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On April 8, 2011, President Obama, Senate Majority Leader Harry Reid (D-NV), and Speaker of the House John Boehner (R-OH) reached a “handshake deal” on a spending bill to fund the federal government through the end of FY 2011 that would cut federal spending by $38.8 billion. The $38 billion in cuts is a compromise between the Democrats and the Republicans who originally sought nearly $60 billion in cuts. The agreement allowed the House to approve, by a vote of 348 to 70, a stopgap short-term Continuing Resolution that expires on April 14, 2011, to avert a government shutdown. The short-term Continuing Resolution gave Congress additional time to prepare and approve the compromise spending agreement.
Some of the education programs that are affected are as follows:
- Maintains the 2011-12 maximum Pell Grant award of $5,550;
- Permanently repeals the year-round Pell Grant, as proposed by President Obama’s FY 2012 budget request, beginning with the 2011-2012 award year;
- Rescinds funding for the Leveraging Educational Assistance Partnership (LEAP) Program;
- Cuts Federal Supplemental Education Opportunity Grants (SEOG) by $20 million;
- Eliminates the $42 million Byrd Honors Scholarship Program;
- Eliminates loan repayment for civil legal assistance attorneys;
- Rescinds $560 million in unused American Competitiveness and National SMART Grant program funds; and
- Includes a 2% across the board cut to non-defense accounts.
The long term Continuing Resolution does not include a provision that was included in H.R. 1, which would have prevented the U.S. Department of Education from finalizing and implementing final gainful employment rules (John Kline/Alcee Hastings Amendment that passed overwhelmingly in the House).
On April 14, 2011, the House approved H.R. 1473, the Full-Year Continuing Resolution by a vote of 260 to 167. Later in the day, the Senate approved H.R. 1473 by a vote of 80-19. Concerning the vote breakdown in the House, 108 Democrats and 59 Republicans opposed the bill, and in the Senate, four Democrats and 15 Republicans voted against the bill. President Obama signed H.R. 1473, the Full-Year Continuing Resolution, into law on April 15, 2011.
On April 5, 2011, House Budget Committee Chair Paul Ryan (R-WI) unveiled the Republican proposed FY 2012 budget resolution entitled, “The Path to Prosperity: Restoring America’s Promise” that includes sweeping changes to entitlements, domestic programs and the federal tax system. The proposal, otherwise known as the alternative Republican budget, would reduce federal spending by $6.2 trillion over the next decade compared to the President’s budget, and $5.8 trillion relative to the current-policy baseline. These reductions would be made in part through elimination of hundreds of duplicative government programs and earmarks.
With respect to education and job training programs, the plan proposes a number of reforms that include returning Pell Grants to their pre-stimulus levels to curb rising tuition inflation and make sure aid is targeted to the truly needy and consolidating dozens of overlapping job-training programs into more accountable career scholarships to improve access to career development assistance. The proposal states: “The last Congress did nothing to streamline the nation’s duplicative job-training programs. Instead, it recklessly expanded Pell grants for higher education beyond government’s means to pay, exacerbating an existing trend of spending-driven tuition inflation and endangering the viability of the program for the truly needy.”
Other proposals seek to repeal and defund the President’s health care law; reform health care and retirement programs; and calls for strict caps on government spending. Under the plan, if the proposals were implemented, the federal deficit would be reduced by $4.4 trillion over the next decade.
On April 11, 2012, the House Budget Committee Report on the FY 2012 Budget Resolution was released. The changes to make the Pell Grant program sustainable include:
- Ending year-round Pell;
- Stricter lifetime limits;
- Rolling back certain expansions to needs analysis;
- Eliminating administrative fees paid to schools;
- Considering a maximum income cap;
- Eliminating eligibility for less-than-half-time students and for those who receive the minimum award.
Other changes include:
- Repealing the expansion of the income-based-repayment (IBR) program;
- Repealing the College Access Challenge Grants;
- Paying servicing fees to nonprofit servicers with discretionary rather than mandatory funds; and
- Using discretionary rather than mandatory funds for Community College/Trade Adjustment Assistance.
