Legislative Updates

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 7th 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 theInstitutional 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 7th 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.

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