This Week In Washington
On Wednesday, the U.S. Department of Education (ED) officially announced its bidding process to implement its Next-Gen federal student aid debit card system. ED is seeking to enter into a cooperative agreement with a company to “guide the establishment and delivery of a student-focused electronic Payment Vehicle Account Program.” This pilot program will allow students at “multiple schools that volunteer to participate” to receive and use financial aid disbursements on a no-fee co-branded payment card for a year until the pilot is concluded and ED can assess the effectiveness of the program. As the bidding and pilot program is finalized, we will keep you abreast of new developments.
On Wednesday, Democrats in both the House and the Senate sent a letter to ED Secretary Betsy DeVos requesting more information on the high level of denials of borrowers seeking student loan discharge under the Public Service Loan Forgiveness Program (PSLF). Citing ED’s own data and a recent Government Accountability Office report, the House Democrats raised concerns over ED’s administration of the PSLF program and whether public servants were wrongly denied.
On Tuesday, U.S. District Judge Randolph Moss ruled against the California association trying to stop the Obama-era Borrower Defense to Repayment (DTR) regulations from taking effect. These regulations primarily govern when and how a borrower can have his or her federal student loans discharged in the event of fraud by his or her school. In denying the association’s motion in this case, Judge Moss primed the Obama-era rules to take effect in another suit he oversaw, one which involved ED’s delay of the rules. This means the Obama-era DTR rules have now taken effect and will be active until at least June 30, 2020 because ED delayed its own rewrite of the regulations.
In addition to loan discharge in cases of fraud, there are several other borrower-friendly provisions in the 2016 DTR regulations, including:
- Title IV institutions are prohibited from using forced arbitration clauses to settle disputes with students;
- Title IV institutions are prohibited from banning class-action lawsuits; and
- Students who cannot complete their education because their institution closes will receive automatic Title IV loan discharge.
Read an archived official summary here.
In related DTR news, Democratic state attorneys general and civil rights groups are urging the Ninth Circuit Court of Appeals to uphold a lower court ruling that invalidated ED’s attempt to provide partial loan forgiveness to students who were defrauded at some now-defunct institutions. Recall, that a federal court temporarily blocked ED from implementing its plan for a tiered forgiveness model because that system violated a federal privacy law.
This week, the trial in the case of Students for Fair Admissions, Inc. v. President and Fellows of Harvard College began, which raises questions about whether Harvard University discriminated against Asian-Americans in its admissions practices. In the early days of the trial, SFFA attorneys have argued that using race as an admission factor is not on trial, but many observers say that is exactly the outcome opponents of race-based admissions would like to see. Harvard’s attorneys countered that their admissions practices are within the bounds of Supreme Court precedent and have been held up as a model in Supreme Court cases. Earlier this year, the Department of Justice sided with SFFA by filing a statement of interest, a reversal of the prior administration’s stance. The trial is expected to last for weeks, and we will update you on the verdict when it arrives.
News You Can Use
A new Stanford University study finds that college rankings are not the best way for students and parents to determine whether a school is a good “fit,” which the study defines as a school where a student will be engaged by what the college has to offer.
The price students pay to attend college is flattening, as institutions give more in grant aid to incent enrollment, according to the College Board’s latest report on college financing trends.
The following bill(s) have been recently introduced for consideration by the 115th Congress (2017-2018):
S. 3584 – Affordable Loans for Any Student Act [Sen. Jeff Merkley (D-OR)] would consolidate student loan repayment plans into two: a standard ten-year repayment plan and an income-driven repayment plan similar to REPAYE. The bill also provides several other borrower-friendly provisions like ending origination fees, auto-enrollment in IDR, and interactive counseling.
S. 3595 – Student Loan Repayment Acceleration Act [Sen. Cory Gardner (R-CO)] would amend the Internal Revenue Code to exclude from income employer contributions up to $10,000 per year to be used for student loan repayment.