On April 15, 2011, the House voted to adopt the FY 2012 budget blueprint. The vote was along party lines, 235 to 193, with four Republicans joining every Democrat opposing it. It is not expected to pass in the Senate.
View a copy of the House Budget Committee Report.
On April 13, 2011, the House Democrats unveiled their FY 2012 budget resolution in response to the Republican’s budget resolution. The Democrats’ proposal is to a large extent symbolic because it would not be approved in the House. The House Democrats are proposing a maximum Pell Grant of $5,550, which will be paid for by reducing spending in other programs.
On April 13, 2011, Republicans on the Senate Health, Education, Labor and Pensions (HELP) Committee, led by Ranking Member Mike Enzi (R-WY), sent a letter to Chairman Tom Harkin (D-IA) to express disappointment in the manner the Majority has conducted a series of “disorganized and prejudicial hearings on for-profit institutions.” In addition to Senator Enzi, the letter was signed by Lamar Alexander (R-TN), Richard Burr (R-SC), Johnny Isakson (R-GA), Rand Paul (R-KY), Orrin G. Hatch (R-UT), John McCain (R-AZ), Pat Roberts (R-KS), Lisa Murkowski (R-AL), and Mark Kirk (R-IL). The letter said:
“We agree that there are serious problems in higher education, particularly with some schools in the for-profit sectors. However, the need to address these problems does not warrant the biased and unprofessional conduct we have witnessed during the past four hearings. It is unacceptable and uncharacteristic of the way this committee or this institution has historically conducted its business.” The letter went on to ask that the Chairman work with them to find constructive solutions to the problems faced by all institutions of higher education. “If you decline this request, we will not participate in the next hearing on for-profit institutions.”
On April 6, 2011, the House Education and the Workforce Committee held a hearing entitled “Streamlining Federal Education and Workforce Programs: A Look at the GAO Report on Government Waste.” The featured witness was the Honorable Gene L. Dodaro, Comptroller General with the U.S. Government Accountability Office (GAO). The hearing focused on the March 1, 2011 GAO Report (GAO-11-318SP) entitled, “Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue.” Chairman of the House Education and the Workforce Committee John Kline (R-MN) began the hearing by highlighting the large number of programs that GAO identified as duplicative, with $4 billion alone in overlapping teacher quality programs. Chairman Kline noted that nine federal agencies (including the Department of Education) provided 47 different job training programs that cost $18 billion in FY 2009. He said that the lack of coordination in job training and teacher quality programs is a wasteful use of taxpayer dollars.
Mr. Dodaro testified that the GAO report underscored 81 opportunities to save billions of taxpayer dollars and create more efficient programs. He stated that fragmentation has hampered program evaluation and contributed to administrative burdens. The FY 2012 budget request for the Department of Education eliminates 13 discretionary programs and proposes to consolidate 38 current Elementary and Secondary Education Act programs into 11 new programs, although Mr. Dodaro indicated that there was no cost savings with the Department’s proposed consolidation of programs. Mr. Dodaro concluded his comments by stating that the GAO stands ready to assist Congress with the current fiscal problems facing the nation.
On March 21st and March 22nd, the House Education and the Workforce Committee held two field hearings, chaired by John Kline (R-MN), in Pennsylvania and New York entitled, “Reviving our Economy: The Role of Higher Education in Job Growth and Development.” The field hearings were designed to solicit feedback on education and workforce needs in American communities.
Representative Richard Hanna (R-NY), the only other member that attended the New York hearing, asked the panel what they thought of for-profit schools. The panel members that included presidents from a state university, a community college, and a private nonprofit institution stated that it is wrong to make a profit on education, the students show up “in debt and without much of a degree,” and that for-profit schools took money away from traditional schools. The president from a for-profit institution did not comment, Congressman Kline commented that farmers and doctors make a profit yet they perform a public good.
The Pennsylvania hearing discussed the gainful employment, Pell Grants, misrepresentation rules, placement rates, and the ability of higher education to respond to the skill demands of the business community. Congressman Kline discussed the rising cost of college, which has outpaced inflation by 6 percent and that Pell Grants have tripled in recent years, calling it “shockingly expensive” and “unsustainable.” He concluded the hearing by asking for placement rate data from the panel members, who were unable to provide it on the spot.
