department is now beginning the internal work needed to prepare for that process.

Why This Is Important

At a conference last week, Acting Under Secretary Bergeron confirmed that ED has started discussions around the negotiated rulemaking sessions needed to implement OBBA. He indicated that announcements on next steps will be made soon. Institutions should begin preparing for a busy regulatory cycle as the Department moves to operationalize the law’s provisions.

ED REVISES 90/10 INTERPRETATION

What You Need to Know

On July 7, ED published an Interpretive Rule in the Federal Register updating how revenues are classified for purposes of the 90/10 calculation. ED clarified that language in the preamble to the October 2022 Final Rule, which stated that revenues from non-Title IV programs delivered via distance education could not be counted, was interpretive. Because this preamble language did not go through the formal notice-and-comment process, ED determined it did not carry the force of law.

Why This Is Important

Institutions may now include revenues from ineligible programs delivered via distance education in their 90/10 calculations, provided those programs meet other regulatory requirements. ED’s announcement specifically addressed the enforceability of language found only in the preamble, not in the formal regulations, which can only be changed through rulemaking. While ED also indicated that revenues from ineligible programs at unapproved locations may be counted, 34 C.F.R. § 668.28(a)(3)(iii) still excludes most unapproved locations. Schools are advised to continue complying with existing regulatory provisions. The new interpretation is effective immediately, and ED has stated that institutions may revise prior fiscal year 90/10 calculations affected by the earlier interpretation.

ED REINTERPRETS PUBLIC BENEFITS ELIGIBILITY FOR ILLEGAL ALIENS

What You Need to Know

On July 11, ED published an Interpretive Rule revising its stance on eligibility for federal public benefits under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). While PRWORA generally restricts benefits to citizens and certain qualified non-citizens, it exempts basic public education for children. ED rescinded a 1997 Dear Colleague Letter that had allowed undocumented individuals, including adults, to receive certain educational benefits not classified as postsecondary. ED concluded that the earlier interpretation misread PRWORA and extended benefits beyond what the law permits.

Why This Is Important

In a July 10 press release, ED stated that the new interpretation ends prior guidance that allowed illegal aliens to access federal public benefits. ED stressed that the rule reinforces that programs authorized under the HEA, such as Pell Grants and federal student loans, remain off-limits to undocumented immigrants. ED also clarified that where HEA programs impose stricter citizenship requirements than PRWORA, institutions must continue to follow those program-specific rules. This change may affect institutional policies and access to certain ED-administered programs.

The U.S. Department of Education announced today that John Huston has been appointed Deputy General Counsel for Postsecondary Education and Competition in the Office of the General Counsel. John brings a wide range of experience in practicing law, policymaking, and higher education advocacy. He most recently practiced antitrust and competition law as Associate Counsel at Jones Day, focusing on government investigations, compliance, litigation, and merger review for clients in industries including agriculture, manufacturing, and transportation.

John recently held the position of Vice President for Legislative and Regulatory Affairs at CECU. His expertise and leadership will continue to advance policies that promote innovation, accountability, and student success in postsecondary education.

John previously served in the first Trump Administration as a Senior Advisor in the Office of Postsecondary Education at the Department. His earlier public service also includes roles as Legislative Director for Congressman Luke Messer and as a Senior Policy Advisor for the House Republican Policy Committee. In addition, John earned his J.D. from Georgetown University Law Center and holds a B.S. in Economics and Political Science from Ball State University

The House passed the long awaited tax and spending bill dubbed the “One Big Beautiful Bill” without making any amendments to the version passed by the Senate. The final vote was 218 to 214. The legislation, which would next head to President Trump for signature, includes an extension of the 2017 tax cuts, spending reductions across a host of domestic programs, and funding for issues such as immigration enforcement. It also includes a number of important changes to higher education programs. Read CECU’s in-depth analysis here.

CECU was active in lobbying members of Congress on the bill and promoting the interests of our members throughout the months-long debate. The final legislation includes several significant wins for our sector. Nevertheless, the bill will still cause significant disruption to some programs and reduce access to federal education loans for graduate and professional students as well as parent borrowers.

In contrast to the original version passed by the House in May, the final bill keeps subsidized loans for undergraduate borrowers, maintains full-time status for the Pell Grant at 12 credit hours while preserving eligibility for students enrolled less than half-time, and provides per-student limits to Parent PLUS loans. The bill caps student loans for graduate and professional students, ends Grad PLUS loans, and caps Parent PLUS loans, although at a more flexible level ($65,000 in aggregate per student) than the House proposal.

The bill also includes a new short-term Pell Grant available to students, including those attending for-profit schools. This is a longtime priority for CECU and has been the subject of considerable debate, so this represents a meaningful win for our schools and students.

The new high school earnings premium accountability formula applies to all degree programs in all sectors of higher education, but improvements should be made in the future to avoid unintended consequences in the form of reduced access and attainment. Importantly, the accountability formula does not include undergraduate certificate programs. The bill requires an appeals process for programmatic earnings data to ensure schools have an opportunity to defend a program’s student outcomes before qualification for federal financial aid is withdrawn.

The regulatory relief section is shorter and less beneficial than earlier proposals. The final bill only delays implementation of the Biden administration’s rules on borrower defense to repayment (BDR) and closed school discharge by 10 years, providing immediate relief but no permanent resolution of the aggressive overreach we have seen with these rules. The final bill does not include repeals of the 90/10 rule and gainful employment (GE), although the GE regulation is subject to an ongoing legal challenge.

CECU is hosting our monthly Federal Policy Update on July 8 at 2 pm ET, where additional updates and analysis will be provided. Register here.

The Senate has passed its final version of the One Big Beautiful Bill Act (OBBBA) by a vote of 51-50, with Vice President Vance casting the tie breaking vote. This concludes a high-stakes legislative process that began in late April just as AACS kicked off our Hill Day.

The bill now heads back to the House, which must pass the Senate’s version without changes to avoid further delays in order to meet the White House’s July 4 deadline. While the outcome in the House is presently uncertain, the Senate’s passage signals that this sweeping legislation is growing ever more likely to reach President Trump’s desk for signature.

The version of the bill that just passed the Senate has been tweaked considerably since late last week. Our initial review is based on the most recent, public version of the legislation. We will provide further updates if Senate Republican leadership made additional changes during the final steps of the process.

Key Wins for Career Education

In a significant victory for AACS and the broader career education sector, the Senate-passed version of OBBBA includes several provisions that reflect months of advocacy and negotiation.

• No Tax on Tips: A major win for our community, the bill includes a new federal income tax deduction for tipped workers. This means that tips earned by hairstylists, estheticians, and other beauty professionals will no longer be subject to federal income tax, up to a cap of $25,000 annually. The benefit phases out for individuals earning over $150,000 or couples earning over $300,000. This version does not include the tip tax deduction. While payroll and state taxes still apply, this provision is expected to increase take-home pay for thousands of beauty professionals.
• Subsidized Loans Remain: The Senate did not include the House’s proposed elimination of subsidized federal student loans and did not include caps on undergraduate borrowing.
• Pell Grant Expansion: Pell Grant eligibility remains largely intact and will now be extended to accredited shorter-term programs.
• Delay of Borrower Defense & Closed School Discharge Rules: The Biden-era borrower defense to repayment and closed school discharge rules will be delayed for 10 years, providing regulatory relief for institutions concerned about retroactive liabilities.

Provisions with Operational Impact for Career Education

While the bill includes many positive changes, some provisions will require the promulgation of potentially complex new regulations and careful operational planning for schools.

• Do No Harm Accountability Framework: A new institutional accountability system will tie access to federal aid to earnings. While we expect that this will not apply to certificate programs based on the statutory text, it will be important for the AACS community to work closely with the Trump Administration on the development of forthcoming regulations.
• Gainful Employment Remains: The Senate did not remove the statutory authority for gainful employment or 90/10, as had been proposed in the House. Given the similarities between Do No Harm and Gainful Employment, it will be critical for AACS to continue our efforts to challenge gainful employment in court as well to advocate for ED to rescind the Biden-era gainful employment regulations to avoid duplicative and contradictory accountability systems.

What Didn’t Make It

Several concerning provisions from the House version were removed or revised in the Senate.

• No caps on borrowing based on median program cost.
• No institutional risk-sharing framework, which could have imposed significant financial penalties on schools.
• No major restrictions on Pell Grant eligibility for non-traditional students.

AACS Government Relations has been actively engaged with lawmakers and coalition partners throughout this process. While we did not get everything that we wanted in the legislation, this is an important legislative milestone for our community. Many of these successes are thanks to our members and your tireless outreach to our elected officials.

In the coming weeks and months, AACS will coordinate with member schools to assess operational impacts and will work closely with the Trump Administration on implementation.

This legislation represents the most significant overhaul of federal education policy in nearly two decades. AACS will continue to advocate for fair, equitable treatment of career education and ensure our members are prepared for the road ahead.

Early this morning, the U.S. Senate released a new version of its budget reconciliation bill, the “One Big Beautiful Bill Act.” Changes were made based upon the actions of the Senate parliamentarian, who struck from the overall bill many provisions that ran afoul of the rules enabling the Senate to consider the bill by a simple majority vote, rather than the normal 60-vote threshold. We comment below on some of the top-line changes that were made to the higher education provisions of the bill. You can see the entire bill here, and a summary of the higher education provisions in the HELP committee section-by-section here. The higher education provisions of the bill begin on page 755.

Key Higher Education Changes

1. The expansion of the Pell Grant to short-term programs remains in the bill. Some media outlets have reported that for-profit schools are ineligible under this new version of the bill, but we believe this reporting is incorrect. CECU has forcefully advocated for the inclusion of our schools, and in reviewing the language and talking with policymakers on Capitol Hill this morning, we have confirmed that for-profit schools are eligible for this new Workforce Pell Grant. However, the new version made it even more clear that unaccredited programs will be ineligible. CECU opposed the inclusion of the unaccredited programs, so this change is consistent with our lobbying efforts as well.
2. Accountability for all schools: The new version of the bill contains a revised but extensively similar version of the accountability standards that were the centerpiece of the first Senate bill. Those standards include the high school earnings premium that was modeled in part from the Biden gainful employment (GE) regulation. Unlike the Biden and Obama-era GE rules, the accountability standards in this bill will apply to all types of schools, regardless of ownership status. It also applies to graduate-level programs. The most significant change is the bill now applies only to students who have completed the program, rather than all students who had enrolled as under the first version. Importantly, the bill will not apply to undergraduate certificate programs; however, undergraduate certificate programs will still be accountable under the Biden GE regulations unless those regulations are overturned in court or rewritten by the Department of Education. As with the original bill, graduate-level programs will be evaluated against the earnings of those with only bachelor’s degrees. The new bill measures all levels of programs by the earnings of their graduates 4 years after program completion, in contrast to the original bill which had different timeframes for measuring earnings from graduate-level programs.
3. Loan Limits and PLUS Loans: The new bill is extensively the same as the original Senate bill on the establishment of loan limits for graduate and professional programs, as well as the termination of Grad PLUS loans. Because these provisions are largely in synch with the House reconciliation bill’s language, it will be very difficult to change these provisions as the bill advances through the legislative process.
4. Rather than fully repeal the Biden regulations on Borrower Defense to Repayment (BDR) and Closed School Discharge, the bill delays the implementation of those regulations by 10-years. We view this as a less-than optimal outcome, as the BDR litigation brought by Career Colleges and Schools of Texas has been approved for a hearing at the U.S. Supreme Court in the next term. Delaying the effective date of the BDR regulation could moot the court case, thereby passing the regulatory scheme to a future presidential administration. We feel very positive about the arguments made in the litigation and the possibility of a favorable decision by the Supreme Court, so we would prefer to allow the case to proceed. Either way, CECU will continue to work with the Department of Education on a more reasonable BDR standard, assuming the Supreme Court does not nullify ED’s BDR authority entirely.

CECU will provide a comprehensive “Deep Dive” analysis of this new Senate bill early next week. We offer these top-line points in answer to some of the questions you may have about changes to the bill and to correct some inaccurate reporting that has been done this morning on the short-term Pell provision. As always, please contact any of our policy team members if you have any questions or would like to discuss this further.

ED’S EFFORTS TO REDUCE TITLE IV IDENTITY FRAUD

What You Need to Know 

On June 6, ED issued new guidance warning that identity fraud has reached a level that threatens the integrity of federal student aid programs. The announcement outlines a nationwide effort to combat fraud, with a new identity verification process for FAFSA applicants set to launch in Fall 2025.

Why This Is Important 

In the meantime, ED will increase the number of applicants selected for verification, focusing on those expected to receive Title IV aid for the first time this summer. The guidance also updates acceptable documentation standards for identity verification. Notably, schools may now verify a student’s identity via video call if in-person verification is not possible.

LAST CHANCE TO PROVIDE BDR APPLICATION FEEDBACK

What You Need to Know 

On May 19, ED opened a public comment period on proposed updates to the Borrower Defense to Repayment (BDR) application. The changes reflect alignment with the 1995, 2016, and 2020 BDR rules, following the April 4 injunction that blocked the 2023 version.

Why This Is Important 

This is an opportunity for stakeholders to weigh in on how the BDR application should function moving forward. Comments must be submitted electronically through the Federal eRulemaking Portal. The deadline to submit feedback is today, June 18. 

GOVERNMENT RELATIONS HIGHLIGHTS

Senate On Deck: Upper chamber eyes edits to House reconciliation bill
McMahon Returns: Education Secretary back on the Hill to defend Trump budget
Kent Advances: Under Secretary nominee clears HELP, awaits full vote

SENATE BEGINS ITS WORK ON RECONCILIATION

What You Need to Know

Congress is back in Washington following the Memorial Day recess. House Republicans are energized after narrowly passing President Trump’s One Big Beautiful Bill Act (OBBBA), but now the spotlight shifts to the Senate. Competing coalitions and complex parliamentary rules could make passage in the Senate challenging.

Why This Is Important

Senate Majority Leader Thune (R-SD) aims to send the bill to the President by July 4. However, he faces pressure from two sides: fiscal conservatives pushing for deep deficit reductions and populists concerned about cuts to social welfare programs. Additionally, the Senate Parliamentarian may strike certain provisions under reconciliation rules. If the Senate passes a revised version, it must return to the House, where Speaker Johnson (R-LA) could face renewed challenges from his slim majority. While there’s little public information about potential changes to the education provisions by the Senate HELP Committee, a draft may be released in the coming weeks.

MCMAHON BACK BEFORE CONGRESS TO DEFEND BUDGET

What You Need to Know

On Friday, President Trump released his FY2026 budget proposal, which includes a 15% cut to ED. The proposal slashes the maximum Pell Grant and eliminates several campus-based and first-generation college programs. These cuts would come on top of those already proposed in the OBBBA. While the President’s budget is largely symbolic, it may influence Republican priorities during the appropriations process.

Why This Is Important

Following two recent hearings, Education Secretary McMahon returned to Capitol Hill on Tuesday to defend the budget before the Senate LHHS Appropriations Subcommittee. She faced bipartisan criticism, particularly over the proposed elimination of first-generation college programs. McMahon is scheduled to testify today before the House Education and Workforce Committee.

UNDER SECRETARY CLEARS HELP COMMITTEE, CONFIRMATION UNCLEAR

What You Need to Know

Before Memorial Day, the Senate HELP Committee held a vote on the nomination of Nicholas Kent to serve as Under Secretary. His nomination was approved on a party-line vote.

Why This Is Important

It is unclear when Kent may be brought to the full Senate for confirmation, but it could be as soon as this month. There is a backlog of nominees waiting to be confirmed, and Democrats can and have used procedural maneuvers to slow down confirmations. In the meantime, James Bergeron will continue to serve as Acting Under Secretary.

Department of Justice Files Motion to Resume Briefing on the Merits in Department of Education v. Career Colleges and Schools of Texas

Yesterday, the DOJ’s Solicitor General’s Office filed a motion to resume briefing in Department of Education v. Career Colleges and Schools of Texas (CCST), signaling that new Education Department leadership will defend its authority on borrower defense to repayment (BDR). As a result, the case will likely remain before the Supreme Court and be heard in fall 2025.

The motion reaffirms the Department’s stance from its petition that the Higher Education Act allows borrower defenses to be assessed before default, through administrative proceedings, and on a group basis. It also states that if the Supreme Court overturns the Fifth Circuit’s ruling, the Department would issue a new borrower defense rule. While the language may suggest a policy shift, it’s more accurately seen as the Department defending its authority to regulate borrower defense—not as an endorsement of the Biden administration’s broader BDR policy.

The BDR program aimed to let students seek loan relief if their school misled them or broke certain state laws. The new rule streamlined the application process and allowed automatic loan discharges in some cases.

Finalized in October 2022, BDR had been on hold since summer 2023, when the Fifth Circuit paused it and later issued a preliminary injunction, citing “numerous statutory and regulatory shortcomings” in the policy.

For more information:

DOJ Motion of the Petitioners to Resume Merits Briefing

What Just Happened with the Big Beautiful Bill? Think of It Like Your Family Budget 

Let’s simplify the very complicated world of political news recently:

The House Reconciliation Bill 

You can think of Congress as a family trying to agree on a huge family budget.

The House (one member of our “family”) barely agreed to spend WAY more money than they have; this is like a family deciding to put $3.3 trillion on the credit card, over the next 10 years.

It was an extremely close vote (R’s 215 – D’s214), and even families on the same “team” voted against it.

House Reconciliation completely strikes the word Gainful Employment from HEA, thus negating the rule.

BDR – Strikes Biden Admin Rulemaking and prevents further rulemaking without Congressional Approval.

90/10 is eliminated from under Program Participation Agreements in HEA and accompanying calculations.

Education Cuts; What This Means for Our Schools

Now here is where it becomes personal for us. The House agreed on $330 billion in cuts over 10 years in education spending.

Think of this like your local school district learning they now have to cut a third of their budget–that’s the scale, but now we are talking about all local districts across the country.

Our schools could have to deal with:

• Cuts to programs
• Fewer resources for students
• Potential changes to how financial aid works

Senate vs. House – Like Two Parents Disagreeing

This is where it gets interesting. The Senate (the other “parent” in this example) wants to spend even more money – $5.8 trillion total. But the Senate only wants to cut $1 billion in education spending, which is different from the $349 billion that the House wants to cut.

It’s like one parent saying, “Let’s cut the kids’ allowance by $300”, while the other parent says, “No, let’s cut the kids’allowance by $1”. They will eventually have to negotiate and find something in the middle.

The “Byrd Rule” – Think of it as the Family’s Spending Rules 

There’s something called the Byrd Rule that serves as rigid family spending rules.

A Senate official (think of a family financial advisor) will check every item and tell you, “This is a budget expense” or “This is a policy change that is not a budget expense, and therefore not allowed.”

Many of the cuts in education will probably get thrown out because many of them are not real expenditures. They are just policy changes about how schools operate.

Please remember – this will be a marathon, not a sprint.

The Senate is going to make significant changes and we will continue to monitor and advocate for our schools and students during this process.

Dear AACS Members,

I’m writing to provide you with key updates regarding our ongoing gainful employment lawsuit and the recent filing by the US Department of Education.

As your Chair of the Government Relations committee, I want to ensure you have clear information about where things stand and our path forward.

Key Highlights

Current Status of the Lawsuit

• The Department of Education recently filed its reply brief in our case
• Our legal team continues to believe we have strong arguments, particularly regarding the Department’s limited statutory authority
• We are proceeding with the case as planned

Timeline and Next Steps

• We anticipate oral arguments to be scheduled for late summer
• The judge in our case (Northern District of Texas) appears to have availability to hear our case
• Our legal team will be reaching out to government counsel to coordinate a date for oral arguments

Legal Strategy

• We are continuing to push forward with our challenge to the rule
• Our case is benefiting from support by several state attorneys general
• The judge is a conservative appointee who may be receptive to arguments about federal overreach

Department of Education’s Position

• The Department appears to be standing firm on its position
• They are emphasizing “transparency” and “accountability” metrics
• Our legal team believes their responses to some of our arguments are weak

What This Means for Members

• Hold tight – we see potential light at the end of the tunnel
• Continue your operations while we pursue this legal challenge
• The association remains committed to protecting member interests

Financial Considerations

• The association is preparing financially for upcoming legal proceedings
• We understand the regulatory uncertainty creates business challenges

Bottom Line

While headlines about the Department’s filing may cause concern, our legal team remains confident in our position. We believe the judge will give our arguments fair consideration, and we’re proceeding with the case as planned.

AACS will continue providing real-time updates as developments occur.

Please contact AACS at membership@myaacs.org if you have specific questions or concerns.

Respectfully,

Dana Persico, Chair

Government Relations Committee

American Association of Career Schools

Today, the Senate HELP Committee met to consider several nominations submitted by President Trump, including the nomination of Nicholas Kent to serve as Under Secretary of Education. The Committee proceeded directly to votes on the nominees, and Kent’s nomination, along with several others, was passed on to the full Senate on a party-line vote of 12-11.

Kent has extensive experience and expertise in higher education policy including with our sector. He served most recently as Deputy Secretary of Education for the Commonwealth of Virginia, where he developed and implemented Governor Youngkin’s postsecondary education strategy. Before joining the Youngkin administration, Kent was Chief Policy Officer at CECU, providing statutory, regulatory, and policy guidance on matters relating to higher education. Prior to that, Kent worked for an institutional accrediting agency for many years.

CECU applauds the Senate HELP Committee for advancing President Trump’s excellent nominees and looks forward to successful final approval by the full Senate.

Dear AACS Members,

We want to provide you with a brief update on the status of our legal challenge to the U.S. Department of Education’s Gainful Employment (GE) and Financial Value Transparency (FVT) regulations.

As scheduled, on Friday, May 16, the Department filed its final brief in response to the briefs filed by AACS and Ogle in December. Since the case had been stayed by the court at the government’s request for 90 days so that the incoming administration could evaluate its position on the regulations at issue. It appears that the new administration has decided to defend the regulations.

In its filing, the Department argues that it has the legal authority to ensure that career training programs—like those in cosmetology—prepare students for financially beneficial employment. The Department claims that “gainful employment” means more than just having a job; it must reflect a return on the federal investment in student aid. It also maintains that using reported earnings data (such as IRS records) is the most reliable way to assess program outcomes and that the rules include safeguards to ensure fairness.

The Department argued the rules do not violate the First Amendment or unfairly target cosmetology programs. It also asked the court to preserve the transparency framework even if any part of the accountability rules is struck down.

The parties have requested oral argument before the judge. We do not have a date yet for those arguments, but expect they will be scheduled sometime this summer. A decision from the court will follow the arguments. We will continue to keep you informed as the case progresses.

To read the government’s brief on AACS v. United States Department of Education, please click here.

2025 AACS Congressional Summit & Hill DayTwo Days of Advocacy, 100 Congressional Meetings, and One United Voice for Career Education 

Last week in Washington, D.C., the American Association of Career Schools (AACS) brought together a dynamic group of beauty, barber, and wellness education leaders for its 2025 Congressional Summit & Hill Day. From coast to coast, AACS member schools and vendor partners made their way to the nation’s capital, united by a mission: to ensure that the voice of beauty, barber, and wellness education is heard loud and clear in federal policymaking.

Over the course of two action-packed days, more than 85 AACS school members and Partners came together to advocate for the future of career education. With around 100 meetings on Capitol Hill, attendees connected directly with Members of Congress to shine a spotlight on the critical role our schools and sector play in workforce development, economic mobility, and small business success.

This year’s Hill Day put a spotlight on several key legislative priorities, including:

• Access to financial aid programs through the Partial HEA Reauthorization
• Support of the No Tax on Tips initiative
• The ongoing challenge of tariffs on beauty supplies impacting member schools and small businesses
• Support for the Clock Hour Program Student Protection Act

To prepare, attendees participated in advocacy training sessions and heard from an impressive lineup of more than 20 expert speakers—including Acting Under Secretary for the U.S. Department of Education James Bergeron and keynote speaker Senator Bill Cassidy (R-LA), among other education, lobbying, and policy specialists.

AACS’s 2025 Congressional Summit & Hill Day wasn’t just about meetings, it was about momentum. And as this energized community heads back to their campuses and businesses, one thing is clear: the beauty, barber, and wellness education sector is stronger—and more united—than ever.

For more information about the AACS Congressional Summit & Hill Day, visit myaacs.org/hill-day.

GOVERNMENT RELATIONS HIGHLIGHTS

EdW Reconciliation Markup: $351 billion in higher education proposed
Collections Resume: Punitive measures for nonpayment begin
Accreditation EO: White House lays out accreditation plans
Skilled Trade EO: Federal agencies directed to coordinate on skilled trades
Student Visa Confusion: Student visas have been restored

HEA PROGRAM CHANGES ADVANCES IN HOUSE

What You Need to Know

Last week, the House EdWorkforce Committee approved their part of the budget reconciliation bill, which they have named Student Success and Taxpayer Savings Plan (SSTSP). This legislation includes several positive reforms, such as eliminating gainful employment and significantly reducing the regulatory authority of the Education Secretary. But the SSTSP also includes some concerning elements, such as risk-sharing and caps on program and aggregate borrowing. EdWorkforce Chair Walberg (R-MI) exceeded the Committee’s $330 billion savings target, with $351 billion in savings generated by the legislation.

Why This Is Important

The SSTSP is the beginning of what will be a lengthy process. The House still needs to compile all the various committees’ bills into one package and pass a full budget reconciliation bill on the House floor, which may prove challenging due to the narrow Republican majority. Meanwhile, the Senate HELP Committee is working on their component of the reconciliation bill, which is expected to be less aggressive than SSTSP. The AACS Hill Day was ideally timed to engage on the issues of greatest concern to our community, and we will advocate for our community throughout the budget reconciliation process.

COLLECTIONS RESUME FOR DEFAULTED LOANS

What You Need to Know

On May 5, ED resumed collections on defaulted student loans, which had been paused for many years during the pandemic. The same day, the Department published an Electronic Announcement, which emphasized that “institutions play a key role in the Department’s ongoing efforts to improve loan repayment outcomes.” ED is urging institutions to conduct outreach to borrowers no later than June 30. In the same announcement, ED stated it would begin publishing loan non-payment rates by institution later this month.

Why This Is Important

Under the HEA, institutions are required to keep their cohort default rates low and will lose eligibility for federal student assistance programs if their CDR exceeds 40% for a single year or 30% for three consecutive years. CDRs published in 2026 will include borrowers who entered repayment in 2023 and defaulted in 2023, 2024, or 2025. Borrowers whose delinquency or default status was reset in September 2024 could be delinquent beginning in June, leading to default this summer.

EXECUTIVE ORDER & DCL ON ACCREDITATION

What You Need to Know

On April 23, President Trump signed an Executive Order directing the Education Secretary to take specific steps to reform accreditation. These steps include recognizing new accreditors, simplifying the process to change institutional accreditors, and investigating certain accreditors for “discriminatory practices,” such as promulgating DEI-based standards. The President also directed the Secretary to mandate that accreditors require institutions to focus on program-level student outcomes, to improve the process for review and recognition of accreditors, and to hold accreditors accountable for failing to comply with recognition requirements. The Executive Order expresses concern over graduation rates and programs with “a negative [financial] return on investment” and signals the Trump Administration’s continued focus on student outcomes.

Why This Is Important

On May 1, the Department published a Dear Colleague Letter (DCL) outlining a substantially simplified process for a school seeking to change its institutional accreditation agency. The updated procedure requires a school to submit a two-page form, certifying the school’s reasonable cause for changing accreditors. If ED does not make a reasonable cause determination within 30 days of submission, the request to change accreditors will be deemed approved by default. For AACS members seeking to change accreditors, the DCL reduces the timeframe to obtain the Department’s approval to begin the process from more than a year, in some cases, to as little as a month.

SKILLED TRADE JOBS EXECUTIVE ORDER

What You Need to Know

On April 23, President Trump signed an Executive Order aimed at “Preparing Americans for High-Paying Skilled Trade Jobs of the Future.” Specifically, the EO directs the Secretaries of Education, Labor, and Commerce to prepare a report on workforce development programs, proposing ways to consolidate and restructure programs; recommending process improvements; and identifying alternative credentials to 4-year degrees to meet workforce demands. The EO also directs the Secretaries to draft a plan to surpass one million new active apprenticeships, including expanding into new industries, especially high-growth and emerging sectors.

Why This Is Important

The EO requires the Secretaries’ plan to consider federal financial aid programs and the opportunities those programs may present for connections between education and apprenticeships. AACS will keep our members informed regarding potential implications for our industry.

CONFUSION OVER STUDENT VISAS

What You Need to Know

On April 25, the US Department of Justice restored the student visa registrations of thousands of international students studying in the US. Over the last month, the Trump Administration revoked international student visas on a large scale, with some reports suggesting that more than 1,500 student visas across at least 280 institutions of higher education had been revoked. The following week, court filings revealed the Trump Administration’s plans to expand the power of federal officials to terminate students’ legal status, arguing that immigration officials have “inherent authority” to do so “as needed.” The plan suggests terminations will move forward based on “evidence of failure to comply” with nonimmigrant visa terms and visa revocation, which the US Department of State can issue without evidence of violation and is typically not subject to court challenge.

Why This Is Important

The vast majority of schools impacted by the revocations were public and private non-profit institutions. It remains to be seen whether the new legal immigrant status termination initiative will continue to focus on these types of institutions or whether the impact will be more broadly felt by all institutions.

Yesterday, the U.S. Department of Education (ED) issued a “Dear Colleague Letter“, reminding all institutions of higher ed about their shared responsibility to support student loan borrowers under Title IV of the Higher Education Act (HEA). According to the letter, only 38% of Direct Loan and Department-held Federal Family Education Loan Program borrowers are in repayment and current on their student loans, and almost 25% of the entire portfolio is either in default or a late stage of delinquency.

The ED stresses that “while borrowers have the primary responsibility for repayment”, institutions play a key role in the Department’s ongoing efforts to improve the loan repayment process and outcomes.

In the letter, the Secretary of Education, Linda McMahon, urges all institutions of higher education that receive federal funding assistance to reach out to all former students to remind them of their obligation to repay any federal student loan that is not in deferment or forbearance, and that they do so before June 30, 2025. ED urges all institutions to begin proactive outreach to former students who are delinquent or in default on their loans to ensure that the schools will not face high cohort default rates (CDRs) next year and lose access to federal student aid.

The release of this Dear Colleauge Letter coincided with the ED’s reimplimentation of the Treasury Offset Program on May 5, with ED now resuming collections on its defaulted federal student loan portfolio.

AACS will continue to keep members updated on this matter.

For more information:

Dear Colleague Letter

Federal Student Aid Website

In a letter to Senator Susan Collins, Chair of the Committee on Appropriations, OMB Director Russell Vought released President Trump’s recommendations for discretionary funding levels for the FY 2026. The President is requesting a $139.9 billion (-7.6%) reduction in overall discretionary spending. The total discretionary budget (including reconciliation resources) of $1.83 trillion in FY 2025 would be reduced to $1.69 trillion for FY 2026.

In terms of overall education funding, the President’s request would cut the Department of Education’s discretionary budget from $78.7 billion in FY 2025 down to $66.7 billion in FY 2026—an overall reduction of $12 billion (-15.3%). On a line-item basis, the education programs and initiatives highlighted below would be the most impacted by the President’s discretionary budget request:

• Charter School Programs: +$60 million increase, up to $500 million in total funding.
• TRIO and Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) Programs: -$1.58 billion reduction. The TRIO and GEAR UP programs would see a drastic cut in funding. To the extent that institutions of higher education (IHEs) materially rely on TRIO and GEAR UP funding as a source of revenue, this reduction would have a significant impact on those IHEs. The administration cites the lack of applicability and outdatedness of the programs as the impetus for the reduction.
• Federal Work Study (FWS): -$980 million reduction. The President’s budget request intends to return FWS back to the States consistent with the administration’s position that education funding should be controlled by local government. Many IHEs rely on FWS funds and would be negatively impacted by this reduction.
• Supplemental Educational Opportunity Grants (SEOG): -$910 million reduction. The administration contends that the SEOG program is ineffective, poorly targeted, duplicative of the Pell Grant program, and inconsistent with the administration’s priorities. IHEs that heavily depend on SEOG funds as a source of revenue would be materially impacted.
• ED Program Administration: -$127 million reduction. As part of its efforts to wind down the Department of Education, the administration has reduced the Department’s operating budget from $420 million in FY 2025 down to $293 million in FY 2026 representing a -30% reduction in funding. The budget request reflects the reduction in force (RIF) that has occurred over the last few months but acknowledges the need for continued funding to support its statutory obligations.
• Office for Civil Rights (OCR): -$49 million reduction. Funding for the Office of Civil Rights at the Department of Education would be cut by 35%, down to $91 million for FY 2026. The administration has been clear that it intends to reduce the federal government’s focus on DEI and Title IX initiatives.

The full text of the Fiscal Year 2026 Discretionary Budget Request, the accompanying Overview and all related Fact Sheets can be found here.

Pursuant to the Executive Order on accreditation signed last week, the Department today published a Dear Colleague Letter (DCL) providing new guidance on changing or adding institutional accreditors. Specifically, the DCL implements the instruction in the EO to “streamline the process for higher education institutions to change accreditors” by simplifying the requirements that institutions must meet to receive Departmental approval for such a change to the minimum required under the law.

The DCL references the regulatory changes enacted during the first Trump administration which clarified that all institutional accreditors could accredit institutions from anywhere in the United States, removing the traditional zones of exclusivity enjoyed by “regional” accreditors as well as the traditional distinction between “regional” and “national” accreditors. The DCL also walks back the prior administration’s guidance documents on changing accreditors and reaffirms the new administration’s policy of supporting institutions in changing accreditors in order to promote competition and innovation in accreditation.

Yesterday, the Education and Workforce Committee passed the Student Success and Taxpayer Savings Plan, one part of a larger bill to provide tax relief for American families and small businesses.

The legislation will now head to the Budget Committee before it is considered on the House Floor.

This bill would “not only would save taxpayers over $350 billion but also bring much-needed reform in three key areas: simplified loan repayment, streamlined student loan options, and accountability for students and taxpayers,” said Education and Workforce Committee Chairman, Tim Walberg (R-MI).

A portion of the bill also includes regulatory relief and would permanently repeal the Gainful Employment rule which unfairly targeted one sector of higher education.

AACS will continue to keep members updated on this matter.

For more information:

Fact Sheet

Full Text

Section-by-Section Summary

Congressional Budget Office’s Preliminary Cost Estimate

Today, the Trump administration released fact sheets on Executive Orders regarding accreditation, Historically Black Colleges and Universities, foreign influence in American universities, and workforce training.

The fact sheet on accreditation outlines efforts to reform the higher education accreditation system by increasing accountability for accreditors, particularly regarding poor performance and unlawful discrimination. It emphasizes a shift toward student-centered outcomes, including the removal of race- or sex-based criteria, the promotion of intellectual diversity, and the simplification of accreditor recognition processes to encourage innovation and competition. Read the Executive Order here.

In a press release, U.S. Department of Education Secretary Linda McMahon stated:

“The existing accreditation monopoly raises costs, contributes to the ever-increasing tuition and fees faced by American families, favors legacy four-year institutions, blocks new accreditors from the market, interferes with states’ governing board decisions, and pushes universities in ideological directions when they should be focused on core subjects.”

The fact sheet on workforce training outlines a plan to modernize federal programs by aligning and streamlining efforts to meet the needs of emerging industries and incentivize domestic manufacturing. It emphasizes expanding apprenticeships and skilled trade opportunities, shifting the focus from traditional college pathways to career-ready training with measurable economic outcomes. Read the Executive Order here.

CECU is reviewing the information and will provide additional analysis to members shortly.

Today, the Department of Education announced that its Office of Federal Student Aid (FSA) would resume collections of defaulted federal student loans beginning on Monday, May 5. According to today’s press release, the initiative “will be paired with a comprehensive communications and outreach campaign to ensure borrowers understand how to return to repayment or get out of default.” The Department has not collected on defaulted loans since March 2020.

Over the next two weeks, all borrowers in default will receive email communications from FSA making them aware of suggested next steps and resources for repayment. AACS will continue to update our members with any new information and developments regarding federal student loan repayments.

For more information: Department of Education Press Release

GOVERNMENT RELATIONS HIGHLIGHTS

• Budget Hurdles: The House is attempting to move to the next step on reconciliation
• Comment on Accreditors: NACIQI calls for comments on the upcoming renewal of accreditors
• Title IX Task Force: The Trump Administration continues its push against transgender athletes
• Deeper Dive: New Neg Reg: With the first neg reg of Trump 2.0 pending, what does this mean, and should you participate?

BUDGET BATTLE: HOUSE ATTEMPTS TO CLEAR NEXT HURTLE

What You Need to Know 

Last week, Republican leaders in the House and Senate reached an agreement on a compromise budget resolution. The new resolution strives for middle ground by keeping the significant cuts proposed by the House largely intact while also giving the Senate maximum flexibility on how much spending they would need to trim. The Senate passed the resolution last Friday and sent it back to the House.

Why This Is Important 

Just a few weeks ago, Speaker Johnson (R-LA) was barely able to pass the prior version of this budget resolution. Johnson currently faces opposition to this agreement from his right flank. Republicans must pass the same budget resolution through both chambers to begin the budget reconciliation process, which they plan to use to advance the Trump legislative agenda. Budget reconciliation could make many changes to federal financial aid programs. AACS is keeping a close eye on how the entire process unfolds.

PUBLIC COMMENTS INVITED FOR ACCREDITING AGENCY RECOGNITION

What You Need to Know

Last week, ED called for public comment on 10 accrediting agencies that will appear before its National Advisory Committee on Institutional Quality and Integrity (NACIQI). These accreditors are seeking renewal of their recognition by the Department at the NACIQI meeting this summer. Comments are due by May 8. Agencies seeking renewal of recognition include the Accrediting Bureau of Health Education Schools (ABHES), the Council on Occupational Education (COE), and the Southern Association of Colleges and Schools Commission on Colleges (SACSCOC).

Why This Is Important 

Accrediting agencies must be recognized by ED to serve as Title IV gatekeepers, and they must seek periodic renewal of their recognition. NACIQI provides a recommendation on recognition after conducting a review of the accreditor, which includes third-party comments. The extended time between the submission of comments and the appearance before NACIQI is mandated in regulation to ensure ample opportunity for the accreditors to receive and respond to comments for NACIQI’s consideration.

TITLE IX TASK FORCE LAUNCHED

What You Need to Know

The Trump Administration announced last week that ED and the US Department of Justice would establish a new Title IX Special Investigations Team (SIT) that “will streamline Title IX investigations by creating a specialized team of investigators” from both agencies. The stated goal of the SIT is to provide “timely, consistent resolutions to protect students, and especially female athletes, from the pernicious effects of gender ideology in school programs and activities.”

Why This Is Important 

The joint SIT is the latest effort by the Trump Administration to address gender issues in higher education. Secretary McMahon already has announced the first SIT investigation into the California Department of Education “for their alleged failure to protect women’s sports.”

DEEPER DIVE: STUDENT LOAN NEGOTIATED RULEMAKING

What You Need to Know 

On April 4, ED announced a new negotiated rulemaking to review some of the federal student loan repayment programs, including Public Service Loan Forgiveness, Pay as You Earn, and Income-Contingent Repayment. The announcement also indicated that the Department would consider “other topics that would streamline current federal student financial assistance programs.” To kick off the process, the Department will hold listening sessions on April 29 (in-person) and May 1 (virtual). Written comments can be submitted to ED through May 5.

