Legislative Updates

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.

Join today

Every member matters. The Florida Association of Cosmetology and Technical Schools (FACTS) represents all cosmetology schools and technical schools that offer cosmetology, beauty, and wellness-related education.