1. TASFAA 2018 Honoring the Past & Building the Future
Washington Update
TASFAA 2018 Honoring the Past & Building the Future
Ron Gambill
Governmental Relations
April 23, 2018

2. Honoring the Past and Building the Future
Current Landscape
TASFAA 2018
Honoring the Past and Building the Future

3. Current Landscape - Administration
Trump Administration has been in office for almost 15 months…but it is still under- staffed.
At ED, of the 15 major positions, 5 have been confirmed by Senate, including Secretary Betsy DeVos, and 6 have been nominated to date (Traditional one-year turnover had little effect since already no Deputy Secretary, no Under Secretary, no Assistant Secretary for Postsecondary Education, no General Counsel).
Unconventional President and scandals plaguing recruitment and retention efforts? Probably.
Overworked employees are spending most of their time reversing final rules put forth by the Obama Administration (ED - borrower defense to repayment, gainful employment, more on the way; CFPB - request for information on consumer database, enforcement, etc.).

4. Current Landscape - Congress
Congress just returned from its Easter/Passover recess – longest 2-week break so far.
As of last week, the House will be in session for only 44 legislative days before the month-long August break, and only 20 days in September and October. The Senate will be in session for a few more days but not much - its an election year!
Spring/Summer Agenda: Pass bills that minimize divisions within the parties and drive up turnout for the November election, and confirm as many judges as possible.
Reps: Reinforce tax reform and other accomplishments
Dems: Keep Trump, front and center, and talk up failures on healthcare/DACA
Everything else has been pushed off until the lame duck (budget/approps) or to next year.

5. Honoring the Past and Building the Future
Policy Forecast
TASFAA 2018
Honoring the Past and Building the Future

6. Policy Forecast
Like Bush and Obama, the Trump Administration is quickly becoming another avenue for higher education reform.
ED delayed all pending regulations, announced that it would revise borrower defense to repayment and gainful employment rules (while addressing guaranty agency collection cost issue), and is conducting comprehensive review of all rules in order to reduce the federal role.
Sec. DeVos has made clear that she supports risk-sharing and life-long learning initiatives; White House released its priorities for HEA reauthorization.
OMB wants fewer programs (President’s budget eliminated SEOG, PSLF, and subsidized loans, merged TRIO and GEARUP and sent to states).

7. Policy Forecast
The Department has focused its main attention on improving the experiences that borrowers have with Federal Student Aid and its Next Generation Financial Services Environment:
Development of mobile FAFSA.
Interaction with IRS for quicker processing of financial information.
“Create world-class, mobile-first, mobile-complete, omni-channel engagement capabilities and a state-of-the-art technical infrastructure” – borrower experience mirrors American Express, Discover, etc.
ED released a notice seeking public input on dischargeability of student loans in bankruptcy – deadline of May 21.

8. Policy Forecast
U.S. House Education and the Workforce Committee largely completed the hearing process in the 113th and 114th Congress, held 15 hearings.
But new Chairs (Foxx/Guthrie), new Ranking Members (Scott/Davis), and 12 new members caused them to hold a few additional hearings last year - March-May held hearings on financial aid simplification, accreditation reform, etc.
Committee is more partisan than ever – Republicans think the feds and spending are the problem and pushing for “one loan, one grant” program; Democrats think they are the solution and pushing “free college.”
In the past - introduced and passed a series of narrowly-tailored, bipartisan bills centered around transparency, more loan counseling, simplifying the FAFSA, etc.

9. Policy Forecast
In December 2017, Committee introduced/passed H.R. 4508, the PROSPER Act:
Consolidates multiple grant (SEOG), loan (subsidized and Perkins Loans), and repayment programs into a new “Federal ONE Loan Program.”
Expands federal aid to short- term programs.
Repeals the rule and includes other provisions favorable to proprietary schools.
Repeals Public Service Loan Forgiveness and restructures loan forgiveness timeline for Income Based Repayment.