Why This Is Important 

Negotiated rulemaking – colloquially known as “neg reg” – is the complicated regulatory process that ED must utilize when it intends to make changes to Title IV regulations. When coupled with the master calendar, which is a statutorily mandated timeline for new Title IV regulations, the entire rulemaking process takes years. The earliest possible date new regulations could take effect is July 1, 2026, though July 1, 2027 seems more likely. AACS remains engaged with senior officials at ED, and we encourage our community to participate in this process to share feedback on loan repayment programs and to provide suggestions to the Department on how to streamline financial aid programs.

For More Information

If you have any questions about this Update, please email info@myaacs.org.

GOVERNMENT RELATIONS HIGHLIGHTS

• Schumer for the Assist: Senate Democrats helped prevent a government shutdown
• Reconciliation Baby Steps: Republicans do not yet have a framework for this year’s most important bill
• RIF-ED: The massive reduction-in-force will permanently reshape ED
• ED Stakeholder Letter: Bergeron asks for education stakeholder feedback
• Student Loan Hot Potato: The $1.7 trillion Direct Loan program remains at ED, for now
• Deeper Dive: Executive Order on Eliminating ED: Will the agency go away, and what does it mean for you?

GOVERNMENT SHUTDOWN AVERTED

What You Need to Know

After days of bitter intra-caucus feuding, Senate Minority Leader Schumer (D-NY) announced on March 13 that he would vote for the House Republicans’ continuing resolution. Schumer and a handful of other Senate Democrats played a critical role in averting a shutdown, though Democrats got none of their priorities in the bill. Schumer has been subsequently pummeled by unhappy Democrats across the political spectrum.

Why This Is Important

This funding patch maintains FY2024 funding levels until September 30. Congress has thus shirked their Article I power by skipping FY2025 appropriations altogether. The FY2026 appropriations process has already begun, with hearings and markups anticipated to begin by late spring. The government relations team will closely monitor any developments that may impact our sector.

CONGRESS INCHES FORWARD ON RECONCILIATION

What You Need to Know

House and Senate Republicans are meeting this week to discuss their competing budget resolutions. Significant differences persist between the House and Senate budget blueprints. Senate Republicans are concerned about the extensive cuts proposed by the House, particularly those affecting Medicaid. Speaker Johnson has urged the Senate to accept the House budget resolution as-is.

Why This is Important

The House budget proposes monumental cuts to education programs, totaling $330 billion. For the reconciliation process to move forward, both chambers must pass identical budget resolutions. Congressional Republicans hope to have a final framework soon so they can get to writing what is expected to be the most significant piece of legislation this year.

ED REDUCTION IN FORCE

What You Need to Know

On March 11, the Trump Administration announced a substantial reduction in force (“RIF”). Of the impacted positions, FSA and the Office for Civil Rights appeared to be hardest hit, followed by the Institute of Educational Sciences. According to self-reported figures, ED’s workforce has been reduced from approximately 4,130 to 2,180 since Inauguration Day. All FSA case teams appear to have been eliminated, except for Chicago and Philadelphia.

Why This is Important

Among the recent developments at ED, the RIF is likely to have the most significant practical impact on schools in the near-term. Cuts to FSA case teams may delay many institution-facing functions. These could include items like issuing policy guidance; technical assistance with the ED’s online platforms, like the E-App; certification and recertification; review of annual audit submissions; program reviews; and processing changes in ownership and control.

On March 14, ED issued guidance revealing that FSA will now respond centrally to all questions related to school eligibility and the E-App. Moving forward, institutions have been instructed to email CaseTeams@ed.gov with all such inquiries.

ED LETTER TO STAKEHOLDERS

What You Need to Know

On March 14, Acting Under Secretary Bergeron published a letter addressed to education stakeholders. The letter focused on ED’s goal of “removing bureaucratic excesses from the Department.” The letter states that “no employees working on core functions of the Free Application for Federal Student Aid (FAFSA) or student loan servicing were impacted by the RIF” and asks stakeholders to provide feedback, if they experience “any immediate operational impact concerns.”

Why This is Important

The Trump Administration’s gutting and reshaping of ED will have far-reaching impacts, which will include revising or eliminating regulations and reducing compliance requirements for institutions. If you have operational questions for ED, get ready! Acting Under Secretary Bergeron will be joining AACS at Congressional Summit & Hill Day.

DIRECT LOANS REMAINING AT ED

What You Need to Know

On March 21, President Trump announced that the Small Business Administration (SBA) “will handle all of the student loan portfolio.” On the same day, White House Press Secretary Levitt stated that the Direct Loan program will remain at ED. Before and since the President’s announcement, the US Department of the Treasury, among other agencies, has been floated as a potential home for the program.

Why This is Important

Congress delegated authority on federal student loans to ED, moving the Direct Loan program to another agency would require congressional action. On the same day President Trump revealed that SBA would be handling the student loan portfolio, SBA announced that it would be reducing its personnel by 43%.

DEEPER DIVE: EXECUTIVE ORDER ON ELIMINATING ED

What You Need to Know

AACS reported on March 20 that President Trump finally signed an executive order directing Education Secretary McMahon to wind down operations at ED “to the maximum extent appropriate and permitted under law.” The executive order instructs Secretary McMahon to ensure that ED continues to deliver its congressionally authorized services, programs, and benefits. The executive order does not specifically ask Congress to take the necessary legislative steps to eliminate ED and redistribute its programs to other agencies.

Why This is Important

The White House has repeatedly conceded that eliminating ED will require congressional approval. The Administration has been consistent in its message on that point, including during Secretary McMahon’s confirmation hearing. Senate HELP Committee Chair Cassidy (R-LA) has publicly committed to introducing legislation to shut down ED. Passage of this legislation is unlikely in the Senate, however, due to unified Democratic opposition and consistent Republican support for many ED programs. ED will remain our sector’s primary federal regulator unless and until Congress acts. Senator Cassidy will be providing a keynote at AACS Hill Day in April.

On Friday President Trump announced at a press conference that the federal student loan portfolio, currently managed by Federal Student Aid at the Department of Education via contracts with private loan servicing entities, will be moved to the Small Business Administration instead:

“I’ve decided that the SBA, the Small Business Administration, headed by Kelly Loeffler, a terrific person, will handle all of the student loan portfolio. We have a portfolio that’s very large, lots of loans, tens of thousands of loans, pretty complicated deal. That’s coming out of the Department of Education immediately, and it’s going to be headed up by Kelly Loeffler, SBA. They’re all set for it, they’re waiting for it, it will be serviced much better than it has been in the past, it’s been a mess.”

Although some press reports presented his remarks as a contrast to White House Press Secretary Karoline Leavitt’s remarks yesterday that “when it comes to student loans and Pell Grants, those will still be run out of the Department of Education,” it appears that Trump’s comments today were focused on the servicing of student loans that occurs after students graduate rather than the processing of applications for federal student aid (including loans and Pell Grants) that initially occurs before students matriculate. When the President initially floated this idea earlier this month, he likewise focused on the servicing of the student loan portfolio specifically.

The Small Business Administration already handles the servicing of SBA loans, which also supports the interpretation of the President’s announcement as being specifically about the servicing of the student loan portfolio. CECU will continue to provide updates on the evolution of the administration’s plans to dismantle the Department as new information becomes available.

The long-awaited Executive Order on the closure of the Department of Education, signed by President Trump today, did not provide any additional details or clarity regarding the plan to close the Department or how the higher education functions of the Department would be impacted. However, in public statements made earlier today the administration reiterated that “when it comes to student loans and Pell grants, those will still be run out of the Department of Education.” It therefore appears that Title IV programs administered by Federal Student Aid will continue untouched for the time being, at least until Congressional action changes the Department’s statutory mandate.

Some of the language in the Executive Order suggests that federal student loans and Pell Grants could eventually be moved to a different Department; for example, after describing the student loan debt portfolio managed by Federal Student Aid, the Executive Order states that “the Department of Education is not a bank” and that it “must return bank functions to an entity equipped to serve America’s students.” However, it does not specify which entity might take over those functions or provide any details as to the mechanism or timeline for such a transfer of function. And while the operative language of the EO instructs the Secretary to “take all necessary steps to facilitate the closure of the Department of Education and return authority over education to the States and local communities,” it only gives that instruction “to the maximum extent appropriate and permitted by law” and it also instructs the Secretary to “ensur[e] the effective and uninterrupted delivery of services, programs, and benefits on which Americans rely.”

It therefore appears that the administration shares the commonly-held understanding that full closure of the Department would require an act of Congress, like the legislation Senator Bill Cassidy (R-LA), Chairman of the Senate HELP Committee, said he would introduce after the signing of the EO.

Acting Under Secretary James Bergeron Releases Higher Education Letter

On Friday, Acting Under Secretary James Bergeron issued a letter reassuring the education community that the recent reduction in force (RIF) does not include employees working on core functions of the Free Application for Federal Student Aid (FASFA) or student loan servicing.

The letter also recognized that certain regional offices that handled matters impacting higher education institutions (such as program reviews, ownership changes, and program participation agreements) were affected by the RIF. Bergeron assured the sector that these functions would be transferred to other offices and staff.

The Department will be providing additional information and guidance. AACS will continue to keep members updated in regard to RIF and other federal matters that may impact your schools.

ED Purge: The Trump Administration announced a massive reduction in force last night

 McMahon Confirmed: Education Secretary Linda McMahon is on the job

Loan Repayment Confusion: Student loan repayment options are growing even more muddled

DEI FAQ: ED has provided additional clarity on its recent Dear Colleague Letter

DEI Injunction: A federal judge has left a nationwide preliminary injunction in place

DEEPER DIVE: Government Shutdown: The federal government could shut down on Saturday morning. How did we get here, and what does this mean for your institution?

MASS LAYOFFS AT ED

What You Need to Know

Rumors started circulating on Tuesday afternoon that ED would be closed on Wednesday. Later in the day, Inside Higher Ed reported that ED would be laying of half of its employees on Tuesday evening.

Why This Is Important

For years, ED has increasingly struggled with capacity and resources to fulfill many of its core functions. The most glaring example was the botched rollout of the Better FAFSA during the Biden Administration. With the Trump Administration’s chainsaw approach to federal bureaucracy, most federal agencies are under tremendous strain. ED will now suffer the most serious staff cuts in its 45 year history, and it’s too early to know whether even its most basic operations will be impacted.

THE “SMACKDOWN” BEGINS

What You Need to Know

After the Senate confirmed her last Monday with a 51-46 vote, Linda McMahon was sworn in as the new Secretary of Education. When addressing ED staff, Secretary McMahon pledged to fulfill the Administration’s goal “to restore the rightful role of state oversight in education and to end the overreach from Washington.” She outlined her planned overhaul of ED, which she described as “a momentous final mission.”

Why This Is Important

The White House has still not released their executive orders on the elimination of ED. Statements coming from the Trump Administration have been consistent, however, in conceding that dismantling ED would require legislation. Despite that critical concession, the Secretary has authority to make significant changes to the way the agency operates and what it chooses to fund.

LOAN REPAYMENT CONFUSION GROWS

What You Need to Know

In February, the Trump Administration removed the online applications for all income-driven and income-contingent repayment plans, leaving the income-based repayment plan as the only such option for borrowers. ED subsequently clarified that borrowers can still apply for loan consolidation, but they must use paper applications. Last week, the White House released an executive order directing the Education Secretary to modify the Public Service Loan Forgiveness (PSLF) program.

Why This Is Important

The executive order said that the Biden Administration abused the PSLF program by forgiving loans prematurely and encouraging students to join “activist” organizations that were improperly considered to be public service entities. Trump Administration clearly intends to narrow the standards that borrowers use to qualify for PSLF. Conducting, finalizing, and implementing a new rulemaking on PSLF will take years.

ED CLARIFIES EXPECTATIONS ON DEI

What You Need to Know

In February, ED released a Dear Colleague Letter on DEI. That subregulatory guidance describes DEI as unacceptable racial discrimination that the Trump Administration intends to eliminate. ED recently issued a set of Frequently Asked Questions to clarify that Dear Colleague.

Why This Is Important

The FAQs take a somewhat moderated tone and provide important insight into the Administration’s approach to DEI compliance and enforcement. As described in the FAQs, Institutions may not treat students differently based on race. But programs and events that celebrate cultures and promote awareness do not violate the law, so long as such events are open to all students regardless of their race or background. Institutions are not required to ignore matters of race and culture in their activities. Instead, institutions may not separate or distinguish one group of students from another based on race.

DEI EXECUTIVE ORDERS REMAIN FROZEN

What You Need to Know

Last week, a federal district court denied the federal government’s request to lift a nationwide preliminary injunction that halted key aspects of President Trump’s two executive orders on DEI (linked here and here). The parties are scheduled to complete their briefings in the case in May. The Trump Administration has indicated that it may seek an interim appeal at the Fourth Circuit.

 Why This Is Important

The court’s injunction is preliminary, meaning the executive orders could come back into effect. Institutions should note that the injunction does not apply to ED’s February Dear Colleague on DEI, discussed above, which threatens federal funding for institutions that operate DEI programming or consider race in almost any institutional decision.

DEEPER DIVE: GOVERNMENT SHUTDOWN

What You Need to Know

Congress is supposed to pass twelve separate spending bills by September 30 of each year, the end of the federal fiscal year, to fund the federal government. For nearly three decades, Congress has not followed its own processes and has come to rely on short-term appropriations – called continuing resolutions (CR) – and bills that pack all federal spending into one massive package – called omnibus appropriations. Congress did not complete FY2025 appropriations by October 1, 2024, and they have kept the government operating by passing CRs in September and December. The current CR runs out this Friday at midnight.

Why This Is Important

Last night, the House narrowly passed a continuing resolution extending FY2024 funding until the start of FY2026 on October 1, 2025. By failing to pass FY2025 funding, the Republican House will keep Biden-era spending priorities largely intact. With Senator Paul (R-KY) already opposed to the measure, Senate Republicans will need to find eight Democrats to support the measure. Only one Democrat voted for the CR in the House. If a government shutdown does occur, it could have significant impacts at ED. Roughly 90% of its remaining staff could be furloughed, severely limiting its ability to manage most implementation, oversight, and enforcement actions until Congress strikes a deal to reopen government.

HEADLINES

•  Arizona House Rejects Deregulation Bill
• Utah Bill Reduces Hours and Modifies Licensure Paradigms
• Hair Braiding Deregulations Bills Advance in Hawaii, New Mexico and Wyoming

THIS WEEK IN THE STATES

The current week finds 48 state legislatures actively meeting – including Florida, which kicked-off its regular legislative session on Tuesday, and Wyoming and Utah which on Thursday (March 6) and Friday (March 7), respectively, become the second and third states to adjourn in 2025.

The following states have crossover deadlines this week or next.

March 3 – Idaho

March 4 – Montana (general bills), Utah

March 6 – Georgia, Hawaii (non-budget bills)

March 12 – Washington

March 14 – Colorado

March 16 – Arizona

This is the last day for a bill to pass out of the chamber in which it was introduced and move forward for consideration in the opposite chamber. Additionally, the following states have bill introduction deadlines this or next week – Arkansas (March 3), Florida Senate (March 4), Missouri House (March 8), and Texas (March 14).

STATE LEGISLATIVE AND REGULATORY UPDATES

Arizona

The House of Representatives voted 17 to 42 last Wednesday to reject a multi-occupation deregulation bill that would eliminate the state’s barbering and cosmetology Board. HB 2031 – the “Abolition of Functionally Unnecessary Excessive Regulators Act” – remains a viable bill on the House floor as a motion to reconsider was subsequently adopted.

Colorado

The Colorado Office of Policy, Research and Regulatory Reform (COPRRR) will be conducting a series of sunset review town halls for the Division of Professions and Occupations. As the COPRRR is currently conducting a 2025 sunset review of the “Cosmetologist Act and Barber and Cosmetology Advisory Committee,” schools and other beauty industry representatives may want to participate on March 7 (virtual),March 21 (in-person in Denver), or April 11 (virtual). Click on the applicable date for registration information. A Sunset report for cosmetology and barbering – similar to this 2014 sunset report – will be released by October 15, 2025.

Additional information about the sunset review process can be found here.

Florida

State Senator Keith Truenow (R) introduced a bill that would eliminate the Babers’ Board and the Board of Cosmetology and transfer licensure oversight to the Department of Business and Professional Regulation. SB 1452 would also require initial cosmetology licensure applicants to be fingerprinted to determine if (s)he has a criminal history record.

An identical House companion bill – HB 1461 – was subsequently filed. The bills will likely be assigned to standing committees later this week.

Idaho

A bill to deregulate makeover and glamour photography businesses is a Senate floor vote away from final passage after the Senate Commerce and Human Resources favorably reported the bill last week. H112 was unanimously passed by the House on February 21, 2025.

The House also passed H120, which would eliminate licensure for “retail thermal styling equipment dealers” by a vote of 66 to 3, and H121, which would deregulate makeup artistry, by a vote of 64 to 3. These measures will be considered by the Senate Commerce and Human Resources Committee this week.

Iowa

The House State Government Committee voted 15 to 9 to recommend passage of HF 711. As previously reported, the bill – initially introduced as HF 49 – would create an ambiguously defined barbering and cosmetology establishment training program that would allow participating salons/shops to employ unlicensed individuals to shampoo, cut hair, color, and style “under the supervision of a licensee who regularly provides the services.” It states, “a person providing services without a license must first complete two hours of education related to barbering and cosmetology laws in this state and rules and sanitation, as determined by the board by rule, before offering services permitted under the program.”

The Committee reported bill also contains language from SF 316 that would allow school instructors to perform services for compensation at a school while not instructing students. It would also allow students to take a combined esthetics and nail technology course of study, and; prohibit the Board of Barbering and Cosmetology Arts and Sciences from approving a program of study that includes a course of study with substantially lower requirements than the requirements imposed by law or the board for a similar license. Additionally, it prohibits the Board from approving “a program of study that is substantially duplicative of an approved program currently operating in this state.”

Montana

A multi-occupation apprenticeship bill was unanimously passed by the House on Saturday. HB 336 would authorize apprenticeship licensure for (i) barbering; (ii) barbering nonchemical; (iii) cosmetology; (iv) electrology; (v) esthetics; and (vi) manicuring.

Oklahoma

A bill to extend the sunset of the State Board of Cosmetology and Barbering until July 1, 2028, was unanimously passed by the House last week. HB 1030 has been transmitted to the Senate but not yet assigned to a standing committee.

Tennessee

The House of Representative unanimously passed HB 862 on Monday. As previously reported, the bill would require the Tennessee Advisory Commission on Intergovernmental Relations (TACIR), a state research agency, to conduct a comprehensive study on the economic impact of cosmetology and barbering, “including revenue generated through the services provided and the number of jobs generated by the professions.” A Senate companion – SB 939 – is in the chamber’s Commerce and Labor Committee.

Utah

A bill to rewrite the state’s cosmetology and barbering Act following a 2024 Office of Professional Licensure Act Review was introduced last Monday and favorably reported from the Senate Business and Labor Committee by a vote of 5 to 1 two days later. Key provisions of SB 330 include: reducing the course of instruction for cosmetology from 1,600 to 1,250 hours; reducing the course of instruction for hair design from 1,200 to 1,000 hours; establishing the following permits – non-chemical barbering (130 hours), chemical hair services (260 hours), haircutting (150 hours), and facial hair removal (50 hours) – which are most likely non-transferable to another state, and; revising instructor licensure requirements. As drafted, apprentices would be required to complete the same number of hours as the course of instruction as a school for each respective license or permit.

The bill’s sponsor noted at the hearing that the measure is a work in progress and that he has a spreadsheet with 22 modifications to consider. A Salt Lake Tribute articleindicated that barbers believe the bill is “de facto deregulation.” According to both a barber and a barber school owner, “aspiring barbers will choose the easier route — the 130-hour permit — over the 1,000-hour license if they can because it’s what they can afford and what they believe will get them to their goal faster.”

A floor substitute to SB 330 was adopted by voice-vote at the end of last week. It made numerous changes from the Sponsor’s list including establishing a 200-hour basic esthetics permit and a fix for CTE cosmetology programs but did not lengthen the hours necessary for a barbering permit. The bill was circled on the floor to allow industry officials to review the modifications before Senate passage this week.

Washington

The House Postsecondary Education and Workforce Committee favorably reported a bill last month that would require cosmetologists, barbers, estheticians, and hair designers to receive training on the care, styling, and treatment of textured hair. HB 1874 is currently awaiting consideration on the House floor.

HAIR BRAIDING DEREGULATION

A Wyoming hair braiding deregulation bill received final legislative approval last week with the Senate voting 29 to 2 to concur in House amendments to SF113. Once enrolled, SF113 will be transmitted to Governor Mark Gordon for signature into law.

A similar Hawaii bill – SB 1620 – was unanimously approved by the Senate yesterday.

In New Mexico, HB 281, which exempts hair braiding from licensure requirements under the Barbers and Cosmetologists Act, was favorably reported by the House Commerce and Economic Development Committee last Friday. The state’s Board of Barbers and Cosmetologists has expressed strong opposition to the measure headed to the House floor.

COMPACT UPDATES

Cosmetology

A Montana Cosmetology Licensure Compact bill was introduced last month and is in the Senate Business, Labor and Economic Affairs Committee. The fiscal note for SB 515 estimates that it will cost $13,080 of state special revenue funds for Compact related data system programing.

Massage

Virginia HB 2488 received final legislative approval last month without a dissenting vote in either chamber. Once enrolled, the Interstate Massage Compact bill will be transmitted to Governor Glenn Youngkin (R) for signature into law.

Arkansas’ House of Representatives unanimously adopted an Interstate Massage Compact bill last week. HB 1217 has been transmitted to the Senate and referred to the chamber’s State Agencies and Government Affairs Committee.

In Georgia, the House of Representatives voted 165 to 5 last month to pass a similar Interstate Massage Compact bill. HB 232 is currently in the Senate Regulated Industries and Utilities Committee.

NEW! STATE LEGISLATIVE TRACKING

Please visit AACS’ newly enhanced State Legislative Tracking page to access bill text and to see what may be pending in your state(s). Please note that this resource contains bills not listed in this report that may be of interest or concern to your school or business.

Today the Senate confirmed Linda McMahon as the Secretary of the U.S. Department of Education. Her diverse background and skill set will serve as an asset in shaping policy that balances the educational needs and career goals of students with the expectations of employers seeking workers with the skills required to be competitive in today’s global economy. As Secretary, she is likely to emphasize practical skills training, partnerships between schools and employers, and expanding access to educational pathways that prepare students for careers in high-demand fields.

Earlier in the year, CECU expressed its support for McMahon’s confirmation in a letter to Senate leadership.

We are confident that, under Secretary McMahon’s leadership, the Department will promote policies that spur innovation and growth, while alleviating the burdens of overregulation and bureaucracy. We look forward to working with her and the leadership team at the Department to accomplish these goals.

The U.S. Department of Education announced today the extension of deadlines related to the new Financial Value Transparency and Gainful Employment (FVT/GE) regulations—including the evaluation of Completers’ Lists and the reporting of debt information—to September 30, 2025.

Many institutions already submitted these items by the original deadline of January 15; however, the Department noted that because of “technical and operational complexities [that] arose” and the tight timetable many institutions were unable to fully verify the accuracy of their submissions. As a result, FSA will revert the FVT/GE completers’ lists to draft status in the NSLDS system by February 17, and institutions will then have several more months to review and correct the information or submit any information not yet submitted.

The Department also indicated that it will not produce any FVT/GE metrics before the new deadline or take any enforcement or other punitive actions against institutions in connection with this reporting requirement, and will continue “working to address outstanding issues and concerns, and to answer remaining questions from the community” during that time.

CECU will continue to work with the Department on this issue and provide additional updates on FVT/GE requirements as they become available.

Litigation and Regulatory Update 

Through a novel and desperate approach, the Biden Department of Education late last year attempted to nullify the lawsuit brought by Cortiva Institute and the Coalition for Career Schools in the Northern District of Texas (360 Degree Education v. U.S. Department of Education, No. 4:24-cv-00508). This new policy approach adopted by the Department relates to the state authorization rules as they apply to state statutes and specifically to the Texas laws governing massage therapy programs.

It is instructive in considering how future Democratic administrations may approach lawsuits challenging an expansive use of authority to regulate schools in the for-profit sector. Perhaps more immediately important, it serves as an example of how critics of for-profit schools may try to achieve policy and legal victories in the states during the Trump administration’s control of the federal regulatory apparatus.

Read the full article…

GOVERNMENT RELATIONS HIGHLIGHTS

Breaking News Nicholas Kent Tapped for ED: Late last night, news reports revealed that Nicholas Kent is expected to be nominated to be Under Secretary at ED, pending Senate confirmation.

McMahon Hearing Tomorrow: The confirmation hearing for Education Secretary-designate McMahon is set for tomorrow morning.

Bare Minimum Rule Legislation: Representative Smucker has reintroduced his legislation to preserve the 150% Rule.

Possible EOs on ED: President Trump may take steps to shrink the US Department of Education (ED).

FVT/GE Lawsuit Paused: A federal court placed our case challenging FVT/GE on hold for 90 days.

BDR on Hold Too: The US Supreme Court last week granted the Trump Administration’s request to pause its review of the BDR litigation.

Title IX Resurrection: ED issued a Dear Colleague letter announcing that it will enforce the 2020 regulations.

DEEPER DIVE: How does Budget Reconciliation work, and what could the impact be on higher education?

BREAKING NEWS: NICHOLAS KENT TAPPED FOR UNDER SECRETARY AT ED

Late last night, news reports revealed that Nicholas Kent is expected to be nominated to be Under Secretary at ED, pending Senate confirmation. In this role, Kent will oversee ED’s policies and programs related to postsecondary education, career and technical education, adult education, and federal student aid. He currently serves as the Deputy Secretary of Education for the Commonwealth of Virginia under Governor Glenn Youngkin. Prior to that, he served as Chief Policy Officer at CECU for over five years.

MCMAHON CONFIRMATION AND NEW ED APPOINTMENTS

What You Need to Know

The Senate HELP Committee will hold its confirmation hearing for Education Secretary-designate Linda McMahon on Thursday, February 13. This hearing could grow contentious in light of consistent reports that the White House is planning executive orders that could begin the process to shutter ED. As mentioned above, late last night, news reports revealed that Nicholas Kent is expected to be nominated to be Under Secretary at ED, pending Senate confirmation. In this role, Kent will oversee ED’s policies and programs related to postsecondary education, career and technical education, adult education, and federal student aid.

Why This Is Important

Those same press reports also revealed that the White House plans to nominate Kimberly Richey to run ED’s Office of Civil Rights; Kevin O’Farrell to be the Assistant Secretary for Career, Technical, and Adult Education; and former House EdWorkforce staffer Mary Christina Riley to be Assistant Secretary for Legislation and Congressional Affairs. Last week, ED formally announced additional senior roles, including the appointment of James Bergeron as Deputy Under Secretary. Bergeron is a well-known expert in higher education policy. Most recently, he served as President of the National Council of Higher Education Resources, one of the student loan industry trade associations. Bergeron previously worked for the House EdWorkforce Committee in senior eduction policy roles for nearly eight years.

SMUCKER CLOCK HOUR LEGISLATION RETURNS

What You Need to Know

Representative Lloyd Smucker (R-PA) has reintroduced the “Clock Hour Program Student Protection Act,” which would preserve the bare minimum rule (i.e., the 150% Rule). The Biden Administration changed the regulations to be 100% maximum program length, but those efforts have been blocked in the courts.

Why This Is Important

The 150% Rule provides schools with flexibility to design their programs to satisfy inconsistent program length requirements among regulators, thereby reducing barriers to licensure encountered by graduates across states. This is but one of many regulatory issues on which the incoming team at ED will have to devise a path forward. Reversion to the old rule could occur via new regulations, court action, or legislation.

EXECUTIVE ORDERS ON ED EXPECTED

What You Need to Know

Over the past two weeks, the Trump Administration has taken a wide range of actions at ED, including placing some staff on paid administrative leave for taking agency-sponsored diversity training programs. Amidst these announcements and with government-wide staff reductions underway, reports have surfaced that the White House is considering one or more executive orders about ED. Though the plan could change, early word is that two executive orders have been planned: one that would wind down as many program at ED as possible, and another that would call on Congress to eliminate ED and move the remaining programs to other agencies.

Why This Is Important

Eliminating ED will most likely require legislation, and it does not appear that there currently are sufficient votes in Congress to accomplish the President’s goal. In the meantime, however, the Administration may have some success in shutting down programs that are currently operating but do not have a formal authorization. For example, Congress occasionally creates a new program using the appropriations process without formally codifying it into an authorizing statute, like the Higher Education Act (HEA). All institutions should continue submitting any required documentation to ED, and we should expect that agency staff may struggle to process responses or approvals given the ongoing uncertainty swirling around ED.

AACS AGREES TO PAUSE FVT/GE LAWSUIT

What You Need to Know

On February 10, a district court in Texas granted a 90-day stay in our case challenging the Financial Value Transparency and Gainful Employment (“FVT/GE”) regulations. The motion, filed at the request of ED and with our consent, provides the Trump Administration with time “to become familiar with and evaluate their position regarding the issues in this case.” Acting Under Secretary Bergeron provided a declaration in which he noted that ED will not issue GE metrics until Fall 2025. Bergeron also stated that ED would not publish any GE metrics or take any action against schools on GE matters while the stay is in place. Finally, he advised the court that, although ED previously extended the reporting deadline to February 18, ED is considering further extensions to July 2025 or later.

Why This Is Important

We remain hopeful that the Trump Administration will make a favorable decision about how to proceed on FVT/GE. For now, this stay merely delays the litigation, and the February 18 debt reporting deadline remains in effect. As always, we will keep you informed on the latest developments in our litigation as well as changes to institutional reporting requirements.

SCOTUS REVIEW OF BDR CASE ON HOLD

What You Need to Know

Last week, the US Supreme Court granted the Trump Administration’s request to pause its review of the Borrower Defense to Repayment (“BDR”) litigation. This was the case brought against ED by the Career Colleges & Schools of Texas. The Supreme Court had previously agreed to hear an appeal of the case, with briefing originally scheduled to be completed in April 2025. On January 24, the Administration asked the Supreme Court to put its review of the appeal on pause in order “to allow for the Department to reassess the basis for and soundness of the borrower-defense regulations.”

Why This Is Important

The Biden Administration’s BDR regulations were previously stayed by an appeals court with a nationwide injunction. This stay remains in effect pending further action by the Supreme Court or ED. The Trump Administration could abandon the federal government’s defense of the current BDR regulations. However the Administration chooses to proceed, it is widely expected that this iteration of the rule will eventually be eliminated.

OLD TITLE IX RULES RESURRECTED

What You Need to Know

ED’s Office for Civil Rights issued a Dear Colleague letter on February 4, 2025, announcing that it will abandon the Biden Administration’s 2024 Title IX regulations. ED will instead enforce the 2020 Title IX regulations promulgated during the first Trump Administration. The Biden Administration rules were vacated nationwide by a court decision in early January and were never put into effect.

Why This Is Important

Schools should ensure that their Title IX policies comply with all of the requirements in the 2020 regulations. This includes the separation of investigative and adjudicative duties and the appropriate training of all participants in the Title IX review process.

DEEPER DIVE: BUDGET RECONCILIATION

What You Need to Know

“Budget reconciliation” is the term on the tips of everyone’s tongues on Capitol Hill at the moment. Reconciliation is a complex and arcane legislative process that allows Congress to circumvent the filibuster and pass budget-related legislation with a simple majority in the Senate. Budget reconciliation is often used by both parties to pass major, partisan legislation. For example, Democrats used reconciliation to pass the Affordable Care Act, and Republicans used reconciliation to pass the 2017 Trump tax cuts. Many of those tax cuts will be expiring soon, and it is a top priority of the White House and its allies in Congress to renew and expand their signature legislative achievement from the President’s first term. This week, the House and Senate began the process of teeing up a budget resolution, though the GOP leaders in each chamber have been at odds on exactly how big to go in reconciliation.

Why This Is Important

When Democrats used reconciliation to finish their work on the Affordable Care Act in 2010, they also eliminated the FFEL program in favor of the Direct Loan program. Stated differently, Democrats used budgetary savings from student loans to pay for Obamacare. Congress may once again look to education programs to pay for other programs. Last year’s College Cost Reduction Act (CCRA) was a bill championed by former EdWorkforce Chair Virginia Foxx (R-NC) and was the Republicans’ most recent attempt at HEA reauthorization. Portions of the CCRA could be included in reconciliation this year to help pay for renewed Trump tax cuts. Whether education provisions are included, let alone whether Republicans can come together and pass wide-ranging legislation with a tiny majority in the House, currently remains to be seen. But we will stay on top of it for you.

This morning the Department of Justice filed a Consent Motion to Stay Proceedings on behalf of the Department of Education in the Gainful Employment lawsuits (AACS v. US Department of Education, consolidated with Ogle School Management v. US Department of Education in the Northern District of Texas), promising not to issue or post any GE metric calculations for the next three months.

In the Motion, the Department asks the Court to stay the proceedings for 90 days while promising not to issue or post any of the GE metric calculations or initiate any measures against schools under the GE regulations during that time. This is a departure from the Department’s most recent statement in Electronic Announcement GE-25-01 announcing the reopening of the GE/FVT reporting system and the extension of the deadline for debt information reporting to February 18, which indicated that the Department anticipated completing the initial calculations and publishing them some time “this spring.” A Declaration from Acting Undersecretary James Bergeron attached to the Motion indicates that the Department is still considering the request by CECU and other school organizations for the Department to further delay the new February 18 deadline for GE/FVT until at least July 2025.

The Department explains in the Motion that the 90-day pause is necessary for incoming officials in the new Administration to familiarize themselves with the challenged regulations and potentially reevaluate them in order to ensure that any additional filings in the case are in accord with the Administration’s policy preferences. The Department’s reply brief, which is the last filing needed before the District Court can consider and rule on summary judgment, is currently due this Friday, February 14, but that deadline would likewise be postponed for 90 days if the Motion is granted.

The Department indicates that the plaintiffs in the lawsuits consented to the Motion, so it is likely that the District Court Judge will grant the Motion and stay the case for 90 days. CECU will continue to monitor the lawsuits and provide additional updates as they become available.

Yesterday, the Department of Education shared a press release announcing six additional appointees who will work to implement President Trump’s America First education agenda. The new appointees are:

James Bergeron – Deputy Under Secretary

James Bergeron recently served as President and Chief Executive Officer of the National Council of Higher Education Resources. In this capacity, he provided day-to-day leadership, operational management, financial health, direction, and growth to the organization and assisted members in carrying out their public service missions to increase college access and success. Previously, James worked as the Director of Education and Human Services Policy for the U.S. House of Representatives Committee on Education and the Workforce where he developed and managed the committee’s legislative agenda, including the reauthorization of the Higher Education Act, Carl D. Perkins Career and Technical Education Act, and Workforce Innovation Opportunity Act. Before joining the committee, James served as Legislative Director for Rep. Buck McKeon where he was responsible for developing the legislative agenda within the House Subcommittee on 21st Century Competitiveness around financial aid simplification and regulatory relief. He received a Bachelor of Arts in Political Science from the University of Louisiana at Lafayette.

Julie Hartman – Senior Advisor, Office of Communications and Outreach

Julie is a broadcast host and writer. After discovering Dennis Prager’s work in college, Julie became his intern and began appearing once-weekly on his nationally-syndicated radio show. In August 2021, Julie guest-hosted three-hour broadcasts of both The Dennis Prager Show and The Mike Gallagher Show, becoming the youngest person yet known to solo guest host a nationally syndicated radio or TV program. Julie was then hired by the Salem Media Group to co-host a show with Dennis Prager, Dennis & Julie, as well as host her own thrice-weekly show, Timeless with Julie Hartman. She also served as the standing guest host for all of Salem’s nationally syndicated talk radio shows. Julie has appeared on international news, including SkyNews Australia, GB News, and Vox India; delivered speeches in Romania, Hungary, and England; and has written for The Wall Street Journal, The American Mind, and The Washington Examiner, among others. Julie graduated cum laude from Harvard University in 2022 with a B.A. in History.

Amber Mariano Davis – Policy Advisor, Office of Planning, Evaluation, and Policy Development

Amber Mariano Davis joins the Department as a Policy Advisor in the Office of Planning, Evaluation, and Policy Development. She brings extensive experience in education policy, legislative leadership, and advocacy. At 21, she made history as the youngest person ever elected to the Florida House of Representatives. She served three terms and chaired the Postsecondary and Lifelong Learning Subcommittee, championing policies to strengthen higher education, expand workforce development, and improve career pathways. Most recently, she served as Director of State Government Affairs at Code.org, leading nationwide efforts to expand computer science education. Davis remains committed to shaping policies that empower students, strengthen the workforce, and expand educational opportunity.

Savannah Newhouse – Special Assistant, Office of Communications and Outreach

Savannah Newhouse will serve as Special Assistant in the Office of Communications and Outreach, bringing vast experience in press, digital, and broadcast media to the team. Savannah most recently served as Communications Director for Senator Marsha Blackburn’s (R-Tenn.) successful re-election campaign in Tennessee. Prior to that, she worked on Capitol Hill as both Senator Blackburn’s Press Secretary and Digital Director. She also served as Press Secretary on Senator Bill Hagerty’s (R-Tenn.) 2020 race. Savannah grew up in Memphis, Tennessee and holds a B.S. in Political Science from Belmont University.

Isaac Hampton – Special Assistant on Higher Education, Office of Legislation and Congressional Affairs

Isaac Hampton is a proud native of Missouri and a graduate of Truman State University, where he earned his Bachelor of Arts in Economics. At Truman, he served as College Republican Chairman from 2018 to 2019, and there wrote his capstone economics paper, “Determinants of Student Performance on Standardized Exams,” which highlighted the power of decentralized education systems and parental involvement in educational choices. Isaac has served as the Legislative Assistant for HD 130 in the Missouri House of Representatives, worked as a Series 7 and 63 Financial Representative, and most recently as the Regional Election Integrity Director for the Montana GOP during the 2024 election. He is excited to work for the President and the Department to return educational decision-making to parents and local communities.

Nicholas Stone – Special Assistant on K-12, Office of Legislation and Congressional Affairs

Nicholas Stone joins the Department after most recently serving on the Trump-Vance 60th Presidential Inaugural Committee. He previously served as a Regional Field Director for the Trump campaign in his home state of New Hampshire during the First in the Nation Primary. Following this, he then served as the Political Field Director for the State of Maine. Nicholas graduated from Plymouth State University with a bachelor’s degree in business administration. Nicholas has also contributed to his community by serving on the Claremont, N.H., School Board where he worked to improve educational quality and advance student success. In addition, he served on the Claremont Planning Board, focusing on efficient development and community planning.

GOVERNMENT RELATIONS HIGHLIGHTS

Grants & Loans Paused: The White House issued a temporary pause on many federal grants and loans. Hours later, a federal judge blocked the pause.

Budget Reconciliation Begins: House Republicans are currently on a retreat in Florida. They hope to return to Washington with a blueprint for legislating President Trump’s agenda.

FVT/GE Reporting Delay: The Biden Administration delayed some reporting, but it is presently unclear how the Trump Administration will manage the rule going forward.

New ED Officials: ED announced several new senior-level appointees, largely in civil rights roles.

The Trump Regulatory Freeze: Though the Trump Administration has issued a freeze on all new federal rulemakings, attempts to modify or remove regulations will take time.

FEDERAL GRANTS & LOANS PAUSED

What You Need to Know

The Trump Administration’s Office of Management and Budget issued a temporary pause on the obligation and disbursement of nearly all federal grants and loans, effective at 5:00 pm on Tuesday, January 28. Late Tuesday, a federal judge blocked the pause through February 3.

