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As noted last month, President Obama’s re-election likely means that the Department of Education will continue to play an active role in developing higher education policies that will impact colleges and universities. As noted earlier, President Obama overhauled the student loan program during his first term by eliminating the Federal Family Education Loan Program (FFELP) and pushing for the maximum Pell Grant of $5,550. He continued to fight to maintain the maximum at $5,550. The President used his executive authority to implement a more generous income-based repayment plan for borrowers of student loans. During the first term, the President sought to expand the federal government’s role in overseeing colleges and universities. Examples include the regulations on gainful employment (most of which were vacated in a recent Federal court ruling), state authorization of online programs (also reversed by a Federal court ruling), and academic issues, like the definition of credit hour.
Some insights into the Department of Education’s second term proposals were offered at the Department’s Federal Student Aid Conference in Orlando, FL during the week of November 26th. The Department believes that there is a need to focus on improving graduation rates particularly in light of the current environment of declining enrollments. The Department actually pointed out that it was pleased with the recent improvements in completion rates at four-year for-profit institutions. Department officials suggested that there will be a focus on rising tuition costs, which will be addressed by increasing disclosures to prospective students and their families via the College Scorecard and the Financial Aid Shopping Sheet. With respect to gainful employment, the Department emphasized that while the U.S. District Court for the District of Columbia took issue with several of the provisions of the gainful employment regulations, the Court confirmed the Department’s authority to issue regulations in this area.
During the SFA Conference, the Department announced that it will soon be publishing a notice in the Federal Register indicating that it will be moving forward with negotiated rulemaking on distance education and fraud prevention as well as addressing the use of debit cards and other banking mechanisms for disbursing Title IV funds. The Department also plans on proposing regulations to improve and streamline the campus-based Title IV programs. The Department could use this negotiated rulemaking session as an avenue to address the gainful employment metrics. Finally, the Department stated that there will be a focus on fraud prevention particularly aimed at online programs as evidenced by the 2013-2014 verification rules.
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On November 28, 2012, the House Republican Steering Committee announced its Committee Chairs for the 113th Congress, which was ratified by the House Republicans on the same day. As expected, Congressman John Kline (R-MN) has been nominated as Chairman of the House Committee on Education and the Workforce. Congressman Paul Ryan (R-WI) will continue as Chairman of the House Budget Committee despite reaching the six-year term limit. Congressman Hal Rodgers (R-KY) will continue serving as Appropriations Chair.
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On December 6, 2012, House Minority Leader Nancy Pelosi (D-CA) announced that the House Democratic Caucus has selected who will serve as the Ranking Members of the House Committees in the 113th Congress. Congressman George Miller (D-CA) will continue to be the Ranking Member of the House Education and the Workforce Committee. Congressman Chris Van Hollen will continue to serve as Ranking Member of the House Budget Committee. Congresswoman Nita Lowey (D-NY) will serve as the Ranking Member of the House Appropriations Committee.
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Zakiya Smith, a senior policy advisor at the White House Domestic Policy Council, will leave the Administration at the end of December to serve as the Director of Postsecondary Innovation and Co-Director of Postsecondary Education at the Center for American Progress, a Washington, DC-based think tank that examines a range of policy issues. Ms. Smith frequently articulated the Obama Administration’s position on college costs and postsecondary success to the higher education community. In a November 20, 2012 article in Inside Higher Education, Becky Timmons, Assistant Vice President for Government Relations at the American Council on Education, stated that “Zakiya totally understands higher ed, and we could count on her giving us a fair hearing, even if she didn’t agree with us.”
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On November 29, 2012, Congressman George Miller (D-CA), the Ranking Member of the House Education and the Workforce Committee, issued a press release stating that he has written letters to four private student loan lenders, including Sallie Mae, Inc., Wells Fargo, Pennsylvania Higher Education Assistance Agency, and Citi Bank, seeking information on their lending practices and their “cooperation in addressing increasing difficulties confronting private student loan customers who struggle to find work and repay their student loans.” The press release referenced the report released from the Consumer Financial Protection Bureau (CFPB), which found that private student loan borrowers face many difficulties while in repayment. The CFPB report revealed that since March 2012, the CFPB has received about 2,900 complaints on private student loans that resemble the issues experienced by mortgage borrowers.
