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On April 28, 2011, The Daily Caller reported that the Department of Education’s Office of Inspector General (OIG) is investigating a Wall Street short seller’s role in the formation of the gainful employment regulation. The OIG is looking at the relationship between Department of Education officials and a Wall Street short seller, and whether the relationship inappropriately influenced the development of the gainful employment rule. The investigation was requested in a letter of November 17, 2010 to Inspector General Kathleen Tighe from Senators Tom Coburn (R-OK) and Richard Burr (R-NC).
On April 28, 2011, Senator Mike Enzi (R-WY), Ranking Member of the Senate Committee on Health, Education, Labor and Pensions (HELP), sent a letter to Secretary of Education Arne Duncan, regarding the investigation into a Wall Street short-seller’s role in the formation of the gainful employment regulation. Senator Enzi asked the Secretary to “make public all Department of Education written correspondence, e-mail or otherwise regarding the development of the proposed gainful employment regulation, and waive any deliberative process exemptions to ensure complete transparency.” Senator Enzi wrote that “questions about the propriety and extent of the Department’s interactions with these individuals will persist until we are able to review all the relevant documents maintained by the Department.”
On May 2, 2011, Senator Mike Enzi (R-WY), Ranking Member of the Senate Committee on Health, Education, Labor and Pensions (HELP), wrote to the Securities and Exchange Committee (SEC) and the U.S. Attorney in New York to urge them to review rulemaking documents on the proposed gainful employment regulation. Senator Enzi stated that the documents raised a number of questions regarding the propriety of the communications between officials at the Department of Education and individuals with a potential financial interest in an ongoing rulemaking process. The Senator believes this warrants further review by the SEC and the U.S. Attorney.
Senator Enzi wrote: “Since issuing the proposed regulation, allegations have been made that DOE officials may have engaged in inappropriate communications with some investors with a financial interest in the outcome of the rulemaking process. These allegations have been bolstered by DOE documents released in response to several FOIA requests. In particular, the documents indicate that several investors contacted DOE and met with officials involved in the development of the proposed rule while the rulemaking process was ongoing. Additionally, these documents suggest that non-profit groups advocating in support of the DOE’s proposed rule were in regular contact with DOE officials, as well as investors interested in the outcome of the rulemaking.”
The Senator went on to say: “It is imperative that federal regulations are developed through an open and transparent process that is not improperly influenced by those seeking to realize a financial gain from the outcome. While these documents do not provide conclusive evidence of any wrongdoing, they do raise a number of troubling questions about the involvement of investor groups in the development of a pending regulation. Therefore, I urge you to review these materials and determine if further action is warranted.”
On April 27, 2011, Congressman Alcee L. Hastings (D-FL), Chairman of the House Education and the Workforce Committee John Kline (R-MI), and 116 other members of Congress sent a bipartisan letter to President Obama requesting that the Department of Education completely withdraw the proposed gainful employment regulation. The letter recommends that the Administration “work with Congress to develop policies that truly protect taxpayer funds and measure and improve educational quality across all sectors of higher education.”
The letter reminded the President that the House had passed, by a wide, bipartisan vote of 289 to 136, an amendment to H.R. 1, the Full Year Continuing Appropriations Act of 2011, which would have prevented the Department from finalizing the rule. While the Members were disappointed that the language was not included in the final legislation, the Members would like to encourage “the Department to jettison its current rule and work with us.”
A similar letter was sent to the President on April 27, 2011 from Congressmen Emmanuel Cleaver (D-MO) and Jesse Jackson, Jr. (D-IL). The Congressmen expressed concern that the implementation of the gainful employment rule could have a negative impact on low-income minority students in their respective districts, as well as making it more difficult for the President to achieve the President’s 2020 goals.
On April 21, 2011, Michael Astrue, the Commissioner of the Social Security Administration (SSA), responded to Senator Orrin Hatch’s (R-UT) letter of April 6, 2011 concerning the gainful employment regulation where he expressed concern about whether that regulation complies with the privacy protections of Section 6103 of the Internal Revenue Code (IRC). Mr. Astrue indicated that in compliance with Section 6103 of the IRC, the SSA will not share tax return information, but will only provide to the Department of Education data that is strictly statistical. “It will not contain any information on individual taxpayers, and no taxpayer will be identifiable, either directly or indirectly.”