The memorandum explicitly excludes funds related to Medicare or Social Security benefits, but it otherwise suspends the distribution of other federal financial assistance funds in order to conduct a review that will assess program alignment with President Trump’s policies. Agencies must report their findings by February 10.

Why This Is Important

Officials from the US Department of Education (ED) have already clarified that the freeze will not impact Pell Grants or Direct Loans. It remains unclear how exactly the pause will impact other federal education programs.

BUDGET RECONCILIATION BEGINS

What You Need to Know

House Republicans are currently in Florida for their GOP retreat. Speaker Johnson stated to his colleagues that his top priority is to have a conference-wide blueprint for their reconciliation bill, which they will use to enact key components of President Trump’s agenda. The reconciliation process will allow Republicans to bypass the filibuster and pass legislation with only a simple majority in the Senate.

Why This Is Important

Republicans are considering savings from all corners of the federal government to help pay for what some are calling a Mega MAGA bill. Certain savings could come from higher education programs. Stay tuned for our GR update in two weeks, where we will dive deeper into the budget reconciliation process and how it may be used for a partial reauthorization of the Higher Education Act.

FVT/GE REPORTING DELAY

What You Need to Know

The window for reporting data required by ED’s Fair Value Transparency and Gainful Employment (“FVT/GE”) rule closed on January 15, 2025. After the reporting deadline had passed, and just days before the inauguration, ED issued Electronic Announcement GE-25-01. Debt reporting will now be allowed until February 18, 2025. ED reiterated that the opportunity to review the Completers Lists had ended as scheduled, and the Completers Lists had been finalized and would be transmitted to “another federal agency” for median earnings data. The Trump Administration has made no announcements regarding FVT/GE reporting, and it is unclear at this point whether or how the orders and directives President Trump signed in his first few days in office will impact the ongoing implementation of the FVT/GE rule.

Why This Is Important

In the litigation we brought challenging the FVT/GE rule, the parties have filed cross-motions for summary judgment. Briefing was scheduled to be completed by the end of this week. However, on January 27, the court granted ED’s request for an extension to file a reply brief, pushing the deadline to February 14, 2025. Assuming ED files its reply brief by the new due date, the case will proceed to a decision on the merits. We expect a court ruling sometime in the next several months. In the meantime, the Trump Administration may announce their plans for FVT/GE in the coming months as well.

NEW EDUCATION OFFICIALS

What You Need to Know

ED announced several new senior-level appointees. Many of these appointees were named to civil rights positions that will allow them to begin work on the Trump Administration’s social agenda. The Senate HELP Committee has not yet scheduled a confirmation hearing for Education Secretary-designate Linda McMahon.

Why This Is Important

We still do not yet know who will be placed in the roles at ED that will be most important to our members. The most critical position is Under Secretary of Education, who is responsible for all postsecondary programs at the agency. We expect an announcement on this and other senior roles soon.

DEEPER DIVE: THE TRUMP REGULATORY FREEZE

What You Need to Know

One of President Trump’s first executive orders after the inauguration froze pending regulations. This directive prohibits the federal government from proposing or issuing any new rules, pending review and approval by a Trump official. The order also withdraws any regulations that had been sent to but not yet published in the Federal Register and encourages federal agencies to consider postponing the effective date of any new regulations that have not yet taken effect. This action has no impact on existing regulations, such as FVT/GE or borrower defense to repayment.

Why This Is Important

This executive order immediately sparked confusion and does not rescind regulations that are already on the books. Modification or removal of any existing rules will take time. ED will need to proceed through the cumbersome negotiated rulemaking process. Under the master calendar provisions of the Higher Education Act, the earliest that any Title IV-related regulatory change could be implemented is July 1, 2026, so long as a final rule is published no later than November 1, 2025. It is not clear when ED might initiate such rulemakings. But it did take most of the first Trump term to rewrite or eliminate Obama-era rules.

The Education Secretary does have some discretion regarding the enforcement of current regulations and the implementation or early adoption of new regulations, but any deviations from federal rulemaking requirements could be subject to court challenges. For now, it will be important to comply with any regulations in effect and to monitor regulatory developments closely.

Direct loans and Pell Grants, among other forms of direct financial assistance to individuals, will not be affected by the previously reported federal aid freeze.

The Department of Education cited a footnote in the memo, which outlines what education programs would be spared:

“Per the OMB memo issued yesterday, the temporary pause does not impact ‘assistance received directly by individuals.’ As such, Title IV, [Higher Education Act] funds that are provided to individual students, such as Federal Pell Grants and Direct Loans, are not impacted by yesterday’s guidance.”

The Department of Education has reopened the reporting process for debt and other information (debt reporting) until February 18, 2025, due to institutions having trouble completing their reporting by the original deadline.

After analyzing data that was received by the Department, it found some common errors and has provided guidance on how to fix those. Schools are not required to submit an explanation of nonreporting at this time, as long as they report by the February 18 filing deadline.

For more information please read the FSA Announcement GE-25-01. AACS will continue to provide updates on this matter as they occur.

The U.S. Department of Education announced its final action to provide student loan forgiveness, bringing total approved debt relief to nearly $189 billion for 5.3 million borrowers.

The Administration approved:

• 1.45 million borrowers for $57.1 billion in loan relief, including $600 million for 4,550 borrowers for Income-Based Repayment (IBR) forgiveness.
• 1,069,000 borrowers for $78.5 billion in forgiveness through Public Service Loan Forgiveness (PSLF).
• 633,000 borrowers for $18.7 billion in loan relief through simplified criteria for permanent and total disability.
• Just under 2 million borrowers for $34.5 billion in loan relief through individual borrower defense claims. According to the press release, all previous Administrations approved 53,500 borrower defense claims, while the Biden administration approved 1,767,000.

Additionally, the Department announced expanded eligibility for closed school loan discharges. They are extending the look-back window for schools that closed under exceptional circumstances, allowing more borrowers to qualify. Most eligible borrowers will need to apply, but the Secretary has directed Federal Student Aid to notify them and pursue automatic discharges for closures between 2013 and 2020 for those who didn’t re-enroll elsewhere within three years.

Beginning of the 119^th Congress: The 119^th Congress kicked off on January 3, 2025, though Congress has been tied up with procedural tasks and confirmation hearings for President-elect Trump’s cabinet.   

Reconciliation/College Cost Reduction Act: As Republicans in Congress look to advance President-elect Trump’s agenda through the budget reconciliation process, they are eyeing potential provisions in the College Cost Reduction Act (CCRA) to help pay for the cost of the legislation.

BDR Lawsuit Update: On January 10, 2025, the Supreme Court announced that it would review the decision by the Fifth Circuit Court of Appeals to stop the enforcement of the Biden Administration’s 2022 Borrower Defense to Repayment (“BDR”) regulations.

Biden Administration Guidance: With only days left in the Biden Administration, the US Department of Education released new Frequently Asked Questions (FAQs) on Administrative Capability and Financial Responsibility.

Fair Value Transparency and Gainful Employment Reporting: On January 15, 2025, the window closed for reporting data required by the Department’s Financial Value Transparency and Gainful Employment (“FVT/GE”) rule.

BEGINNING OF THE 119TH CONGRESS

What You Need to Know

The 119th Congress kicked off on January 3, 2025, with Republicans reelecting Speaker Mike Johnson (R-LA) on the first ballot. House Committees are still finalizing membership rosters, which are expected to be completed by the end of the month. The Senate rosters have been announced, and much of the Senate’s early business has been consumed with consideration of President-elect Trump’s cabinet nominees.

Why This Is Important

Education Secretary-designate Linda McMahon has not yet had her confirmation hearing scheduled before the Senate HELP Committee due to reported delays in completing her disclosure paperwork. Her confirmation is not expected to be as contentious as some of the other nominated cabinet officials. To date, the Trump Administration has not announced any other nominees for the Department, including the Under Secretary of Education, who will be the lead on higher education policy.

RECONCILIATION/COLLEGE COST REDUCTION ACT

What You Need to Know

As Republicans in Congress look to advance President-elect Trump’s agenda through the budget reconciliation process, they are eyeing potential provisions from the CCRA to help pay for the cost of the legislation. The CCRA cleared the House EdWorkforce Committee last year but was not brought forward for a full vote in the House. Due to the arcane nature of the reconciliation process, which allows Republicans to bypass the traditional 60-vote threshold in the Senate but limits policy changes, it is not yet clear which elements from this legislation may be considered.

Why This Is Important

Republicans have laid out an ambitious agenda to pass reconciliation, with Speaker Johnson announcing his goal to have a completed bill to President Trump by Easter. This may be overly ambitious because Republicans need to reach consensus on the scope and cost of the package, which is expected to include an extension of the previous Trump tax cuts, immigration-related provisions, and other GOP priorities. For context, President Biden’s Build Back Better plan took nearly 11 months from introduction to passage as the Inflation Reduction Act, and it ultimately saw a significant reduction in size and scope due to opposition from Senate Democrats.

BDR LAWSUIT UPDATE

What You Need to Know

The Supreme Court announced on January 10, 2025 that it would review the decision by the Fifth Circuit Court of Appeals to stop the enforcement of the Biden Administration’s 2022 BDR regulations. The Supreme Court will decide if the Department of Education has the authority to grant borrower defenses before a borrower defaults, in administrative proceedings, or on a group basis. The Department is appealing a case brought by Career Colleges and Schools of Texas challenging the Biden BDR rules. The Fifth Circuit stayed the implementation of the new BDR rules in April 2024, finding “a strong likelihood that the plaintiffs will succeed on the merits in demonstrating the Rule’s numerous statutory and regulatory shortcomings.” The Fifth Circuit also stayed implementation of the Biden Administration’s 2022 Closed School Loan Discharge regulations, which the Supreme Court has indicated it will not consider on appeal.

Why This Is Important

The stay of both the BDR and Closed School Loan Discharge regulations will remain in effect pending the Supreme Court’s decision. The Supreme Court’s announcement did not include a timeline for next steps, but a decision on the appeal is expected later this year. The incoming Trump Administration has not indicated its position on this matter.

BIDEN ADMINISTRATIVE GUIDANCE

What You Need to Know

Last week, with only days left in the Biden Administration, the Department announced the publication of new FAQs on Administrative Capability and Financial Responsibility. The Administrative Capability FAQ covers topics including financial aid counseling, validating high school diplomas, and geographically accessible clinics or externships, among others. The Financial Responsibility FAQ focuses on procedures for implementing the Department’s new requirement, effective July 1, 2024, that an institution use the same fiscal year for Title IV purposes as it uses for submission of its tax returns to the Internal Revenue Service.

Why This Is Important

The staying power of these FAQs remains to be seen. Like all other sub-regulatory guidance, President-elect Trump’s Department of Education could rescind the FAQs.

FVT/GE REPORTING

What You Need to Know

On January 15, 2025, the window closed for reporting data required by the Department of Education’s FVT/GE rule. The rule directed institutions to submit a range of student-specific and programmatic data, intended to facilitate the Department’s calculation of the debt-to-earnings and earnings premium metrics. Institutions were also able to make updates to the draft Completers Lists through the January 15 deadline. The litigation AACS brought challenging the FVT/GE rule is expected to be fully briefed by the end of January, at which point the case will proceed to a decision on the merits. A court ruling is expected sometime in Spring 2025.

Why This Is Important

If the Trump Administration decides to rescind the FVT/GE rule, it would likely need to proceed through negotiated rulemaking and would be subject to the master calendar. This means that, at the earliest, the Trump Administration would not be able to officially rescind the rule until July 1, 2026, although it would have regulatory tools at its disposal to slow-walk implementation of the rule until July 1, 2026, if it chooses to do so.

In a Friday evening announcement, the Supreme Court of the United States agreed to hear arguments on the appeal filed by the Biden administration challenging the Fifth Circuit’s ruling in favor of Career Colleges and Schools of Texas (CCST). Last year, the Fifth Circuit sided with the for-profit sector’s argument that the Department of Education (ED) lacked the authority to implement a wide-ranging regulation expanding student debt relief through the Borrower Defense to Repayment (BDR) process. The Biden administration challenged the Fifth Circuit’s ruling in favor of CCST, arguing that ED does have the authority to do so, as granted through the Higher Education Act. The Supreme Court accepted the case and agreed to hear arguments on the appeal, likely to be heard in April, followed by a final ruling in the summer. Importantly, the Supreme Court did not accept the Biden administration’s appeal of the nationwide injunction on implementation of the onerous Biden BDR regulations, so the delay in implementation of those regulations remains in effect.

This means that our sector’s challenge to the Biden BDR regulation will be more complicated and drawn out than we had hoped. Today’s ruling keeps the case alive and will result in substantial additional work and legal expenses in support of the case. CECU will continue to help lead the sector’s response, assisting CCST with strategy and expenses related to their important challenge to the Biden administration’s executive overreach. An important but as of yet unknown aspect of the case is how the incoming Trump administration will react to today’s ruling and the upcoming arguments before the Supreme Court. The Trump solicitor general could argue in favor of the Department’s BDR authority, with the ultimate goal of preserving the ability of the Department to mold future BDR regulations as Trump and likely ED Secretary McMahon would want. Alternatively, the Trump administration could drop opposition to the case, or otherwise modify the arguments that have up to this point been made by the Biden administration.

CECU will continue to keep our members informed of the latest developments in this important case, including how schools can help support the cause. For more information about this lawsuit, you can visit CECU’s comprehensive archive of documents, legal filings, news articles, and our analysis of the BDR regulations.

Today, U.S. District Judge Danny C. Reeves, chief jurist for the Eastern District of Kentucky, ruled that the current administration’s rewrite of Title IX violated the Constitution. A nationwide moratorium on implementing these regulations is now in effect.

This decision could be appealed by the federal government, but with less than two weeks in the Biden Administration, it is unknown if they will do so. It is unlikely that the incoming Administration would appeal, since they have already issued significant public opposition to these regulations. AACS will keep members informed of any other updates on this issue.

For more information:

State Of Tennessee Vs. US Department Of Education

With only days remaining in the Biden Administration, the US Department of Education (ED) released long-awaited rules on distance education and return of Title IV funds.

Background

ED formally began a negotiated rulemaking in January 2024 that addressed a host of Title IV regulatory issues related to program integrity, institutional quality, and the federal TRIO programs. The negotiators examined potential regulatory changes to accreditation, cash management, distance education, return of Title IV funds (R2T4), state authorization, and opening up the TRIO programs to undocumented students. Consensus was reached for the proposed changes to TRIO; on all other issues, the negotiators failed to reach consensus.

ED released proposed rules for public comment in July 2024 on three of the six topics: distance education, R2T4, and TRIO. ED did not release proposed rules on cash management, accreditation, and state authorization. ED further winnowed down the final regulations on December 28, when it published final rules for R2T4 and distance education. In doing so, ED made minor technical changes to TRIO but omitted the larger proposal to open up the program to undocumented students.

The new distance education and R2T4 rules are currently slated to go into effect on July 1, 2026, with institutional reporting obligations related to distance education enrollments beginning July 1, 2027.

Distance Education

The final rule on distance education increases oversight and reporting requirements for online learning programs and includes wins for the regulated community.

Starting on July 1, 2027, institutions will be required to report detailed information about Title IV students enrolled in distance education or correspondence courses to ED’s National Student Loan Data System (NSLDS). ED’s stated aims for the reporting requirements are to “better understand the outcomes and effectiveness of online learning.” In commentary to the final rule, ED shared that additional instructions for reporting the data are forthcoming.

Separately, the rule promulgates a definition of “distance education course.” This is described in the rule as courses consisting entirely of distance instruction notwithstanding in-person, non-instructional requirements.

Closely watched by our institutions, ED did not to move forward with several key distance education proposals. For example, institutions will not be required to report all of their fully online programs at a virtual additional location and will use the NSLDS process for tracking distance education students instead, as noted above. ED also nixed the proposal that would have prohibited Title IV eligibility for asynchronous clock-hour programs offered through distance education.

R2T4

R2T4 is an important component of the federal financial aid programs because it determines how funds should be handled by an institution when a student withdraws. The final R2T4 rule introduces several exemptions to the determination of when a student is considered withdrawn, such as when the

institution’s records treat the student as having never attended courses for that payment period or period of enrollment.

Other key changes include confirmation that a module would be considered part of the payment period used in the denominator of the R2T4 calculation only when a student begins attendance in the module. Further, under certain circumstances, the rule allows incarcerated individuals to return at a different point in their eligible prison education program than the point at which the student left off. Finally, the rule prescribes a new process for calculating R2T4 calculations for programs measured in clock hours, and it codifies current guidance that institutions that are required to take attendance must document a student’s withdrawal date within 14 days of the student’s last day of attendance.

Here, again, ED decided not to implement certain concepts included in the proposed rule. ED declined to adopt the blanket requirement that all distance education programs take attendance. This was initially intended by ED as a means of determining a formal date of withdrawal for the purposes of R2T4 calculations but has now been abandoned.

Incoming Trump Administration

We do not yet know how the Trump Administration will approach implementation of these new rules. We expect many Biden-era rules, from loan forgiveness and gainful employment to borrower defense and Title IX, to be scrapped or rewritten. The incoming Trump team may also open up additional rules beyond those addressed during the Biden years for revision. We should know more later this year on the Trump Administration’s planned regulatory agenda as well as the processes they plan to use to accomplish their goals.

For now and until ED makes further announcements, our institutions should plan to come into compliance with these new distance education and R2T4 rules by July 1, 2026 and prepare for the required NSLDS reporting no later than July 1, 2027. As always, we will keep you up-to-speed on all of the latest regulatory developments.

The U.S. Department of Education announced the withdrawal of two major proposed rules to cancel student debt. One of these rules has already been blocked by a federal court in a lawsuit brought by Republican attorneys general. This proposal would have forgiven the debt of an estimated 30 million borrowers who fit into certain categories, such as borrowers whose debt has ballooned because of interest, those who’ve carried debts for decades, and borrowers who missed out on existing relief programs.

The other was intended to clarify the Secretary of Education’s authority to waive student loan debt for borrowers facing hardships under the Higher Education Act. Withdrawing the proposed rules prevents the incoming administration from substantially altering the essence of the rule during finalization and implementation.

The new hardship rule would have created two pathways for the Secretary to clear student debt. The first is individualized, automatic relief without an application. Under this authority, the Secretary could provide relief on a one-time basis to borrowers who the Department determines, based on a predictive assessment using existing borrower data, have at least an 80% chance of being in default within the next two years. This included the indicator “type and level of institution attended,” which the Department used to single out for-profit institutions.

The second pathway would have created the authority for the Secretary to clear debts for current and future cohorts of borrowers based on an assessment of the borrower’s hardship and would be primarily application-based. The Department would assess whether a borrower is highly likely to be in default or experience similarly severe negative and persistent circumstances.

While the negotiated rulemaking committee reached consensus on the text of the proposed rule, CECU’s primary objection was the Department’s use of “type and level” as a factor for consideration of hardship relief. The rationale provided in the Notice of Proposed Rulemaking (NPRM) demonstrated a clear, intentional bias against proprietary institutions of higher education. CECU’s concern was that the use of “type and level” could allow the Department to use hardship relief authority to malign and disparage a disfavored sector.

CECU previously reported on the NPRM encouraging our members to submit comments expressing their concerns related to the Department’s methodology in determining eligibility for hardship relief. View our summary of our observations and recommendations here and CECU’s comment on the proposed rule here.

Today the Department of Education announced several FAFSA-related updates via a press release and a corresponding Electronic Announcement. Here are several toplines from today’s announcements:

• The Department has received over 1.5M 2025-26 FAFSA form submissions from students and has successfully processed and sent 7 million student records to institutions of higher education and states to prepare and package aid offers. With hundreds of extra Federal Student Aid Information Center (contact center) agents in place, the wait time for families and students calling for help is under two minutes.
• The Department launches the next phase of FAFSA Student Support Strategy and College Support Strategy to help more students complete the FAFSA and pursue higher education. In order to continue the effort to ensure that every student who wants to can apply for federal financial aid, the Department is announcing the next phase of this year, the Department will make another $50 million of federal funds available via the FAFSA Student Support Strategyto eligible organizations supporting 2025–26 FAFSA completion. Additionally, the Department is making another $10 million of federal funds available for the next phase of the FAFSA College Support Strategy. The funds will support lower-resourced institutions of higher education in ensuring that their systems are prepared to process financial aid for the 2025–26 FAFSA form.
• The Department created new, permanent FAFSA leadership positions to oversee the process and technology moving forward and provided staffing updates for those roles.
• This week, the Department is holding a FAFSA Week of Action to rally the K12 school and partners community and raise awareness about the 2025–26 form. The campaign engages organizations to help students create their StudentAid.gov account and submit their FAFSA form.
• The Department continues to make technical updates to the FAFSA form to improve usability. This week the Department successfully deployed a set of 49 updates that impact both the 2024–25 and 2025–26 FAFSA forms. The Department will continue to list issues and provide status updates on the FAFSA Issue Alertspage.
• The Department commits to ensuring students and families get the help they need to successfully submit a FAFSA form. Recent support updates include:
• A live and recorded webinar that includes a demonstration of the form, an overview of the financial aid process, and a guide to creating a StudentAid.gov account.
• A suite of resources for students and familiesoffering a series of brief how-to videos, a federal aid estimator and tips on successfully completing the FAFSA form.
• Extended FAFSA-only FSA Contact Center hours in the evenings and on Saturdays through March 2nd. Students and families can reach agents at the contact center in English or in Spanish. Interpretation services in additional languages can be accessed at StudentAid.gov/interpreter.

For more information:

Press release

Electronic Announcement

Representative Tim Walberg was just elected as the Chairman of the Committee on Education & the Workforce to replace Virginia Fox R-NC who had termed out as Chair.

Tim Walberg is currently serving his eighth term in Congress as the representative of southern Michigan. The diverse constituency of Michigan’s 5th District encompasses Branch, Cass, Hillsdale, Jackson, Lenawee, Monroe, and St. Joseph Counties, along with portions of Berrien, Calhoun, and Kalamazoo Counties. Since first taking office, Tim has hosted hundreds of coffee and town hall meetings to better understand the thoughts and concerns of the district.

Prior to his time in public office, Tim served as a pastor in Michigan and Indiana, as president of the Warren Reuther Center for Education and Community Impact, and as a division manager for Moody Bible Institute. He also served in the Michigan House of Representatives from 1983 to 1999, and is proud to bring his reputation as a principled legislator, fiscal reformer, and defender of traditional values to Washington.

AACS congratulates Representative Walberg on his appointment and will continue to work with Representative Walberg and the other members of the House Committee on Education & the Workforce in 2025 on behalf of private beauty, barber and wellness education.

Sen. Mike Rounds (R-S.D.) Introduces Legislation to Eliminate the ED, Returning Education to States

Yesterday, Senator Mike Rounds (R-S.D) introduced the “Returning Education to Our States Act” which would eliminate the U.S. Department of Education and redistribute all critical federal programs under other departments.

“The federal Department of Education has never educated a single student, and it’s long past time to end this bureaucratic Department that causes more harm than good,” said Rounds. “We all know local control is best when it comes to education[…] Local school boards and state Departments of Education know best what their students need, not unelected bureaucrats in Washington, D.C.”

There are several important programs housed within the Department. Senator Rounds’ legislation would redirect these programs to Departments of Interior, Treasury, Health and Human Services, Labor and State, as follows:

Department of the Interior

• Native American-Serving Institutions Programs
• Alaska Native Education Equity Program
• American Indian Vocational Rehabilitation Services Program
• Indian Education Formula Grants and National Activities
• Native American and Alaska Native Children in School Program
• Native Hawaiian Education
• Special Programs for Indian Children
• Tribally Controlled Postsecondary Career and Technical Education Program
• Impact Aid Programs

Department of the Treasury

• William D. Ford Federal Direct Loan Program
• Federal Family Education Loan Program
• Federal Perkins Loan Program
• Federal Pell Grant Program
• Health Education Assistance Loan Program
• Education Sciences Reform Act

Department of Health and Human Services

• Individuals with Disabilities Education Act
• American Printing House for the Blind
• Helen Keller Center for Deaf/Blind Youth and Adults
• Federal Real Property Assistance Program
• Special Education Grants

Department of Labor

• All Office of Career, Technical and Adult Education programs
• National Technical Institute for the Deaf
• Randolph Sheppard Vending Facility Program
• Vocational Rehabilitation State Grants

Department of State

• Fulbright-Hays Program

AACS will continue to monitor the progress of the bill and any action that the new administration takes with regards to the Department of Education.

For more information:

Returning Education to Our States Act

Press Release

Linda McMahon is nominated as President-elect Trump’s Secretary of Education

The U.S. Department of Education officially released the 2025–26 Free Application for Federal Student Aid (FAFSA®). The online FAFSA form is available to all students and families at fafsa.gov, and the Department is processing submissions and sending them to schools. The paper form is also now available for students to submit.

The Department has recently released a suite of resources to assist students and families in completing and submitting the FAFSA form during the 2025–26 cycle, including:

• “Who’s the Parent on the FAFSA Form?” Wizard—A new, stand-alone tool to help students and families determine who will need to provide contributor information on the 2025–26 FAFSA form prior to starting the application.
• “Creating Your StudentAid.gov Account” Page—A new resource that explains what families and partners need to know about creating a StudentAid.gov account.
• Pro Tips for Completing the FAFSA Form—Updated tips for preparing to complete and submit the FAFSA form. This resource will also be linked from the StudentAid.gov Dashboard to promote easier access for students and their required contributor(s).
• Federal Student Aid Estimator—The tool provides an estimate of the 2025–26 Student Aid Index and Federal Pell Grant eligibility calculation.
• Federal Student Aid YouTube Channel: FAFSA Videos—Updated videos to help students and families understand the importance of the FAFSA form, who is a FAFSA contributor, and what happens after submitting the form.

Throughout the fall, the Department has released resources to assist partners to help students and families prepare for and navigate the 2025–26 FAFSA cycle, including:

• 2025–26 Counselor Resource for Completing the FAFSA Form—The resource provides counselors and advisors with information and resources to help guide students and their families through the FAFSA form.
• 2025–26 FAFSA Roadmap—The tool highlights key dates for the FAFSA form launch, as well as timelines for the release of resources to assist our partners.
• 2025–26 FAFSA Preview Presentation—The resource provides financial aid administrators, advisors, and counselors with reference tools for staff trainings and financial aid nights. The presentation deck contains screenshots which highlight changes to the online 2025–26 FAFSA form.
• 2025–26 FAFSA Prototype—The tool provides the financial aid community an opportunity to gain a deeper understanding of the FAFSA user experience.

Updated information and outreach tools for counselors, college access professionals, and other advisors can be found in the Financial Aid Toolkit. 

Congress Mandates October 1 FAFSA Launch for Future Cycles 

Relatedly, today, the Senate unanimously passed a bill to mandate an October 1 launch of the FAFSA form for future years starting in the 2026-27 cycle. The bill was previously passed unanimously by the House and now heads to the President’s desk for enactment. The new legal requirement would apply beginning in the next FAFSA cycle, and the Office of Federal Student Aid has said it is on track to return to a regular launch date of Oct. 1, 2025, for the 2026-27 FAFSA with “a fully functioning system.”

Linda McMahon is nominated as President-elect Trump’s Secretary of Education

CECU congratulates Linda McMahon on the nomination to be the new U.S. Secretary of Education. We applaud this appointment and look forward to working with her and the team assembled around her moving forward.

Ms. McMahon served as the 25th Administrator of the U.S. Small Business Administration. As a member of President Trump’s cabinet, she advocated on behalf of the 30 million small businesses in America. She led a team of professionals dedicated to ensuring entrepreneurs have the support and tools they need to start, grow and succeed in business, specifically through access to capital and federal contracting opportunities.

An entrepreneur and business executive herself, McMahon is the co-founder and former chief executive officer of WWE. She helped grow WWE from a 13-person regional operation to a publicly traded global enterprise with more than 800 employees in offices worldwide.

McMahon has been a longtime advocate for women in leadership and business and has been widely recognized as one of the country’s top female executives.

Today, the U.S. Department of Agriculture’s Food and Nutrition Service (FNS) and the U.S. Department of Education’s office of Federal Student Aid (FSA) announced the signing of a joint agreement to strengthen college student access to the Supplemental Nutrition Assistance Program, also known as SNAP. This agreement aims to increase awareness of SNAP among college students, as new data shows millions of eligible students are falling through the cracks. A recent Government Accountability Office report revealed 67% of the 3.3 million college students potentially eligible for SNAP reported not receiving benefits.

Today’s action is a key achievement of the Biden-Harris Administration’s National Strategy on Hunger, Nutrition and Health. FNS and FSA will work together to send emails to low-income students who may be eligible for SNAP informing them of their potential eligibility, basic information about SNAP rules for students, and how to apply. They will also work closely with institutions of higher education to help them provide clear guidance to students on SNAP eligibility and application processes. These efforts are aimed at increasing awareness of students’ potential eligibility for SNAP and reducing barriers that prevent many eligible students from accessing the food assistance they are entitled to.

The agreement also includes plans to pilot data-sharing projects in up to 10 states, allowing state SNAP agencies and colleges to collaborate in outreach to students who may be eligible for benefits and providing technical support to institutions and agencies in those efforts. By utilizing Free Application for Federal Student Aid (FAFSA®) data, this initiative aims to enable institutions and agencies to reach potential SNAP applicants and connect them with the resources they need. The Department of Education has previously released guidance on how institutions of higher education and state grant agencies can use FAFSA data for outreach about means-tested benefits, such as SNAP.

As you have already seen from the news, Donald Trump was elected to become our 47th President. In addition, the U.S. Senate will have a Republican majority. The House of Representatives is still too close to call with several races still undecided.

What does this mean for AACS and its members? We are excited to let you know that we have already begun working with members of Trump’s transition team to ensure that our issues–including Gainful Employment–are part of his first 90 days. We have begun reaching out to our allies in both the House and Senate to seek their assistance in our efforts.

We will be providing our members more information once the House of Representatives is decided. We will also be letting you know how this affects our current legal action against the Department of Education over Gainful Employment.

The next four years will give us the opportunity to go on the offensive and ensure that our sector and schools are provided greater protections in the Higher Education Reauthorization Act. We need everyone to get even more involved in 2025 as AACS continues our work to protect the beauty, barber, and wellness education sector.

Department of Education Rulemaking Delay

What You Need To Know

Additional Final Rules on Student Loan Debt Relief and Program Integrity and Institutional Quality will likely not take effect in 2025, as the Department has not complied with the November 1st Master Calendar deadline. In accordance with the Master Calendar rule, the Department had until November 1, 2024 to publish Final Rules with an effective date of July 1st, 2025. The following Proposed Rules are delayed:

(1) Accreditation and Related Issues;

(2) State Authorization;

(3) Cash Management;

(4) Distance Education;

(5) Return to Title IV;

(6) Student Debt Relief Hardship; and

(7) Federal TRIO Programs.

The Department could include provisions for early implementation, however, the current framework provides that the rules will not take effect in 2025.

Why This Is Important

Many of the Proposed Rules listed above may significantly impact AACS member institutions. AACS previously submitted public comments on the Program Integrity and Institutional Quality: Distance Education, Return of Title IV, HEA Funds, and Federal TRIO Programs rulemaking. We raised concern with the Distance Education regulations and the proposed change that would disallow asynchronous distance education in clock-hour programs for Title IV, HEA purposes.

A delay may allow for reconsideration of the Proposed Rules and will place additional importance on the upcoming 2024 Election as to the future of the Proposed Rules.

GOVERNMENT RELATIONS HIGHLIGHTS

FVT/GE Completers List: The Department published an electronic announcement informing institutions that it will receive revised Financial Value Transparency/Gainful Employment (“FVT/GE”) Completers Lists over the weekend of October 26-27, 2024.

22024-25 FAFSA Processing: The Department announced that the current processing time for 2024-25 FAFSA paper applications is approximately 7-10 days. The Department is additionally processing corrections to its paper forms and its processing time is approximately 7-10 days.

Hardship NPRM: The Department published a proposed rule that provides student debt relief to approximately 8 million experiencing “financial hardship,” which includes the type of institution that a borrower attends as a factor in its determination of hardship.

FVT/GE COMPLETERS LIST

What You Need To Know

Last week, the Department published an electronic announcement informing institutions that it will receive revised Financial Value Transparency/Gainful Employment (“FVT/GE”) Completers Lists over the weekend of October 26-27, 2024. If an institution did not receive a revised Completer List, it should refer to the NSLDS Professional Access website for instructions on how to request an ad hoc report.

Why This Is Important

2024 VIRTUAL FEDERAL STUDENT AID TRAINING CONFERENCE
What You Need To Know

The 2024 Federal Student Aid Training Conference will take place virtually December 3–6, 2024. The Conference will include addresses from U.S. Department of Education leadership, five general sessions, two Foreign School sessions, 21 breakout sessions (covering the latest in financial aid policy and operational updates), and eight Virtual Exhibit Hall stations. The Department will release a draft agenda in November.

Registration is free and found on the FSA Training Conference Home on FSA Partner Connect.

Why This Is Important

The Conference will cover a wide range of financial aid topics for financial aid professionals.

For more information:
2024 Virtual Student Aid Training Conference
Electronic Announcement

Institutions have until Jan. 15, 2025 to review and correct student information on the revised draft FVT/GE Completers List. Importantly, if an institution discovers any errors in the report, those should be reported to the Department.

For more information:
Department Electronic Announcement

UPDATES ON 2024-25 FAFSA PAPER (AND 2025-26)

What You Need to Know

The Department announced that the current processing time for 2024-25 FAFSA paper applications is approximately 7-10 days. The Department is additionally processing corrections to its paper forms and its processing time is approximately 7-10 days.
Additionally, the Department has announced the availability of the 2025-26 test data file for use in system testing by schools, state agencies, software providers, and other agencies and entities. The file is used to confirm that an institution’s processing system is prepared for the ISIR data that will be produced by the FAFSA Processing System (FPS).

Why This is Important

The Department has previously delayed its processing of paper applications (and paper corrections) which may have led to institutions not having an Institutional Student Information Record (“ISIR”) or an official ISIR to award and disburse Title IV funds to students without access to an electronic form. In order to remedy this delay, the Department has continued to provide a number of flexibilities to allow institutions to disburse federal aid. We will continue to provide updates on FAFSA processing developments.

For more information:
Department Electronic Announcement (2024-25)
Department Electronic Announcement (2025-26)

HARDSHIP FORGIVENESS RULE

What You Need to Know

The Department published a proposed rule that provides student debt relief to approximately 8 million borrowers experiencing “financial hardship.” In order to qualify for relief as a result of hardship, the Department would assess (via a number of factors) whether a borrower is highly likely to be in default or experience similarly severe negative and persistent circumstances. The Department provides a non-exhaustive list of 17 factors in its determination of whether a borrower is suffering from hardship, including household income, assets, types and balances of student loans, debt balances, Pell Grant recipient information and, additionally, the type of institution that the borrower attended. In its justification for including this final factor, the Department stated that it “proposes to include these factors because there are clear connections between student outcomes and the type of institution attended.”

The final rule is currently available via an unofficial version, however, it will be published in the Federal Register shortly.

Why This Is Important

The Department continues to push forward with its agenda to provide student loan debt relief to past and present borrowers. This final rule is important to members as it provides that attending a for-profit institution is a causal factor in why a borrower may experience financial hardship.

For more information:
Department Press Release
NPRM

GAO BDR REPORT

What You Need to Know

Last week, the U.S. Government Accountability Office (“GAO”) publicly released its report entitled, “Student Loan Relief in Cases of College Misconduct” which highlights the Biden Administration’s Borrower Defense to Repayment (“BDR”) efforts. The GAO analyzed the Department’s cumulative borrower defense data as of April 30, 2024, and found the following:

The Department has discharged $17.2 billion in federal student loans for 974,820 borrowers;
One percent of applications submitted for borrower defense were denied; and
All approved applicants received a complete and total discharge of their loans.

Why This Is Important

This report demonstrates the expansive and evolving impact of the BDR process on student loan forgiveness. The Biden Administration (and previously the Obama Administration) continues to prioritize BDR as an avenue for student loan forgiveness.

CFPB LAWSUIT

What You Need To Know

The Consumer Financial Protection Bureau (“CFPB”) filed a lawsuit against student lender Climb Credit for misrepresentations it made to students regarding training programs at its partner schools. The lawsuit states Climb Credit failed to properly vet its partners’ schools for “outcomes and value,” and instead offered loans for programs that had failed its return-on-investment analysis (or which had not been analyzed at all). It further alleges that Climb Credit failed to properly disclose annual percentage rates in online marketing materials and illegally hid loan origination fees in disclosures.

Why This Is Important

The CFPB has the authority to take action against institutions violating consumer financial laws, including engaging in unfair, deceptive, or abusive acts and practices. It continues to take action against institutions, lenders and other servicers that are engaging in such unlawful conduct.

For more information:
CFPB Press Release

2024 VIRTUAL FEDERAL STUDENT AID TRAINING CONFERENCE

What You Need To Know

The 2024 Federal Student Aid Training Conference will take place virtually December 3–6, 2024. The Conference will include addresses from U.S. Department of Education leadership, five general sessions, two Foreign School sessions, 21 breakout sessions (covering the latest in financial aid policy and operational updates), and eight Virtual Exhibit Hall stations. The Department will release a draft agenda in November.

Registration is free and found on the FSA Training Conference Home on FSA Partner Connect.

Why This Is Important

The Conference will cover a wide range of financial aid topics for financial aid professionals.

For more information:
2024 Virtual Student Aid Training Conference
Electronic Announcement

Department Publishes Financial Hardship Forgiveness Rule

What You Need to Know

Today, the Department published a proposed rule that provides student debt relief to approximately 8 million experiencing “financial hardship.” In order to qualify for relief as a result of hardship, the Department would assess (via a number of factors) whether a borrower is highly likely to be in default or experience similarly severe negative and persistent circumstances. The Department provides a non-exhaustive list of 17 factors in its determination of whether a borrower is suffering from hardship, including household income, assets, types and balances of student loans, debt balances, Pell Grant recipient information and, additionally, the type of institution that the borrower attended. In its justification for including this final factor, the Department stated that it “proposes to include these factors because there are clear connections between student outcomes and the type of institution attended.”

The final rule is currently available via an unofficial version, however, it will be published in the Federal Register shortly.

Why This Is Important

The Department continues to push forward with its agenda to provide student loan debt relief to past and present borrowers. This final rule is important to members as it provides that attending a for-profit institution is a causal factor in why a borrower may experience financial hardship.

For more information:

Department Press Release

NPRM

AACS and Ogle School Management File Briefs in Gainful Employment

The American Association of Cosmetology Schools (“AACS”) and one of its member schools, Ogle School Management, LLC, have challenged the U.S. Department of Education’s 2023 “gainful employment” rule (“GE Rule”) in a lawsuit in the U.S. District Court for the Northern District of Texas. The DOE has until November 8 to respond.