On March 17, 2011, Chairman John Kline (R-MN) of the House Education and the Workforce Committee held a hearing that reviewed the Department of Education’s proposed gainful employment regulation. This hearing represented the fourth hearing that the Committee has held to review the program integrity regulations. Congressman Kline opened the hearing by expressing concern over the unintended consequences of defining the term “gainful employment.” “This gainful employment regulation is yet another example of federal overreach into the nation’s colleges and universities that will reduce access to higher education for millions of students, undercut our efforts to reenergize our economy, and destroy jobs.” He continued by saying that “[a]t its heart, this issue is about student choice. We all support transparency and accountability. We realize there are some bad actors that should be rooted out. But we should not deny students the opportunity to attend the college of their choice and gain the valuable skills they need to compete in the workforce.”
Chairman Kline also noted in his opening remarks that “Congress has purposely never defined the term ‘gainful employment,’ despite its presence in statute for the past 50 years. It was decided that any attempt to define such an evolving concept could have unintended consequences. However, some in the administration seem to believe they know better than Congress.”
A former for-profit college student and an employer gave accounts of their positive experience with for-profit colleges. Jeanne Herrmann, COO of Globe University, a for-profit university, testified that the proposed rule would impact the institution’s ability to offer new programs and should be abandoned in favor of targeted, common sense solutions that encourage transparency and protect consumers as well as taxpayers. Arnold Mitchem, President of the Council for Opportunity in Higher Education (COE), testified that regulations like gainful employment place the burden on for-profit institutions and not students and are necessary to ensure that low-income students are protected and federal dollars are spent wisely.
The Republicans and many of the Democrats on the Committee agreed with Ms. Herrmann who said that “[w]e simply do not understand why the federal government would, especially at this time in our country’s history, seek to implement a rule that would impact job placement in fast-growing occupations. In short, the Department could not have contrived a more anti-student and thereby anti-employer and anti-taxpayer proposed rule.”
Although speaking in support of the for-profit sector, Ranking Democrat George Miller (D-CA) expressed concern in his opening remarks that some institutions earn 90 percent of their revenue from student aid that is paid for by taxpayers. Congressman Miller argued that there was no real accountability for these institutions and that many students leave their programs with crippling debt and without being better prepared. Congressman Robert Andrews (D-NJ) provided a hypothetical example of how unfair the proposed gainful employment regulations are by comparing two schools, one with better graduation rates, placement rates, but a higher debt-income ratio than the other. Everyone who testified ultimately agreed that they would rather attend the institution with the higher graduation and placement rates. Raul Grijalva (D-AZ) was one of the few Democrats at the hearing who spoke out in favor of the gainful employment regulation.
On March 11, 2011, Chairman Virginia Foxx (R-NC) of the House Subcommittee on Higher Education held a hearing that examined the potential impact on students and schools of the program integrity rules. The hearing specifically addressed the provisions that expand state authorization requirements and define a credit hour and the additional burdens placed on states and schools.
Chairman Foxx spoke of her opposition to the regulations and stated that the federal government should support efforts to streamline its role in higher education rather than moving forward with burdensome regulations. The congresswoman said schools have expressed concern that these rules mark the beginning of an increased federal rule of state higher education policies and will restrict schools in their course planning. Ranking Democrat of the Subcommittee Ruben Hinojosa asserted that the program integrity regulations were needed to strengthen accountability in higher education.
John Ebersole, President of the for-profit Excelsior College, testified that the career colleges provide a needed service to nontraditional students who seek access to higher education. He also noted that the economic downturn has increased the demand for online education and a number of college presidents include online education in their future strategy. Dr. G. Blair Dowden, President of Huntington University, provided the faith-based, private college perspective, and testified that the regulations undermine the independence and creative principles of American higher education. Kathleen Tighe, Inspector General of the Department of Education, testified that financial aid programs are dependent on the definition of credit hour to determine the amount of financial aid awarded to a student and funded by taxpayers.
Ms. Tighe stated that accreditation is a primary component of an institution’s participation in the federal financial aid programs, and many accrediting agencies lack a definition of credit hour, especially with respect to online education. She said that the OIG will monitor implementation of the program integrity regulations to ensure that they protect students, parents, and taxpayers.
