This Week In Washington
POLITICO reported that Education Secretary Betsy DeVos has begun a massive restructuring of the U.S. Department of Education (ED) by dismantling its central budget office. According to documents obtained and interviews conducted by POLITICO, DeVos wants to “break up and decentralize all of the Education Department’s budget functions.” However, the dissolution of the budget office is opposed by the White House Office of Management and Budget (OMB). OMB Director Mick Mulvaney expressed deep concerns about breaking up the budget office. Despite these concerns, Secretary DeVos is moving ahead with the plans.
For context, ED’s budget office is (or was) responsible for estimating costs and providing analysis related to federal education programs, but those functions will be moved to the Office of Federal Student Aid. According to the restructuring plan, budget office personnel who oversaw specific programs will move to various program offices, and any remaining functions and staffers will be moved to the Office of the Chief Financial Officer. While some changes are immediate, the effective date of most of the reorganization is January 2019.
On Friday, ED published its interpretation of case law as it pertains to federal student loan servicing. ED’s position is that federal law preempts states from regulating federal student loan servicing and collection activities. The interpretation argues that the states and their regulatory agencies do not have the power to regulate the companies hired by ED to collect student loans, and as a result, ED’s student loan servicers can ignore states’ attempts to regulate them. This new guidance is in direct response to several states passing or currently considering enacting laws that would strengthen regulations on federal student loan servicers. Some states and attorneys general are pushing back against this interpretation and have vowed to continue to regulate these companies.
Also last Friday, Secretary DeVos extended the eligibility window to discharge student loan debt for students who attended the now-closed Charlotte School of Law. This effectively means that several additional former Charlotte law school students can now apply to have their federal student loans discharged under a closed school discharge procedure. In a statement, DeVos said that “Several students, through no fault of their own, fell through the cracks as Charlotte School of Law closed. It’s important that they, too, are made whole.”
This week, ED conducted its final negotiated rulemaking session to redraft Gainful Employment regulations. The current regulations assess whether certain programs are preparing graduates for employment that will enable them to pay back their student loans. During this week's session, negotiators discussed the scope of the program (whether to apply it to all programs or a specific subset), as well as changes to the metric for evaluation, new sanctions and disclosure requirements. ED is expected to release final regulations by late summer or fall, with an effective date of July 1, 2019.
News You Can Use
Michelle Weise, Senior Vice President of Strada Education Network, believes that overturning the federal student-level data ban would allow prospective students to make better informed decisions based on program outcomes.
Demos, a public policy organization, released new polling results on college affordability that shows, among other things, that 92 percent of respondents believe that student loan debt is a serious problem in America.
No student aid-related bills were introduced this week for consideration by the 115th Congress.