The lawsuit filed by AACS attacks the GE Rule from several angles, including:

1. The Department of Education (“Department”) lacks authority under the Higher Education Act to condition a program’s eligibility on debt-to-earnings metrics and an “earnings premium.” This argument benefits from recent decisions by the U.S. Supreme Court overturning the Chevrondoctrine and reinforcing the importance of reading statutes closely to determine the outer limits of a federal agency’s authority.
2. The GE Rule deprives schools of their right to a hearing before their participation in Title IV programs is limited or terminated. The HEA mandates that the Department provide notice and an opportunity for a hearing before taking an action to terminate or limit a school’s participation in Title IV programs. The GE Rule ignores that obligation and purports to give the Department the authority to terminate a program with no hearing at all.
3. The debt-to-earnings and earnings premium tests in the GE Rule are calculated using data that the Department knows to be wrong, at least with respect to cosmetology programs. It is widely known and acknowledged that workers in the cosmetology industry tend to underreport tips and self-employment income at a significantly higher rate than workers in other industries. Even though the Department’s own expert recommended an adjustment to earnings of workers in cosmetology and other “highly tipped” industries, the Department arbitrarily and capriciously refused to make any adjustments at all.
4. In its prior gainful employment rules, the Department has always included a mechanism for allowing schools to provide alternate earnings data. The Department’s latest GE Rule abolishes all appeal processes, leaving schools with no opportunity to correct for underreporting or other flaws in earnings data. The Department did not provide a rational reason for abolishing the alternate earnings appeal.
5. Despite acknowledging that gender and race affect earnings (i.e., due to wage discrimination, women and minorities are often paid less for the same work), the Department refused to make any adjustments for industries (like cosmetology) with higher-than-average rates of female and minority workers. The Department’s reasoning for refusing any adjustments is based on a flawed regression analysis produced using an unsound methodology.
6. The cosmetology industry has a higher percentage of workers who work part-time. It also has a higher percentage of workers who leave the workforce temporarily or permanently relative to the average worker—often women who start families and decide to stay home and/or work less. Even though the Department knew that cosmetology workers work part-time (or stay home) more than average, the Department refused to adjust their “earnings premium” calculation to reflect reality. Instead, the Department will compare the earnings of all cosmetology program graduates (whether they are in the workforce or not) with the earnings of only high school graduates who are actively working or seeking work. Moreover, the Department will not adjust the part-time earnings of cosmetology graduates to produce an “apples-to-apples” comparison against high school graduates who work full-time.
7. The Department will use earnings data from 2021 and 2022 in calculating the first set of debt-to-earnings rates and earnings premiums. The cosmetology industry was uniquely impacted more than the average industry by coronavirus-related restrictions and shut-downs. Despite knowing that 1) more women than men stopped working as a result of the coronavirus, 2) salons and studios were more severely impacted by restrictions than non-contact businesses, and 3) cosmetologists’ earnings were artificially low in 2021-22, the Department arbitrarily refused to make any adjustments at all to their calculations, and further refused to simply wait for one to two years so that earnings would rebound to normal levels.
8. The Department claims that the effects of the GE Rule are not detrimental to students because there will be plenty of “high quality” alternative programs in which students can enroll if their chosen program loses Title IV eligibility. However, the GE Rule exempts roughly three-quarters of gainful employment programs from any scrutiny whatsoever. Thus, while the Department claimsthere are thousands of alternative, “high quality” programs available to students, in reality, it has no idea if these alternatives are better, worse, or the same as programs that fail the GE Rule’s tests. Furthermore, the Department assumes without evidence that these “alternative” programs have the capacity to take on tens or hundreds of thousands of students whose programs are shut down as a result of the GE Rule.
9. The GE Rule unreasonably targets cosmetology programs more than other gainful employment programs. The Department’s own expert found that, in nine of the ten most popular gainful employment fields, gainful employment programs at non-profit colleges resulted in better financial outcomes for students than gainful employment programs at for-profit colleges. The one exception was cosmetology programs; graduates of for-profit cosmetology programs have better financial outcomes than graduates of non-profit cosmetology programs. Yet, of all the programs that will be terminated from Title IV participation as a result of the GE Rule, for-profit cosmetology programs will suffer the highest rate of terminations. Because the net effect of the GE Rule does not line up with reality, the GE Rule is arbitrary and capricious.
10. The effect of the GE Rule will be to restrict, if not eliminate, a school’s ability to teach and a student’s ability to learn. Giving and receiving educational messages are forms of speech protected by the First Amendment. Since the GE Rule relates only to certain subject matters and certain speakers/listeners, it is a “content-based” restriction on speech subject to the “strict scrutiny” under the U.S. Constitution. Almost uniformly, laws and regulations subject to the “strict scrutiny” test fail and are struck down. The GE Rule is no exception.
11. The GE Rule requires schools to give “warnings” if a program fails either the debt-to-earnings or earnings premium metric just once. Because schools have no choice in the contents of the warnings or whether to give them in the first place, the warnings are compelled government speech. Such warnings should be considered content-based (and subjected to strict scrutiny). However, even if the warnings are viewed as commercial speech (which is subject to a lesser form of scrutiny), they are still unconstitutional because they are not “uncontroversial” and not “purely factual.”

For more information:

AACS Brief

Ogle School Management Brief

What You Need To Know

Today, the House Education and Workforce Committee held a hearing titled, “GAO Uncovers Biden-Harris FAFSA Failures” which addressed the ongoing challenges to implement the 2024-25 Free Application for Federal Student Aid (“FAFSA”). Two U.S. Government Accountability Office (“GAO”) Directors testified at the hearing. The hearing coincided with the GAO’s release of its preliminary findings reviewing the rollout of the 2024-2025 FAFSA. The GAO report addressed the following,

This GAO testimony (1) describes the delays in delivering on FPS requirements; (2) describes the defects that were identified before and after FPS deployment; (3) assesses the extent to which disciplined systems acquisition practices were used to manage FPS requirements, conduct systems testing, and carry out independent acquisition reviews; and (4) assesses the extent to which Education and FSA IT leadership provided oversight of FPS development. This statement is a companion to GAO’s related statement on the simplified FAFSA rollout (GAO-24-107407).

The report indicated that FSA identified and reportedly addressed significant defects prior to–and following the release of–the FAFSA. In total, the report identified 55 defects which were largely a result of oversight failures by the Department. The report included six recommendations to the Department, “including adhering to agency policy in managing requirements and testing, developing policy for independent acquisition reviews, and hiring a permanent departmental CIO. Education provided technical comments, which GAO incorporated as appropriate.”

The Committee hearing featured Members from both sides of the aisle expressing concern and outrage from the results of the GAO report. Rep. Burgess Owens (R-UT) strongly criticized the Department for its lack of accountability in his opening remarks,

The Committee, bipartisan lawmakers, and the public have all demanded answers. And yet the Department has been largely unresponsive to requests for information, even going so far as to stonewall a non-partisan Government Accountability Office’s (GAO) investigation into the FAFSA failures. It has taken a subpoena from this body for the Department to finally respond to the GAO’s request. This lack of accountability is unacceptable, as students and taxpayers ultimately pay the price.

Why This Is Important

The failed FAFSA rollout has impacted many of our member institutions as was shared with the Department in various listening sessions and through the Request for Information (RFI). This report and hearing is important as the Department continues to prepare for the release of its 2025-26 FAFSA in the upcoming months.

For more information:

GAO Summary

GAO Report

NEW FVT/GE REPORTING DEADLINE: JANUARY 15, 2025

Cybersecurity NPRM Coming in October 2024

The Department of Education will soon publish a Notice of Proposed Rule Making related to cybersecurity standards for institutions. Why is the Department planning a new regulation on cybersecurity? What can schools expect? Find out in our new blog post by Jed Brinton, CECU’s Senior Vice President and General Counsel, and former Deputy General Counsel at the Department of Education.

Read More Here

NEW FVT/GE REPORTING DEADLINE: JANUARY 15, 2025

What You Need to Know

The Department just announced that the Financial Value Transparency and Gainful Employment reporting requirements are delayed from October 1, 2024 to January 15, 2025. This delay comes after Members of Congress, interest groups, and institutions throughout the higher education sector pressured the Department to delay the reporting deadline. The delay also comes following the Department’s announcement on August 30, 2024 that it has temporarily suspended reviewing NSLDS FVT/GE Completers Lists.

Why This is Important

Institutions now have a significant amount of additional time to complete their reporting obligations.

For more information:
Announcement

Two Senate Health, Education, Labor and Pensions (HELP) committee members led a bipartisan group of 18 senators to request an extension of the reporting deadline until July 2025.

The letter cites concerns over the 2024-2025 FASFA rollout and concerns that the minimal extension for GE/FVT reporting does not provide adequate time for institutions, particularly financial aid offices, to comply with the deadline.

AACS will keep you updated should any extension occur.  As of today, the reporting deadline is still October 1, 2024.

For more information:

Link to Senator Kaine press release

Bipartisan Senate Letter

Regulatory Update

What You Need To Know

On August 30, 2024, the Department announced that it has temporarily suspended reviewing NSLDS Financial Value Transparency and Gainful Employment (FVT/GE) Completers Lists. In the announcement, the Department states,

We have newly identified issues with the Completers Lists and FVT/GE Reports based upon feedback and questions raised by the community. We suggest institutions pause reviews of the Completers Lists and use of the FVT/GE Reports as we work to resolve these issues. We will notify the community with an update to this announcement once resolved, and we will review the related reporting deadlines. We appreciate the community’s diligence in identifying issues.

The Department originally provided draft FVT/GE Completers Lists to institutions on August 8, 2024. Institutions have a 60-day period to review and correct student information on the draft FVT/GE Completers List, with the correction period closing on Oct. 7, 2024.

Why This Is Important

It is uncertain whether this delay will have any impact on the FVT/GE reporting requirements. It is noteworthy that in the announcement, the Department stated that it “will review the related reporting deadlines” as a result of this delay. We will continue to monitor the Department’s announcements for any developments.

For more information:
Electronic Announcement

Regulatory Update

Today, the U.S. Department of Education released the framework for the testing period it will use starting October 1, 2024, ahead of making the 2025–26 Free Application for Federal Student Aid (FAFSA®) available to all students and contributors on or before December 1. The Department’s top priority remains ensuring the FAFSA form is stable and delivers a smooth and secure experience for families, schools, states, and other partners.

For the first beta test (Beta 1)—which will begin on October 1—the Department seeks to partner with community based organizations (CBOs) that can reach a broad and diverse set of student and contributor populations and have the ability to partner with institutions to test the ISIRs generated by submitted FAFSA forms. Further details can be found in our press release and electronic announcement. Starting today through September 5, CBOs can submit a form to express interest in participating in Beta 1.

In subsequent beta tests, the Department will work with other types of organizations and institutions—in addition to CBOs—to recruit participants. The Department will seek to work with high schools that can host FAFSA completion nights and institutions that can recruit their returning students to submit the FAFSA form and process those students’ ISIRs. Working with high schools and additional institutions of higher education will allow the Department to test the FAFSA form with tens of thousands of students from a wider variety of student populations and help the Department identify and fix major issues before the application is available to all students and contributors. The Department also may directly recruit students in later beta tests. In the coming weeks, the Department will announce additional details about later beta tests and will provide information about how the Department will recruit participants, as well as how organizations can apply. Applicants for Beta 1 also will be eligible to participate in later beta tests.

Federal GR Update: AACS Meets with Elected Officials

Your AACS leadership is once again working diligently to protect and support our unique sector of education. The beauty, barber, and wellness sector of tax-paying schools is unique in many ways and it is important our elected officials understand our impact on the country’s economy.

AACS Chair, Cathy Koluch, and AACS Executive Director, Cecil Kidd, were invited to attend Congressman Burgess Owens’ retreat in South Carolina earlier this month. Koluch and Kidd were able to spend three days of quality time with Congressman Owens, his Chief of Staff, Lee Lonsberry, and other members of his staff. The event culminated with a private dinner with Congressman Owens where Koluch and Kidd were able to discuss the most pressing issues to our schools, the owners, staff, and most importantly the students who attend our institutions.

Last week while attending a fundraiser for Congressman Juan Ciscomani, AACS Chair Cathy Koluch met with Speaker Mike Johnson. During the Q&A portion of the meeting, Koluch asked the Speaker if he would help encourage the President to repeal Gainful Employment in his first 100 days, should former President Trump be elected. Speaker Johnson assured the attendees that President Trump supports the trades and trade schools, and he is quite aware of the current administration’s policies affecting education.

Yesterday, more than 400 beauty professionals in Utah, including numerous AACS member school owners, directors, educators, and students, showed up at the Capitol Building in Salt Lake City to attend the Business and Labor Interim Committee meeting to oppose the recommendations to replace the cosmetology license with numerous micro credentials. The Utah Office of Licensure Review submitted this proposal without input from the beauty, barber, and wellness education sector. The report also stated that licensure hours should be reduced because it is not the state’s responsibility to legislate skill, but rather to regulate safety. The representatives from the beauty education sector made it clear that changing the licensure structure of beauty and wellness careers in Utah would put it out of step with all other states and make it almost impossible for licensed professionals to move to another state to practice. The reduction of hours and the creation of the micro credentials would also make most of the educational programs too short for the students to receive federal Pell Grant funding. The recommendations will most likely be drafted into legislation that will be presented to the same committee in October for a vote.

The AACS leadership and legal team will continue to monitor updates on these issues and keep our members informed.

 More About Advocacy

The Department of Education’s FSA Announces New PPA Transparency Measures

The Department of Education Office of Federal Student Aid (FSA) announced it will begin publishing certain information related to Title IV Program Participation Agreements on the FSA datacenter website on a regular basis. The announcement states that FSA will publish:

• the participation statuses of the institutions currently participating in one or more Title IV programs;
• an example of a typical full certification PPA and copies of all provisional PPAs executed between Jan. 1, 2024 and June 26, 2024;
• FSA will add copies of provisional PPAs that are issued after June 26, 2024; and,
• a list of adverse administrative actions initiated on or after Oct. 1, 2021 (the start of Fiscal Year 2022) through July 31, 2024 against institutions participating in Title IV programs.

FSA intends for these postings to improve transparency and will update this information on a regular basis. CECU is concerned that the publication of this information may be used by organizations opposed to proprietary institutions to continue to misrepresent the sector. CECU will provide additional information on this announcement when it becomes available from FSA.

The U.S. Department of Education announced today that the 2025-26 FAFSA will only be released for testing with a limited set of students and institutions on October 1, and that the full release of the FAFSA may not occur until December 1. In recent years the FAFSA had been fully released on October 1 each year. Last year the Department’s process of updating the FAFSA caused significant delays that pushed the full release back to December 31, 2023. As recently as May Secretary Cardona had shared his expectation with Congress that the 2025-2026 FAFSA would be ready by October 1, and an electronic announcement in June had reiterated that commitment. However, today’s announcement suggests that the next FAFSA cycle may look more like the 2024-2025 FAFSA rollout than prior years’ schedules.

The Department indicated that its goal with the limited release on October 1 is to identify and resolve system errors to ensure the form is user-friendly for students and other stakeholders. During the testing period, the Department plans to provide regular updates while also seeking feedback through listening sessions in August and through a formal Request for Information to be released next week. Additional information will be provided in the coming weeks by the Department about the testing period.

Read more coverage of the issue in this story from The Hill: FAFSA forms delayed again after last year’s shaky rollout of revamped applications.

GOVERNMENT RELATIONS HIGHLIGHTS

Draft Completer List for FVT/GE: This past weekend, the Department sent draft Financial Value Transparency and Gainful Employment (FVT/GE) Completers List to all institutions of higher education.

FVT/GE FAQ: The Department has added additional Frequently Asked Questions (FAQs) to its FVT/GE Topics Page. All new guidance is marked as NEW. The additional FAQs pertain to a number of relevant reporting topics.

Senate Appropriations Bill: The Senate Appropriations Committee passed the Labor, Health and Human Services, Education and Related Agencies Appropriations Act, 2025, which includes $79.6 billion in discretionary funding for the Department of Education. The legislation increases the maximum Pell Grant Award by $100 to $7,495 for all institutions of higher education.

DRAFT COMPLETER LIST FOR FVT/GE

What You Need To Know

This past weekend, the Department sent draft Financial Value Transparency and Gainful Employment (FVT/GE) Completers List to all institutions of higher education. The list was transmitted to each institution’s Student Aid Internet Gateway (SAIG) TG mailbox. If an institution did not receive a message, it is likely that the institution has a location which is not yet enrolled NSLDS FVT/GE reporting. Institutions now have a 60-day period (from August 6, 2024 to October 5, 2024) to review and correct student information on the draft FVT/GE Completers List.

During this 60-day period, schools can add or remove students from the list or opt to exclude them from the FVT/GE calculations using NSLDS Enrollment Reporting, FVT/GE reporting, or the FVT/GE Completers List page on the NSLDS Professional Access website. Following this review period, each school’s Completer List is finalized and sent to the Internal Revenue Service to gather the annual median earnings data for GE purposes.

Why This Is Important to You

As provided in the FVT/GE Final Rule, institutions are required to annually report two types of data to the NSLDS: student-specific information and program-specific information. Institutions must comply with the reporting deadlines in order to ensure compliance with Department regulations. It is essential that all institutions closely analyze the draft Completers List and provide any corrections to the Department prior to the October 5, 2024 deadline. Any students not excluded from the Completer List will be included in the annual median earnings data used for GE purposes.

For more information:

Electronic Announcement

FVT/GE FAQ

What You Need To Know

The Department has added additional Frequently Asked Questions (FAQs) to its FVT/GE Topics Page. All new guidance is marked as NEW. The additional FAQs pertain to a number of relevant reporting topics.

Why This Is Important to You

Institutions will have until October 1, 2024 to provide all required reporting for FVT/GE. The Department indicated that it will continue to add future FAQs to its website as it receives additional questions.

For more information:

FAQ Page

SENATE APPROPRIATIONS BILL

What You Need To Know

The Senate Appropriations Committee passed the Labor, Health and Human Services, Education and Related Agencies Appropriations Act, 2025, which includes $79.6 billion in discretionary funding for the Department of Education. The legislation increases the maximum Pell Grant Award by $100 to $7,495 for all institutions of higher education. Last month, the House Appropriations Committee previously passed its FY 2025 Labor, Health and Human Services, Education, and Related Agencies Appropriations Act, which maintains the current Pell Grant Award level at $7,495.

Why This Is Important to You

The two chambers of Congress will have a short period of time to pass its spending bills prior to the expiration of FY2024 funding on September 30, 2024. It is likely that Congress may consider a continuing resolution, as it did last year.

For more information:

Senate Appropriations Committee Press Release

TITLE IX UPDATES

On August 1, 2024, the Title IX Final Rule took effect for 24 states, excluding 26 states that were granted a preliminary injunction by a federal court. The states in which the Title IX Final Rule did not take effect, include:

1. Alabama;
2. Alaska;
3. Arkansas;
4. Florida;
5. Georgia
6. Idaho;
7. Indiana;
8. Iowa’
9. Kansas;
10. Kentucky;
11. Louisiana;
12. Mississippi;
13. Missouri;
14. Montana
15. Nebraska;
16. North Dakota;
17. Ohio;
18. Oklahoma;
19. South Carolina;
20. South Dakota;
21. Tennessee;
22. Texas;
23. Utah;
24. Virginia
25. West Virginia; and
26. Wyoming.

Why This Is Important to You

On April 19, 2024, the Department released its final rule on Title IX (“Final Rule”). Title IX institutions in the states referenced above are not be bound by the Final Rule and will prepare for the 2024-2025 school year based on the 2020 Title IX regulations until the cases are decided in court.

FAFSA INVESTIGATION

What You Need To Know

House Education and Workforce Committee Chairwoman Virginia Foxx (R-NC) subpoenaed Secretary Cardona requesting documentation and communication relating to the Department’s failed FAFSA rollout. In the accompanying letter to the Secretary, Chairwoman Foxx states,

Subsequently, on May 31 Senate HELP Ranking Member Cassidy and I wrote to you expressing our concerns about how the Department’s failure to provide GAO full and complete information and documents is hindering GAO’s ability to perform its FAFSA-related work for Congress…Further, Comptroller General Dodaro wrote two letters to you on May 20 providing great specificity about GAO’s many meetings with the Department (dating back to February 28, 2024), its requests, and its offer of accommodations to the Department—all for the purpose of obtaining the requested information and documents. Though GAO has received some information and documents, many pending requests remain with the Department over four months later.

Why This is Important to You

The Department’s failed FAFSA rollout has had a significant impact on all institutions of higher education and could impact enrollment.

For more information:

Chairwoman Foxx Press Release

Subpoena

Department Sends Draft Completers List for FVT/GE

What You Need To Know

This past weekend, the Department sent a draft Financial Value Transparency and Gainful Employment (FVT/GE) Completers List to all institutions of higher education. The list was transmitted to each institution’s Student Aid Internet Gateway (SAIG) TG mailbox. If an institution did not receive a message, it is likely that the institution has a location which is not yet enrolled in NSLDS FVT/GE reporting. Institutions now have a 60-day period (from August 6, 2024 to October 5, 2024) to review and correct student information on the draft FVT/GE Completers List.

During this 60-day period, schools can add or remove students from the list or opt to exclude them from the FVT/GE calculations using NSLDS Enrollment Reporting, FVT/GE reporting, or the FVT/GE Completers List page on the NSLDS Professional Access website. Following this review period, each school’s Completer List is finalized and sent to the Internal Revenue Service to gather the annual median earnings data for GE purposes.

Why This Is Important to You

As provided in the FVT/GE Final Rule, institutions are required to annually report two types of data to the NSLDS: student-specific information and program-specific information. Institutions must comply with the reporting deadlines in order to ensure compliance with Department regulations. It is essential that all institutions closely analyze the draft Completers List and provide any corrections to the Department prior to the October 5, 2024 deadline. Any students not excluded from the Completer List will be included in the annual median earnings data used for GE purposes.

For more information:

Electronic Announcement

Today, the Senate Committee on Appropriations considered a handful of appropriations bills to fund government operations. The mark-up included the Labor-HHS-Education appropriations bill which funds the Department of Education (Department).

The Committee report expresses concern with the Department’s delays and missteps in implementation of the simplified FAFSA application and provides an additional $100 million to administer federal student aid programs in the bill. The proposal is $625 million less than the increase requested by the White House for student aid administration.

Additionally, the maximum Pell Grant award would receive a $100 increase — to $7,495. The bill maintains funding for Federal Work Study and the Federal Supplemental Educational Opportunity Grant. A summary of the Labor-HHS-Education funding bill can be found here.

The bill does not include any new provisions that target proprietary education providers, nor were any amendments of the kind offered during the perfunctory consideration of the bill.

Last week, the House pulled its version of Department of Education funding from floor consideration because it lacked the votes in the Republican caucus to pass. It is unlikely the bill will get consideration after the August recess. The Senate is not expected to pass any of the fiscal 2025 appropriations bills on the floor.

Both chambers are now adjourned for the August recess and will return for three weeks of legislative business in September before government funding expires. Congress will turn its attention to passing a continuing resolution when lawmakers return, in the hopes of averting a government shutdown on October 1. Then bipartisan, bicameral government funding talks are expected to begin after the November 5 elections.

Updates on the College Scorecard

The U.S. Department of Education is introducing two new innovative toolkits that extend the utility and capabilities of our College Scorecard; one tailored specifically for teachers, and another for school counselors and college access advisors. Collectively, these resources are designed to equip education professionals with the information and tools they need to guide students towards their best postsecondary education decision. To help inform that process with up-to-date, objective information, the Department recently refreshed several of Scorecard’s key data points such as post completion earning calculations at the institutional and program level to ensure users have access to the most recent value outcomes when comparing programs of study and institutions.

You can read more in a new post on the Department’s Homeroom blog. To access these toolkits and how to integrate them into your educational practices, please click on the “Resources ” tab located at the top right of the College Scorecard page.

The Department will also be hosting a public webinar on August 1st with the American School Counselor Association to share these toolkits and how to use the College Scorecard in the classroom. You can register for the webinar here. Please note that while the event is open to the public, attendees will need to create a free account with ASCA in order to register.

OIRA Approves Proposed Rule on Program Integrity and Institutional Quality

What You Need To Know

Last week, AACS representatives met with Office of Information and Regulatory Affairs (“OIRA”) to discuss the impact that the Department’s Proposed Rule on Program Integrity and Institutional Quality will have on the beauty, barber, and wellness industry. Other interested parties, such as the American Association of Community Colleges (“AACC”), also met with OIRA and similarly expressed concern over the Department’s potential inclusion of provisions which disallow asynchronous distance learning in clock hour programs. Yesterday, OIRA approved the Proposed Rule and it will now be sent back to the Department, where the Department has indicated that it will publish a Notice of Proposed Rulemaking (”NPRM”) this week. As stated by Under Secretary James Kvaal in his blog post on the Department’s website,

This package of proposed rules will update and improve outdated processes, consolidate rules, and establish more consumer-friendly policies for students to access the aid to which they are entitled. The NPRM will also propose improvements to how institutions report enrollment in distance education programs to get better data on the outcomes of students who attend those types of programs and help the Department more accurately determine eligibility for closed school loan discharges. Additionally, the proposed rule will address eligibility for certain Federal TRIO programs.

The Proposed Rule includes regulations on the following topics: Distance Education, Return of Title IV, HEA Funds, and Federal TRIO Programs.

The draft language for the Proposed Rule was formed via the Negotiated Rulemaking Committee process, which held three sessions between January and March, 2024. The Department considered two proposals that particularly impact AACS members: (i) disallow asynchronous distance learning in clock hour programs that participate in Title IV federal student aid programs; and (ii) the exclusion of books and supplies (which includes kits for beauty, barber, and wellness institutions) from the definition of “tuition, fees and institutionally provided food and housing.” The negotiators did not reach consensus on either issue. In the Negotiated Rulemaking process, once negotiations have concluded, if consensus language is reached on a particular provision, the Department is required to use that regulatory language in its NPRM. As consensus was not reached, the Department may use regulatory language developed during the negotiations as the basis for its NPRM, or develop new regulatory language for all or a portion of its NPRM.

Why This is Important to You

Once the Department publishes the Notice of Proposed Rulemaking, all parties will have the opportunity to submit a public comment on the draft language of the rule. The two provisions referenced above may significantly impact AACS member institutions. As to the regulation on asynchronous distance learning, those cosmetology schools that have incorporated asynchronous distance learning into their programs will lose that flexibility.

The proposed changes to the definitions of “books and supplies” prohibits institutions from automatically charging students for books and supplies without initially providing students with an option to purchase these items from a third-party. Students will still have the option to “opt-in” and purchase the items directly from the institution.

For more information:

Update on Department of Education’s Postsecondary Education Regulatory Work

The Week That Was in Washington

Much has happened this week in Washington! With all the focus on the presidential campaign, it would be easy to overlook the significant activities that have happened related to our key issues. As the week comes to a close, we wanted to provide our members an update on the many different important issues that were addressed this week, touching all three branches of the federal government.

Congress

House Passes Resolution to Stop Biden’s Title IX Rule
On Thursday, the House voted 210-205 along party lines to pass a joint resolution invoking the Congressional Review Act, which allows Congress to overturn Title IX. The bill will almost certainly be ignored by the Democrat-controlled Senate. President Biden has already issued a veto warning if the bill did make it to his desk. In addition, federal courts have blocked implementation of the rule in more than a dozen states.

Education Appropriations for Fiscal Year 2025
On Wednesday, the House Appropriations Committee marked-up the Labor-HHS-Education spending bill for fiscal year 2025. The bill would provide $72.34 billion for the Education Department, including $67.95 billion in discretionary funds. Total appropriation is roughly $11 billion below fiscal 2024 funding levels and $14.54 billion below the White House’s budget request.

Defunding the Biden Regulations: Importantly, Section 315 of the bill would prohibit the use of funds for the execution of borrower defense to repayment, the 90/10 final rule, and nearly everything in the Financial Value Transparency and Gainful Employment final rule – including the entirety of the Gainful Employment provision.

House Appropriations Chairman Tom Cole (R-OK) wants to get all 12 appropriations bills passed on the House floor prior to the August recess, but he has also acknowledged that good faith negotiations will not take place until after the November elections.

The Senate Appropriations Committee has yet to release its proposal for fiscal 2025 Labor-HHS-Education funding.

Education Committee Advances Bill to Mandate FAFSA Release Date
The House Committee on Education and the Workforce advanced a bill Wednesday that would require the Department of Education to release the Free Application for Federal Student Aid (FAFSA) by Oct. 1 each year, including 2024. Rep. Erin Houchin (R-IN) introduced the new bill.

The Republican-controlled committee voted 34-6 to send the legislation to the full House of Representatives. The proposal received conditional support from some Democratic lawmakers, who called for increased investment in the Department to allow it to fulfill its mandate. If this bill passes the House it is still highly unlikely the Senate will consider it.

House and Senate Republicans Demand Answers on FAFSA Rollout
U.S. Senator Bill Cassidy, M.D. (R-LA), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, along with U.S. Representative Virginia Foxx (R-NC), chairwoman of the House Committee on Education and the Workforce, urged the Department of Education Office of Inspector General to provide an update on its investigation into the Biden administration’s botched FAFSA implementation.

Sen. Durbin and Rep. Cohen Introduce Bill to Revive the 85/15 Rule
Senate Majority Whip Dick Durbin (D-IL) and Congressman Steve Cohen (D-TN) introduced the Protecting Our Students and Taxpayers (POST) Act that would reinstate the 85/15 rule. This bill will not receive consideration in the House and is highly unlikely to receive consideration in the Senate. However, the reintroduction demonstrates the continued need to repeal the 90/10 rule altogether as opponents of proprietary education continue to view the rule as a primary mechanism to close proprietary institutions by regulatory bludgeoning. The bill would:

• Reinstate the original federal revenue cap of 85 percent on for-profit colleges, creating an 85/15 rule;
• Align the new 85/15 rule to the current 90/10 rule that was passed in the American Rescue Plan and the Department of Education’s regulations;
• Count institutional loans in the calculation of federal revenue sources;
• Eliminate a proprietary institution’s eligibility to receive federal funding after one year of noncompliance instead of the three consecutive years it now takes; and
• Require proprietary institutions that lose federal funding eligibility to meet all eligibility and certification requirements for a minimum of two years before regaining eligibility.

What’s Next in Congress?
Both chambers are in recess next week while the Republican Convention takes place in Milwaukee. CECU’s CEO Jason Altmire and Senior Vice President of Regulatory and Legislative Affairs Jordan Wicker will be attending and meeting with Members of Congress, Senators, and Governors during the Convention to share the critical role proprietary career education plays in providing opportunities for upward mobility and training the American workforce.

Congress will return to work for a quick week and half to close out July prior to the August recess. There is ongoing conversation among Chairman Bernie Sanders (I-VT), Ranking Member Bill Cassidy (R-LA), Senator Tim Kaine (D-VA), and others in an effort for the Senate HELP Committee to mark-up bills related to federal education and workforce programs. CECU will provide an update when mark-up details are formalized.

Join the CECU Government Relations team as they review the latest policy developments and CECU advocacy efforts in Congress, the Administration, and the courts. We will discuss the impact of these policies on institutions, explain CECU’s efforts to advance the sector’s priorities, and answer your questions. Note: you must log in to register for the webinar.

Register

Regulation

The Biden Administration released its Spring 2024 Unified Agenda, which included updates on several relevant regulatory packages. Most notably, the estimated dates for the NPRM on the regulatory packages addressing Distance Education and Return to Title IV have been moved from October 2024 to July 2024. This coincides with the fact that those packages are already undergoing OIRA review pursuant to EO 12866, suggesting that an NPRM on those subjects should be forthcoming very soon.

Litigation

Title IX

Two additional courts entered preliminary injunctions against the Biden Title IX Rule, the first in the case brought by Carroll Independent School District in Texas and the other in the case brought by the state of Texas itself. All five of the federal judges that have ruled on motions for preliminary injunction so far (out of the ten lawsuits that have been filed against the Biden Title IX Rule) have granted the injunctions, although all of them have been limited to the plaintiffs before the Court. The sixteen states covered by the injunctions now includes Louisiana, Mississippi, Montana, Idaho, Texas, Tennessee, Kentucky, Ohio, Indiana, Virginia, West Virginia, Kansas, Alaska, Utah, and Wyoming. However, it is unclear which of the injunctions if any apply only to public schools in the state rather than all schools in the state, so we advise schools in those states to talk with legal counsel about the applicability of the specific injunction in their circumstances. In addition, in the Kansas case the Judge has requested that the several nonprofit membership groups that are plaintiffs in that case provide the court with a list of the schools covered by their membership, which has the potential to expand the reach of the Kansas preliminary injunction significantly across the country.

Borrower Defense to Repayment

Although the seven days specified in Rule 41 of the Federal Rules of Appellate Procedure have already passed following the Fifth Circuit’s denial of the Department’s petition for rehearing en banc, the Clerk of the Court has not yet issued the mandate returning the case to the District Court, but the mandate should be issued soon. In the meantime, the Department has until early September to decide whether to file a writ of certiorari to ask the Supreme Court to take the case on appeal.

Gainful Employment

The two lawsuits against the Biden Gainful Employment Final Rule, which were already both before Judge O’Connor in the Northern District of Texas, were consolidated into a single case, although it appears that the separate plaintiffs from each case will maintain their ability to file separate briefs on summary judgment. The parties indicated that they would likely agree to a briefing schedule for summary judgment that would be similar to the one already set in the AACS case (under which summary judgment briefing would conclude in November 2024), and the Judge instructed the parties to submit an amended briefing schedule. It is still unclear whether the plaintiffs in the Ogle lawsuit will appeal from the District Court’s denial of their motion for a preliminary injunction.

Bare Minimum/150% Rule

In the 360 Degree/Cortiva lawsuit, Judge Pittman rejected the Department’s attempt to limit the preliminary injunction to only apply to the plaintiffs via a motion for clarification. Instead, he granted the motion for clarification but clarified that the order barred the Department from applying its new Bare Minimum Rule to any institution, leaving in place the longstanding 150% Rule instead. The Department then finally published an Electronic Announcement indicating that it would comply with the preliminary injunction, although in that guidance it characterized the 150% Rule as if it were a hard cap (like the Bare Minimum Rule) rather than a safe harbor as indicated in the text of the regulation itself.

Potential 90/10 litigation

Discussions are ongoing about one or more lawsuits that could be brought soon against the Department’s interpretation of the 90/10 rule published in the aftermath of the Congressional action moving veterans’ benefits into the 90 percent part. In addition to the longstanding concerns about the Department’s insertion of a limitation on distance education via the preamble text at the Final Rule stage, other concerns have been raised regarding the retroactivity of the rule as well as various non-inclusion prohibitions for shorter cash programs that aren’t Title IV eligible, WIOA funds routed through state entities, and even funds from product sales earned during training. If you are potentially impacted by these aspects of the 90/10 rule or others and would be interested in learning more about possible litigation on this issue please contact Jed Brinton at Jed.Brinton@career.org for more information.

We wish everyone a fantastic weekend, and as always, please do not hesitate to contact anyone of us on your CECU team if you have any questions or would like to discuss any of these issues.

eZ-Audit System – 90/10 Regulations
Date: July 11, 2024
Source: American Association of Cosmetology Schools (AACS)

eZ-Audit System – 90/10 Regulations

What You Need To Know

Today, the Department released an Electronic Announcement which informs proprietary institutions that the eZ-Audit system is now ready to receive annual financial statements and compliance audits. Even if a proprietary institution has already submitted its documentation via the Common Origination and Disbursement website or via email at FSAFinancialAnalysisDivision@ed.gov, it still is required to resubmit the Annual Submission through eZ-Audit within three weeks of the notification (July 11, 2024).

Why This Is Important

The revised 90/10 regulations took effect on July 1, 2023. The new 90/10 Rule requires institutions to submit annual financial statements and compliance audit submission guidance, including the 90/10 revenue footnote disclosure, to the Department via the eZ-Audit system.

For more information:

Electronic Announcement

AACS Federal GR Update
Date: July 11, 2024
Source: American Association of Cosmetology Schools (AACS)

GOVERNMENT RELATIONS HIGHLIGHTS

• 100% Certification Rule Lawsuit: Judge Mark Pittman clarified his previous order in 360 Degree Education v. U.S. Department of Educationthat the district court’s grant of a Preliminary Injunction of the Bare Minimum Rule extends nationwide.
• Chevron Doctrine: The Supreme Court overturned the Chevron Doctrine in its ruling in Loper Bright Enterprises et al. v. Raimondo, Secretary of Commerce, et al.
• NSLDS FVT/GE Reporting: The Department issued an Electronic Announcement stating that institutions are now able to report Financial Value Transparency and Gainful Employment (FVT/GE) data to the National Student Loan Data System (NSLDS).

100% CERTIFICATION RULE LAWSUIT

What You Need to Know

Last week, Judge Mark Pittman clarified his previous order in 360 Degree Education v. U.S. Department of Education that the district court’s grant of a Preliminary Injunction of the Bare Minimum Rule extends nationwide. In response to the Defendant’s motion for clarification, Judge Pittman stated, “This language seems to make clear that the Court limited its relief to the Bare Minimum Rule (rather than the entire Final Rule), but it did not limit relief to Plaintiffs.”

Following this order, the Department released an FSA Announcement confirming that the current “150% Rule” remains in effect, pending the outcome of future court decisions on the issue. As stated in the announcement, “until further notice institutions must continue to comply with the maximum program length regulations that were in effect prior to July 1, 2024.”

Why This is Important

The revised 100% Certification Rule was set to take effect on July 1, 2024. This ruling prevents the Department from enforcing the rule against all institutions while the case is pending.

For more information:

Motion for Clarification

Department FSA Announcement

CHEVRON DOCTRINE

What You Need To Know

The Supreme Court overturned the Chevron Doctrine in its ruling in Loper Bright Enterprises et al. v. Raimondo, Secretary of Commerce, et al. Chief Justice Roberts wrote in the majority opinion, “Chevron is overruled. Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA requires. Careful attention to the judgment of the Executive Branch may help inform that inquiry. And when a particular statute delegates authority to an agency consistent with constitutional limits, courts must respect the delegation, while ensuring that the agency acts within it. But courts need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous.”

Why This Is Important

This ruling could have implications for the AACS GE lawsuit against the Department.

For more information:

Loper Bright Enterprises

NSLDS FVT/GE REPORTING

What You Need To Know

The Department issued an Electronic Announcement stating that institutions are now able to report Financial Value Transparency and Gainful Employment (FVT/GE) data to the National Student Loan Data System (NSLDS). NSLDS will allow for a variety of reporting methods, including batch processing, online submittal, or the spreadsheet submittal process through NSLDS.

The deadline to submit FVT/GE data for the initial reporting period is Oct. 1, 2024. The most recently completed award year for the initial reporting period is the 2023–24 award year, which ended on June 30, 2024.

Why This Is Important

As provided in the FVT/GE Final Rule, institutions are required to annually report two types of data to the NSLDS: student-specific information and program-specific information. Institutions must comply with the reporting deadlines in order to ensure compliance with Department regulations.

AACS is hosting a webinar on July 11, 2024 covering the required data that institutions must report, guidance provided by the Department of Education on this topic, and actions that institutions should take now in order to ensure compliance by the October 1, 2024 deadline.

For more information:

Electronic Announcement

TITLE IX LAWSUITS

What You Need To Know

There have been nine lawsuits filed by states, school districts, independent organizations, and individuals against the Department of Education regarding the Final Rule for Title IX. In two of those lawsuits, plaintiffs moved for and were granted preliminary injunctions.

The states of Louisiana, Mississippi, Montana, and Idaho along with the Louisiana Department of Education, Rapides Parish School Board, and seventeen Louisiana School Districts filed suit in the United States District Court in the Western District of Louisiana against the Department on April 29, 2024. The court granted the motion for preliminary injunction on June 13, 2024. The Department recently filed an appeal with the Fifth Circuit to overturn the granting of the preliminary injunction.

Tennessee, Kentucky, Ohio, Indiana, Virginia, and West Virginia filed suit in the United States District Court in the Eastern District of Kentucky against the Department on May 3, 2024. The Plaintiffs moved for a preliminary injunction and the court granted their motion on June 17, 2024.

Last week, Representative Mary Miller (R-IL) introduced H.J. Res. 165, which proposes to prevent the implementation of the Title IX Final Rule. It is not likely that the Resolution will garner sufficient support in the Senate.