Ralph Wolff, President of the Western Association of Schools and Colleges, testified that he has received feedback from a number of colleges who are concerned about the program integrity regulations because they establish federal criteria by which all states must comply and impact institutions in a way that might not be fully realized. Mr. Wolff concluded his remarks by requesting that the Department withdraw or suspend the regulations.
Congressman Ruben Hinojosa (D-TX), the Ranking Democrat of the Subcommittee, was the only Democrat that supported the program integrity rules. He agreed with Ms. Tighe that the regulations were necessary to strengthen the accountability and review of institutions that participate in student financial aid programs. Congressman Robert E. Andrews (D-NJ) said that unless Ms. Tighe could identify a “program” with the “status quo” interpretation of the credit hour, the regulation may be “a solution in search of a problem.” Congressman John Tierney (D-MA) agreed with Mr. Andrews and said that the credit hour regulation sounded like “No Child Left Behind for college students.” Congresswoman Foxx said to Congressmen Andrews and Tierney that “something must be going on if we’re agreeing.”
On March 10, 2011, Senator Tom Harkin (D-IA), Chairman of the Health, Education, Labor and Pensions (HELP) Committee, held a hearing that addressed oversight at for-profit institutions, using Bridgepoint as a case study. The hearing reviewed Bridgepoint’s rapid enrollment growth. In opening remarks, Senator Harkin expressed concern over the institution’s rapid growth and the high dropout rate. Ranking Committee Member Mike Enzi (R-WY) called the hearing an “agenda-driven rush to judgment” and emphasized the service that online education provides.
Kathleen Tighe, Inspector General for the Department of Education, stated that the students’ use of federal aid increased significantly since 2004-2005. Ms. Tighe noted that the OIG will continue to monitor federal student aid expenditures to ensure that taxpayer funds are spent wisely. Sylvia Manning, President of the Higher Learning Commission, testified that it is making major changes to stop companies from buying colleges solely to obtain accreditation and access to student aid. The Commission is also attaching conditions to the sale of colleges, by requiring them to “remain essentially the same institution” to keep their accreditation. Arlie Willems, a retired reviewer for the Iowa Department of Education, described the agency’s decision to not approve the institution’s request to offer a masters of arts degree in teaching.
During the hearing, Senator Harkin expressed concern about state oversight, but he and the other Democratic Senators on the committee continued to question the ability of accrediting agencies to evaluate billion dollar multi-state institutions. Senator Harkin suggested that Congress should impose federal oversight criteria on accrediting agencies.
On March 9, 2011, Chairman John Kline (R-MN) of the House Committee on Education and the Workforce held a hearing to review the Administration’s FY 2012 budget request for the Department of Education. Chairman Kline questioned Secretary of Education Arne Duncan as to how it could make a 31 percent increase in the Department’s budget and he also questioned the Department’s priorities for the next fiscal year. Congressman Kline said that “[w]inning the future is a goal we all share, but it can’t be won through record spending and record debt.” He went on to say that “[i]t is time we changed the status quo, not only in how we approach our fiscal future, but also in the way we support our nation’s education system.” The focus of the hearing was on bolstering K-12 education and the upcoming reauthorization of the Elementary and Secondary Education Act (ESEA).
On March 15, 2011, Department of Education Under Secretary Martha Kanter asked the House Subcommittee on Labor-HHS-Education Appropriations to support the Administration’s $44 billion funding proposal to sustain the $5,550 annual maximum Pell Grant award despite increased costs. Under Secretary Kanter highlighted President Obama’s “Pell Grant Protection Act” proposal for FY 2012 that would eliminate year-round Pell Grant and offer a Direct Loan “conversion” proposal to address split borrowing and eliminate the availability of subsidized Stafford Loans for graduate students. If enacted, the proposal would provide the offsets needed to cover the projected $20 billion shortfall in Pell Grant funding and maintain the $5,550 maximum award. She called the $845 Pell Grant cut in H.R. 1, the House-approved full-year appropriations measure for FY 2011, the “wrong way” to address deficit reduction as it would impact 9.4 million students.
