Title IV of the HEA Regulatory Developments and Emerging Issues Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 Title IV of the HEA Regulatory Developments and Emerging Issues Karen Laverdiere, Esq. klaverdiere@bruman.com www.bruman.com

Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 Agenda Gainful Employment (Program Integrity Rules) Cash Management Regulations Experimental Sites Student Loans Application Process Borrower Defenses State Authorization Student Loan Servicing Perkins Loan Program Emerging Issues Title IV Funding Questions FWS SEOG Pell Grants Funding Dual Enrollment Year Round Pell Brustein & Manasevit, PLLC © 2017. All rights reserved.

Gainful Employment: Background/History Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 Gainful Employment: Background/History Initially proposed in 2010 Most requirements vacated June 30, 2012 by US District Court; left limited disclosure requirements in tact Final regulations published 10/31/14; included Reporting for prior years by 7/31/15 New, expanded, disclosure requirements 1/1/17 Brustein & Manasevit, PLLC © 2017. All rights reserved.

Gainful Employment: Recent Developments/Future of GE Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 Gainful Employment: Recent Developments/Future of GE Delayed expanded disclosure requirements from January 2017 to April 2017 New administration further delayed new disclosure requirements to July 1, 2017 Date to appeal the GE debt-to-earnings ratio also extended to July 1, 2017 Additional time provided for Department to review all of the GE regulations and their implementation Unclear as to what position new administration will take May see rollback of some or all of the GE requirements Brustein & Manasevit, PLLC © 2017. All rights reserved.

Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 Student Loans Borrower defenses have been in regulation since 1995 – but rarely used, old definition: Any “act or omission of the school attended by the student that would give rise to a cause of action against the school under applicable State law.’’ New definition: A defense to repayment of amounts owed to the Secretary on a Direct Loan, in whole or in part; and a right to recover amounts previously collected by the Secretary on the Direct Loan, in whole or in part.” Borrower Defenses Repayment Loan Servicing Perkins Loan Program Brustein & Manasevit, PLLC © 2017. All rights reserved.

Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 Student Loans Prior administration directive: Barred student loan guaranty agencies (GAs) from adding on fees to defaulted loans. Allowed borrower to get out of default and rehabilitate their credit. Current administration: Rescinded directive and GAs are now allowed to assess up to 16% in fees on student loans, that may or may not be in relation to actual cost Borrower Defenses Repayment Loan Servicing Perkins Loan Program Brustein & Manasevit, PLLC © 2017. All rights reserved.

Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 Student Loans Current administration withdrew three policy memos Intent was to create one loan servicing platform for all students to use, regardless of servicer Also called for expanded oversight of loan servicers These memos focused on improving student loan servicing for borrowers, and changed the way ED determines which third-party servicers would participate in a new servicing platform Removes certain consumer protections Borrower Defenses Repayment Loan Servicing Perkins Loan Program Brustein & Manasevit, PLLC © 2017. All rights reserved.

Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 Student Loans Current Perkins Loan program extended with the Federal Perkins Loan Program Extension (FPLPE) Act of 2015 Prior to this extension, there were grandfathering rules which allowed schools to make loans to certain students after 9/30/2015 through 2020 Extended the authority to make loans until 9/30/2017, but removed grandfathering provision FPLPE added additional disclosures and awarding requirements Prevents any further extensions Borrower Defenses Repayment Loan Servicing Perkins Loan Program Brustein & Manasevit, PLLC © 2017. All rights reserved.

Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 Title IV Funding In general, looking at a decrease in overall funding for FY2018 and going forward Financial aid is discretionary funding and is subject to funding each year Current Pell Grant surplus is $10.8 billion; seeks to cut $3.9 billion of the surplus Budget eliminates SEOG funding and calls for significant cuts to Federal Work Study along with directing funds to students who significantly need funding Proposed expanding Pell eligibility to year around Proposed expanding Pell to dual enrollment students Brustein & Manasevit, PLLC © 2017. All rights reserved.

Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 Cash Management Recent Developments Allows students to freely choose how they want to receive their financial aid funds Are provided neutral and objective information regarding payment options Removes excessive fees charged to access funds, through debit and pre-paid cards; ensure fee-free access to funds Brustein & Manasevit, PLLC © 2017. All rights reserved.