Why This Is Important

On April 19, 2024, the Department released its final rule on Title IX (“Final Rule”). The Final Rule and its accompanying regulations are slated to go into effect on August 1, 2024, when federally funded education programs and activities must comply or they will be denied federal funding. Title IX institutions in the ten states referenced above will not be bound by the Final Rule and will prepare for the 2024-2025 school year based on the 2020 Title IX regulations until the cases are decided in court.

For more information:

Preliminary Injunction Order – Louisiana

Preliminary Injunction Order — Tennessee

Appeal

H.J. Res. 165

HOUSE EDUCATION SPENDING BILL

What You Need To Know

The House Appropriations Committee, Subcommittee on Labor, Health and Human Services, Education, and Related Agencies advanced its FY 2025 spending bill for the Department of Education to the full House Appropriations Committee. The full committee markup is scheduled for July 10, when the House is back in session following its July Fourth Recess. Under the proposed bill, the Department would experience a 13% budget cut. Lead Democrats on the Appropriations Committee have already stated that Democrats would not support any funding measures that propose significant budget cuts to the Department.

Why This Is Important

The FY 2025 spending bill will dictate how much funding is allocated towards federal programs, including the Federal Pell Grant Program (among others). This will likely be a lengthy process, as both parties have strong stances on the required funding for the Department.

For more information:

Draft Bill

Judge Denies Government’s Motion to Limit 100% Certification Injunction
Date: July 03, 2024
Source: American Association of Cosmetology Schools (AACS)

Judge Denies Government’s Motion to Limit 100% Certification Injunction

Yesterday, the judge in the 360 Degree Education v. U.S. Department of Educationcase denied the Department’s motion to limit the Preliminary Injunction to just the plaintiffs in the case. Judge Mark Pittman reiterated in his decision on the request for clarification that as the Court previously ordered, “enforcement and implementation of the Bare Minimum Rule, as described herein and contained in the Department of Education’s October 31, 2023 Final Regulations, is hereby ENJOINED pending resolution of this lawsuit.”

His decision clarified that the Bare Minimum Rule is enjoined nationwide and not just for the plaintiffs, which prevents the Department from applying the Bare Minimum Rule against any school in the country. Judge Pittman also reiterated “its desire for this case to progress to the merits quickly so the Preliminary Injunction lasts no longer than absolutely necessary for resolution of Plaintiff’s claim”. Click here to read the court’s response.

AACS will keep members posted on this case and all active litigation against the Department of Education which effects our sector.

For more information:

Court Order Clarifying Nationwide Preliminary Injunction

U.S. Department of Education Confirms 150% Rule to Stay In Place Until Further Notice
Date: July 03, 2024
Source: American Association of Cosmetology Schools (AACS)

DOE Confirms Current 150% Rule to Stay in Place Until Further Notice

Today, as a result of recent court decisions, the U.S. Department of Education released an FSA Announcement confirming the current “150% Rule” for clock hour programs will remain in effect for now, pending the outcome of future court decisions on the issue. According the announcement, “until further notice institutions must continue to comply with the maximum program length regulations that were in effect prior to July 1, 2024.”

AACS will continue to monitor and update membership with new developments as needed.

For more information:

FSA Announcement

FSA Opens FVT/GE Reporting in NSLDS
Date: July 01, 2024
Source: American Association of Cosmetology Schools (AACS)

FSA Opens FVT/GE Reporting in NSLDS

What You Need To Know

Today, Federal Student Aid (FSA) announced that schools may now begin reporting Financial Value Transparency and Gainful Employment (FVT/GE) data to the National Student Loan Data System (NSLDS). The announcement includes a description of various reporting methods, including batch processing, online submittal, or the spreadsheet submittal process through NSLDS. The deadline for submission is October 1, 2024.

Why This Is Important

AACS member schools will need to work to comply with the FVT/GE Rule and new regulations that went into effect today. AACS will continue to monitor the Department’s guidance and keep members updated with the latest information.

For more information:

Federal Student Aid (FSA) Announcement

FSA Opens FVT/GE Reporting in NSLDS
Date: July 01, 2024
Source: Career Education Colleges and Universities, (CECU)

FSA Opens FVT/GE Reporting in NSLDS

Federal Student Aid (FSA) announced today that schools can now begin reporting Financial Value Transparency and Gainful Employment (FVT/GE) data to the National Student Loan Data System (NSLDS). The announcement describes the different reporting methods, including batch processing, online submittal, or the spreadsheet submittal process through NSLDS, while reiterating that the deadline for submission is October 1, 2024.

As member schools work to comply with the FVT/GE Rule and the other new regulations from the Department that went into effect today, CECU will continue to monitor the Department’s guidance and update members as appropriate.

Breaking News: Supreme Court Ruling on Chevron
Date: June 28, 2024
Source: American Association of Cosmetology Schools (AACS)

SUPREME COURT RULING ON CHEVRON

What You Need To Know

In its opinion in Loper Bright Enterprises et al. v. Raimondo, Secretary of Commerce, et al. published today, the Supreme Court overturned the Chevron Doctrine. Chief Justice Roberts wrote in the majority opinion, “Chevron is overruled. Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA requires. Careful attention to the judgment of the Executive Branch may help inform that inquiry. And when a particular statute delegates authority to an agency consistent with constitutional limits, courts must respect the delegation, while ensuring that the agency acts within it. But courts need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous.”

Why This Is Important

This ruling is likely significant for the AACS GE lawsuit against the Department as the original case giving the Department the authority to define “Gainful Employment” relied on Chevron. Stay tuned for more updates about the AACS GE case as they develop.

AACS Federal GR Update
Date: June 26, 2024
Source: American Association of Cosmetology Schools (AACS)

GOVERNMENT RELATIONS HIGHLIGHTS

• 100% Certification Rule Lawsuit: The United States District Court for the Northern District of Texas, Fort Worth Division granted Plaintiffs’ motion for a preliminary injunction in 360 Degree Education v. U.S. Department of Education.
• Second GE Lawsuit: The United States District Court for the Northern District of Texas, Fort Worth Division denied a motion for a preliminary injunction in Ogle School Management v. U.S. Department of Education.
• Proposed Rule on Program Integrity and Institutional Quality: The Department of Education recently submitted its Proposed Rule on Program Integrity and Institutional Quality to the Office of Management and Budget’s (“OMB”) Office of Information and Regulatory Affairs (“OIRA”) for approval.

100% CERTIFICATION RULE LAWSUIT

What You Need to Know

The United States District Court for the Northern District of Texas, Fort Worth Division granted Plaintiffs’ motion for a preliminary injunction in 360 Degree Education v. U.S. Department of Education. The order prevents the Department’s revised 100% Certification Rule from taking effect on July 1, 2024. The order did not specify whether this injunction applies to only the parties in this case, or will be applied nationwide, but since the Plaintiff sought nation-wide relief, it appears this is a nation-wide injunction. Additionally, previous Fifth Circuit decisions indicate that the injunction may apply nationwide.

This ruling is significant as one of the criteria for a preliminary injunction is that the case is likely to succeed on the merits. In addition to this criteria, District Judge Mark Pittman held that the Plaintiff satisfied all four required conditions for granting a preliminary injunction:

1. Plaintiffs demonstrated that there is a substantial likelihood of success on the merits of this case;
2. Plaintiffs demonstrated that it will experience irreparable harm if the preliminary injunction was not granted;
3. The potential harm to the institutions outweighed any interests that the Department may have in enforcing the rule; and
4. The preliminary injunction is in the favor of the public interest, as the public interest is served when the law is followed.

Why This is Important

The revised 100% Certification Rule is set to take effect on July 1, 2024. AACS has provided updates to membership that the Department will use “enforcement discretion” for the period between July 1, 2024 and January 1, 2025. This ruling prevents the Department from enforcing the rule while the case is pending.

For more information:

Preliminary Injunction Order

SECOND GE LAWSUIT

What You Need to Know

The United States District Court for the Northern District of Texas, Fort Worth Division denied a motion for a preliminary injunction in Ogle School Management v. U.S. Department of Education. Ogle School Management, LLC and Tricoci University of Beauty Culture, LLC filed the lawsuit against the U.S. Department of Education challenging its Gainful Employment rule. This decision was not in the case brought by AACS.

In his ruling in the Ogle matter, Judge O’Connor held that “Plaintiffs have not met their burden to justify an extraordinary remedy of injunctive relief at this stage….[However] This holding is not a substitute for a merits-based decision. Plaintiffs may ultimately succeed upon review of the full administrative record at summary judgment.” The preliminary injunction would have blocked enforcement of the Gainful Employment Final Rule until the district court ruled on the case.

As part of the order, Judge O’Connor found:

1. At this initial point of the case, the Court is not convinced that the Department misinterpreted the definition of “gainful employment” to necessitate a ruling for injunctive relief. The Court initially held that “gainful employment” encompasses profitability and advantageous financial outcomes and, therefore, the Department has not exceeded its authority in promulgating this Final Rule.
2. As to whether the Final Rule is arbitrary and capricious, the Plaintiff has not yet met this burden as the Department engaged in “thorough rulemaking.” The Court found that the Department adequately reviewed and responded to each of the public comments proposed in the rulemaking process in accordance with the requirements of the Administrative Procedure Act.

Judge O’Connor further stated in the order, “Plaintiffs shall confer with Defendants regarding whether consolidation with American Association of Cosmetology Schools is appropriate.”

Why This is Important

AACS was hopeful that Ogle and Tricoci would be successful in obtaining a preliminary injunction against the enforcement of the GE Rule. However, the Judge has stated his ruling does not amount to a ruling on the merits. We additionally want to note that the AACS lawsuit includes a number of different arguments that were not raised in this lawsuit.

The case brought by AACS remains on track for summary judgment briefing to be completed this fall.

For more information:

Ogle School Management v. U.S. Department of Education

PROPOSED RULE ON PROGRAM INTEGRITY AND INSTITUTIONAL QUALITY

What You Need to Know

The Department of Education recently submitted its Proposed Rule on Program Integrity and Institutional Quality to the Office of Management and Budget (“OMB”) to the Office of Management and Budget’s Office of Information and Regulatory Affairs (“OIRA”) for approval. The Proposed Rule includes regulations on the following topics: Distance Education, Return of Title IV, HEA Funds, and Federal TRIO Programs. OIRA may review the Proposed Rule for up to ninety days, with a possibility to extend the review period to one-hundred and twenty days.

The draft language for the Proposed Rule was formed via the Negotiated Rulemaking Committee process, which held three sessions between January and March, 2024. The Department considered two proposals that particularly impact AACS members: (i) disallow asynchronous distance learning in clock hour programs that participate in Title IV federal student aid programs; and (ii) the exclusion of books and supplies (which includes kits for beauty and wellness institutions) from the definition of “tuition, fees and institutionally provided food and housing.” The negotiators did not reach consensus on either issue. In the Negotiated Rulemaking process, once negotiations have concluded, if consensus language is reached on a particular provision, the Department is required to use that regulatory language in its NPRM. As consensus was not reached, the Department may use regulatory language developed during the negotiations as the basis for its Notice of Proposed Rulemaking (“NPRM”), or develop new regulatory language for all or a portion of its NPRM.

During OIRA’s review of the Proposed Rule, the public has the option to request a meeting with OIRA. AACS has secured a meeting with OIRA to discuss its issues with the Proposed Rule. Following this review period, the Department will publish its NPRM in the Federal Register and invite the public to comment on the draft language.

Why This is Important

The two provisions referenced above may significantly impact AACS member institutions. As to the regulation on asynchronous distance learning, those cosmetology schools that have incorporated asynchronous distance learning into their programs will lose that flexibility.

The proposed changes to the definitions of “books and supplies” prohibits institutions from automatically charging students for books and supplies without initially providing students with an option to purchase these items from a third-party. Students will still have the option to “opt-in” and purchase the items directly from the institution.

BDR LAWSUIT

What You Need to Know

The U.S. Court of Appeals for the Fifth Circuit ruled against the U.S. Department of Education’s petition for rehearing in CCST v. U.S. Department of Education. The Department filed this motion to overturn the Fifth Circuit’s previous order of a preliminary injunction preventing the Department from implementing the 2022 Borrower Defense to Repayment Rule. Petitions for rehearing are rarely granted, and the Fifth Circuit was not expected to grant this motion.

Why This is Important

As a result of the order, the preliminary injunction of the 2022 Borrower Defense to Repayment Rule will remain in effect as the U.S. District Court for the Western District of Texas continues to hear the case.

For more information:

Fifth Circuit Order

TITLE IX LAWSUITS

What You Need to Know

There have been nine lawsuits filed by states, school districts, independent organizations, and individuals against the Department of Education regarding the Final Rule. In two of those lawsuits, plaintiffs moved for and were granted preliminary injunctions.

The states of Louisiana, Mississippi, Montana, and Idaho along with the Louisiana Department of Education, Rapides Parish School Board, and seventeen Louisiana School Districts filed suit in the United States District Court in the Western District of Louisiana against the Department on April 29, 2024. The court granted the motion for preliminary injunction on June 13, 2024. The Department recently filed an appeal with the Fifth Circuit to overturn the granting of the preliminary injunction.

Tennessee, Kentucky, Ohio, Indiana, Virginia, and West Virginia filed suit in the United States District Court in the Eastern District of Kentucky against the Department on May 3, 2024. The Plaintiffs moved for a preliminary injunction and the court granted their motion on June 17, 2024.

Why This is Important

On April 19, 2024, the Department released its final rule on Title IX (“Final Rule”). The Final Rule and its accompanying regulations are slated to go into effect on August 1, 2024, when federally funded education programs and activities must comply or they will be denied federal funding. Title IX institutions in the ten states referenced above will not be bound by the Final Rule and will prepare for the 2024-2025 school year based on the 2020 Title IX regulations until the cases are decided in court.

For more information:

Preliminary Injunction Order – Louisiana

Preliminary Injunction Order – Tennessee

Appeal

GUIDANCE ON GE METRIC REQUIREMENTS

What You Need to Know

The Department published an Electronic Announcement that provides additional information for institutions on the inclusion of new GE requirements under the Administrative Capability regulations in 34 C.F.R. § 668.16(t) and the Financial Responsibility regulations in § 668.171(c), which go into effect July 1, 2024.

Under the Administrative Capability Final Rule, institutions are required to receive less than half of its total Title IV, HEA funds from programs that are “failing” the new GE Final Rule for the most recent award year.

For the Financial Responsibility Final Rule, “[o]ne of the new mandatory triggers is § 668.171(c)(2)(iii), which is triggered when an institution receives at least 50 percent of its Title IV, HEA program funds in its most recently completed fiscal year (FY) from GE programs that are “failing” under subpart S of 34 C.F.R. Part 668 [GE Final Rule].

Why This is Important

The new Final Rules on Administrative Capability and Financial Responsibility are set to take effect on July 1, 2024. Institutions should be aware of its obligations under the Final Rules, and how non-compliance with the GE Final Rule may impact these other regulations.

For more information:

Electronic Announcement

GUIDANCE ON GE METRIC REQUIREMENTS

What You Need to Know

Last week, U.S. Senators Mazie K. Hirono (D-HI), Patty Murray (D-WA), Jack Reed (D-RI), and Sheldon Whitehouse (D-RI) and Representatives Mark Pocan (D-WI) and Robert C. “Bobby” Scott (D-VA) introduced the Pell Grant Preservation and Expansion Act of 2024. The legislation proposes to “double the maximum Pell Grant award, index the maximum award for inflation… makes the Pell Grant funding fully mandatory to protect it from funding shortfalls, expands the program to include DREAMers, and restores lifetime eligibility for the program to 18 semesters, among other changes that will benefit students.” The provisions in this legislation will apply to all institutions.

Why This Is Important

It is not likely that this legislation will garner sufficient Republican support to pass both chambers of Congress. However, this legislation represents another attempt by the Democratic Party to substantially increase the Pell Grant award among other provisions to make postsecondary education more affordable.

For More Information:

Press Release

Bill Text

Fact Sheet

FAFSA PARTNER PORTAL CORRECTIONS

What You Need to Know

The Department will host a webinar on Friday, June 28, 2024 at 3:00PM EST to demonstrate the process for institutions to submit FAFSA corrections on FAFSA Partner Portal. The webinar “will walk through the process of submitting school-initiated corrections electronically by entering the data manually in the FPP, as well as performing a dependency override and a professional judgement when federal tax information (FTI) is on the FAFSA.”

Why This is Important

We have continued to hear from membership about the impact that the FAFSA rollout has had on your administrative teams and students. The impact of the FAFSA rollout has been felt by almost every sector of the higher education industry. This webinar should provide helpful information to institutions to resolve any discrepancies with FAFSA applications.

For more information:

Electronic Announcement

Senate WIOA Discriminates Against Proprietary Schools
Date: June 25, 2024
Source: Career Education Colleges and Universities (CECU)

The Senate Health, Education, Labor and Pensions (HELP) Committee made available a discussion draft of a bill to reauthorize the Workforce Innovation and Opportunity Act (WIOA). This is a “discussion draft,” and the Committee is actively seeking feedback from stakeholders before introducing the bill. The Committee has requested all feedback be received by July 5. A section-by-section on the discussion draft can be found here.

CECU is gravely concerned that the discussion draft would create a risk-sharing component for training providers which would apply only to proprietary career education schools and not to other workforce program providers. The risk-sharing is for schools with “particularly poor outcomes,” as stated in the section-by-section provided by the Committee. CECU is working with the Committee voicing our concerns and advocating against provisions harmful to proprietary schools.

While CECU is conducting a thorough review, below are a few important provisions and how they relate to the House-passed WIOA reauthorization.

Statewide Funding Reservations: Similar to the House-passed WIOA proposal, the Senate discussion draft would allow states to set aside an additional 10% of WIOA Title I funding for statewide training initiatives. However, the draft is a bit more prescriptive and would require these funds to be used for industry/sector partnership efforts or employer-based training activities.

Funding: The bill does not propose specific authorized funding levels for any programs authorized under the legislation, instead using “such sums as may be necessary” language throughout the bill. This means that, as written, appropriations leaders would be given much more discretion in determining funding for WIOA as part of the wider federal budget and appropriations process. In addition, the discussion draft envisions providing a new formula funding stream to states and local communities using H-1B visa fees for the exclusive use of funding Individual Training Accounts. Leaving out funding authorization levels may be strategic to focus feedback on policy changes as opposed to the appropriate level of funding.

Please let CECU know if the changes described above may impact your school. If you would like to provide CECU feedback, we will relay any feedback we receive without attribution to any particular school or member. CECU will provide members with feedback on the discussion draft that CECU sends to the HELP Committee.

Updates on 150% Rule
Date: June 04, 2024
Source: American Association of Cosmetology Schools (AACS)

Updates on 150% Rule

What You Need to Know

As previously reported, AACS is currently working with Members of Congress to circulate a bi-partisan letter which requests that the Department postpone the effective date of the recently revised 100% Certification Rule to July 1, 2025.

Additionally, on May 31, 2024, the Cortiva Institute School of Beauty, Health and Wellness and the Coalition for Career Schools filed a complaint against the U.S. Department of Education in the Fort Worth Division of the Northern District of Texas, seeking to invalidate the revised 100% Certification Rule. The complaint provides that the Department’s Final Rule “unlawfully assert[s] control over” Title IV clock-hour programs. In addition to the complaint, the Plaintiff’s filed a motion for a Temporary Restraining Order, Preliminary Injunction and Stay of the provision in the Final Rule. If granted, this motion will effectively prevent the Department from implementing the Bare Minimum Rule, or in the alternative, delay its effective date pending the outcome of the litigation.

Why This is Important to You

AACS remains concerned over the revised 100% Certification Rule and its harmful impact on institutions and programs. We applaud our friends the Cortiva Institute School of Beauty, Health and Wellness, and the Coalition for Career Schools for bringing this action on behalf of all impacted institutions. The complaint and the motion for a Temporary Restraining Order are first steps in seeking to invalidate this rule.

For more information:

Bi-Partisan Letter

Complaint

Motion for Temporary Restraining Order

Volume 2 and 3 of FVT/GE User Guide
Date: June 03, 2024
Source: American Association of Cosmetology Schools (AACS)

Volume 2 and 3 of FVT/GE User Guide

Why This is Important to You

Last week, the Department of Education published Volume 2 and 3 of the NSLDS FVT/GE User Guide. The User Guide is intended to assist institutions comply with the October 1, 2024 FVT/GE reporting deadlines. Institutions should familiarize themselves with the reporting requirements sooner rather than later so that they have time to submit the data prior to the October 1, 2024 deadline. All institutions should review Volumes 1, 2 and 3 of the User Guide and be on the lookout for future installments of the User Guide, which will be published in the coming months.

What You Need to Know

Volume 2 of the NSLDS Financial Value Transparency and Gainful Employment (FVT/GE) User Guide focuses on the batch reporting of program information via the Student Aid Internet Gateway (SAIG) to the National Student Loan Data System (NSLDS®). The volume provides schools with details on the descriptions for the FVT/GE Program Batch Submittal File, along with information on the header and trailer details, file formats, data elements, and definitions.

Volume 3 of the NSLDS Financial Value Transparency and Gainful Employment (FVT/GE) User Guide focuses on the Completers List process. The reporting process starts with the formation of the Draft FVT/GE Completers List, and is followed by the 60-day correction period, and then concludes with the creation of the FVT/GE Final Completers List. The Draft FVT/GE Completers List will be comprised of students who completed a Gainful Employment (GE) or an Eligible Non-GE program during the applicable cohort period.

For more information:

Volume 2 of User Guide

Volume 3 of User Guide

New Financial Responsibility and Certification Procedures FAQs
Date: May 20, 2024
Source: Career Education Colleges and Universities (CECU)

The Department of Education posted a new Electronic Announcement with FAQs for Financial Responsibility and Certification Procedures to answer the many policy questions institutions have regarding these regulations, which are set to go into effect on July 1, 2024. The Department will release more documentation on its Office of Postsecondary Education Guidance Documents page. The page indicates that FAQs regarding GE Program Length Limitations are forthcoming.

The FAQs regarding Certification Procedures are divided into three categories: Gainful Employment Program Hours (GEPH), Licensure and Disclosure Requirements (LDR), and Transcript Withholding (TW). Several questions under GEPH have to do with accreditation, like the one below:

Question: What happens if a State’s licensure requirement is lower than the minimum number of hours required by an institution’s accrediting agency? For example, if the minimum number of credits required by the State is 500 hours but the accrediting agency requires 600 hours for the same program, must the school then limit the program to the minimum required by the State even if it means the program loses its accreditation and, therefore, it’s Title IV eligibility?

Answer: As stated in 34 CFR 668.14(b)(26)(ii)(A), the State’s minimum number of hours required for training in the recognized occupation is the limit for the number of hours a program may include. The regulations do not account for limitations set by the accrediting agency. In this case, either the accrediting agency or the State would need to change their requirements to meet the State’s minimum number of clock hours, credit hours, or the equivalent for the program to maintain its Title IV eligibility.

The Financial Responsibility FAQs list 24 questions and answers, including the one below.

Question: When must existing situations and conditions that were not considered reportable financial triggers prior to July 1, 2024, but are considered reportable financial triggers upon implementation of the revised financial responsibility regulations, be reported to the Department?

Answer: With both the mandatory and discretionary triggers in existence on July 1, 2024, that were not considered reportable triggers prior to that date but would be considered reportable upon implementation of the revised financial regulations, the institution must report any existing provisions within 21 days of the effective date of the regulation.

CECU is reviewing the FAQs and will provide additional analysis shortly.

News from Capitol Hill: Secretary Cardona Again on Hot Seat for FAFSA Rollout
Date: May 08, 2024
Source: American Association of Cosmetology Schools (AACS)

SECRETARY CARDONA AGAIN ON HOT SEAT FOR FAFSA ROLLOUT

Why This Matters

The botched FAFSA rollout has been felt across higher education. During a House oversight hearing, Members of Congress noted the impact that the troubled rollout will have on student enrollment in the upcoming fall. Secretary Cardona did not provide any new solutions, instead reiterating that the Department is working on this issue and that previous data errors have been fixed.

During the hearing, Congressman Lloyd Smucker (R-PA) pressed Secretary Cardona to delay enforcement of the newly revised 100% Certification Rule until January 1, 2024. Secretary Cardona did not directly respond to this request. AACS will continue to provide membership with any updates on this matter, as we know this is one of the most important issues facing our member institutions.

House Education and Workforce Committee Hearing Summary

Secretary Cardona faced intense pressure from the House Education and Workforce Committee on Tuesday, May 7, 2024, as he testified on the failed FAFSA rollout, the Department of Education’s FY 2025 Budget Request, the Department’s recent rulemaking efforts, and a number of other education matters. This was the fourth time Secretary Cardona has testified in front of the House Education and Workforce Committee on the Department’s FY 2025 Budget Request. Chairwoman Virginia Foxx (R-NC) set the tone for the hearing with her opening remarks, “You have presided over the greatest decline of educational attainment and institutional legitimacy in the history of our nation.” Chairwoman Foxx was joined by all of the Committee Members in seeking accountability and answers from the Secretary for the mismanagement of the FAFSA rollout. All of the Members were united in the message that the Department’s mismanagement has led to a significant decrease in FAFSA completion rates and, as a result, a significant decrease in student enrollment at institutions of higher education for this upcoming fall. Chairwoman Foxx concluded her remarks by saying, “If I were to grade your time as secretary based on the state of postsecondary education, I would also give you an F.”

Congressman Lloyd Smucker (R-PA) questioned the Department’s new requirements contained within its Certification Procedures Final Rule published in October 2023. He stated that the elimination of the 150% Certification Rule will prevent students attending certain career and technical education schools from accessing federal financial aid. He specifically requested that the Department further its delay in enforcement of the revised 100% Certification Rule until January 1, 2025 in order to provide institutions with additional time to comply with this certification requirement. The Secretary failed to respond to this request, instead noting that the Certification Procedures Final Rule is aimed at ensuring that institutions of higher education maintain and provide high-quality education to students.

For more information:

Full Committee Hearing

Hearing Recap

AACS Federal GR Update
Date: May 01, 2024
Source: American Association of Cosmetology Schools (AACS)

GOVERNMENT RELATIONS HIGHLIGHTS

FVT/GE Reporting Guidance: The U.S. Department of Education published the NSLDS Financial Value Transparency and Gainful Employment (FVT/GE) User Guide, which provides instructions and guidance for complying with the FVT/GE reporting requirements via the National Student Loan Data System (NSLDS®).

• Title IX: The U.S. Department of Education has published its Title IX Final Rule, which prohibits discrimination on the basis of sex in education programs or activities receiving Federal financial assistance.
• FAFSA Rollout: The House Education and Workforce Committee is holding a hearing titled “Examining the Education Department’s Policies, Priorities, and FY 2023 Financial Audit Failure” in which Secretary Miguel Cardona will testify on the FAFSA rollout.

FVT/GE REPORTING GUIDANCE

What You Should Know

Today, the U.S. Department of Education published the NSLDS Financial Value Transparency and Gainful Employment (FVT/GE) User Guide, which provides instructions and guidance for complying with the FVT/GE reporting requirements via the National Student Loan Data System (NSLDS®). The Department additionally hosted a webinar on May 1, 2024, which provided additional guidance on the NSLDS reports. As a reminder, the reporting deadlines for FVT/GE have been extended to October 1, 2024. For FVT/GE purposes, an institution must annually report student-specific data and program-specific data to NSLDS. In its announcement, the Department indicated that it will publish additional individual volumes of the User Guide covering a range of topics, including: reporting methods (batch, web, spreadsheet submittal), reporting content, the FVT/GE Completers List, the FVT/GE calculations, and other relevant topics.

Of particular note, Section 1.8 of the User Guide references the FVT/GE Debt-to-Earnings Rate and Earnings Premium Measurement reporting requirements. The User Guide states that “[s]chools will be provided information on the FVT/GE debt measures process, how the debt measures backup data is distributed, how to utilize the NSLDS Professional Access website to review the rates for each program, how to review backup data for each program, and how to use reports to assist in the review process.” The Earnings Premium will be calculated by comparing each program’s median annual earnings – from the IRS – against the earnings threshold that was determined for that program.

Why This is Important to You

The Department’s publication of the User Guide is intended to assist institutions comply with the October 1, 2024 FVT/GE reporting deadlines. This reporting requirement pertains to all AACS member institutions. The required data must be reported by submitting files to NSLDS via the Student Aid Information Gateway or through the online process.

For more information:

Electronic Announcement

NSLDS FVT/GE User Guide Introduction

NSLDS Reporting Webinar

TITLE IX

What You Need to Know

After much delay, the U.S. Department of Education has published its Title IX Final Rule, which prohibits discrimination on the basis of sex in education programs or activities receiving Federal financial assistance. The robust 1,577 page Final Rule clarifies the scope and application of Title IX and the obligations of institutions that receive Federal financial assistance from the Department. It amends current regulations, which took effect in August 2020. The Final Rule takes effect August 1, 2024.

Of particular note for AACS members, the new Title IX regulations change how and when employees of a college must take action when they learn of conduct that may constitute sexual harassment under the law. Currently, the law allows colleges to designate specific employees who must take action. This new rule broadens this to a larger group of employees.

These changes will likely increase burdens on colleges, including changes to existing policies and procedures and the implementation of training for employees. In response to comments about the burdens and cost that the Final Rule will impose on colleges, the Department expressed doubt that any significant cost increases would result.

In response to the Final Rule, Attorney Generals in Louisiana, Mississippi, Montana and Idaho filed a lawsuit in the Western District of Louisiana in Monroe.

The publication of the Final Rule comes after a number of delays by the Department. AACS will analyze the Final Rule closely and provide an updated regulatory impact analysis to membership.

Why This is Important to You

The Title IX Final Rule has significant compliance implications for AACS members. Colleges will be required to change policies and procedures implementing the regulations. They will also need to train all employees in their new reporting obligations under the rule. AACS is closely reviewing this 1,577 page Final Rule, and will provide further updates as needed.

For more information:

Title IX Final Rule

Lawsuit

HOUSE EDUCATION AND WORKFORCE FAFSA

What You Need to Know

On May 7, 2024, the House Education and Workforce Committee is holding a hearing titled “Examining the Education Department’s Policies, Priorities, and FY 2023 Financial Audit Failure” in which Secretary Miguel Cardona will testify on the FAFSA rollout. This hearing follows a number of previous congressional hearings (in the House Appropriations Committee and House Education and Workforce Committee) which have featured Members of Congress from both sides of the aisle continuing to press the Department and Secretary Cardona for answers and resolutions on the failed FAFSA rollout. In anticipation for the May 7^th hearing, Chairwoman Foxx stated,

“I’m greatly disappointed by Secretary Cardona’s leadership of the Department of Education and his willingness to toe the line for the Biden administration’s disdain for the Constitution. We’ve watched as the Department has advanced the President’s illegal ‘free’ college agenda, botched the FAFSA rollout and return to repayment, implemented radical changes to Title IX, and failed to combat antisemitism and foreign influence in any significant way… Yet, with this abysmal track record, including the Department failing its financial audits for fiscal years 2022 and 2023, Secretary Cardona has requested billions more in taxpayer dollars. Taxpayers have reached their limit, Mr. Secretary. This hearing gives the Committee an opportunity to hold Secretary Cardona accountable for his partisan agenda and regulatory overreach.”

As a likely result of the troubled rollout, Richard Cordray – the chief operating officer for the Office of Federal Student Aid – has stepped down from his position with the Department. Cordray has served in the Department since May 2021.

Why This is Important to You

We have heard from a number of our members about the impact that the FAFSA rollout has had on schools’ administrative teams and students. This issue has been at the forefront of the higher education sector for the past several months. Members of Congress are pressuring the Department to quickly remedy the significant problems caused by the FAFSA rollout and to take accountability for the situation we currently face. AACS will continue to update membership on any developments concerning the FAFSA rollout.

For more information:

House Education and Workforce Hearing

STUDENT LOAN FORGIVENESS

What You Need to Know

The Department announced the approval of more than $6.1 billion in automatic student loan relief to nearly 317,000 borrowers who enrolled at any Art Institute campus on or after Jan. 1, 2004, through Oct. 16, 2017. The Department found that The Art Institutes and its parent company, Education Management Corporation (EDMC), made substantial misrepresentation to prospective students on a range of topics, including: graduation rates, employment rates, salaries, and career services offered by the institution.

Why This is Important to You

President Biden has continued to campaign on the promise of reducing the burden of student debt and ensuring that student loans are not a barrier to opportunity for students and families. While institutions will not be held responsible for the student loan discharge, we highlight these announcements as the Department has enacted a series of mechanisms to provide student loan debt relief. This student relief action brings the total amount of student relief approved by the Biden-Harris Administration to almost $160 billion for nearly 4.6 million borrowers.

For more information:

Student Loan Relief Announcement

For More Information

If you have any questions about this Update, please email info@beautyschools.org.

FVT/GE Reporting Guidance
Date: May 01, 2024
Source: American Association of Cosmetology Schools (AACS)

FVT/GE Reporting Guidance

Why This Matters

The Department’s publication of the User Guide is intended to help institutions comply with the October 1, 2024 FVT/GE reporting deadlines. This reporting requirement pertains to all AACS member institutions. The required data must be reported by submitting files to NSLDS via the Student Aid Information Gateway or through the online process.

What You Should Know

The Department of Education recently published the NSLDS Financial Value Transparency and Gainful Employment (FVT/GE) User Guide, which provides instructions and guidance for complying with the FVT/GE reporting requirements via the National Student Loan Data System (NSLDS®). The Department is hosting a webinar today, May 1, 2024, between 1:00-2:00 p.m. to provide additional guidance on the NSLDS reports. As a reminder, the reporting deadlines for FVT/GE have been extended to October 1, 2024. For FVT/GE purposes, an institution must annually report student-specific data and program-specific data to NSLDS. In its announcement, the Department indicated that it will publish additional individual volumes of the User Guide covering a range of topics, including: reporting methods (batch, web, spreadsheet submittal), reporting content, the FVT/GE Completers List, the FVT/GE calculations, and other relevant topics.

Of particular note, Section 1.8 of the User Guide references the FVT/GE Debt-to-Earnings Rate and Earnings Premium Measurement reporting requirements. The User Guide states that “[s]chools will be provided information on the FVT/GE debt measures process, how the debt measures backup data is distributed, how to utilize the NSLDS Professional Access website to review the rates for each program, how to review backup data for each program, and how to use reports to assist in the review process.” The Earnings Premium will be calculated by comparing each program’s median annual earnings – from the IRS – against the earnings threshold that was determined for that program.

For more information:

Electronic Announcement

NSLDS FVT/GE User Guide Introduction

NSLDS Reporting Webinar

Additionally, AACS will be holding a webinar in June to provide further reporting guidance. Please keep an eye out for more information on this upcoming webinar.

U.S. Department of Education Completes Processing for FAFSA Forms Impacted by Known Issues, Outlines Push to Expand Application Submissions

Date: April 30, 2024
Source: American Association of Cosmetology Schools (AACS)

Dear colleagues,

The U.S. Department of Education announced that it has completed reprocessing 2024–25 Free Application for Federal Student Aid (FAFSA®) forms impacted by known issues with IRS data, which should enable all institutions to package financial aid offers. The Department completed reprocessing FAFSA forms impacted by known issues with the FUTURE Act Direct Data Exchange (FA-DDX) and has now transmitted the Institutional Student Information Records (ISIRs) from more than 8.3 million FAFSA forms to schools, states, and designated scholarship organizations. In addition, nearly one million corrections have been successfully processed, addressing the most common issues with FAFSA submission.

Whether resulting from a new submission or a correction, applicants’ ISIRs are now being sent to schools and states within one to three days of submission. The Department has now delivered the reprocessed ISIRs of nearly all impacted records to institutions and states.

The Department also announced changes to allow applicants and contributors without a Social Security number (SSN) to immediately access and submit the online form. You can read more in today’s EA. The Department is temporarily allowing individuals without an SSN to enter and complete the FAFSA form. Students and contributors must manually enter their tax information. Students without an SSN must verify their eligible noncitizen status through their school before they receive any federal funds. These changes streamline the process for students who have contributors without an SSN to complete their FAFSA form.

These actions coincide with a national outreach campaign to continue increasing completion rates. This week, the Department will kick-off a series of regional and local media engagement in media markets across the country to drive awareness and increase FAFSA completion rates. The Department is committed to providing schools, organizations, students, and families with the support and resources they need to access the new FAFSA form and pursue their higher education goals.

Best,

Kaitlyn Vitez (she/her)

Higher Education Liaison
Office of Communications and Outreach
U.S. Department of Education
(202) 550-7359

Gainful Employment Lawsuit Update
Date: April 25, 2024
Source: American Association of Cosmetology Schools (AACS)

Gainful Employment Lawsuit Update

AACS Members,

Late last month, we informed you that two AACS member schools—Ogle School of Beauty and Tricoci University of Beauty Culture—filed a second lawsuit against the Department seeking to enjoin and overturn the rule. This second case is in the same court and in front of the same judge as the case brought by AACS. The cases are largely the same, except that the Ogle/Tricoci Case is seeking a preliminary injunction (a “PI”). If successful, the PI would prevent the Department from enforcing the rule as soon as June 2023.

AACS is fully supportive of the PI motion brought by these two AACS member schools. If successful, the PI has the potential to immediately benefit AACS members and give a significant boost to our efforts to bring an end to this detrimental rule. We are monitoring the progress of the PI closely, and our legal team is in communication with the legal team for Ogle and Tricoci. AACS is ready to provide any assistance necessary to give the PI motion the best chance of success.

We will provide further updates as this matter continues to develop.

Breaking News: Title IX Final Rule
Date: April 22, 2024
Source: American Association of Cosmetology Schools (AACS)

TITLE IX FINAL RULE

Why This Matters

The Title IX Final Rule has significant compliance implications for AACS members. Colleges will be required to change policies and procedures implementing the regulations. They will also need to train all employees in their new reporting obligations under the rule. AACS is closely reviewing this 1,577 page Final Rule, and will provide further updates as needed.

Title IX Final Rule

After much delay, the U.S. Department of Education has published its Title IX Final Rule, which prohibits discrimination on the basis of sex in education programs or activities receiving Federal financial assistance. The robust 1,577 page Final Rule clarifies the scope and application of Title IX and the obligations of institutions that receive Federal financial assistance from the Department. It amends current regulations, which took effect in August 2020. The Final Rule takes effect August 1, 2024.

Of particular note for AACS members, the new Title IX regulations change how and when employees of a college must take action when they learn of conduct that may constitute sexual harassment under the law. Currently, the law allows colleges to designate specific employees who must take action. This new rule broadens this to a larger group of employees.

The Department has broken down the employees of colleges who must take action into two categories: (1) employees who have authority to institute corrective measures on behalf of the college or who have responsibility for administrative leadership, teaching, or advising; and (2) all other employees. Employees in the first group must notify the Title IX Coordinator when they learn of conduct that may constitute sexual harassment. Employees in the second group must either notify the Title IX Coordinator or provide potential victims with contact information for the Title IX Coordinator and information on how to submit a complaint of sex discrimination.

The changes referenced above will likely result in an increased burden on colleges, including changes to existing policies and procedures and the implementation of training for employees. In response to comments about the burdens and cost that the Final Rule will impose on colleges, the Department responded,

“[We] disagree that § 106.44(c) would impose an undue and unworkable burden on [colleges], which could increase the cost of attendance in higher education. The Department has considered the costs, including potential litigation costs, in the Regulatory Impact Analysis and determined the benefits of the notification requirements justify the costs. The Department also has no reason to believe that the costs associated with § 106.44(c) are so great that they are likely to increase the overall cost of attending higher education institutions.”