During the hearing, Under Secretary Kanter was questioned about the gainful employment regulation, and she responded that ED had received 90,000 comments on the rule and the final rule would be reasonable and would accomplish both a decrease in default rates and an increase in graduation rates. When asked when the rules would be published, she said “soon.”
On March 1, 2011, Chairman of the House Committee on Education and the Workforce John Kline (R-MN) held his first hearing to examine the administrative burden of federal regulations on K-12, colleges and universities. In general, the members who were present at the hearing agreed that taxpayer dollars are spent effectively without impeding educational institutions’ ability to educate their students. Congressman Kline cited the gainful employment regulations as evidence that the federal government was overregulating. However, Ranking Member George Miller (D-CA) asserted that while regulations can impede the delivery of education, he believed that regulations were important to protect the integrity of billions of federal taxpayer dollars.
In general, the focus of the hearing was on K-12 education. However, Christopher Nelson, President of St. John’s College, testified that the “regulation of colleges and universities is massive.” He pointed out that “every diversion or distraction from these primary purposes [of educating students] weakens our best attempts to achieve those ends.”
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On March 14, 2011, Senator Dick Durbin (D-IL) wrote to 60 accrediting agencies seeking an explanation of their accreditation standards to better understand their role in holding colleges and universities to high academic standards. He said that he was looking forward to “working with accrediting agencies to guarantee a high-quality education for all our nation’s students.”
On March 10, 2011, the American Council on Education (ACE) representing a coalition of 60 higher education associations asked Congressional leaders to delay for one-year the implementation of the credit hour and state authorization provisions included in the program integrity regulations. On March 2, 2011, ACE issued a similar letter to Secretary of Education Arne Duncan expressing concern over regulations that “significantly expand and complicate the existing federal requirements for institutions to be ‘legally authorized’ in a state.”
Seventeen Senators sent a letter to Secretary of Education Arne Duncan on March 23, 2011, requesting the rescission of the “program integrity issues final rules of October 29, 2010,” but the focus of the letter was on the state authorization and credit hour provisions included in the program integrity rules. The Senators said that these regulations could negatively affect the “flexibility, freedom, and diversity of public and private colleges and universities in our states and across the country.”
The Senators said: “We support efforts to strengthen the quality of education provided to students across the country and to curb abuses in federal aid programs.” The letter went on to say: “However, we are concerned that the regulations create federal standards that states must meet in order to fulfill the requirement for state authorization and that a one-size-fits-all credit hour definition will prohibit institutions from designing programs as they see fit.” The Senators also contended that the state authorization requirement “imposes unnecessarily cumbersome and bureaucratic process on any postsecondary institution that has a robust online degree program.”
On March 18, 2011, the Administration filed a motion with the U.S. District Court for the District of Columba urging the Court to dismiss a lawsuit filed by the Association of Private Sector Colleges and Universities (“APSCU”). APSCU argued in its lawsuit that the state authorization, misrepresentation, and the incentive compensation provisions included in the program integrity regulations published on October 29, 2010 were beyond the Department’s authority. The Administration rejected APSCU’s claims and asserted that these three regulations were “permissible under the plain language of the HEA.” The Administration also argued against the lawsuit’s claim of harm that these regulations will cause, speculation that is refuted by the “statements in the preamble to the regulations, and subsequent regulatory guidance issued by the Department regarding how it interprets and intends to enforce the regulations.”
On April 2, 2011, APSCU filed its reply motion to the federal government’s Motion for Summary Judgment. The federal government has until April 15, 2011 to respond to APSCU’s response.
On March 17, 2011, the Department of Education issued a Dear Colleague letter (GEN-11-05) that provides guidance on three program integrity provisions: State authorization, incentive compensation, and misrepresentation.
On March 18, 2011, the Department released a second Dear Colleague letter (GEN-11-06) that provides guidance on another program integrity provision: credit hour definition.
On March 25, 2011, the Department released a third Dear Colleague letter (GEN-11-08) that provides guidance on the ability-to-benefit provisions included in the program integrity provisions. This letter addresses ability-to-benefit testing for students for whom English is not their native language and who are enrolled in a program taught in their native language.
