May 19, 2023

Higher Ed Policy Roundup: Vol. 7 - Issue 16

Policy and Advocacy


This Week in Washington

On Wednesday, the Education Department (ED) released a draft version of its rule on gainful employment meant to cut federal spending on underperforming non-degree programs and programs at for-profit institutions. In the draft rules, career training programs will have to pass two tests. The first is a debt-to-earnings ratio test where a borrower’s student debt cannot exceed eight percent of their annual income or 20 percent of their discretionary income. The second is an earnings premium test where a federal student loan borrower must earn at least as much as a working high school graduate between 25-34 years old in the same state. In addition, the draft rules propose new disclosure requirements for all institutions receiving federal aid. There is a 30-day comment period on the draft rules with an expectation that the final rule will go into effect on July 1, 2024.

On Tuesday, the House Committee on Education and the Workforce held a hearing titled “Examining the Policies and Priorities of the Department of Education” where Education Secretary Miguel Cardona testified on the Biden-Harris Administration’s fiscal year (FY) 2024 budget request for ED. In his testimony, Secretary Cardona advocated for the budget request listing benefits of the proposed budget on postsecondary education, including increases to Pell Grant awards and investments in Historically Black Colleges and Universities, minority serving institutions, and Tribal Colleges and Universities. The hearing can be viewed here

On Monday, the Department of Justice (DOJ) filed a motion to have a lawsuit brought by SoFi Technologies Inc. dismissed. Recall that SoFi Technologies Inc., a student loan refinancing company, sued the Biden-Harris Administration asking the U.S. District Court for the District of Columbia to end the student loan forgiveness pause that has been in place since March 2020. The motion asks for the dismissal on the grounds that, according to DOJ, SoFi’s goal of profiting from student loan activity is not a federally protected interest.

Also on Monday, the Office of Federal Student Aid released an announcement required by the Budget Control Act of 2011 providing information on Direct Loan fees. According to the announcement, for FY 2024, Direct Subsidized and Unsubsidized Loans will have a 1.057 percent origination fee and Direct Plus Loans will have a 4.228 percent origination fee. These fees are the same as FY 2023.

News You Can Use

An issue brief from New America indicated that student loan borrowers most likely to benefit from income drive repayment (IDR) are less likely to know about IDR plans

A Michigan legal advocacy group becomes the second to file a lawsuit challenging the student loan pause, arguing the pause costs five million dollars a month and hinders employee recruitment. 

Recent Legislation

The following bill(s) have been recently introduced for consideration by the 118th Congress (2023-2024): 

H.R. 3453 – [Rep. Beth Van Duyne (R-TX-24)] would require the Secretary of Education to report default rates and other data for each program of study for higher education institutions.

H.R. 3452 – [Rep. Beth Van Duyne (R-TX-24)] would require that loans made to a parent on behalf of a dependent student or to a graduate student are in the definition of cohort default rate under the Higher Education Act of 1965.

H.R. 3414Responsible Borrowers Act [Rep. Glenn Grothman (R-WI-6)] would allow higher education institutions to limit the amount of federal loans students can borrow.