The publication of the Final Rule comes after a number of delays by the Department. AACS will analyze the Final Rule closely and provide an updated regulatory impact analysis to membership.

For more information:

Title IX Final Rule

Breaking News: Department of Education Dear Colleague Letter–Implementation of 150% Rule
Date: April 16, 2024
Source: American Association of Cosmetology Schools (AACS)

DEPARTMENT OF EDUCATION RELEASES GUIDANCE ON 150% RULE 

Why This Matters

Today’s “Dear Colleague Letter” from the Department of Education clarifies the financial aid eligibility of currently enrolled students and new student enrollments for GE Programs starting on July 1, 2024. The Department reiterated prior guidance that institutions may temporarily offer two versions of the same program concurrently. It also provided guidance on the type and timing of reporting that institutions will be required to provide to the Department.

The Department’s Dear Colleague Letter

The Department of Education, Office of Federal Student Aid published a “Dear Colleague Letter” that provides additional guidance on the treatment of existing GE programs under the newly published 150% Certification Rule, which takes effect as of July 1, 2024. The guidance provides that students enrolled in GE programs as of June 30, 2024 will be eligible to continue to receive their current federal student aid awards until their completion, transfer, or withdrawal from their respective program. Students who enroll on July 1, 2024 or after this date, will be subjected to the federal aid awards in accordance with the clock hours of the revised program. Below is additional information for institutions following the implementation of the 150% Certification Rule for institutions with programs consisting of (i) more than 600 clock hours; (ii) between 300 and 599 clock hours; and (iii) below 300 clock hours.

Programs above 600 Clock Hours

• The Department states that “it will permit institutions to continue offering a program after the implementation date of the regulation that exceeds the applicable maximum length for students who were enrolled in the program prior to the effective date of the regulatory change. For such existing GE programs, institutions will be allowed to continue to serve through completion students who enroll in the program on or before June 30, 2024, under the provisions of the 150% Certification Rule.”
• Students who enroll in the program on or after July 1, 2024, will receive prorated Pell Grant amounts based on the state’s minimum clock hour requirements. We specifically highlight this point as the Department now states that new enrollees will be eligible to receive prorated Pell Grant amounts. This interpretation is contrary to our initial understanding. AACS will reach out to the Department for clarity, but advise members to separately seek additional guidance from your respective accrediting agencies (and the Department itself) on this matter.
• Once all “legacy students” – students enrolled prior to July 1, 2024 – have completed the program, the institutions must then report the revised program length to the Department through Partner Connect.

Short-Term Programs

• For students at short-term programs – consisting of less than 600 clock hours, 16 semester hours, or 24 quarter hours – prior to July 1, 2024, the students will be allowed to continue to receive Pell Grants and Campus-based funds until the student completes, transfers, or withdraws from the program.
• For students who enroll on July 1, 2024 or after, the students will no longer be eligible to participate in the Federal Pell Grant and Campus-based programs, but would remain eligible, at the institution’s option, to participate in the Direct Loan program under § 668.8(d)(3).

Below 300 Clock Hour Programs

• Programs that are required by the new rule to drop below 300 clock hours, 8 semester hours, or 12 quarter hours will no longer meet the regulatory definition of an eligible educational program for purposes of an institution’s Title IV program participation.
• For students enrolled as of June 30, 2024, they will remain eligible for Title IV aid until the student withdraws, transfers, or graduates from the program.
• Students enrolling on or after July 1, 2024, will not be eligible for Title IV aid.

This guidance follows the Department’s April 9, 2024 announcement that it will use discretion – particularly for the period between July 1, 2024 and January 1, 2025 – before enforcing any punitive measures for failure to comply with the newly revised 150% Certification Rule. AACS previously provided members with a communication regarding its analysis of this guidance. We are continuing to analyze the impact of this “Dear Colleague Letter” and will provide you with additional information on this topic.

For more information, please review the Dear Colleague Letter.

Breaking News: Breaking News: Department of Education Testifies to Congressional Committee on Failed FAFSA Rollout
Date: April 11, 2024
Source: American Association of Cosmetology Schools (AACS)

DEPARTMENT OF EDUCATION TESTIFIES TO CONGRESSIONAL COMMITTEE ON FAILED FAFSA ROLLOUT

Why This Matters

We have heard from a number of our members about the impact that the FAFSA rollout has had on your administrative teams and students. This issue has been at the forefront of the higher education sector for the past several months. Members of Congress are pressuring the Department to quickly remedy the significant problems caused by the FAFSA rollout and to take accountability for the situation we currently face. We will continue to update membership on any developments concerning the FAFSA rollout.

In addition, this alert brings attention to a recent proposal that was included in President Biden’s FY 2025 Budget. This proposed budget does not have any binding effect on Congress, however, it provides another example of the Administration specifically targeting our sector.

Summary

Yesterday, the trouble-ridden FAFSA rollout was front and center in Congress, as the House Appropriations Committee and the House Education and Workforce Committee demanded answers from the Department of Education.

As stated by Chairman Burgess Owens in the House Education and Workforce Committee, Higher Education and Workforce Development Subcommittee hearing, “the Department of Education’s FAFSA rollout was mired in delays and dysfunction. Without accountability, the Department of Education’s botched implementation threatens to damage students, families, and institutions.” AACS applauds Rep. Owens’ actions in bringing this issue to the forefront as he works to protect all students.

The hearing included higher education professionals, such as:

Mr. Mark Kantrowitz, President of Cerebly, Inc.;

Mr. Justin Draeger, President and CEO of the National Association of Student Financial Aid Administrators;

Ms. Kim Cook, CEO of the National College Attainment Network; and

Ms. Rachelle Feldman, Vice Provost of Enrollment at the University of North Carolina Chapel Hill.

The panelists and Members from both sides of the aisle were vocal in expressing displeasure with the Department’s rollout efforts, with Representative Virginia Foxx (R-NC) stating, “This country deserves public leaders who fulfill their duties rather than shirk responsibilities and point the finger of blame at others. Now is the time for Secretary Cardona to explain his abysmal leadership to the American people. It is clear something needs to change.” All participants further expressed dismay with the Department’s inability to take accountability for the failed rollout, as Mr. Draeger shared, “I have yet to hear any sort of apology from the Department of Education and not even to schools but to students and families.”

Meanwhile, in the House Appropriations Committee, Subcommittee on Labor, Health and Human Services, and Education hearing on President Biden’s FY 2025 Budget Proposal, Secretary Cardona acknowledged the Department’s shortcomings and reiterated “there’s nothing more important right now at the Department of Education. We’re working on this around the clock, because we want to make sure our students have information they need to make informed decisions.” The hearing included a contentious discussion concerning the proposed increase to the mandatory Pell add-on by $650 for a total maximum award of $8,145 for students attending public and nonprofit institutions (and excludes for-profit institutions). In defense of this provision, Secretary Cardona stated that he opposed public funding being distributed to for-profit institutions. As expected, Democratic Members largely supported this policy, as Republican Members expressed dismay for targeting a specific sector of the higher education industry.

As additional FAFSA errors and delays continue to arise, we expect Members of Congress – from both sides of the aisle – to continue to press the Department and Secretary Cardona for answers and resolutions.

For more information on these hearings:

Higher Education and Workforce Development Subcommittee Hearing

Labor, Health and Human Services, and Education Subcommittee Hearing

Breaking News: Department of Education Guidance on 150% Certification Rule
Date: April 09, 2024
Source: American Association of Cosmetology Schools (AACS)

DEPARTMENT OF EDUCATION EXTENDS DISCRETION TO INSTITUTIONS FACING DIFFICULTY COMPLYING WITH REVISED 150% CERTIFICATE RULE ON JULY 1, 2024

The Department of Education responds to the concerns raised by AACS, state agencies and other organizations and issues the following update to the revised 150% Certification rule to go into effect on July 1, 2024.

Highlights

• The Department will utilize discretion before enforcement of the revised 150% Certification Rule on July 1, 2024;
• The Department has implemented a number of defenses that an institution may raise if it is unable to comply with the Rule; and
• It encourages all institutions to document, prior to July 1, 2024, the circumstances that prevent their compliance with any requirement by the regulations’ effective date.

Today, the Office of Federal Student Aid released guidance stating that the Department will use discretion – particularly for the period between July 1, 2024 and January 1, 2025 – before enforcing any punitive measures for failure to comply with the newly revised 150% Certification Rule. AACS has continued to voice its concerns to the Department over the last several months that many of our member institutions will not be able to restructure its programs to comply with the new rule by its effective date of July 1, 2024. In its announcement, the Department stated that it understands these concerns and the challenges outside the control of institutions that may “affect their ability to comply with the following provisions of the regulations by the date they become effective.”

In recognition of this concern, the Department has implemented a number of defenses that an institution may raise if it is unable to comply with the rule on July 1, 2024. Examples of the defenses that an institution may raise include the following:

• The inability to obtain approvals from States and/or accrediting agencies for changes in program length in order to comply with requirements under 34 CFR 668.14(b)(26);
• The inability to obtain approvals for academic program changes to comply with the requirements related to licensure/certification under 34 CFR 668.14(b)(32);
• The inability to obtain sufficient clarity from State licensing and certification entities about licensure and certification requirements; and
• The inability to access and use the Department’s systems.

The Department further notes that it will utilize its discretion on a case-by-case basis. Additionally, it encourages all institutions to document, prior to July 1, 2024, the circumstances that prevent their compliance with any requirement by the regulations’ effective date.

AACS has maintained the position that the length of educational programs, regardless of industry, is the prerogative of institutions and the purview of accreditors. Institutions are in the best positions to determine appropriate program lengths and curricula. Our legal team is continuing to analyze this Rule and will discuss with AACS leadership the best path forward towards invalidating this harmful regulation.

For more information, please visit the Office of Federal Student Aid Guidance.

Breaking News: Fifth Circuit Reverses District Court Decision and Imposes Preliminary Injunction of New Borrower Defense to Repayment Rule
Date: April 04, 2024
Source: American Association of Cosmetology Schools (AACS)

FIFTH CIRCUIT REVERSES DISTRICT COURT DECISION AND IMPOSES PRELIMINARY INJUNCTION OF NEW BORROWER DEFENSE TO REPAYMENT RULE

Today, the three-judge Fifth Circuit panel ruled in favor of the Career Colleges and Schools of Texas (CCST) in CCST v. Cardona, and granted a preliminary injunction of the new Borrower Defense to Repayment (BDR) rule. In its opinion, the Fifth Circuit stated, “CCST has met the criteria to satisfy a preliminary injunction, and the district court erred by concluding that CCST faced no irreparable harm. We REVERSE the district court’s judgment, REMAND, and instruct the district court to postpone the effective date of the borrower-defense and closed-school discharge provisions of the Rule pending final judgment as specified above.” The previous stay pending appeal will remain in effect until the District Court imposes the preliminary injunction.

As you know, CCST filed a lawsuit in the United States District Court for the Northern District of Texas seeking to have the U.S. Department of Education’s 2022 Borrower Defense to Repayment (BDR) final rule vacated and enjoined. Among other claims, CCST argued that the final rule creates unlawful processes, fails to serve any legitimate purpose under the Higher Education Act (HEA) and “represents enormous executive overreach” by the Biden administration in violation of the Department’s statutory authority and the Constitution’s separation of powers. Since then, the case has taken a number of twists, including a significant amount of media coverage, a transfer of venue and most recently, an appeal to the U.S. Court of Appeals for the Fifth Circuit.

This decision represents a significant win for higher education, including for AACS member institutions. We will closely analyze this decision and provide membership with a detailed analysis of the impacts in the coming days. Congratulations to our friends at CCST for this major victory.

AACS Federal GR Update
Date: April 04, 2024
Source: American Association of Cosmetology Schools (AACS)

GOVERNMENT RELATIONS HIGHLIGHTS

Department Delays Gainful Employment Deadline: The Department formally announced the extension of reporting deadlines from July 31, 2024, to October 1, 2024 for required data reporting for the new Financial Value Transparency (“FVT”) and Gainful Employment (“GE”) Rule.

·     Clock Hour Program Student Protection Act: Anticipated release of the Clock Hour Program Student Protection Act, which preserves the 150% Certification Rule and allows clock hour programs that operate within 150% of its state’s minimum hours requirement for licensure (or another state under limited circumstances) to maintain Title IV eligibility.

·     Second GE Lawsuit Filed: A second complaint was filed against the U.S. Department of Education challenging its Gainful Employment rule.

DEPARTMENT DELAYS GAINFUL EMPLOYMENT DEADLINE

What You Need to Know

The U.S. Department of Education formally announced the extension of reporting deadlines from July 31, 2024, to October 1, 2024 for required data reporting for the new Financial Value Transparency (“FVT”) and Gainful Employment (“GE”) Rule. In its announcement, the Department provides the following revised timeline for reporting of FVT/GE data:

• Data Entry Start Date: Institutions will have the ability to start reporting FVT/GE data through the National Student Loan Data System (“NSLDS”) starting July 1, 2024.
• New Deadline: Institutions will have until October 1, 2024, to provide all required reporting (revised from prior July 31, 2024 deadline).

The revised timeline will enable institutions to prioritize providing student aid to students this upcoming Spring, while also providing institutions with additional time to compile data for FVT/GE purposes. The Department has stated that it still intends to produce the first official round of FVT/GE metrics in early 2025.

Why This is Important to You

The delay of reporting is critical to our membership. We have provided a number of actions that institutions should take in order to prepare for the upcoming reporting timelines. Institutions should proceed accordingly:

1. Plan for resource allocation to meet the revised reporting obligations;
2. Keep an eye on the Department’s forthcoming additional guidance via the Knowledge Center, and
3. Consider filing public comments with the Department before the April 22, 2024 in the GE/FVT Reporting Requirements Call for Public Comment to express concerns about any aspect of the reporting requirements including any information that would support further extension of the reporting timeline based on burden placed on institutions from the reporting requirements. Instructions for filing such comments are included in the Federal Register notice.

We will continue to monitor the Department’s efforts to combat challenges incurred as a result of the newly released FAFSA. The AACS legal team is continuing to analyze the impact that the delay may have on the lawsuit.

Department Press Release

Call for Public Comment

BIDEN BUDGET PROPOSAL FOR FY 2025: EXCLUSION OF FOR-PROFIT SCHOOLS

What You Need to Know

President Biden recently released his Budget Proposal for Fiscal Year 2025, which includes an increase to the maximum Federal Pell Grant award for all institutions except for-profit institutions. The proposal increases the maximum Pell Grant to $8,145, a $750 increase over the current level. The maximum Pell Grant award for students at proprietary institutions will be $7,495.

Why This is Important to You

The President’s Budget Proposal is noteworthy as it excludes students at for-profit institutions from having access to the increased maximum Pell Grant. The President sent his Budget to Congress, specifically to the Appropriation Committees in the House of Representatives and the Senate. The House and Senate will draft their own budget resolutions, and will negotiate and merge their respective proposal together. We expect the Republicans to oppose this Budget Proposal, and this particular provision related to the exclusion of for-profit schools. AACS will continue to oppose any policies that target our sector and our students.

Department Press Release

Budget Proposal

CLOCK HOUR PROGRAM STUDENT PROTECTION ACT

What You Need to Know

Congressman Lloyd Smucker (R-PA) recently introduced the “Clock Hour Program Student Protection Act,” which preserves the 150% Certification Rule and allows clock hour programs that operate within 150% of its state’s minimum hours requirement for licensure (or another state under limited circumstances) to maintain Title IV eligibility. The legislation responds to the Department’s elimination of the 150% Certification Rule. The new rule, effective July 1, 2024, eliminates Title IV eligibility for all clock hour programs that exceed a state’s (or another state under limited circumstances) minimum hours requirement. This latest effort closely mirrors Congressman Smucker’s previously introduced Amendment to the House, Labor, Health and Human Services, and Education Appropriations Bill (H.R. 5894).

Why This is Important to You

The Department’s newly published Certification Rule will result in institutions losing Title IV eligibility for these programs, which will likely lead to significant revenue impacts if not closure of our institutions. In particular, many short-term clock hour programs will not satisfy the new clock hour requirements and, therefore, may not continue their participation in Title IV federal aid programs. The length of educational programs, regardless of industry, is the prerogative of institutions and the purview of accreditors. Institutions are in the best positions to determine appropriate program lengths and curricula.

AACS has issued a Call to Action in support of this legislation, which can be viewed on the AACS Government Relations Action Center webpage.

H.R. 7810

SECOND GE LAWSUIT FILED

What You Need to Know

A second complaint was filed against the U.S. Department of Education challenging its Gainful Employment rule. Ogle School Management, LLC and Tricoci University of Beauty Culture, LLC are listed as the Plaintiffs. The lawsuit was filed in the United States District Court for the Northern District of Texas, Fort Worth Division—the same court in which AACS filed action against the Department. Judge Reed O’Connor is assigned to both cases. The new case alleges essentially the same claims and seeks the same relief as the original case filed by AACS.

Why This is Important to You

Our legal team is continuing their work to have this harmful and unlawful rule invalidated. We look forward to working with the attorneys and plaintiffs in the new case.

Full Complaint

FAFSA DELAYS

What You Need to Know

The Department continues to experience challenges with the Free Application for Federal Student Aid (FAFSA) processing system, as approximately 200,000 student financial aid records recently sent to schools included data errors. The issue impacted records sent to institutions prior to March 21, 2024, and involved the miscalculation of the financial need of dependent students.

The American Council of Education and numerous other influential higher education institution constituencies recently drafted a letter to Secretary Cardona expressing concern about processing the Institutional Student Information Records (ISIRs) within the next few weeks. The letter requests that the Department “fully communicate all information regarding the FAFSA process to institutions in a timely manner and provide the necessary support to ensure that they can make this process as smooth as possible for both current and incoming students.”

Why This is Important to You

A number of our institutions are facing challenges with processing ISIRs. Please update AACS with any difficulties that you are experiencing in order to provide us with additional information to assist in our efforts to provide relief to our members. We will continue to provide you with any developments.

ACE Letter

HOUSE DEMOCRATS INTRODUCE LEGISLATION TARGETING FOR-PROFITS

What You Need to Know

House Democrats introduced H.R. 7804, which specifically targets for-profit institutions and seeks to impose increased oversight and additional regulatory burdens on the entire sector. The legislation establishes a federal oversight committee to monitor for-profit institutions. The committee will consist of officials from the Department of Education, the Consumer Financial Protection Bureau, the Department of Justice, the Securities and Exchange Commission, the Department of Defense, the Department of Veterans Affairs, the Federal Trade Commission, the Department of Labor, and the Internal Revenue Service. The Senate previously introduced its version of this legislation this past February.

Why This is Important to You

The provisions and intent of this legislation are harmful to our entire sector. It is unlikely that this partisan legislation will pass the House of Representatives, and instead represents another attack on the existence of the for-profit industry. AACS will maintain an aggressive approach in opposing this legislation, and ensuring that all Members of Congress understand the valuable role that our institutions have in the higher education sector.

H.R. 7804

S. 3727

STATE LAWSUIT CHALLENGING “SAVE” PLAN

What You Need to Know

Eleven states filed a lawsuit against the Department of Education to invalidate President Biden’s Saving on a Valuable Education (“SAVE”) Plan. The complaint alleges that that the SAVE Plan is another attempt by the Department to enact an illegal student debt forgiveness policy. It further provides that the SAVE Plan exceeds the authority of the Department, similar to the Supreme Court’s ruling in Nebraska v. Biden. The Plaintiffs in the lawsuit include the Attorneys General from the following states: Kansas, Alabama, Alaska, Idaho, Iowa, Louisiana, Montana, Nebraska, South Carolina, Texas, and Utah.

The SAVE Plan was officially launched in Fall 2023. It is estimated that the SAVE Plan will cost approximately $230 billion over the next decade.

Why This is Important to You

President Biden continues to pursue his campaign promise to provide student loan debt relief to borrowers. The SAVE Plan has already provided significant relief to enrollees and will lead to a decrease in student loan debt and defaults. It is likely that a number of students enrolled in AACS member institutions participate in the SAVE Plan. This case is noteworthy for its potential impact on our students and, additionally, for the impact that the SAVE Plan may have on future accountability metrics that measure student loan debt.

Full Complaint

Breaking News: FVT/GE Reporting Deadline Extended
Date: March 29, 2024
Source: American Association of Cosmetology Schools (AACS)

FVT/GE REPORTING DEADLINES EXTENDED TO OCTOBER 1, 2024

The Department announced today that the reporting deadlines for FVT/GE have been extended to October 1, 2024. This extension is likely part of the Department’s efforts to lessen the burden on institutions and students, as a result of the challenges it has faced with the 2024-25 FAFSA. In its press release, the Department stated that “effectively launching the FVT/GE regulations means giving institutions the time needed to compile the necessary data for reporting, while also carrying out their other responsibilities.” The announcement provided the following revised timeline as a result of the extensions:

• Institutions will have the ability to start reporting FVT/GE data through the National Student Loan Data System (“NSLDS”) starting July 1, 2024.
• Institutions will have until October 1, 2024 to provide all required reporting. The Department is providing institutions additional time to report such information by allowing institutions to submit the information that was previously due by July 31, 2024 to be submitted by no later than October 1, 2024.

This revised timeline will enable institutions to prioritize providing student aid to students this upcoming Spring, while also providing institutions with additional time to compile data for FVT/GE purposes. The Department has stated that it still intends to produce the first official round of FVT/GE metrics in early 2025.

We will continue to monitor the Department’s efforts to combat challenges incurred as a result of the newly released FAFSA. Our legal team is additionally analyzing how this delay in reporting may impact the lawsuit. Please let us know if you have any questions or need additional information regarding this development.

Read the full press release.

Call to Action: Another Attempt to Retain the 150% Rule
Date: March 28, 2024
Source: American Association of Cosmetology Schools (AACS)

Late last week, Congressman Lloyd Smucker (R-PA) introduced the “Clock Hour Program Student Protection Act” (HB 7810), which preserves the 150% Certification Rule and allows clock hour programs that operate within 150% of its state’s minimum hour requirement for licensure (or another state under limited circumstances) to maintain Title IV eligibility. The legislation is in response to the recently published Non-GE Final Rule that eliminates the 150% Certification Rule in favor of a requirement that will strip away Title IV eligibility for all clock hour programs that exceed its state’s (or another state under limited circumstances) minimum hour requirement. This latest effort closely mirrors Congressman Smucker’s previously introduced Amendment to the House, Labor, Health and Human Services, and Education Appropriations Bill (H.R. 5894).

As we are all well aware, the Department’s newly published Certification Rule will result in institutions losing Title IV eligibility for these programs, which will likely lead to significant revenue impacts if not closure of our institutions. In particular, many short-term clock hour programs will not be able to satisfy the new clock hour requirements and still participate in Title IV federal aid programs. The length of educational programs, regardless of industry, is the prerogative of institutions and the purview of accreditors. Institutions are in the best position to determine appropriate program lengths and curricula.

We are asking all AACS Members to reach out to your House Members and insist that the Member support this legislation. It is important that all Members of Congress are aware of the significant impact that this rule will have on beauty, barber, and wellness programs and, in particular, short-term programs. It will affect the higher education industry, our students, graduates, employees and the community as a whole.

We have made this easy for you. Please follow the instructions to auto generate an appropriation communication to your House Member (based on zip code of your institution and or home), asking your Member to support our request. In the first box of the Message Body, add your personal story (including your name, your school, number of students, etc.) to be included with the auto-generated message. For example: “Hi, my name is ______ and I own the ______ school, which is located in your district. I have over _____ students, most of whom receive federal financial aid.”

Please contact us if you have any questions, or need additional clarification on this matter. We appreciate your attention and quick assistance with this request.

Breaking News: Second GE Complaint Filed Against Department of Education
Date: March 21, 2024
Source: American Association of Cosmetology Schools (AACS)

Second Gainful Employment Complaint Filed Against Department of Education

Yesterday, a second complaint was filed against the U.S. Department of Education challenging its Gainful Employment rule. Ogle School Management, LLC and Tricoci University of Beauty Culture, LLC are listed as the Plaintiffs. The lawsuit was filed in the United States District Court for the Northern District of Texas, Fort Worth Division—the same court in which AACS filed action against the Department. Judge Reed O’Connor is assigned to both cases.

We are in the process of closely analyzing the complaint. We will provide further updates shortly. Rest assured the AACS legal team will continue their work to have this harmful and unlawful rule invalidated.

AACS Federal GR Update
Date: March 20, 2024
Source: American Association of Cosmetology Schools (AACS)

GOVERNMENT RELATIONS HIGHLIGHTS

·     Clock Hour Program Student Protection Act: Anticipated release of the Clock Hour Program Student Protection Act, which preserves the 150% Certification Rule and allows clock hour programs that operate within 150% of its state’s minimum hours requirement for licensure (or another state under limited circumstances) to maintain Title IV eligibility.

·     Biden Budget Proposal for FY 2025: President Biden recently released his Budget Proposal for Fiscal Year 2025, which includes an increase to the maximum Federal Pell Grant award for all institutions except for-profit institutions.

·     Negotiated Rulemaking Committee: The Department held its final round of Negotiated Rulemaking Committee session, and the negotiators did not reach consensus on any of its proposed changes to regulations on state authorization, distance education, and accreditation.

CLOCK HOUR PROGRAM STUDENT PROTECTION ACT

What You Need to Know

Congressman Lloyd Smucker (R-PA) is planning to introduce the “Clock Hour Program Student Protection Act,” which preserves the 150% Certification Rule and allows clock hour programs that operate within 150% of its state’s minimum hours requirement for licensure (or another state under limited circumstances) to maintain Title IV eligibility. The legislation responds to the Department’s elimination of the 150% Certification Rule. The new rule, effective July 1, 2024, eliminates Title IV eligibility for all clock hour programs that exceed a state’s (or another state under limited circumstances) minimum hours requirement. This latest effort closely mirrors Congressman Smucker’s previously introduced Amendment to the House, Labor, Health and Human Services, and Education Appropriations Bill (H.R. 5894).

Why This is Important to You

As we are all well aware, the Department’s newly published Certification Rule will result in institutions losing Title IV eligibility for these programs, which will likely lead to significant revenue impacts if not closure of our institutions. In particular, many short-term clock hour programs will not satisfy the new clock hour requirements and, therefore, may not continue their participation in Title IV federal aid programs. The length of educational programs, regardless of industry, is the prerogative of institutions and the purview of accreditors. Institutions are in the best positions to determine appropriate program lengths and curricula.

AACS will be acting quickly on this legislation, and will reach out with ways for our members to support our efforts.

BIDEN BUDGET PROPOSAL FOR FY 2025: EXCLUSION OF FOR-PROFIT SCHOOLS

What You Need to Know

President Biden recently released his Budget Proposal for Fiscal Year 2025, which includes an increase to the maximum Federal Pell Grant award for all institutions except for-profit institutions. The proposal increases the maximum Pell Grant to $8,145, a $750 increase over the current level. The maximum Pell Grant award for students at proprietary institutions will be $7,495.

Why This is Important to You

The President’s Budget Proposal is noteworthy as it excludes students at for-profit institutions from having access to the increased maximum Pell Grant. The President sent his Budget to Congress, specifically to the Appropriation Committees in the House of Representatives and the Senate. The House and Senate will draft their own budget resolutions, and will negotiate and merge their respective proposal together. We expect the Republicans to oppose this Budget Proposal, and this particular provision related to the exclusion of for-profit schools. AACS will continue to oppose any policies that target our sector and our students.

Department Press Release

Budget Proposal

NEGOTIATED RULEMAKING COMMITTEE

What You Need to Know

The Department held its final round of Negotiated Rulemaking Committee sessions to develop new regulations on institutional quality and program integrity. The negotiators did not reach consensus on any of its proposed changes to regulations on state authorization, distance education, and accreditation. Two particular topics of note for our membership are: (1) asynchronous distance learning for clock hour programs and (2) the exclusion of books and supplies (which includes kits for beauty and wellness institutions) from the definition of “tuition, fees and institutionally provided food and housing.” With regard to the first, the Department initially indicated that it was open to considering changes that would permit asynchronous distance learning for clock hour programs, however, the Department later rejected proposals from the negotiators on this issue. As to the definition of books and supplies, the Department again did not reach consensus on this proposed language.

Because the negotiators did not reach consensus on the proposed changes to the regulations, the Department may continue to proceed with the rulemaking process and either (1) use the regulatory language developed during the negotiations as the basis for its Notice of Proposed Rulemaking (“NPRM”), or (2) develop new regulatory language for all or a portion of its NPRM. In terms of next steps, the Department will draft its NPRM and publish it in the Federal Register with a request for public comments.

Why This is Important to You

The above referenced provisions may have a significant impact on our institutions. Regarding asynchronous distance learning, many of our schools have incorporated asynchronous distance learning into their programs in recent years. If this provision is adopted in a final rule, these programs that include asynchronous distance learning cannot participate in Title IV federal student aid programs. As to the definition of books and supplies, this proposed language requires institutions to provide students with an option to purchase its kits (and/or other supplies) from a third-party instead of requiring the purchase directly from the institution.

Negotiated Rulemaking Website

FAFSA DELAY

What You Need to Know

Secretary of Education Miguel Cardona sent a letter via email to leadership at all institutions of higher education providing an update on its efforts to help students and institutions that are experiencing challenges associated with the FAFSA delays. The letter highlighted the following efforts over the last several months:

1. The Department sent (and continues to send) Institutional Student Information Records (“ISIRs”) to institutions.
2. The Department’s deployed federal personnel and nonprofit financial aid experts to support nearly 300 schools to assist in the processing of financial aid packages.
3. The Department reduced certain verification requirements and suspended new program reviews through June 2024.

Additionally, the Department announced that it fixed the FAFSA to now allow students with contributors without an SSN to successfully submit the form. Some students are still encountering trouble submitting the form, however, the Department stated that it is working to resolve this issue.

Why This is Important to You

While we are aware that the reduced verification requirements and suspension of program reviews are significant to our institutions, it likely is not a resolution to the challenges that our institutions will face from having students that continue to wait for financial aid awards. We will continue to monitor the Department’s efforts.

Secretary Cardona Letter

ISIR Delivery and Processing Assistance

FEDERAL TRADE COMMISSION: STUDENT LOAN DEBT RELIEF SCAM

What You Need to Know

The Federal Trade Commission is returning approximately $4.1 million in refunds to individuals who were defrauded by student loan debt relief scammers. The scammers lured consumers with fake loan forgiveness claims. The scheme used many names including Mission Hills Federal, Federal Direct Group, National Secure Processing, and The Student Loan Group.

The FTC is sending checks to 27,584 consumers. Recipients should cash their checks within 90 days, as indicated on the check.

Why This is Important to You

Defrauded students will receive checks from the Federal Trade Commission. Individuals with questions about their payment should contact the refund administrator, JND Legal Administration, at 1-844-566-0108, or visit the FTC website to view frequently asked questions about the refund process.

Press Release

Breaking News: Smucker Amendment to Become a Stand-Alone Bill
Date: March 15, 2024
Source: American Association of Cosmetology Schools (AACS)

THIS WEEK IN THE STATES

Congressman Lloyd Smucker (R-PA) is planning to introduce the “Clock Hour Program Student Protection Act,” which preserves the 150% Certification Rule and allows clock hour programs that operate within 150% of its state’s minimum hours requirement for licensure (or another state under limited circumstances) to maintain Title IV eligibility. The legislation is in response to the recently published Non-GE Final Rule that eliminates the 150% Certification Rule in favor of a requirement that will strip away Title IV eligibility for all clock hour programs that exceed its state’s (or another state under limited circumstances) minimum hours requirement. This latest effort closely mirrors Congressman Smucker’s previously introduced Amendment to the House, Labor, Health and Human Services, and Education Appropriations Bill (H.R. 5894).

As we are all aware, the Department’s newly published Certification Rule will result in institutions losing Title IV eligibility for these programs, which will likely lead to significant revenue impacts if not closure of our institutions. Many short-term clock hour programs will not be able to satisfy the new clock hour requirements and still participate for Title IV federal aid programs. The length of educational programs, regardless of industry, is the prerogative of institutions and the purview of accreditors. Institutions are in the best positions to determine appropriate program lengths and curricula.

Once the bill is introduced and receives a bill number, we will be reaching out to you to engage your Members of Congress and ask for their support and to become co-sponsors.

Watch your inbox next week when the Call-to-Action campaign begins. This is an extremely important bill which will positively impact our students and future students.

AACS State Government Relations Update
Date: March 13, 2024
Source: American Association of Cosmetology Schools (AACS)

THIS WEEK IN THE STATES

Beware the Ides of March

The week before St. Patrick’s Day finds 35 state legislatures actively meeting. The following states have crossover deadlines this week and next by which bills need to be passed by their chamber of origin to remain viable.

• Mississippi and Oklahoma – March 14
• Vermont – March 15
• Maryland – March 18

Additionally, four states will be adjourning for the year.

• Indiana – March 14
• Wisconsin – March 14
• Idaho – March 22 (anticipated)
• South Dakota – March 25

THIS WEEK’S HEADLINES

• North Carolina and Texas Hold Primaries
• Indiana Passes Apprenticeship Bill
• Cosmetology Compact Bills Advance in Tennessee and Virginia
• Utah Passes Bill Revising Instructor Experience & Training Requirements

The details can be found below. The bills in this Update may not reflect every bill or regulation of interest or concern to your school or business. Please visit the AACS State Tracking Portal to review bills and regulations from your state(s).

SUPER TUESDAY ON THE STATE LEVEL

North Carolina will have a closely watched, and expensive, governor’s race this fall as the GOP is looking to take control of the state’s highest office for the first time since Governor Pat McCrory (R) lost his reelection bid in 2016. Their nominee is Lt. Governor Mark Robinson (R), who advanced from the primary election with approximately 65 percent of the vote by defeating State Treasurer Dale Folwell and former prosecutor Bill Graham. Robinson was elected North Carolina’s lieutenant governor in 2020 and focused his campaign on firearm access, law enforcement, and pro-life policies, as well as touting his endorsement from former President Donald Trump.

His Democratic opponent will be Attorney General Josh Stein (D) who garnered approximately 70 percent of the primary vote. Stein was elected attorney general in 2017 and previously served four terms as a state senator. His campaign focused on education, the economy, and public safety, as well as his accomplishments in state government.

While Democrats have controlled the governor’s office for 26 of the past 30 years, Larry Sabato’s Crystal Ball rates the election a toss-up.

For North Carolina Attorney General, Congressman Jeff Jackson (D) will face Congressman Dan Bishop (R) in November. Both nominees also served in the state senate.

Four North Carolina legislators – two from each party – were defeated in primaries last week. Both Democratic incumbents – Senator Mike Woodward and Representative Michael Wray – were moderates who broke party lines to help the GOP override Democratic Gov. Roy Cooper’s vetoes on lending fees and environmental regulations.

In Texas, there were a number of competitive legislative primaries as Attorney General Ken Paxton (R) sought revenge against Republicans who voted to impeach him, and Governor Greg Abbott worked to unseat House Republicans who opposed school vouchers. According to the Houston Chronicle, “nine GOP incumbents were ousted from their seats, while a handful more are in vulnerable territory and will head to a runoff on May 28. One of the most critical runoff races is House Speaker Dade Phelan (R-Beaumont) versus challenger David Covey, the former chairman of the Orange County Republican Party. Phelan didn’t reach the 50 percent majority needed to win outright after a brutal campaign season where he faced opposition from some of his fellow GOP members, and Covey nabbed the endorsement of Trump.”

UPCOMING STATE LEGISLATIVE UPDATES

North Carolina State Representative Destin Hall (R) is expected to become the next Speaker in 2025 after four potential competitors coalesced around him. The current Speaker of the House, Representative Tim Moore (R), is running for a Congressional seat in Charlotte and Gaston County.

In Arkansas, changes to house leadership are anticipated after Speaker Matthew Shepherd (R) decided not to seek another term as Speaker, although he is running for reelection.

The Maine House will also see leadership changes as Speaker Rachel Talbot Ross (D) is running for a seat in the state senate.

STATE LEGISLATIVE UPDATES

Connecticut

The Joint Public Health Committee voted 34 to 3 to favorably report a bill that would require barbering, hairdressing, and cosmetology school curriculums to “include education and training in the provision of services to individuals with textured hair, including, but not limited to, working with various curl and wave patterns, hair strand thicknesses and volumes of hair.” SB 178 is currently in the Legislative Commissioners’ Office, which is a procedural step to check for constitutionality and consistency with other law.

Florida

The Senate recently voted unanimously – 31 to 0 – to pass HB 133. As previously reported, the bill would reduce the look back timeframe for using a criminal conviction as grounds for denying a barbering, or cosmetology, license from five years to three years.

The enrolled bill will be transmitted to Governor Ron DeSantis (R) for signature into law.

The legislature also gave final approval to SB 1600, which would require the regulatory boards in the Department of Business and Professional Regulation to issues a professional license to an applicant holding the same or a similar valid, current license from another state for at least five years. Passage of a “recognized national licensing exam” is required if the exam is established as a requirement for licensure in the profession.

Illinois

The House Health Care Licenses Committee favorably reported HB 4570 to the House floor last week. The measure specifies that that a licensed cosmetology teacher who submits barber teacher licensure application must meet all requirements as a barber teacher, except that an applicant who has at least three years of experience as a licensed cosmetology teacher would be given credit for hours of instruction completed in subjects that are common to both barbering and cosmetology in the supplemental barbering course. Similar provisions would also apply to licensed barber, esthetician, and nail technician teachers submitting a cosmetology teacher licensure application.

Indiana

A cosmetology apprenticeship bill – HB 1135 – received final legislative approval last week with the House voting 66 to 27 to concur in Senate amendments. As previously reported and currently drafted, the measure would allow U.S. Department of Labor registered cosmetology apprentices to qualify for Indiana licensure by examination.

Once enrolled, the bill will be transmitted to Governor Eric Holcomb (R) for signature into law.

Maryland

The Senate unanimously passed SB 629 and SB 1044 last Friday. SB 629 would modify the composition of the seven-member State Board of Cosmetologists by creating a designated seat for a licensed esthetician, and eliminating a “consumer” member.

SB 1044 specifies that Maryland estheticians would be able to perform cosmetic microneedling, superficial exfoliation to the epidermis “using professional and other commercially available products or devices,” and nonablative skin rejuvenation. Additionally, the measures would allow estheticians to apply eyelash extensions. According to the sponsor – Senator Dawn Gile (D) – the bill is “a critical legislative initiative aimed at aligning Maryland’s regulations with contemporary standards. By updating the law to encompass the latest advancements in skincare technology, SB1044 seeks to empower estheticians to deliver services safely and effectively, thus retaining their talent within the state. We are currently losing estheticians to other states that have updated their definition and are practicing within their intended scope and education. Moreover, the bill grants the Board of Cosmetology the flexibility to promulgate regulations that support the evolving needs of the industry.”

New York

The Senate Consumer Protection Committee voted without discussion to send S3607 back to the Senate floor. The measure, which was passed by the Senate last year by a vote 60 to 1, would establish a laser hair technician license and regulate laser hair removal in the Empire State. The Secretary of State “shall promulgate rules and regulations which establish standards for practice and operation by licensees and trainees under this article in order to ensure the health, safety and welfare of the public including licensees and trainees.”

Rhode Island

The House State Government and Elections Committee conducted a hearing on H7388 last Thursday. As previously reported, the measure would allow any licensed barber, hairdresser, pedicurist, manicurist, or individual providing makeup application services to provide training services for individuals that presently do not have such a license. After a four-year training period, the trainee would be entitled to receive a license, although “the division may require additional training and/or licensure for the application or use of hazardous chemicals.” The Committee is holding the bill for further study.