On April 13, 2011, the Department of Education published a final regulation making corrections to the October 29, 2010 final regulations on program integrity. The effective date is July 1, 2011, except for the corrections to 34 CFR 668.58, which go into effect on July 1, 2012 (verification).
On March 9, 2011, the Department of Education published a notice in the Federal Register, announcing the schedule and agenda of the upcoming June 8-9, 2011 meeting of the National Advisory Committee on Institutional Quality and Integrity (NACIQI). The agenda includes a review of the petitions for renewal of recognition that includes the Accrediting Bureau of Health Education Schools (ABHES), the Accrediting Commission of Career Schools and Colleges (ACCSC), the Accrediting Council for Independent Colleges and Schools (ACICS), and the Council on Occupational Education (COE).
On April 4, 2011, the Department of Education’s Office for Civil Rights issued a Dear Colleague letter on sexual violence. ED is issuing the DCL to explain that the requirements of Title IX cover sexual violence and to remind schools of their responsibilities to take immediate and effective steps to respond to sexual violence in accordance with Title IX of the Education Amendments of 1972.
The DCL provides guidance as to what the school’s obligations are under Title IX regarding sexual violence, which includes:
- Once a school knows of possible sexual violence, it must take immediate and appropriate action to investigate or otherwise determine what occurred.
- A school must take steps to protect the complainant;
- A school must provide a grievance procedure for students to file complaints of sex discrimination;
- A school’s grievance procedures must use the preponderance of the evidence standard to resolve complaints of sex discrimination; and
- A school must notify both parties of the outcome of the complaint.
The Office of Civil Rights provides technical assistance to help schools achieve voluntary compliance with the civil rights laws it enforces and works with schools to develop approaches to preventing and addressing discrimination.
The Institute for College Access and Success (“TICAS”) released a report on March 16, 2011, that reviewed how colleges are implementing the Net Price Calculator requirement. Institutions are required to implement a Net Price Calculator no later than October 29, 2011. TICAS examined examples that were posted by more than a dozen colleges by early 2011. It found that the most user-friendly calculators were those that were prominently placed on the college’s websites, asked questions that most people could answer quickly and easily, and clearly conveyed the estimated “net price.”
TICAS offered the following recommendations for making the Net Price Calculator as useful as possible:
- Make the Net Price Calculator easy to find on their websites;
- Make it easy for users to view net price estimates by limiting the number of required questions, clearly marking which ones are required, and keeping them simple;
- Make Net Price Calculator results easy to understand and compare by emphasizing the “net price” figure, not what is left after subtracting work-study and loans, Also clearly distinguish between grants, work-study, and loans, as well as types of loans; and
- Make it clear that submitting personal contact information is optional, protect user’s privacy, and inform them about who owns and has access to their information.
On March 15, 2011, the Institute for Higher Education Policy (“IHEP”) released a report entitled, Delinquency: The Untold Story of Student Loan Borrowing, that examines how student borrowers managed their repayment of student loans. Five of the largest guaranty agencies contributed data to the report and the report found:
- For every student loan borrower who defaults, at least two more borrowers become delinquent without defaulting;
- Two out of five borrowers are delinquent at some point in the first five years after entering repayment;
- Twenty-six percent of borrowers in the 2005 cohort became delinquent on their loans at some point, but did not default;
- Thirty-three percent of undergraduate borrowers in the 2005 cohort who left college without receiving a credential became delinquent without defaulting and 26 percent defaulted;
- Twenty-one percent of undergraduate borrowers in the 2005 cohort who left college with a credential became delinquent without defaulting and 16 percent defaulted; and
- With regard to institution type:
- A third or less of the borrowers at four-year, public or private nonprofit institutions became delinquent or went into default; and
- More than half of the borrowers at for-profit and public two-year institutions were delinquent or had already defaulted.
As reported in a March 26, 2011 article in The Washington Post, Alisa Cunningham, a co-author of the report, was quoted as stating that “[w]e were surprised and shocked by the magnitude of delinquencies.” She went on to conclude that “[w]e are not capturing these borrowers in the current data that is used in policy debates. Often there are more of those borrowers than defaulters."
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