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On November 21, 2012, the Department of Education issued Electronic Announcement #41, Requirements for Adding New Educational Programs, because the U.S. District Court for the District of Columbia issued a decision on June 30, 2012, vacating several provisions in the gainful employment regulations, including the requirements, which went into effect on July 1, 2011 that addressed the program approval process for certain types of programs. The Electronic Announcement stated that the program provisions that are now in effect are those regulations that existed prior to July 1, 2011.
The Electronic Announcement addresses those programs that need to be approved by the Secretary before providing students with Title IV funds. The Electronic Announcement also describes the circumstances under which an institution can make a self-determination of a new educational program’s Title IV eligibility.
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On November 23, 2012, the Department of Education issued Electronic Announcement #42, 2011-2012 Disclosures for Gainful Employment Programs. In previous Electronic Announcements, including Electronic Announcement #39, the Department had advised institutions that they were not required to update their GE disclosures until further information was provided by the Department. The Department has not yet provided the GE disclosure template form because it is waiting for the Court to rule on the Department’s request to reinstate the GE reporting requirements.
The Electronic Announcement informs institutions that if they have not updated their GE program disclosures for the 2011-2012 award year, they must update their disclosures for each of their GE programs no later than January 31, 2013. These disclosures must be based on data about students who completed the GE program during the 2011-2012 award year (July 1, 2011 to June 30, 2012). Until the template is available, institutions must make their GE program disclosures using the institutionally-determined format.
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On November 15, 2012, Secretary of Education Arne Duncan announced that more than 500 colleges and universities, enrolling more than 2.5 million undergraduate students (13 percent of undergraduates), have committed to adopting the Financial Aid Shopping Sheet during the 2013-2014 award year. Secretary Duncan said that the Obama Administration introduced the Financial Aid Shopping Sheet in July 2012, and he applauded the institutions that have agreed to adopt the Shopping Sheet. He hopes that more colleges will agree to adopt the Shopping Sheet.
On November 20, 2012, David Bergeron, Acting Assistant Secretary of Postsecondary Education, sent a letter to all participants and thanked them for their participating during the September 2011 public meeting on improving financial aid offer forms. He stated that through discussions and recommendations made by stakeholders participating in the meeting, the Department of Education and the Consumer Financial Protection Bureau finalized the Model Financial Aid Offer Form, now referred to as the “Financial Aid Shopping Sheet,” in July 2012. Mr. Bergeron stated that as of Mid-October 2012, over 500 colleges and universities have voluntarily adopted the Shopping Sheet and will be distributing it to students who have been awarded financial aid beginning in the 2013-2014 school year.
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On December 7, 2012, the Department of Education published a notice in the Federal Register that provides for an early implementation of the new income-contingent repayment plan based on the President’s “Pay As You Earn” repayment initiative on December 21, 2012. On November 1, 2012, the Department issued final regulations for the “Pay As You Earn” repayment plan. In the preamble of the final regulations, the Department announced its intent to establish the “Pay As You Earn” repayment plan as soon as possible.
The new repayment plan, which is similar to the current income-based repayment plan (IBR), will accept enrollees who were new borrowers on or after October 1, 2007 and who took out a loan on or after October 1, 2011. Under “Pay As You Earn,” payments are capped at 10 percent of discretionary income and loan forgiveness occurs after 20 years of payments. Under the IBR program, payments are capped at 15 percent and loans are forgiven after 25 years of payments. However, in 2010, Congress modified the IBR plan to 10 percent of discretionary income and loan forgiveness after 20 years of payments with the enactment of the Student Aid and Fiscal Responsibility Act included in the Health Care and Reconciliation Act of 2010 (P.L. 11-152). These changes will go into effect on July 1, 2014.
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On December 6, 2012, the Department of Defense (DoD) released a revised Tuition Assistance Memorandum of Understanding (TA MOU), which results from the input of many of the universities and reflects President Obama’s Executive Order 13607, Principles of Excellence, issued on April 26, 2012. DoD will implement the DoD MOU policy on March 1, 2013, which will require an institution to have signed the DoD MOU in order to be eligible to participate in the Tuition Assistance Program. After March 1, 2013, institutions without a signed DoD MOU will not be able to enroll service members under the Tuition Assistance Program until they have signed the MOU. Institutions with a currently signed DoD MOU can compare both versions and select to retain the original DoD MOU or sign the revised DoD MOU.