On May 2, 2011, the Department of Education sent the “gainful employment” rule to the Office of Management and Budget (OMB), which has up to 90 days to formally conduct a review of the proposed final rule. The Department’s spokeswoman Jane Glickman was reported to have said, according to the May 3, 2011 Bloomberg News, that OMB expects to conclude the examination of the rule before the deadline. OMB will finish meeting with interested parties on the rule as soon as the week of May 16, 2011, but final publication remains unclear.
On May 5, 2011, the Department of Education announced in Dear Colleague letter ANN-11-11 that it will hold the first in a series of webinars on the regulatory requirements for institutions that offer educational programs that prepare students for gainful employment in a recognized occupation. The first webinar will be offered on May 25-26, 2011 and will include information about the reporting and disclosure requirements related to gainful employment.
Read the letter and register for the webinar.
In addition to the Dear Colleague letters issued on March 17, 2011 on state authorization, incentive compensation, and misrepresentation (GEN-11-05); on March 18, 2011 on the credit hour definition (GEN-11-06); and on ability-to-benefit (GEN-11-08), the Department has released the following Dear Colleague letters:
- On April 20, 2011, the Department issued a DCL on the reporting and disclosure requirements for programs leading to gainful employment in a recognized occupation (GEN-11-10);
- On April 20, 2011, the Department issued a DCL on state authorization in the context of distance learning (GEN-11-11), which has been Amended; and
- On May 6, 2011, the Department issued an announcement on the effective date of the return of Title IV regulations.
The amended DCL of April 20, 2011 (GEN-11-11), which was released on May 10, 2011, clarifies that an institution cannot use Title IV, HEA program funds for an eligible program if the institution “does not have State authorization in the State in which the student is located while receiving instruction.”
More to come!
On April 29, 2011, the Department of Education issued an electronic announcement on its intent to establish one or more negotiated rulemaking committees to prepare proposed regulations under the Higher Education Act (HEA). The announcement includes details of three upcoming public hearings to prepare proposed regulations during which stakeholders will have an opportunity to suggest issues they believe should be considered for action by the negotiating committees as well as policy roundtable discussions. The Department intends to use these discussions in three policy areas: the design and implementation of teacher preparation programs; College Completion with a focus on obtaining analysis and evaluations; and possible priorities and structure for a Fund for the Improvement of Postsecondary Education (FIPSE) “First in the World” competition proposed in the President’s FY 2012 budget.
Read the announcement about the public hearings schedule.
Get additional information on the roundtable discussions.
Read the May 5, 2011 Federal Register Notice on intent to establish a negotiated rulemaking committee.
On May 4, 2011, William Taggart, Chief Operating Officer (COO) of Federal Student Aid (FSA), announced that he would be leaving his position effective July 15, 2011. Upon his departure, James Runcie, FSA’s Deputy Chief Operating Officer, will assume Mr. Taggart’s position in an acting capacity.
On May 2, 2011, David Bergeron, Deputy Assistant Secretary for Policy, Planning and Innovation, Office of Postsecondary Education, sent an electronic announcement regarding the implementation of the Net Price Calculator. By October 29, 2011, each postsecondary institution that participates in Title IV student aid programs must post a Net Price Calculator on its Web site. The purpose of the requirement is to help current and prospective students, their families, and other consumers estimate the individual net price of an institution of higher education. The Net Price Calculator must use institutional data to provide an estimated net price that can be tailored to a student’s individual circumstances. While schools may develop their own Net Price Calculator, the Department has designed and developed a fully functional Net Price Calculator, which is available to all educational institutions.
Access the Net Price Calculator.