South Carolina

Senator Tom Davis, the Chair of the Senate Labor, Commerce and Industry Committee, introduced a bill this week to deregulate blow dry styling, hair braiding, and make-up artistry. S1132 has been referred to Senator Davis’ committee.

South Dakota

HB 1233, which amends cosmetology apprenticeship requirements, received final legislative approval last week with a unanimous Senate vote. As previously reported, the bill specifies that a licensed instructor must supervise the apprentice, provides for both part- and full-time apprenticeships, and permits the transfer of hours “between an apprenticeship, program, or school if allowed by the institution to which the person is transferring.”

Once enrolled, the bill will be transmitted to Governor Kristi Noem (R) for signature into law.

Tennessee

The Senate Commerce and Labor Committee re-drafted SB 2732 last week to include the Cosmetology Licensure Compact and Tennessee Department of Commerce and Insurance amendments that would allow for individuals to become a licensed cosmetology or barbering professional without completing two years of high school or receiving a passing GED or HiSET examination score.

The amended bill was reported to the Senate Government Operations Committee by a vote of 7 to 1. The Government Operations Committee has calendared the bill for a hearing Wednesday.

The House companion – HB 2781 – is expected to be considered and amended by the House Commerce Committee this week.

Utah

Both the House and the Senate voted unanimously to adopt a conference committee report to SB 112. As previously reported, the bill would: create a 100-hour eyelash extension license; reduce the training and experience requirements for the instructor licenses; clarify the definition of “direct supervision;” allow a licensed instructor to teach the instructor’s scope of practice at any licensed school, and; add dermaplaning to the practice of master esthetics. If signed into law, cosmetologist/barber instructors would be required to have 1,600 hours of experience as a practitioner (3,000 hours are currently required) and 240-hours of on-the-job training (400 hours are currently required). Similar reductions would apply to barber, electrologist, esthetician, hair designer, and nail technician instructors.

The conference committee report added language for Utah esthetics schools to offer the eyelash and eyebrow technology program without obtaining an additional license. Once enrollment is complete, SB 112 will be transmitted to Governor Spencer Cox (R) for signature into law.

Virginia

The Commonwealth’s Cosmetology Licensure Compact bill – HB 322 – recently received final legislative passage with a 40 to 0 Senate vote. The bill did not receive a dissenting vote in either legislative chamber. Once enrolled, the bill will be transmitted to Governor Glenn Youngkin (R) for signature into law.

Wisconsin

A bipartisan Assembly bill revising the membership of the Cosmetology Examining Board was recently introduced. AB 1128 would add a licensed manicurist to the Board by decreasing the number of public members from two to one. The measure has been referred to the Assembly Regulatory Licensing Reform Committee.

A companion bill – SB 1031 – is in the Senate Licensing, Constitution and Federalism Committee.

UPCOMING LEGISLATIVE HEARINGS

March 14, 2024 at 1:00 p.m. – New Jersey Assembly Regulated Professions Committee Hearing on A1628, A2903, A3414, and A3891

A1628 would allow certain licensees of New Jersey’s State Board of Cosmetology and Hairstyling to teach in private schools of cosmetology and hairstyling. Current law limits a license to teach cosmetology and hairstyling to individuals who hold a cosmetologist-hairstylist license.  This bill expands that law to allow individuals holding a license to practice barbering, beauty culture, manicuring or as a hair braiding or skin care specialist to teach in a private school of cosmetology and hairstyling, provided the individuals meet certain other requirements.

A2903 would extend a pilot program allowing individuals trained in another state or foreign country that does not issue licenses to render barbering services to qualify for a renewable 120-day temporary permit.

A3414 would require shampoo technicians to complete a 40-hour training at a licensed school, a public school vocational program, or “for a responsible fee” at a licensed shop.  Upon completion of the training program, the individual would need to pass a practical examination to receive a certification.

A3891 would establish a “general barbering” license and barbering apprenticeships. The new “general barbering” license is non-chemical and cannot exceed 550 hours of instruction.

March 14, 2024, at 9:00 a.m. – South Carolina Senate Labor, Commerce and Industry Committee Hearing on S857 and S1132

S857 would provide for permitting and regulation of mobile salons and portable cosmetologist, esthetician, or nail technician operations.

S1132 – see above for additional information.

AACS Federal Government Relations Update
Date: March 04, 2024
Source: American Association of Cosmetology Schools (AACS)

CONGRESSIONAL HEADLINES

Bipartisan Workforce Pell Act

The House removed the Bipartisan Workforce Pell Act (H.R. 6585) from its scheduled floor vote in response to rising concerns about certain provisions of the legislation. The legislation would have required a two-thirds majority vote as it was being considered under suspension of the rules in the House. Several interests expressed concern over the funding for this expansion of the Federal Pell Grant program, which would have subjected several universities with large endowments to an excise tax.

Degrees Not Debt Act of 2024

Representative Salud Carbajal (D-CA) introduced the Degrees Not Debt Act of 2024 (H.R. 7488) which doubles the total maximum Federal Pell Grant to $14,800. It is not likely that this legislation will garner sufficient Republican support to pass the House.

DEPARTMENT HEADLINES

Negotiated Rulemaking Committee: Program Integrity and Institutional Quality

On March 4, 2024, the Department began its final round of Negotiated Rulemaking Committee sessions to develop new regulations on institutional quality and program integrity. The final session will take place through March 7, 2024. The topics include: Secretary’s recognition of accrediting agencies, institutional eligibility including state authorization as a component of eligibility, program requirements for distance education, return of Title IV funds, cash management including timely student disbursements, and eligibility requirements for TRIO program participation.

Of particular note, the Department has indicated that it is open to considering changes that would continue to permit asynchronous distance learning for clock hour programs with certain additional guardrails. AACS has been heavily engaged in this issue and has worked closely with several negotiators to reach agreement on a new proposal that would adequately address the Department’s concerns. AACS remains hopeful that the compromise will be adopted by the Department in the NPRM or the Final Rule.

Updates on the rulemaking process will be posted here.

Establishment of New Collection System for GE Reporting

The Department published a notice in the Federal Register requesting a new collection system to allow the Department to obtain the required information and assess the burden on institutions in accordance with the reporting requirements contained within the Gainful Employment (“GE”) Final Rule. The Department’s Final GE Rule establishes reporting requirements for postsecondary institutions who participate in the Title IV programs under the Higher Education Act of 1965 to report on their students who enroll in, complete, or withdraw from a gainful employment program or an eligible non-GE program in specified award years. The new regulations also define the timeframes for institutions to report the required information.

SAVE Plan

Kansas Attorney General Kris Kobach has filed a lawsuit attempting to invalidate President Biden’s SAVE Repayment Plan, alleging that it exceeds the Department’s legal authority and unfairly saddles taxpayers with the cost of subsidizing and forgiving loans.

Additional Preparation Support for 2024-25 FAFSA Implementation 

The Department announced updates on its progress on the 2024–25 Better FAFSA implementation. First, the Department has updated how it calculates the amount of aid students will receive in order to be in full alignment with the FAFSA Simplification Act. The update will not affect the Department’s timeline for delivering completed applications to schools in the first half of March. Second, over the next week, the Department will begin to deploy support from the office of Federal Student Aid and nonprofit organizations to lower-resourced colleges as part of its FAFSA College Support Strategy. Finally, the Department will send system-generated test student records (Institutional Student Information Records, or ISIRs) to schools and their vendors to process student records faster and more efficiently.

Liberty University

The Department announced that it has fined Liberty University $14 million for engaging in “material and ongoing violations” of federal campus safety rules. The fine was included in the settlement agreement between the Department and University following a federal investigation. Additionally, the University has agreed to spend $2 million over the course of two years to improve its campus safety operations.

Department Announcements

The Department has distributed the FY 2021 draft cohort default rate (CDR) notification packages to all eligible domestic and foreign schools only. The time for appealing the FY 2021 draft cohort default rates under 34 C.F.R Part 668, Subpart N begins on Tuesday, March 5, 2024, for all schools.

The Department published an announcement in the Federal Register requesting a new information collection to collect programmatic and student information from institutions participating in the revised Second Chance Pell experiment and Prison Education Programs (PEPs) for confined or incarcerated individuals.

The Department has provided additional details concerning the delivery of 2024-25 FAFSA Institutional Student Information Records (ISIRs) to institutions, state higher education agencies, and scholarship organizations.

The first Administrative Cost Allowance payment for the 2023–24 award year is based on records that the COD System has processed from the start of the Pell Grant 2023–24 award year up to the date that we process the first ACA payments for the 2023–24 award year. The Department began processing the Pell Grant ACA payments for all schools on February 20, 2024.

The Department has posted the 2024–2025 Common Origination and Disbursement (COD) Technical Reference for the 2024–25 award year.

The Department has published two volumes of the 2024-2025 Federal Student Aid Handbook:

• Volume 1: Student Eligibility discusses the eligibility requirements for student and parent borrowers and your responsibilities to ensure that recipients qualify for their aid awards.
• Volume 7: The Federal Pell Grant Program provides information to assist schools in determining student eligibility for and calculating Federal Pell Grants.

The Department has republished the EDconnect 8.6.1 software after resolving an issue that had impacted certain users following its initial release on February 27, 2024.

The Department released EDExpress for Windows 2024–25, Release 1.0. This is the initial EDExpress software release for the 2024–25 award cycle and includes the Application Processing and Packaging modules, as well as Global functionality such as Security setup, Document Tracking, and User Database. The Department has provided an installation guide and a link to the full download of the software.

The Direct Loan established data submission (closeout) deadline for the 2022–23 Program Year is Friday, July 31, 2024. This is the last processing day of the program year, so all school data must be received and accepted by this date to be included in a school’s final Ending Cash Balance for the year. As a reminder, all cash management, disbursement reporting, and monthly reconciliation regulatory requirements supersede the closeout deadline.

CONSUMER FINANCIAL PROTECTION BUREAU

Julia Barnard has been appointed as the new student loan official at the Consumer Financial Protection Bureau (“CFPB”). The appointment was confirmed by Treasury Secretary Janet Yellen and CFPB Director Rohit Chopra. Ms. Barnard previously served as a policy analyst at the CFPB. Ms. Barnard replaces Robert Cameron in this role.

Breaking News: House to Consider Bipartisan Workforce Pell Act
Date: February 22, 2024
Source: American Association of Cosmetology Schools (AACS)

The House of Representatives is scheduled to consider the Bipartisan Workforce Pell Act (H.R. 6585) as soon as next week. The Bipartisan Workforce Pell Act expands Pell Grant eligibility to short-term programs at all eligible institutions (including for-profit institutions). The legislation was previously approved by the House Education and Workforce Committee by a vote of 37–8 in favor of the legislation.

Under the Bipartisan Workforce Pell Act, programs resulting in certain high-skill, high wage outcomes with at least 150 “clock hours” of instruction, but less than 600 hours are eligible to participate in the extension of the Pell Grant program. Eligibility in the short-term Federal Pell Grant program is conditioned on the following:

• Determination from a workforce board that the program’s curriculum satisfies the requirements of high-skill, high-wage, or in-demand industries;
• Approval from an accreditor that the program meets other standards such as providing a recognized postsecondary credential; and
• Additional approval from the Department that the institution has satisfied its eligibility requirements.

While the legislation may pass the House with Republican support, it remains to be seen whether the legislation will garner sufficient support to pass the Senate. The Senate previously introduced a bipartisan bill titled the JOBS Act that prohibited for-profit institutions from participating in the program. The Senate HELP committee postponed a markup of the bill this past summer, and it has yet to reschedule the markup.

Passage of this legislation represents a victory for all privately owned, for-profit colleges, to the extent it is a major pushback on attempts to exclude for-profit institutions from federal student aid programs. AACS is hopeful that this bipartisan momentum will continue in other areas of importance to AACS member schools.

Breaking News: AACS Federal Government Relations Update
Date: February 21, 2024
Source: American Association of Cosmetology Schools (AACS)

House Education and Workforce Committee Leadership

Chairwoman Virginia Foxx (R-NC) announced that she will not seek a new term as the Republican leader on the House Education and Workforce Committee next term. Reps. Tim Walberg (R-MI.) and Burgess Owens (R-UT) are the top candidates to replace Chairwoman Virginia Foxx (R-NC), with Rep. Tim Walberg as the presumptive favorite. AACS is engaged with both Reps. Walberg and Owens.

Student Loan Forgiveness

The Department released its proposed language for the upcoming Negotiated Rulemaking Committee session on Student Loan Debt Relief, which will be held February 22 – February 23, 2024. The proposed language will implement a one-time mass cancellation of student loan debt for borrowers who are highly likely to default on their loans within the next two years. Additionally, the one-time cancellation will apply to borrowers experiencing “undue hardship,” which the Department defines further in its proposed language.

Additional information on the student debt relief rulemaking process – as well as the link to participate in the session – is posted on the Department’s website.

FAFSA Delays

The Department announced that it is taking a number of measures to better assist institutions and students, as the Department continues to experience processing delays with the new FAFSA. In particular, the Department announced that it will:

• Reduce verification requirements, which will reduce the burden for institutions and students;
• Suspend all new program reviews through June 2024, except for those related to the most serious issues like suspected fraud or a severe breach of fiduciary duty; and,
• Provide additional flexibility on renewing participation in federal student aid programs. The Department will waive that 90-day requirement for schools whose PPA expires in March, June, or September 2024, meaning these schools have until their expiration day to submit a recertification application.

The Department is taking the measures outlined above along with additional measures that it outlined in its FAFSA College Support Strategy, which Secretary Cardona announced in early February. The Department subsequently provided additional guidance on the FAFSA College Support Strategy and its various offerings for institutions and students.

It is noted that the Government Accountability Office recently announced that it has opened two investigations into the Department for its handling of the new FAFSA rollout.

Department Announcements

The Direct Loan established data submission (closeout) deadline for the 2022–23 Program Year is Friday, July 31, 2024. This is the last processing day of the program year, so all school data must be received and accepted by this date to be included in a school’s final Ending Cash Balance for the year. As a reminder, all cash management, disbursement reporting, and monthly reconciliation regulatory requirements supersede the closeout deadline.

The Department has begun publishing additional test versions of the Institutional Student Information Record (ISIR). The new test ISIR data file contains fictitious student records with realistic field values for different scenarios. The test ISIRs and open-source tools are stored in a public Department of Education GitHub repository.

The Department released guidance for institutions that wish to have direct assessment (competency-based) programs considered for Title IV, Higher Education Act (HEA) program eligibility, including requirements for approval of such programs under the current regulations on direct assessment programs. The Department published a final rule amending its regulations related to competency-based education programs, including direct assessment programs, on September 2, 2020. Those final regulations, located in 34 CFR 668.10, include changes to the definition of a “direct assessment program,” update the procedures and requirements for an institution that offers such a program to apply for the program to be determined an eligible program, and specify limitations on the use of Title IV program funds. If your institution wishes to have a direct assessment program determined to be an eligible program for Title IV, HEA program purposes, you must submit an updated E-App including the new program.

Secretary Cardona published a semiannual agenda of Federal regulatory and deregulatory actions. The agenda is issued under the authority of section 4(b) of Executive Order 12866, “Regulatory Planning and Review.” The purpose of the agenda is to encourage more effective public participation in the regulatory process by providing the public with early information about the regulatory actions we plan to take.

Breaking News: Conclusion of Negotiated Rulemaking Sessions on Program Integrity and Institutional Quality
Date: February 09, 2024
Source: American Association of Cosmetology Schools (AACS)

NEGOTIATED RULEMAKING SESSIONS ON PROGRAM INTEGRITY AND INSTITUTIONAL QUALITY CONCLUDED

Highlights:

• Department proposes regulations to prohibit schools from compelling students to pay for books and kits with Title IV funds;
• Department would disallow asynchronous distance learning in clock hour programs, essentially compelling in person instruction for all clock hours; and
• Department would tighten recognition criterial for all institutional and programmatic accreditors

This week, the Department of Education conducted its second Negotiated Rulemaking session on Program Integrity and Institutional Quality. The following topics were the focus of the session: cash management, state authorization, distance education, return to Title IV and accreditation proposals. Of particular note, the topics discussed by the Rulemaking Committee included the Department’s proposed language to end the ability of institutions to compel students to pay for book and kit fees with Title IV funds and remove asynchronous coursework from the definition of clock-hour programs. Further analysis on these issues are provided below.

We remind membership that the final Negotiated Rulemaking session on March 4 – 6, 2024 will include a public comment period starting at 3:30 PM, with each commenter having three minutes for public comment. Additional information on the Negotiated Rulemaking Committee can be found on the Department’s website.

First Session – Cash Management

The session on cash management focused on the definition of “tuition, fees and institutionally provided food and housing,” as it appears in § 668.164(c)(1)(i)(A).The proposed language excludes books and supplies from this definition, unless there is a compelling health or safety reason. The Department deleted its previous provision that included books and supplies within the definition, if the “institution documents on a current basis that the books or supplies, including digital or electronic materials, are not available elsewhere or accessible by students enrolled in that program from sources other than those provided by the institution.” AACS members should monitor this provision, as it would force institutions to provide students with an option to purchase its kits (and/or other supplies) from a third-party instead requiring that it be purchased directly from the institution. The Department remained focus on ensuring that students have the choice of where to purchase books and supplies, without being forced to purchase the items from the institution. An early temperature check indicated that negotiators were divided on this issue.

Additionally, the Committee focused on proposed changes to § 668.167, concerning the return of funds and overpayments. The proposed language provides that an institution must promptly send written notices to students requesting repayment of the balance, and that the institutions have thirty (30) days to then either (a) recover the overpayment in full; or (b) enter into a repayment arrangement with the student. The proposed changes are potentially beneficial to AACS members, as it would provide a timeline and pathway to recover overpayments of funds not tied to nonattendance or return of title IV, HEA funds.

Second Session – State Authorization and Distance Education

The Rulemaking Committee discussed the Department’s proposed language to remove asynchronous coursework from the definition of clock-hour programs, as the term appears in § 600.2. The Department noted that this change will impact cosmetology programs, as some of institutions providing these programs have adapted new educational delivery models. It does not appear likely that the negotiators will reach consensus on this proposed change, as an initial “temperature check” revealed that several of the negotiators did not approve of this language.

Additionally, a main topic of discussion centered around exemptions for state authorization under § 600.9(a)(3), and provides three exemptions for when an institution is not authorized to comply with state authorization and licensing requirements. The proposed exemptions are as follows:

1. The institution is providing distance education in a state through participation in a state authorization reciprocity agreement, but does not have a physical presence in the state;
2. The institution is listed by name in a state action by the appropriate state agency or entity to provide postsecondary education including programs that lead to a degree or certificate before July 1, 2030; or
3. The institution is exempted by a state action based on the institution’s accreditation with one or more accreditors recognized by the Department or based on the institution being in operation for 20 years before July 1, 2030.

The proposed language will sunset all of the exemptions on July 1, 2030, except for the exemption relating to participation in a state authorizing reciprocity agreement.

Third Session – Return of Title IV and Accreditation 

Overall, the Department is proposing regulations that will tighten recognition criteria for accreditors of all types. Two relevant topics raised during this session of the Rulemaking Committee were (1) the requirement for accreditation agencies to include public representatives in their voting memberships, and (2) defining when a student has withdrawn from an institution in assessing return of Title IV funds. The Department’s proposed language on voting memberships for accrediting agencies was met with skepticism, as the requirement seems to exceed reasonable bounds to ensure that the agencies are representatives of the public. As to the issue of withdrawal of students, negotiators remained divided on whether institutions are reasonable in determining the date of withdrawal for students, and whether additional Departmental involvement is necessary.

Fourth Session – Accreditation 

The Department’s proposed language amends the timeline for institutions that have violated agency standards for student achievement, to return to compliance. Under the new language, the timeline may include intermediate checkpoints on the way to full compliance and must not exceed the lesser of four years or 150 percent of the —

1. Length of the program in the case of a programmatic accrediting agency; or
2. Length of the longest program at the institution in the case of an institutional accrediting agency.

Additionally, the Department provided proposals to require all pre-accredited institutions and institutions seeking renewal of accreditation to submit a teach-out plan to the accreditor. All institutions and all accreditors will be subject to this provision. Several negotiators objected that the proposed language does not provide enough time for institutional improvement, while others objected that the language allows for too much time.

While it has little chance of becoming law, AACS will monitor this legislation and work to ensure that our friends and allies in Congress understand the valuable role that our institutions serve.

AACS Federal Government Relations Update
Date: February 08, 2024
Source: American Association of Cosmetology Schools (AACS)

CONGRESSIONAL HEADLINES

Proprietary Education Oversight Task Force

Senate Democrats have reintroduced legislation targeting for-profit institutions and seeking to impose increased oversight and additional regulatory burdens on the entire sector. At the outset, it should be noted that this partisan legislation will not likely pass the House of Representatives. Sens. Dick Durbin (D-IL), Tina Smith (D-MN), Richard Blumenthal (D-CT), Jeff Merkley (D-OR), and Elizabeth Warren (D-MA) introduced “the Proprietary Education Oversight Task Force Act,” which would establish a federal oversight committee to monitor for-profit institutions. The Committee would consist of officials from the Department of Education, the Consumer Financial Protection Bureau, the Department of Justice, the Securities and Exchange Commission, the Department of Defense, the Department of Veterans Affairs, the Federal Trade Commission, the Department of Labor, and the Internal Revenue Service.

College Cost and Reduction Act

The House Education and Workforce Committee marked up the College Cost and Reduction Act (H.R. 6951) and passed the legislation by a vote of 22-19, which will now advance to the House floor for consideration. It is not likely that the legislation will garner enough support to pass the Senate once that time arrives, however, it lays out the foundational elements that the Republican Party will incorporate into its future efforts to reauthorize the Higher Education Act.

As a reminder, the College Cost and Reduction Act is aimed at fixing the current student loan debt crisis. The legislation includes measures related to increased transparency, policies focused on access and affordability, and additionally provides accountability provisions focused on student success. The accountability measures included in the College Cost Reduction Act are of particular importance to AACS members. Many of the accountability measures will repeal current regulations that are harmful to our membership, such as:

• Gainful Employment and Financial Value Transparency: Repeals current regulations by the Secretary and eliminates authority for any future regulations.
• 90/10 Rule: Repeals current regulations and eliminates authority for any future regulations.
• Financial Responsibility: Repeals current regulations and clarifies circumstances in which ED determines whether an institution is financially responsible; requires ED to undergo a new rulemaking process to update the financial responsibility ratios no later than 18 months after enactment.
• Changes in Ownership: Includes the Change of Ownership and Conversion Improvement Act (Rep. Owens and Rep. Miller Meeks), which repeals current regulations and reforms the process to require IHEs to pay an administrative fee when submitting change of control and conversion applications; these fees will be used by ED and the IRS to hire staff and reduce the application processing time as well as conduct oversight.
• Other Repeals: Repeals new regulations issues by ED related to closed school discharges, borrowers defense to repayment, pre-dispute arbitration, false certification, administrative capability, certification procedures, and ability to benefit, as well as guidance related to personal liability for owners of proprietary institutions. Prohibits any substantially similar regulation on these topics from being issued by ED.

We note that the College Cost Reduction Act includes certain accountability provisions. One provision provides that institutions will be held financially responsible for when borrowers are unable to pay their student loans. The proposed language states that institutions “will be required to compensate the government annually for a portion of the unpaid interest and principal on the loans associated with their former students based on the total price the institution charges students for a program of study and the value-added earnings of students after they graduate or, in the case of students who do not graduate, the institution’s completion rate.” The provision will develop two risk-sharing metrics for institutions – (1) for completing student cohorts – that will calculate the median value-added earnings of students who completed the program minus the total price charged to students multiplied by one hundred; and (2) for non-completing student cohorts – that will compare the percentage of students who received Federal financial assistance who did not complete the program within 150% of the program length or did not complete the program within six years after enrollment in a two-year institution. The institution will then be responsible for a portion of the unpaid interest and principal based on these metrics.

Roadmap to College Student Success

House Education and Workforce Ranking Member Bobby Scott (D-VA) introduced a bill package following the recently introduced Republican-led College Cost and Reduction Act. The “Roadmap to College Student Success” is a package of six bills that proposes a number of higher education reforms. This package represents the Democratic Party’s platform for the Reauthorization of the Higher Education Act, which is expected in the next term.

Below is a list of the relevant bills contained within the package:

• “College Transparency Act” (H.R. 2957) – Would increase transparency through improving institutional data available to students and families. In particular, it would establish an advisory committee (to include for-profit institutions, among many others) to review the terms of data collection and create a student level data system that tracks all students;
• Lowering Obstacles to Achievement Now (LOAN) Act” (H.R. 1731) – Doubles the maximum Federal Pell Grant, reduces interest rates, decreases the number of monthly loan payments required for loan forgiveness under the Public Service Loan Forgiveness (PSLF) program amongst other reforms;
• “Pell to Grad Act” (H.R. 961) – Raises from 12 to 16 the total number of Semesters during which a student may receive a Pell Grant; and
• “America’s College Promise Act” (H.R. 5998) – Provides tuition-free community colleges and tuition-free attendance at Historically Black Colleges and Universities and Minority-Serving Institutions through a number of federal and state grant programs.

It is not likely that this package will be passed, but instead it is an important preview of what the Democratic Party will pursue following the results of the 2024 Election.

The Change of Ownership and Conversion Improvement Act

Higher Education and Workforce Development Chair Burgess Owens (UT-04) introduced the Change of Ownership and Conversion Improvement Act, legislation to ensure the Department of Education does not slow or impede institutions of higher education that are actively changing ownership or converting from for-profit to nonprofit or public status.

Specifically, the Change of Ownership and Conversion Improvement Act would:

• Shift the burden of processing applications from taxpayers to institutions by requiring the institution to pay an administrative fee when applying. The Department of Education will use these fees to hire staff to reduce the application processing time.
• Create numerous safeguards to ensure that any application for a conversion is rigorously evaluated. Specifically, it requires all sales to be at or below fair market value and that any transaction involving an insider be approved by an independent committee of directors for the institution.
• Prohibit institutions from advertising as a nonprofit until after the Department has approved the transaction.
• Require any institution that has recently converted to be subject to a five-year monitoring period and pay a fee to the Department and the IRS to fund monitoring costs.

DEPARTMENT HEADLINES

Title IX

On February 2, 2024, the Department submitted the Title IX Final Rule to the Office of Management and Budget (“OMB”) for approval. OMB may review the Title IX proposed rule for up to ninety days, with a possibility to extend the review period to one-hundred and twenty days. The Department had previously delayed the release of the Title IX Final Rule in May 2023 and again in October 2023. The Final Rule is expected to amend former Education Secretary Betsy DeVos’ Title IX rule, which took effect in August 2020.

Negotiated Rulemaking Committee: Program Integrity and Institutional Quality

On February 5, 2024, the Department began its second round of Negotiated Rulemaking Committee sessions to develop new regulations on institutional quality and program integrity. The second session will take place through February 9, 2024. The topics include: Secretary’s recognition of accrediting agencies, institutional eligibility including state authorization as a component of eligibility, program requirements for distance education, return of Title IV funds, cash management including timely student disbursements, and eligibility requirements for TRIO program participation.

Of particular note, the Rulemaking Committee discussed the Department’s proposed language to remove asynchronous coursework from the definition of clock-hour programs, as the term appears in 34 CFR § 600.2. The Department specifically noted that this change will impact cosmetology programs, as many of these institutions have adapted new educational delivery models. It does not appear likely that the negotiators will reach consensus on this proposed change, as an initial “temperature check” revealed that several of the negotiators did not approve of this language.

Click here for updates on the rulemaking process.

2024-2025 Federal Pell Grant Maximum and Minimum Award Amounts

The Department published a Dear Colleague Letter providing the Federal Pell Grant maximum and minimum award amounts for the 2024-2025 award year (July 1, 2024, through June 30, 2025). All 2024-2025 Federal Pell Grant awards must be based on these amounts. Although $7,395 is the maximum Pell Grant Scheduled Award for the 2024-2025 award year, institutions are reminded that a student may be eligible to receive Pell Grant funds for up to 150 percent of the student’s Pell Grant Scheduled Award for an award year.

Student Debt Relief Negotiated Rulemaking

The Department published a notice in the Federal Register announcing its intention to establish the Student Debt Relief Negotiated Rulemaking Committee (Committee) to develop proposed regulations related to the modification, waiver, release, or compromise of Federal student loans under the Higher Education Act of 1965, as amended (HEA). The fourth session of Committee negotiations will be on February 22 and 23, 2024.

FAFSA Delay

The Department is allocating $50 million in federal funding in an effort to assist with the processing delays that have occurred as a result of the release of the new Free Application for Federal Student Aid (“FAFSA”). In coordination with the funding, the Department announced the release of a FAFSA College Support Strategy that provides additional personnel, resources, and technology to help schools and students complete the better FAFSA form and to help colleges prepare to process student records. The Department’s FAFSA College Support Strategy includes:

· Deploying federal personnel and expertise to help colleges prepare and process financial aid forms;
· Directing funding for technical assistance and support for under resourced colleges; and
· Releasing tools to help colleges prepare to quickly and accurately process student records and deliver financial aid packages.

Navient

Navient announced its intention to outsource its student loan servicing to the Missouri Higher Education Loan Authority (“MOHELA”). As stated in its press release, “[t]his transaction is intended to create a variable cost structure for the servicing of our student loan portfolios and provides attractive unit economics across a wide range of servicing volume scenarios. Navient and MOHELA will work toward ensuring a seamless transition in the coming months and providing customers with uninterrupted servicing of their loans.”

Department Announcements

The Department published an electronic announcement providing information to assist institutions in reconciling the Federal Pell Grant Program. Pell Grant Reconciliation is the process by which a school reviews and compares Pell Grant data recorded on the U.S. Department of Education’s (the Department’s) systems with the information in the school’s internal records and resolves any discrepancies. The Department recommends that this process should be performed on a regular basis.

The updated 2024–25 Federal School Code (FSC) List of Participating Schools has been released. The Federal School Code List contains the unique codes assigned by the Department of Education for schools participating in the Title IV federal student aid programs. Students enter these codes on the Free Application for Federal Student Aid (FAFSA) form to indicate which postsecondary schools will receive the processed application results.

Tentative funding levels and corresponding worksheets for the Federal Work-Study (FWS) Program and the Federal Supplemental Educational Opportunity Grant (FSEOG) Program for the 2024–25 award year (July 1, 2024, through June 30, 2025) were posted to the Common Origination and Disbursement (COD). These tentative funding levels are determined in accordance with the Higher Education Act of 1965, as amended (HEA).

The Secretary is issuing updates of longstanding waivers and modifications of statutory and regulatory requirements governing the Federal student financial aid programs under the authority of the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act). The HEROES Act requires the Secretary to publish a document in the Federal Register providing notice of the waivers or modifications of statutory or regulatory requirements applicable to the student financial assistance programs under title IV of the Higher Education Act of 1965, as amended (HEA), to assist individuals who are performing qualifying military service, and individuals who are affected by a disaster, war or other military operation, or national emergency. The waivers and modifications are effective January 24, 2024, and expire on January 24, 2029.

OTHER FEDERAL AGENCY HEADLINES

A group of student loan debt relief scammers will be permanently banned from the debt relief industry and is required to turn over their assets as part of a settlement with the Federal Trade Commission. According to the FTC’s August 2023 complaint, since at least 2019, Express Enrollment LLC (also doing business as SLFD Processing), Intercontinental Solutions LLC (also doing business as Apex Doc Processing LLC), and their operators Marco Manzi, Ivan Esquivel, and Robert Kissinger falsely claimed to be affiliated with the U.S. Department of Education and used “Biden Loan Forgiveness” or some similar name, which consumers have understood to refer to the Biden-Harris Administration’s Student Loan Debt Relief Plan, to lure students into signing up for their phony student debt relief scheme. The FTC charged that the scheme’s operators collected approximately $8.8 million in junk fees in exchange for student loan debt relief services that did not exist. The defendants also used these misrepresentations to illegally obtain consumers’ bank account, debit card, or credit card information, and typically collect hundreds of dollars in unlawful advance fees—sometimes through remotely created checks in violation of the Telemarketing Sales Rule, according to the FTC’s complaint.

Breaking News: Proprietary Education Oversight Task Force Act
Date: February 05, 2024
Source: American Association of Cosmetology Schools (AACS)

Highlights

• Legislation establishes a federal oversight committee to monitor for-profit institutions;
• It is unlikely that the legislation will garner enough support to pass the House and become law; and
• AACS will monitor this legislation and work to ensure that our friends and allies in Congress understand the valuable role that our institutions serve.

Last week, Senate Democrats reintroduced legislation targeting for-profit institutions and seeking to impose increased oversight and additional regulatory burdens on the entire sector. At the outset, it should be noted that this partisan legislation will not likely pass the House of Representatives. Sens. Dick Durbin (D-IL), Tina Smith (D-MN), Richard Blumenthal (D-CT), Jeff Merkley (D-OR), and Elizabeth Warren (D-MA) introduced “the Proprietary Education Oversight Task Force Act,” which would establish a federal oversight committee to monitor for-profit institutions. The Committee would consist of officials from the Department of Education, the Consumer Financial Protection Bureau, the Department of Justice, the Securities and Exchange Commission, the Department of Defense, the Department of Veterans Affairs, the Federal Trade Commission, the Department of Labor, and the Internal Revenue Service.

Among other provisions, the legislation would:

• Task the committee with improving enforcement of federal laws and regulations and increasing accountability of for-profit colleges to students and taxpayers. The committee would be required to hold regular meetings as a group and with State Attorneys General and other stakeholders to coordinate federal and state activities related to for-profit school oversight;
• Create an easily accessible complaint collection and tracking system for students, parents, and stakeholders to report misconduct in the for-profit college industry;
• Require the committee to publish a report on the for-profit college industry, including information on federal oversight actions, student complaints, data on student outcomes, and financial information related to executive compensation, marketing, and other metrics; and
• Require the committee to publish a For-Profit College Warning List for Parents and Students made up of schools that have engaged in illegal activities or for which there is sufficient evidence of widespread or systemic fraudulent or predatory practices.

While it has little chance of becoming law, AACS will monitor this legislation and work to ensure that our friends and allies in Congress understand the valuable role that our institutions serve.

College Cost Reduction Act Advances to House
Date: February 01, 2024
Source: American Association of Cosmetology Schools (AACS)

College Cost Reduction Act Advances To House Floor

Highlights of Markup

• The College Cost and Reduction Act passed the Committee by a vote of 22-19, and now advances to House floor;
• Democrats introduced a number of Amendments to strike a majority of the regulatory relief provisions included in the legislation, all of which were rejected;
• The legislation may pass the House, but is unlikely to pass the Senate. However, the bill provides a foundation for future efforts to reauthorize the Higher Education Act.

Yesterday, the House Education and Workforce Committee marked up the College Cost and Reduction Act (H.R. 6951) and passed the legislation by a vote of 22-19, which will now advance to the House floor for consideration. It is not likely that the legislation will garner enough support to pass the Senate once that time arrives, however, it lays out the foundational elements that the Republican Party will incorporate into its future efforts to reauthorize the Higher Education Act.

The markup demonstrated the partisan nature of this legislation, and consisted mostly of Democratic Members voicing their opposition to the legislation and introducing Amendments to more closely align the College Cost and Reduction Act with the Democrats’ recently introduced “Roadmap to College Student Success.” Of particular note, Democrats introduced Amendments striking the repeal of the Gainful Employment Rule, the Borrower Defense to Repayment (“BDR”) Rule, the 90/10 Rule, and the Closed School Discharge Rule. None of those Amendments were agreed to by the Committee. The lone Republican Amendment was advanced by Rep. Burgess Owens (R-UT) which eliminated the Pell Plus program–a program that provides Pell Grant bonuses for students in the third and fourth years of college who are on track to graduate on time–from the legislation.

As a reminder, the College Cost and Reduction Act is aimed at fixing the current student loan debt crisis. The legislation includes measures related to increased transparency, policies focused on access and affordability, and additionally provides accountability provisions focused on student success. The accountability measures included in the College Cost Reduction Act are of particular importance to AACS members. Many of the accountability measures will repeal current regulations that are harmful to our membership, such as:

Gainful Employment and Financial Value Transparency: Repeals current regulations by the Secretary and eliminates authority for any future regulations.

90/10 Rule: Repeals current regulations and eliminates authority for any future regulations.

Financial Responsibility: Repeals current regulations and clarifies circumstances in which the Department of Education (ED) determines whether an institution is financially responsible; requires ED to undergo a new rulemaking process to update the financial responsibility ratios no later than 18 months after enactment.

Changes in Ownership: Includes the Change of Ownership and Conversion Improvement Act (Rep. Owens and Rep. Miller Meeks), which repeals current regulations and reforms the process to require IHEs to pay an administrative fee when submitting change of control and conversion applications; these fees will be used by ED and the IRS to hire staff and reduce the application processing time as well as conduct oversight.

Other Repeals: Repeals new regulations issued by ED related to closed school discharges, borrowers defense to repayment, pre-dispute arbitration, false certification, administrative capability, certification procedures, and ability to benefit, as well as guidance related to personal liability for owners of proprietary institutions. Prohibits any substantially similar regulation on these topics from being issued by ED.

The College Cost Reduction Act would also significantly revise the current accreditation system. It proposes to provide States with the authority to designate industry-specific accreditors, and additionally directs accreditors to focus on student achievement outcomes standards in its review of institutional and program quality.

Finally, we note that the College Cost Reduction Act includes certain accountability provisions. One provision provides that institutions will be held financially responsible when borrowers are unable to pay their student loans. The proposed language states that institutions “will be required to compensate the government annually for a portion of the unpaid interest and principal on the loans associated with their former students based on the total price the institution charges students for a program of study and the value-added earnings of students after they graduate or, in the case of students who do not graduate, the institution’s completion rate.” The provision will develop two risk-sharing metrics for institutions–(1) for completing student cohorts–that will calculate the median value-added earnings of students who completed the program minus the total price charged to students multiplied by one hundred; and (2) for non-completing student cohorts–that will compare the percentage of students who received Federal financial assistance who did not complete the program within 150% of the program length or did not complete the program within six years after enrollment in a two-year institution. The institution will then be responsible for a portion of the unpaid interest and principal based on these metrics.

We will continue to update AACS Membership on any developments with the College Cost and Reduction Act.

Roadmap to College Student Success
Date: January 30, 2024
Source: American Association of Cosmetology Schools (AACS)

Highlights of Bill

• Transparency: Establish an advisory committee (to include for-profit institutions, among many others) to review the terms of data collection and create a student level data system that tracks all students.
• Affordability and Accessibility: Doubles Federal Pell Grant and reduces interest rates.
• Accessibility: Raises from 12 to 16 the total number of semesters during which a student may receive a Pell Grant.

Today, House Education and Workforce Ranking Member Bobby Scott (D-VA) introduced a bill package following the recently introduced Republican-led College Cost and Reduction Act. The “Roadmap to College Student Success” is a package of six bills that proposes a number of higher education reforms. This package represents the Democratic Party’s platform for the Reauthorization of the Higher Education Act, which is expected in the next term.

Below is a list of the relevant bills contained within the package:

(1) “College Transparency Act” (H.R. 2957)– Would increase transparency through improving institutional data available to students and families. In particular, it would establish an advisory committee (to include for-profit institutions, among many others) to review the terms of data collection and create a student level data system that tracks all students;

(2) “Lowering Obstacles to Achievement Now (LOAN) Act” (H.R. 1731) – Doubles the maximum Federal Pell Grant, reduces interest rates, decreases the number of monthly loan payments required for loan forgiveness under the Public Service Loan Forgiveness (PSLF) program amongst other reforms;

(3) “Pell to Grad Act” (H.R. 961)– Raises from 12 to 16 the total number of semesters during which a student may receive a Pell Grant; and

(4) “America’s College Promise Act” (H.R. 5998) – Provides tuition-free community colleges and tuition-free attendance at Historically Black Colleges and Universities and Minority-Serving Institutions through a number of federal and state grant programs.