State Authorization: Previous Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 State Authorization: Previous State authorization is a longstanding requirement Requires institutions to be authorized in the state in which they are located as a condition for eligibility to receive Title IV Federal student aid.  There was no such requirement for online programs While all higher education institutions must have state authorization in the states in which they are physically located, there were no federal regulations for distance education providers in states where the institutions are not located Previously regulated on this in 2010, but federal appeals court struck down the distance education portion in 2011 Brustein & Manasevit, PLLC © 2017. All rights reserved.

State Authorization: Current Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 State Authorization: Current Final regulations published in December 2016 clarify state authorization requirements for institutions offering distance education programs; effective July 1, 2018 Now, institutions offering distance education programs in other states, must be authorized by that state if the state requires it Also requires the school to document the complaint process for each state regarding distance education programs Requires certain disclosures Brustein & Manasevit, PLLC © 2017. All rights reserved.

Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 Experimental Sites Experimental sites authority gives ED the ability to grant waivers from federal statutory requirements to study the effect of potential policies  More than a dozen implemented between 2011 and 2017 Trump administration has ended four of these experiments: Unsubsidized loan limit experiment Students with bachelor’s degrees allowed to enroll in career and vocational program and receive Pell Pell eligibility for programs shorter than the statutorty length FWS program allowing payment of FWS funds to students who serve as peer counselors for high school students New administration may implement additional experiements Brustein & Manasevit, PLLC © 2017. All rights reserved.

Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 Application Process Implemented as a result of a September 13, 2017 Presidential Executive Order Beginning with the 2017-2018 year, FAFSA began using prior-prior-year tax information; 2015 income information used for two years Allowed for expanded use of the IRS Data Retrieval Tool Created one-time issues regarding conflicting information Allowed ED to move up FAFSA filing date to begin on October 1 Allows schools to communicate with potential students earlier Prior-Prior-Year IRS Data Retrieval Tool Brustein & Manasevit, PLLC © 2017. All rights reserved.

Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 Application Process Moving the FAFSA filing date and base year income allowed for more expanded use of the IRS Data Retrieval Tool Allows parents/students to transfer income information directly from the IRS, decreasing the number of students selected for verification In March, the tool was disabled due to security concerns by the IRS and Department of Education Likely will not be available until October 2017, for the 2018-2019 FAFSA Prior-Prior-Year IRS Data Retrieval Tool Brustein & Manasevit, PLLC © 2017. All rights reserved.

Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 Emerging Issues Presidential order regarding reducing regulations (1/30/17) Policy of alleviating unnecessary regulatory burdens When an agency proposes a new regulation, it must identify two regulations to be repealed Any new incremental cost of a new regulations, must be offset by the reduction of cost of the two repealed regulations Brustein & Manasevit, PLLC © 2017. All rights reserved.

Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 Resources USDE Dear Colleague Letter GEN-15-12 6/30/2015 USDE GE Electronic Announcement 39, 101, 103, 105 Federal Register Vol 81 No 116 Page 39330 USDE Dear Colleague Letter GEN-16-05 2/17/16 USDE Dear Colleague Letter GEN-15-03 1/30/15 USDE Dear Colleague Letter GEN-11-05 3/17/11 Federal Register Vol 81 No 243 Page 92232 Brustein & Manasevit, PLLC © 2017. All rights reserved.

Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 Questions? Brustein & Manasevit, PLLC © 2017. All rights reserved.

Education: The New Federalism! Spring Forum 2017 May 10-12, 2017 Disclaimer This presentation is intended solely to provide general information and does not constitute legal advice or a legal service.  This presentation does not create a client-lawyer relationship with Brustein & Manasevit, PLLC and, therefore, carries none of the protections under the D.C. Rules of Professional Conduct.  Attendance at this presentation, a later review of any printed or electronic materials, or any follow-up questions or communications arising out of this presentation with any attorney at Brustein & Manasevit, PLLC does not create an attorney-client relationship with Brustein & Manasevit, PLLC.  You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances. Brustein & Manasevit, PLLC © 2017. All rights reserved.