Under the original agreement, all participating colleges and universities would have been required to follow the guidelines under the Servicemembers Opportunity Colleges (SOC), a consortium of colleges that work with veterans and service members. The guidelines require a 25 percent cap on residency requirements and have rules governing transfer of credit, placement by examination, and prior-learning credit. The modified MOU will not require non-SOC members to adhere to SOC guidelines. Such institutions that are not SOC members will be required to disclose, prior to enrollment, their transfer of credit policies, any academic residency requirements, and information about program cost. Colleges and universities will be required to provide each service member with access to an institutional financial aid advisor before he or she enrolls.
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On December 5, 2012, the Department of Veterans Affairs (VA) announced that it registered the term” GI Bill” with the U.S. Patent and Trademark Office and is now the sole owner of the mark. The move is designed to “stop deceptive and misleading” promotional efforts that target Veterans and Service Members and eligible family members. It fulfills the Executive Order E.O. 13607 – Establishing Principles of Excellence for Educational Institutions Serving Service Members, Veterans, Spouses, and other Family Members, signed by President Obama on April 26, 2012. In addition, VA obtained the rights to the GIBill.com website after the original owners agreed to give up the site.
VA is expected to issue terms of use for “GI Bill” within the next six months.
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On November 15, 2012, the National Student Clearinghouse Research Center (Clearinghouse) released the results of its latest Signature Report that demonstrate a dramatic increase in the college completion rate when nontraditional student pathways are included. Including the nontraditional students in the completion rate increases the rate from 42 percent to 54 percent. The findings also show that over 75 percent of full-time students complete college within six years, which is higher than the conclusions from previous studies. The study follows college enrollment behaviors starting in the fall 2006 through the spring 2012, focusing on first-time degree-seeking students. The authors wrote that incorporating nontraditional student pathways into the calculation of completers may ensure that institutions are held “accountable for the success outcomes not only of their full-time students but also of their part-time students as well as students who change their enrollment status during their postsecondary career.”
The key findings of the Signature Report are:
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Within six years, 12 percent of the first-time students completed a degree or certificate at an institution other than the one where the students started, which increases the overall completion rate from 42 percent to 54 percent;
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More than 20 percent of the students who completed a degree or certificate did so at an institution other than the one where they started. The authors noted that these students with successful outcomes are invisible to traditional graduation rate calculations;
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Out of the full starting cohort, 3.5 percent received a degree within six years in a state different from the state where they started, representing 6.5 percent of all completions;
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Overall, 15 percent of two-year starters completed a four-year institution within six years, and almost two-thirds of those did so without first obtaining a two-year degree. Community colleges do not receive any credit for the success of these students under traditional graduation rate measures.
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On December 5, 2012, the National College Access Network (NCAN), an association of nonprofit groups, federally funded programs and scholarship providers working with low-income and first-generation college students, released a report titled, “Increasing Return on Investment from Federal Student Aid,” which called for an overhaul of the Federal financial aid programs. NCAN was funded by the Bill & Melinda Gates Foundation. The grants are designed to develop strategies in preparation for the reauthorization of the Higher Education Act. The Gates Foundation awarded $3.3 million in grants to 16 groups for white papers on how to change the financial aid system to encourage college completion. Young Invincibles, an advocacy group for Americans under 30 years of age, released its white paper in November.
NCAN calls for:
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Maintaining full funding for Pell Grants including meeting the estimated $5 billion funding shortfall for FY 2014 without making additional eligibility changes for the Pell Grant Program.
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Eliminating the interest subsidy for undergraduate loans;
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Easing the debt burden by automatically enrolling all federal borrowers in an income-based repayment plan upon graduation;
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Distributing campus-based aid based on a competitive formula that takes into account the number of low-income students that a college enrolls and graduates compared to its peers; and
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Eliminating tax credits for higher education.
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On December 4, 2012, the Center for American Progress (CAP) released a report titled, “Improving the College Scorecard,” which offers suggestions for enhancing the College Scorecard. The College Scorecard is a new online tool that was proposed by President Obama last February 2012 that the White House plans to add to the Department of Education’s College Affordability and Transparency Center, which will assist prospective students and their families in comparing colleges before they choose. The objective is to make it easier for students and their families choose high-quality and affordable colleges.
Recommendations for the College Scorecard include:
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The government should develop alternative measures of student debt that matter to students should repayment rate or default rate not be meaningful to students;
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The government should find better ways to communicate the concept of “net price;” and
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The College Scorecard should emphasize four-year graduation rates, not six-year rates.
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