It is not likely that this package will be passed, but instead it is an important preview of what the Democratic Party will pursue following the results of the 2024 Election. It is additionally noted that the House Education Workforce Committee is marking up the College Cost Reduction Act tomorrow, January 31, 2024. AACS will be preparing a report of the legislation following this mark-up.

Chevron Doctrine Could Face Changes
Date: January 24, 2024
Source: American Association of Cosmetology Schools (AACS)

Last week, the US Supreme Court heard arguments in two significant cases that could dramatically impact the ability of all federal agencies, including the U.S. Department of Education, to promulgate new regulations. The two cases were Loper Bright Enterprises, Inc. v. Raimondo and Relentless, Inc. v. Department of Commerce.

In each case, the Court examined what level of deference, if any, federal courts should give to agencies when they promulgate regulations to implement statutes passed by Congress. Under current Supreme Court precedent, known as the Chevron doctrine, when a statute is silent or ambiguous on a specific issue, courts must defer to agency interpretation so long as the interpretation is reasonable.

The Chevron doctrine, which has stood since 1984, now appears to be in jeopardy. During oral argument in the Loper Bright and Relentless cases, the Court’s conservative justices (who hold a 6-3 majority) are reported to have been skeptical of Chevron. While lawyers representing the federal government argued the doctrine should stand to preserve predictability, several justices openly disagreed. Justice Gorsuch characterized Chevron as a “recipe for instability … because each new administration can come in and undo the work of a prior one.” Justice Kavanaugh stated, “[Y]ou say don’t overrule Chevron because it would be a shock to the system, but the reality of how this works is Chevron itself ushers in shocks to the system every four or eight years when a new administration comes in, whether it’s communications law or securities law or competition law or environmental law, and goes from pillar to post.”

Based on the oral arguments, it has been widely reported that the Court is likely to either overturn or significantly limit the Chevron doctrine moving forward. This would have broad implications for how agencies enact new regulations in the future and how courts review challenges to federal regulations, potentially including the ongoing challenge by AACS to the Department of Education’s “gainful employment” rule. However, until the Supreme Court issues its decision, it will not be clear how, if at all, AACS members will benefit from any changes to the Chevron doctrine.

College Cost Reduction Act and Smucker Amendment Update
Date: January 12, 2024
Source: American Association of Cosmetology Schools (AACS)

Chairwoman Foxx’s College Cost Reduction Act Would Repeal GE, FVT, 90-10, & More; Smucker Amendment Update
See full stories below

COLLEGE COST REDUCTION ACT

On Thursday, January 11, 2024, Chairwoman Foxx introduced H.R.6951, the College Cost Reduction Act, which is a bipartisan effort to fix the current student loan debt crisis. The legislation includes measures related to increased transparency, policies focused on access and affordability, and additionally provides accountability provisions focused on student success.

The accountability measures included in the College Cost Reduction Act are of particular importance to AACS members. Many of the accountability measures will repeal current regulations that are harmful to our membership, such as:

Gainful Employment and Financial Value Transparency: Repeals current regulations by the Secretary and eliminates authority for any future regulations.
90/10 Rule: Repeals current regulations and eliminates authority for any future regulations.
Financial Responsibility: Repeals current regulations and clarifies circumstances in which ED determines whether an institution is financially responsible; requires ED to undergo a new rulemaking process to update the financial responsibility ratios no later than 18 months after enactment.
Changes in Ownership: Includes the Change of Ownership and Conversion Improvement Act (Rep. Owens and Rep. Miller Meeks), which repeals current regulations and reforms the process to require IHEs to pay an administrative fee when submitting change of control and conversion applications; these fees will be used by ED and the IRS to hire staff and reduce the application processing time as well as conduct oversight.
Other Repeals: Repeals new regulations issued by ED related to closed school discharges, borrowers defense to repayment, pre-dispute arbitration, false certification, administrative capability, certification procedures, and ability to benefit, as well as guidance related to personal liability for owners of proprietary institutions. Prohibits any substantially similar regulation on these topics from being issued by ED.

The College Cost Reduction Act would also significantly revise the current accreditation system. It proposes to provide States with the authority to designate industry-specific accreditors, and additionally directs accreditors to focus on student achievement outcomes standards in its review of institutional and program quality.

Finally, we note that the College Cost Reduction Act includes certain accountability provisions. AACS is analyzing these proposals to determine the potential impact on our membership. One provision provides that institutions will be held financially responsible for when borrowers are unable to pay their student loans. The proposed language states that institutions “will be required to compensate the government annually for a portion of the unpaid interest and principal on the loans associated with their former students based on the total price the institution charges students for a program of study and the value-added earnings of students after they graduate or, in the case of students who do not graduate, the institution’s completion rate.”

We will provide an in-depth analysis of this legislation in the coming days. We will additionally provide membership with an update for how to support the College Cost Reduction Act in its next steps in the legislative process.

Bill Summary
Bill Text
Fact Sheet

SMUCKER AMENDMENT
The inclusion of the Smucker Amendment–which blocks the implementation of the 150% certification rule–in the final appropriations bill will likely be determined by negotiations during a formal conference committee between the House and Senate. The Smucker Amendment was included in the latest text of the Labor, HHS, and Education Appropriations Act that was approved by the House Appropriations Committee. The Senate’s Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act was marked up this past July and did not include a similar amendment. Following the passage of House and Senate appropriations bills, the next step in the appropriations process is to hold a formal conference committee between the House and Senate to negotiate compromised text. As part of this process, Members from each chamber will be appointed as conferees to negotiate a compromise text, which then has to be approved by both chambers. The conferees are chosen from the membership of the Appropriations Committees.

As a reminder, Representative Lloyd Smucker (R-PA) introduced an amendment to the House, Labor, Health and Human Services, and Education Appropriations Bill that “prohibits the Department from using funds to implement, administer, or enforce a provision of their October 31, 2023 final rule that would prohibit education and training programs from exceeding their state’s minimum hours requirements.” The Amendment was in response to the Department’s Non-GE Final Rule, which included a provision that eliminated the 150% certification rule for Title IV institutions.

AACS will advocate with selected conferees and advocate for the inclusion of the Smucker Amendment. It is worth noting that the final appropriations bills may not include policy riders, in which case the Smucker Amendment will not be included. We will continue to update membership with any developments.

Key Developments
Date: January 05, 2024
Source: American Association of Cosmetology Schools (AACS)

KEY DEVELOPMENTS
See full stories below

AACS Files GE Lawsuit
AACS filed its complaint against the Department and Secretary Miguel Cardona, in U.S. District Court for the Northern District of Texas, Fort Worth Division. AACS is joined as plaintiff in this suit by DuVall’s School of Cosmetology LLC, an AACS member school in the district.

Negotiated Rulemaking Committee on Program Integrity and Institutional Quality
The Department has released six issue papers across a range of categories in preparation for the upcoming Negotiated Rulemaking on Program Integrity and Institutional Committee meeting taking place January 8 through 11.

New Bill Makes For-Profit Colleges Eligible to Participate in Short-Term Pell
The House Education and Workforce Committee passed the Bipartisan Workforce Pell Act, which would extend the Federal Pell Grant program to include short-term programs. The legislation advances to the House for consideration.

GAINFUL EMPLOYMENT LAWSUIT

On Friday, December 22, 2023, AACS filed its complaint against the US Department of Education and Secretary Miguel Cardona, in US District Court for the Northern District of Texas, Fort Worth Division. AACS is joined as plaintiff in this suit by DuVall’s School of Cosmetology LLC, an AACS member school in the district. A committee of AACS leaders and the legal team at Duane Morris wrote that the complaint challenges “…the latest attempt by the United States Department of Education…to impose arbitrary, capricious, and unconstitutional new requirements on institutions of higher learning which, at a minimum, threatened institutions’ ability to recruit new students and…jeopardize their very existence.”

We will continue to keep you updated as the complaint progresses through the legal process.

CONGRESSIONAL HEADLINES

Short-Term Pell

The House Education and Workforce Committee passed the Bipartisan Workforce Pell Act, which would extend the Federal Pell Grant program to include short-term programs. The legislation now advances to the House for consideration. The Bipartisan Workforce Pell Act would allow students to receive a “Workforce Pell Grant” to attend short-term programs at any institution (including for-profit institutions) that satisfies certain eligibility requirements. Programs with at least 150 “clock hours” of instruction, but less than 600 hours would be eligible. The Department would begin awarding short-term Pell grants starting on July 1, 2025, for the 2025-2026 school year.

The eligibility requirements would include the following:

• Approval from a state workforce board that the program’s curriculum satisfies the requirements of high-skill, high-wage or in-demand industries;
• Approval from an accreditor that the program meets other standards such as providing a recognized postsecondary credential;
• Additional approval from the Department.

Opposition to SAVE Plan

The House passed H.J. Res. 88, which blocks the implementation of President Biden’s SAVE income-driven student loan repayment plan. The resolution provides that –

“Congress disapproves the rule submitted by the Department of Education relating to ‘Improving Income Driven Repayment for the William D. Ford Federal Direct Loan Program and the Federal Family Education Loan (FFEL) Program’ (88 Fed. Reg. 43820 (July 10, 2023)), and such rule shall have no force or effect.”

The Senate recently voted against an identical resolution, S.J. Res. 43. President Biden has indicated that he would veto any resolution that blocks the implementation of his student loan forgiveness policies.

DEPARTMENT HEADLINES

Student Loan Forgiveness

The Biden Administration announced that it had approved $4.8 billion in student loan forgiveness. The debt relief was provided through two sources:

• $2.2 billion for nearly 46,000 borrowers through fixes to IDR that will provide borrowers with an accurate count of progress toward forgiveness and address longstanding concerns with misuse of forbearance. Including today’s numbers, the Biden-Harris Administration has now approved almost $44 billion in IDR relief for nearly 901,000 borrowers.
• $2.6 billion for 34,400 borrowers through PSLF. This includes borrowers who have benefited through the limited PSLF waiver and ongoing regulatory improvements to the programs. This brings total relief through PSLF up to $53.5 billion for almost 750,000 borrowers since October 2021. By contrast, only about 7,000 borrowers had received forgiveness through these programs at the start of the Biden-Harris Administration.

The Negotiated Rulemaking Committee on Student Loan Debt Relief reached consensus on forgiveness measures related to Gainful Employment and Cohort Default Rates, and will include these provisions in its proposed rule. The Department voted on each section of the proposed regulatory text, as it held its final session of the Negotiated Rulemaking Committee today. The proposed rule will include a waiver for students who attended Gainful Employment programs closed due to high debt-to-earnings rates or low median earnings. Additionally, the Secretary may waive the borrower’s obligation to repay the balance on a Federal Family Education Loan (“FFEL”) for loans received for attendance at an institution that lost its eligibility to participate in any title IV, HEA program because of its cohort default rate. As the negotiated rulemaking sessions have concluded, the Department will next publish its proposed rule in the Federal Register for public comment. We will continue to provide updates once the Department publishes its proposed text, and will alert Membership to the public comment period.

Negotiated Rulemaking Committee: Program Integrity and Institutional Quality

The Department has released six issue papers across a range of categories in preparation for the upcoming Negotiated Rulemaking on Program Integrity and Institutional Committee meeting taking place January 8th through 11th. The topics include: the Secretary’s recognition of accrediting agencies, institutional eligibility including state authorization as a component of eligibility, program requirements for distance education, return of Title IV funds, cash management including timely student disbursements, and eligibility requirements for TRIO program participation.

The committee will be comprised of non-federal negotiators from 15 constituency groups. The primary negotiator representing proprietary institutions on the Rulemaking Committee is Jillian Klein. Ms. Klein is the senior vice president of government and external affairs for Strategic Education. David Cohen, Five Towns College and APC Board of Directors, is the alternate for the Rulemaking Committee.

A copy of the proposed regulatory text is available here. Updates on the student debt relief rulemaking process will be posted here.

Title IX

Rep. Lois Frankel (D-FL) and Rep. Mark Takano (D-CA) drafted a letter to Secretary Cardona to request that the Department provide an update on its publication of the final Title IX rule. A total of 65 Members signed the letter. The final Title IX rule has been delayed twice, once in May and then again this October. As stated in the letter, “students across the country have lived under former President Donald Trump’s Title IX policies that weakened protections for sexual assault and harassment survivors and sowed confusion about the extent of students’ protections against sex discrimination, including discrimination on the basis of sexual orientation, gender identity, and sex characteristics.”

In addition to the letter, the House Oversight Committee held a hearing on the final Title IX rule. It is expected that a final rule will be released in March.

FAFSA Soft Launch

The Department has started the soft launch of the 2024-25 FAFSA form, where the form will be available for periods of time over the coming days while it monitors site performance and respond in real time to any potential issues impacting the applicant experience. During the soft launch the Department will be initiating pauses to the site, during which time the form will not be available while our team makes improvements. As explained below, students and families will have ample time to complete the 2024-25 FAFSA, and do not need to rush to fill out the form immediately when the soft launch period opens.

IPEDS Report

The National Center for Education Statistics released its latest the Integrated Postsecondary Education Data System (IPEDS) report. IPEDS gathers information annually from U.S. college, university, and technical and vocational institutions eligible to participate in any of the Title IV federal student financial aid programs. The Secretary provided the following statement in following the release of the report:

“The U.S. Department of Education has issued a comprehensive report on the most effective and lawful strategies for promoting equal opportunity and diversity on our college campuses, and we will continue to support efforts to promote equity in higher education. This data also shows that unfortunately still far too many students never make it to commencement day and that institutions must do more to raise the bar for student success and equitable outcomes. For the United States to thrive and compete in the 21st century, we need a higher education system that provides students of all backgrounds with opportunities to reach their potential, cultivate their talents, and contribute to our country.”

Department Announcements

The FSA Partner and School Relations Center will allow for COD School Testing for the 2024–25 award year from Jan. 8, 2024, through Dec. 13, 2024. COD School Testing will provide organizations with an opportunity to test Federal Pell Grant (Pell Grant), Teacher Education Assistance for College and Higher Education (TEACH) Grant, and William D. Ford Federal Direct Loan (Direct Loan) business processes and system software with the COD System prior to the transmission and processing of actual production data using COD Common Record XML Schema Version 5.0b. Organizations that wish to participate must submit the “COD School Testing 2024–25 Sign-Up Document” to the FSA Partner and School Relations Center.” The sign-up document is posted on the COD website’s Home page under the “COD Resources” link.

The Department published an electronic announcement providing additional information for individuals without a social security number (SSN) to successfully create their StudentAid.gov account, which will allow the individual to access and sign the FAFSA form. Individuals who do not possess an SSN (who fail the SSA match), as well as individuals who fail the TransUnion® verification processes will be required to complete the StudentAid.gov account creation process specifically developed for those without an SSN.

The Department published an electronic announcement reminding institutions of their obligation to have its auditors evaluate and report on the accuracy of certain calculations performed by the institution in order to participate in federal student aid programs. The Department of Education’s (Department) regulations require institutions approved to participate in the federal student aid programs to have an independent certified public accountant substantiate every year the following calculations on an award year basis for the institution and/or its programs to remain eligible. The Department stated that it has become aware that some institutions are not ensuring that the required attestations are performed each year. Given the current confusion at institutions and in the audit community about the applicability of the attestation requirements, the Department does not plan to take action against an institution solely on the basis of the institution’s failure to have the rates substantiated timely by an independent auditor for award years ending on June 30, 2025 or earlier unless an institution has already been informed it needed to comply with these requirements and failed to do so.

As of December 17, 2023, the Department has expanded the features of FSA Partner Connect, the digital front door for all Federal Student Aid and partner engagement. In order to use the new features, users must have access to FSA Partner Connect. Users who need access to FSA Partner Connect must contact their organization’s Primary Administrator to complete that process.

The Office of Federal Student Aid (FSA) released new quarterly portfolio reports on its FSA Data Center website with key data and other information about the American student aid programs from September 30, 2023. As of September 2023, approximately 43.2 million unduplicated student loan recipients had $1.60 trillion in outstanding loans. More than 26 million ED-held recipients, with more than $1 trillion in outstanding loans, were in a repayment status as of September 2023, compared to about 400,000 recipients in September 2022 and 19.3 million recipients in September 2019.

The Department’s electronic announcement provides instructions to proprietary institutions on how they should report tuition assistance payments delayed as a result of the U.S. Army’s ArmyIgnitED system issues and the U.S. Department of Education’s (ED) treatment of such delayed payments for purposes of 90/10 enforcement. Notwithstanding Army Tuition Assistance payments delayed as a result of ArmyIgnitED system issues, institutions must calculate their 90/10 percentage, as required by the statute and applicable regulations, to include all Federal funds received in FY 2023 or 2024 that were used to satisfy tuition, fees, and other institutional charges and make all disclosures required by the Department for that calculation in its 90/10 note to its financial statements. In order to receive the enforcement relief outlined above, an institution must also disclose in its 90/10 note to the financial statements a revised 90/10 attestation that excludes the CY 2021 or 2022 late ArmyIgnitED payments received in FY 2023 or 2024 that were used to pay tuition, fees, and other institutional charges.

The Office of Federal Student Aid issued an enforcement bulletin reminding institutions of their obligation to establish and maintain appropriate compliance management systems and policies as part of the responsibilities required under their Program Participation Agreement (PPA) and to foster an overall culture of compliance to prevent violations and minimize harm to students and taxpayers. The bulletin does not represent a change in policy or an announcement of a new requirement. Instead, the bulletin is intended to reinforce the importance of robust compliance management systems for institutions participating in the Title IV programs.

The Department published a notice in the Federal Register requesting for a new information collection to collect programmatic and student information from institutions participating in the Second Chance Pell experience and Prison Education Programs (PEPs) for confined or incarcerated individuals. Since schools participating in the Second Chance Pell experiment have three years to transition their programs under the experiment to comply with the PEP requirements, the data collected for the experiment and the PEP provisions is almost identical.

Other Federal Agencies Headlines

The Federal Trade Commission has filed suit against Grand Canyon Education (GCE), Inc., Grand Canyon University (GCU), and Brian Mueller—the CEO of GCE and president of GCU—for deceiving prospective doctoral students about the cost and course requirements of its doctoral programs and about being a nonprofit, while also engaging in deceptive and abusive telemarketing practices. In a complaint filed in federal court, the FTC says that GCU and GCE told prospective students that the total cost of GCU’s “accelerated” doctoral programs was equal to the cost of just 20 courses (or 60 credits). In reality, the school requires that almost all doctoral students take additional “continuation courses” that add thousands of dollars in costs.

The Commission vote authorizing the staff to file the complaint was 3-0. The complaint was filed in the U.S. District Court for the District of Arizona.
For More Information

If you have any questions about this update, please contact Ed Cramp, Kristina Gill, or Matthew Steinway.

Gainful Employment Complaint Filed
Date: December 22, 2023
Source: American Association of Cosmetology Schools (AACS)

Today, Friday, December 22, 2023, AACS filed its complaint against the US Department of Education and Secretary Miguel Cardona, in the US District Court for the Northern District of Texas, Fort Worth Division. AACS is joined as a plaintiff in this suit by DuVall’s School of Cosmetology LLC, an AACS member school in the district.

A committee of AACS leaders and the legal team at Duane Morris wrote that the complaint challenges “…the latest attempt by the United States Department of Education…to impose arbitrary, capricious, and unconstitutional new requirements on institutions of higher learning which, at a minimum, threatened institutions’ ability to recruit new students and…jeopardize their very existence.”

We will continue to keep you updated as the complaint progresses through the legal process.

Important Federal GR Updates
Date: December 12, 2023
Source: American Association of Cosmetology Schools (AACS)

There have been two significant developments on the higher education front: the advance of the Bipartisan Workforce Pell Act to the House and the inclusion of Gainful Employment and Cohort Default Rates forgiveness measures in the Department’s proposed regulatory text for student loan debt forgiveness.

Negotiated Rulemaking Committee on Student Loan Debt Relief

The Negotiated Rulemaking Committee on Student Loan Debt Relief reached consensus on forgiveness measures related to Gainful Employment and Cohort Default Rates, and will include these provisions in its proposed rule. The Department voted on each section of the proposed regulatory text, as it held its final session of the Negotiated Rulemaking Committee today. The proposed rule will include a waiver for students who attended Gainful Employment programs closed due to high debt-to-earnings rates or low median earnings. Additionally, the Secretary may waive the borrower’s obligation to repay the balance on a Federal Family Education Loan (“FFEL”) for loans received for attendance at an institution that lost its eligibility to participate in any title IV, HEA program because of its cohort default rate.

The overall sentiment from the Negotiated Rulemaking Committee – and many Democratic Members in separate communications – is that the Department’s proposals are insufficient to satisfy the current student loan crisis. This viewpoint was reflected in the Committee’s voting on many of the proposed provisions. The Department acknowledged this fact, and stated that it will continue to work to find solutions that will adequately provide student loan forgiveness to borrowers.

As the negotiated rulemaking sessions have concluded, the Department will next publish its proposed rule in the Federal Register for public comment. We will continue to provide updates once the Department publishes its proposed text, and will alert Membership to the public comment period.

Short-Term Pell

The House Education and Workforce Committee has approved the Bipartisan Workforce Pell Act, which expands Pell Grant eligibility to short-term programs at all eligible institutions (including for-profit institutions). The Committee voted 37–8 in favor of the legislation, and it will now advance to the House for consideration. Under the Bipartisan Workforce Pell Act, programs resulting in certain high-skill, high wage outcomes with at least 150 “clock hours” of instruction, but less than 600 hours are eligible to participate in the extension of the Pell Grant program. Eligibility in the short-term Federal Pell Grant program is conditioned on the following:

• Determination from a workforce board that the program’s curriculum satisfies the requirements of high-skill, high-wage, or in-demand industries;
• Approval from an accreditor that the program meets other standards such as providing a recognized postsecondary credential; and
• Additional approval from the Department that the institution has satisfied its eligibility requirements.

Many Democratic Members of the Committee – Representatives Pramila Jayapal (D-WA), Suzanne Bonamici (D-OR), Alma Adams (D-NC) and Lucy McBath (D-GA) – all advocated to exclude for-profit participation in Short-Term Pell. Despite this opposition, it is still likely that the legislation will pass the House. It remains to be seen whether the bill will garner sufficient support to pass the Senate. The Senate previously introduced a bipartisan bill titled the JOBS Act that prohibited for-profit institutions from participating in the program. The Senate HELP committee postponed a markup of the bill this past summer, and it has yet to reschedule the markup.

This represents a victory for all privately owned, for-profit colleges, to the extent it is a major pushback on attempts to exclude for-profit institutions from federal student aid programs. AACS is hopeful that this bipartisan momentum will continue in other areas of importance to AACS member schools.

Bipartisan Short-Term Pell Bill Introduced
Date: December 05, 2023
Source: American Association of Cosmetology Schools (AACS)

Today, Chairwoman Virginia Foxx (R-NC) and Ranking Member Bobby Scott (D-VA) of the House Education and Workforce Committee introduced bipartisan legislation that would expand Pell Grant eligibility to short-term programs approved by workforce boards at all institutions (including for-profit institutions). If signed into law, the Bipartisan Workforce Pell Act (HR 6585) would allow students to receive a “Workforce Pell Grant” to attend short-term programs at any institution that satisfies certain eligibility requirements. The Department additionally released a fact sheet highlighting key portions of the legislation. Programs with at least 150 “clock hours” of instruction, but less than 600 hours are eligible to participate in the extension of the Pell Grant program. For the past year, Congress has actively attempted to expand the Federal Pell Grant program to include short-term programs, however, Members have debated over whether for-profit institutions should be eligible to participate.

Eligibility in the short-term Federal Pell Grant program is conditioned on the following:
Approval from a workforce board that the program’s curriculum satisfies the requirements of high-skill, high-wage, or in-demand industries;
Approval from an accreditor that the program meets other standards such as providing a recognized postsecondary credential; and
Additional approval from the Department that the institution has satisfied its eligibility requirements.

It is likely that this legislation will pass the House, however, it still remains to be seen whether it will garner sufficient support to pass the Senate. The Senate previously introduced a bipartisan bill titled the JOBS Act that prohibited for-profit institutions from participating in the program. The Senate HELP committee postponed a markup of the bill this past summer, and it has yet to reschedule the markup.

We will continue to provide you updates on this legislation. As always, if you have any questions or concerns please feel free to reach out to the AACS team.

Department Establishing Rulemaking Committee on Quality and Accountability Regulations for Title IV Programs –
Nominations for Negotiators Open November 29, 2023
Date: November 28, 2023
Source: American Association of Cosmetology Schools (AACS)

The Department is publishing a notice in the Federal Register on November 29, 2023, announcing its intention to establish a rulemaking committee to propose quality and accountability regulations for Title IV programs. Nominations for negotiators to serve on the rulemaking committee will open up after the date of publication in the Federal Register – which is expected November 29, 2023 – and must be received within fourteen (14) days of that date. AACS is accepting nominations for potential negotiators. If you are interested in being nominated, please reply to Cecil Kidd no later than Friday, December 1, 2023. As stated in the notice, the committee will address the following topics:

1. The Secretary’s recognition of accrediting agencies under 34 CFR part 602 and related parts;
2. Institutional eligibility under 34 CFR 600.2, including State authorization as a component of such eligibility under 34 CFR 600.9;
3. The requirements for distance education under 34 CFR 600.2 that pertain to clock hour programs and reporting for students who enroll primarily online;
4. Return of Title IV funds, to address requirements for participating institutions to return unearned Title IV funds in a manner that protects students and taxpayers while easing the administrative burden for institutions of higher education under 34 CFR 668.22;
5. Cash management, to address timely student access to disbursements of Title IV, HEA Federal student financial assistance and provisions related to credit balances, escheatment, and loss of such funds under 34 CFR part 668, subpart K; and
6. The eligibility requirements for participants in the Federal TRIO Programs.

We will continue to provide membership with updates on negotiators, and any additional developments on the rulemaking process.

BDR Updates
Date: November 10, 2023
Source: Career Education Colleges and Universities (CECU)

Department Guidance on New BDR Claims

You may have seen in our Daily News email this morning that the Department of Education has finally offered some long-awaited guidance on why so many schools are receiving notice of new claims, and what schools should do about those notices. The guidance provides answers to questions that have arisen about the motivation for the claims, why so many schools are receiving them, what time period those claims are from, and whether a response is necessary.

According to the Department:

• As part of the Sweet v. Cardona settlement, ED is notifying schools of BDR applications received from June 23, 2022, to November 15, 2022.
• ED plans to notify impacted schools of the entirety of their claims from that time period in one single notice.
• Approximately 90% of schools that have thus far received notices have “less than 100” claims, according to the Department.
• The Department reviews and adjudicates those claims based on the 2016 (Obama era) BDR rules. The 2016 Regulation provides for approvals based on substantial misrepresentation; a nondefault, favorable contested judgment; or breach of contract. Substantial misrepresentations are the most common type of alleged misconduct.
• Schools are not required to respond to the claims and failure to respond will not impact the Department’s decision on the claim.
• Importantly, ED has NOT reviewed the substance of the claims. The Department explains that this is because sending the school the claims first allows the school to add any relevant information before the substantive review takes place.
• According to the announcement, “Applications that allege substantial misrepresentations will only be approved if ED has evidence that demonstrates that a borrower’s school made a substantial misrepresentation that the borrower reasonably relied on to their detriment.”
• ED anticipates that claim notices will continue to be sent to schools under this process through April 2024, after which all claims subject to the settlement terms will have been sent.
• Importantly, ED will decide separately whether to seek recoupment from the school for approved claims. If recoupment is sought, the process will include providing additional evidence to the school.

We will, of course, keep you updated on this important matter.

CCST lawsuit on the Biden BDR rule

This past Monday in New Orleans, the 5th Circuit Court of Appeals heard the oral arguments about whether to continue the nationwide delay on implementation of the new BDR regulations that were scheduled to take effect on July 1, 2023. As you know, these BDR rules provide new tools for the Department to weaponize against our schools. You can see our summary of the impact of the new BDR rules here.

The oral arguments appeared to go very well for Career Colleges and Schools of Texas (CCST), which is bringing the lawsuit against the new BDR rules. It may be several weeks before the court rules on extending the nationwide delay, but the three-judge panel was properly inquisitive and appeared skeptical of the arguments being conveyed by the Biden Administration. Should the delay in implementation continue, the underlying lawsuit will still have to make its way through the process. The lawsuit is currently pending in district court in Austin, Texas. We are confident the facts are on CCST’s side and justice will ultimately prevail. The tone and tenor of the proceedings this week in the 5th Circuit provide reason for continued optimism. Should you wish to assist in supporting CCST’s lawsuit, you can learn more here.

Second Session of Negotiated Rulemaking on Student Loan Forgiveness – GE, CDR and Borrower Hardship
Date: November 9, 2023
Source: American Association of Cosmetology Schools (AACS)

The second session of the Student Loan Debt Relief Negotiated Rulemaking is now complete, and the last remaining session is scheduled for December 11 – 12, 2023. A topic that we have been monitoring is the Department’s newly proposed forgiveness measure that would link student loan debt forgiveness to the Gainful Employment metrics. The provision specifically provides the Secretary with authority to waive repayment of student loans if –

“[t]he Secretary determines that the GE program has failed the debt-to-earnings (D/E) rates measure, or has failed the earnings premium measure, under paragraph (f)(2) of this section in two out of any three consecutive award years for which the program’s D/E rates or earnings premium, as applicable, are calculated.”

The Department continues to state that the institution would not be liable for the repayment of the forgiven student loans. Negotiators raised concerns that the Gainful Employment provision is not sufficient on its own as a forgiveness measure, as the Gainful Employment metrics are not applied universally to all higher education programs. It seems likely that the Department will attempt to incorporate aspects of the Gainful Employment Final Rule, as well as portions of the other recently published Final Rules on Administrative Capability, Financial Responsibility, Certification Procedures, into its student loan forgiveness analysis.

In addition to the Gainful Employment provision, the Department introduced another forgiveness provision that provides student loan forgiveness based off the Cohort Default Rate measure –

“[f]or loans received for attendance at an institution that lost its eligibility to participate in any title IV, HEA program because of its high cohort default rate, as defined in 20 U.S.C. 1085(m), the Secretary may waive repayment of the loan provided that the borrower was included in the cohort whose debt was used to calculate the cohort default rate.”

Finally, one of the main topics of the rulemaking session centered around the term “borrower hardship,” and how a final rule should address this issue. In the discussion of hardship, negotiators referenced attending a for-profit school as an indicator of hardship that should be accounted for within any standard the Department establishes on this matter.

The Department will be forced to attempt to incorporate the several proposed revisions into its draft language prior to the next rulemaking session starting on December 11, 2023. We will continue to provide membership with updates on this negotiated rulemaking process.

U.S. Department of Education Reminds Schools of Their Legal Obligation to Address Discrimination, Including Harassment
Date: November 7, 2023
Source: U.S. Department of Education

As part of the Biden-Harris Administration’s continued efforts to take aggressive action to address the alarming rise in reports of antisemitic, Islamophobic, and other hate-based or bias-based incidents at schools and on college campuses since the October 7^th Israel-Hamas conflict, today the U.S. Department of Education’s (Department) Office for Civil Rights (OCR) released a new Dear Colleague Letter reminding schools of their legal obligations under Title VI of the Civil Rights Act of 1964 (Title VI) to provide all students, including students who are or are perceived to be Jewish, Israeli, Muslim, Arab, or Palestinian, a school environment free from discrimination based on race, color, or national origin. The Biden-Harris Administration is implementing the U.S. National Strategy to Counter Antisemitism, and the White House also announced last week that the Biden-Harris Administration will develop a U.S. National Strategy to Counter Islamophobia. The Department will continue to complete actions under the strategy to counter antisemitism and anticipates additional actions under its purview will result from the forthcoming strategy to counter Islamophobia.

“The rise of reports of hate incidents on our college campuses in the wake of the Israel-Hamas conflict is deeply traumatic for students and should be alarming to all Americans. Antisemitism, Islamophobia, and all other forms of hatred go against everything we stand for as a nation,” said U.S. Secretary of Education Miguel Cardona. “The Biden-Harris Administration is committed to upholding the civil rights of students of all backgrounds, including students who are, or who are perceived to be, Jewish, Israeli, Muslim, Arab, or Palestinian or of any other shared ancestry. College and university leaders must be unequivocal about condemning hatred and violence and work harder than ever to ensure all students have the freedom to learn in safe and inclusive campus communities.”

Today’s announcement comes on the heels of Secretary Cardona’s and White House Domestic Policy Advisor Neera Tanden’s visit to the Baltimore Hebrew Institute at Towson University last week. The leaders held a roundtable discussion with Jewish students from several Baltimore-area universities as part of the Department’s Antisemitism Awareness Campaign, initiated under the Biden-Harris Administration’s National Strategy to Counter Antisemitism. In recent weeks, as part of its Antisemitism Awareness Campaign, the Department has conducted site visits in cities across the country to address and learn about antisemitism at schools and college campuses.

OCR also recently released an updated complaint form specifying that Title VI’s protection from discrimination based on race, color, or national origin extends to students who are or are perceived to be Jewish, Muslim, Hindu, or Sikh, or based on other shared ancestry or ethnic characteristics. This update will help individuals understand how to file a Title VI complaint.

Anyone who believes that a school has discriminated against a student based on race, color, or national origin can file a complaint of discrimination with OCR. The person who files the complaint does not need to have been the target of the alleged violation, but could be a family member, or faculty, staff, or any other concerned community member who is aware of possible discrimination. To file a complaint, visit https://www2.ed.gov/about/offices/list/ocr/complaintintro.html.

The Department is available to provide technical assistance webinars on the application of Title VI to discrimination based on race, color, or national origin as described in the letter released today. To request such a training, please contact OCR at OCR@ed.gov.

“Through this letter we urge school communities to be vigilant of your students’ rights under Title VI, understanding that we in OCR are and will be,” said Assistant Secretary for Civil Rights Catherine E. Lhamon. “Jewish students, Israeli students, Muslim students, Arab students, and Palestinian students, and all other students who reside within our school communities have the right to learn in our nation’s schools free from discrimination.”

Title VI’s protection from race, color, or national origin discrimination extends to students who experience discrimination, including harassment, based on their actual or perceived: (i) shared ancestry or ethnic characteristics; or (ii) citizenship or residency in a country with a dominant religion or distinct religious identity. Schools that receive federal financial assistance have a responsibility to address discrimination when the discrimination involves racial, ethnic, or ancestral slurs or stereotypes; when the discrimination is based on a student’s  skin color, physical features, or style of dress that reflects both ethnic and religious traditions, to name a few characteristics. Likewise, schools have a responsibility to address discrimination against students based on the region of the world they come from or are perceived to come from.

Today’s newly released documents are among several resources released by OCR to support schools in complying with their obligations under Title VI to address discrimination based on race, color, or national origin, including shared ancestry and ethnic characteristics. Additional resources in this area include a fact sheet, Protecting Students from Discrimination Based on Shared Ancestry or Ethnic Characteristics, released in January 2023, and a Dear Colleague Letter issued in May 2023 as part of the Department’s launch of an Antisemitism Awareness Campaign. These resources are available on the Shared Ancestry or Ethnic Characteristics page of OCR’s website. Information about recently resolved complaints under Title VI, including complaints alleging discrimination based on shared ancestry or ethnic characteristics, is available here.

Smucker Amendment: 150% Certification Rule
Date: November 6, 2023
Source: American Association of Cosmetology Schools (AACS)

Representative Lloyd Smucker (R-PA) introduced an amendment to the House, Labor, Health and Human Services, and Education Appropriations Bill. Amendment #176 “prohibits the Department from using funds to implement, administer, or enforce a provision of their October 31, 2023 final rule that would prohibit education and training programs from exceeding their state’s minimum hours requirements.”

The Amendment is in response to the Department’s Non-GE Final Rule, which included a provision that eliminated the 150% certification rule for Title IV institutions. The Final Rule instead required that all clock hour programs change their hours to the amount the state requires as a minimum by July 1, 2024.

AACS has worked closely behind the scenes on this Amendment, and continues to reach out to Members to build bipartisan support. We will continue to update AACS membership on any developments.

Chairwoman Foxx Subpoenas Cardona for Borrower Defense Documents
Date: November 1, 2023
Source: American Association of Cosmetology Schools (AACS)

Yesterday, Chairwoman Virginia Foxx (R-NC) issued a subpoena to Department of Education Secretary Miguel Cardona for documents relating to the Borrower Defense to Repayment (BDR) regulations. This subpoena is in response to multiple requests from Chairwoman Foxx and Representative Lisa McClain (R-MI) to the Department to respond to a series of questions concerning the Department’s actions to promote equal treatment of institutions in the BDR process. Neither Chairwoman Foxx nor Rep. McClain received responses to either their letter to the Secretary on October 4, 2023, or their request for additional information to Secretary Cardona during a May 16, 2023, House Education and Workforce Committee hearing with the Secretary titled “Examining the Policies and Priorities of the Department of Education.” The October 4, 2023, letter provided an October 18, 2023, deadline to respond to its request.

In the cover letter of the subpoena, Chairwoman Foxx states that –

“This is the first time the Committee has subpoenaed the Education Department, and it is a measure that I do not take lightly. Secretary Cardona sat before this Committee in May and gave us his word that he would assist us in our oversight efforts. At every turn, the Department has thrown up roadblocks to prevent us from getting answers on borrower defense to repayment. Clearly, Secretary Cardona’s word doesn’t mean much. His lack of candor not only blocks the Committee from doing its job, but it also leaves students, borrowers, and institutions in the dark. We intend to get the answers for the American people.”

The Department has failed to respond to these requests, or acknowledge that the requests have been made. Chairwoman Foxx, therefore, stated that these “compulsory measures are necessary.” The subpoena provides that all documentation be delivered no later than November 14, 2023.

We will continue to update the membership on this development. As always, please feel free to reach out to our team with any questions or concerns.

Chairwoman Foxx Subpoenas Cardona for Borrower Defense Documents
Date: October 31, 2023
Source: American Association of Cosmetology Schools (AACS)

Chairwoman Virginia Foxx (R-NC) issued a subpoena to Department of Education Secretary Miguel Cardona for documents relating to the Borrower Defense to Repayment (BDR) regulations.

Analysis of the Published Final Rule on Financial Value Transparency and Gainful Employment
Date: October 10, 2023
Source: American Association of Cosmetology Schools (AACS)

Download to read.

Gainful Employment Rule Sent to OMB
Date: August 17, 2023
Source: American Association of Cosmetology Schools (AACS)

Yesterday, the Office of Information and Regulatory Affairs (OIRA), Office of Management & Budget (OMB) announced that the Department of Education has sent the draft Gainful Employment Rule to their office for final review. This is one of the final actions before the Department publishes the final rule.

OIRA allows interested stakeholders to request a meeting with them as provided under Executive Order 12866 to discuss issues on a rule under review. AACS will be requesting a meeting on behalf of its members to once again reiterate our many concerns regarding the proposed rule and the devastating effect it will have on our schools and students.

As updates continue to develop, you can find the latest information on our Gainful Employment webpage, including the draft rule and the AACS public comment.

FACTS Gainful Employment Public Comments response
Date: June 19, 2023
Source: FACTS – Florida Association of Cosmetology & Technical Schools

Download to read.

Letter to Secretary Cardona requesting an extension to file public comments on Gainful Employment regulation
Date: June 5, 2023
Source: FACTS – Florida Association of Cosmetology & Technical Schools

Download to read.