At the National Association of State Administrators and Supervisors of Private Career Schools (NASASPS), the State Higher Education Executive Officers (SHEEO) announced that in coordination with the National Center for Higher Education Management Systems (NCHEMS), it is planning on producing a compendium of state laws and regulations in order to assist institutions with compliance efforts with respect to the new State authorization rules. SHEEO will also produce a directory of agencies and individuals who are responsible for implementing the rules.
On April 29, 2011, the Project on Student Debt released an issue brief entitled, “Still Denied: How Community Colleges Shortchange Students by Not Offering Federal Loans,” which examines changes in loan participation among community colleges since the Project first reviewed participation in 2004-2005 and again in 2007-2008.
According to the analysis, more than 10 percent of community college students lack access to federal student loans in 12 states and more than 20 percent of community college students lack access to federal student loans in 8 states. In addition, racial and ethnic disparities still persist, with African-American and Native-American students remaining the least likely to have access to federal student loans.
The Project pointed out three notable changes in loan participation since the policy brief released in 2007-2008:
- In Chicago, IL, all seven of the City Colleges now participate in the federal student loan program, as compared to only four in 2007-2008;
- Recent legislation in North Carolina requires all of the state’s 58 community colleges to offer federal student loans in 2011-2012. Currently, North Carolina has the largest share (57 percent) of community college students without access to federal student loans in the nation; and
- California has about 214,000 community college students without access to federal student loans. Since the 2007-2008 policy brief was released, six of the state’s community colleges have withdrawn from the federal student loan program, and two more are now participating in the federal student loan program.
Two reasons are cited for not participating in the loan program:
- A concern about students’ ability to repay their loans once they leave college, and how the college’s reputation and access to federal grant aid might be affected if students default; and
- A belief that their students have no need to borrow and that offering loans only opens them up to unnecessary debt.
The brief noted that no community college is being sanctioned based on its more recent default rate, and there are exemptions for colleges where a relatively small share of students borrow. Colleges can also use loan counseling and preventive strategies to help limit student defaults. The brief pointed out that while community colleges may worry about students borrowing more than they need, national data indicate that less than three percent of all community college students borrow the maximum available in federal loans.
The Project provided the following recommendations to help increase community college access to federal loans:
- Requiring the Department to publish information about federal student loan participation by institution on a regular basis;
- Working with financial aid associations to help raise awareness by using training opportunities to promote a more thorough understanding of the likelihood of default rate sanctions and the ways to mitigate them; and
- Encouraging community college districts and system offices to explore additional ways to promote and facilitate federal student loan participation.
According to the Huffington Post of May 3, 2011, attorney generals in 10 states launched a joint investigation into for-profit colleges and potential violations of consumer protection laws, according to Kentucky’s Attorney General Jack Conway (D), who is leading the multi-state effort. “The combined investigation only began within the past two months, but it comes after several state attorneys general launched individual probates of deceptive recruiting practices and possible misrepresentations to recruits regarding financial aid dollars.”
Read the Huffington Post article.
The Department of Veterans Affairs (“VA”) was recently asked if veterans attending non-degree granting institutions could receive Post-9/11 GI Bill benefits for non-degree granting programs offered online and the answer was no unless the programs can be considered correspondence courses.
P.L. 111-377 expanded the VA’s authority to pay Post-9/11 GI Bill benefits for non-degree programs of education. However, the changes to the statute do not amend or remove the applicability of the existing definition of “institution of higher learning.” An institution of higher learning is defined in 38 U.S.C. 3452(f) and requires that the school offer postsecondary level instruction that leads to an associate’s degree or higher. Any institution that does not offer a degree program may be considered an educational institution but is not an institution of higher learning.
Prior to P.L. 111-377, the programs would have to be degree programs offered by an institution of higher learning. After August 1, 2011, non-degree programs offered by institutions of higher learning are eligible for Post-9/11 GI Bill benefits. Programs offered at non-degree granting institutions may qualify for Post-9/11 GI Bill benefits if other requirements apply such as if the program leads to a certificate that could be approved as a correspondence course. According to the VA, because “online courses generally do not include enough regularly scheduled conventional classroom sessions to be considered resident training, they fall under the “independent study” category.” Correspondence courses are considered in the same category as independent study.
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