10. Policy Forecast

11. Policy Forecast
U.S. Senate largely completed the hearing process in the 114th Congress, but held “a hearing a week” in January and February 2018 on financial aid simplification, accountability, innovation, and affordability in order to further lay the groundwork on HEA reauthorization.
During the hearings, Chairman Alexander and Ranking Member Murray argued about the treatment of Secretary DeVos, implementation of the elementary and secondary act, and other non-higher education issues – impacting bipartisan negotiations.
Committee remains non-partisan, but confirmation fights and other areas have strained the Alexander and Murray relationship.
Republicans are focused on simplification and deregulation, including turning the Task Force on Higher Education Regulation recommendations into legislation, and risk-sharing.
Democrats have their own wish-lists, Murray to address homeless children, Gillibrand to address campus safety, Warren to allow borrowers to refinance their federal loans and wrap-in private loans, etc.

12. Policy Forecast
With the HEA reauthorization process taking longer than anticipated, budget and appropriations continue to drive federal higher education policy:
Bipartisan Budget Act of Amended TCPA to authorize the use of predictive dialer technology to collect a debt owed/guaranteed by the United States.
Consolidated Appropriations Act, Allocated loan volume to federal student loan servicers on performance and capacity. Amended the Higher Education Act to increase from 95 to 100 percent reinsurance payments on default claims paid by guaranty agencies to lenders. Amended the Higher Education Act to extend authority for Account Maintenance Fees.

13. Policy Forecast
Consolidated Appropriations Act, 2017 – Reinstated Year-Round Pell Grants. Required the Department of Education to allow all of its federal student loan servicers to offer consolidation loans. Required the Department of Education to put in place a plan under which it will give credit for subcontracting with small businesses, including state-based nonprofit organizations with expertise in assisting borrowers.
Bipartisan Budget Act, 2018 – Two-year budget agreement that increased discretionary spending for education until September 30, 2018.
Consolidated Appropriations Act, 2018 – Prohibited the Department from moving forward on the federal student loan servicing procurement unless it includes the participation of multiple servicers and they manage “a unique portfolio of borrower accounts and the full life-cycle of loans from disbursement to pay-off.” Allowed institutions of higher education to share financial information with scholarship organizations. Modified the Public Service Loan Forgiveness Program to assist borrowers enrolled in ineligible repayment plans. Incorporated “Children of Fallen Heroes Scholarship Act.” Exempted two colleges from the penalties of cohort default rates.

14. Policy Forecast
Outside of the Trump Administration and Congress, there are several think- tanks, trade associations, and consumer groups interested in higher education reform.
States are also passing legislation to create Student Loan Ombudsmen and license federal and private student loan servicers (new fees, disclosures, prohibitions, etc.).
Growing consensus on the main problems and challenges with the higher education system:
“How do you promote a highly-educated workforce focused on college access AND completion?”
“How do you improve institutional quality and hold institutions accountable?”
“How do you make college more affordable?”

15. Policy Forecast
But there continues to be no consensus on the role of the federal government to provide solutions to address these challenges.
Higher education, including financing, continues to be a high-profile issue.
More players in higher education policy than in past (ED, CFPB, Treasury, states, consumer groups, etc.).
Federal Student Aid/federal financial aid system envisions limited role for states.
Younger and inexperienced House and Senate members and staff responsible for policy development, many with student loans.

16. With many moving parts, can consensus be achieved?
Policy Forecast
With many moving parts, can consensus be achieved?
Accreditation reform
Automatic payroll deduction
Borrower defenses to repayment
Campus-based aid programs
Competency-based education
Debt-free college
Federal-state partnership
Federal student data system
Financial education/literacy
Gainful employment for all schools
Income share agreements
One loan, one grant program
“Pell-Well” concept
Private loan regulation
Public service loan forgiveness
Repayment rates v. default rates
Risk-sharing proposals
Sexual abuse protections
Simplifying repayment plans
Student loan servicing changes
Teacher preparation improvements
Year-Round Pell Grants
90-10 and other prop school issues

17. Snapshot of Financial Aid
Source: College Board

18. Total Grant Aid 18
SOURCE: The College Board, Trends in Student Aid 2016, Figure 4

19. Total Federal and Nonfederal Loans19
SOURCE: The College Board, Trends in Student Aid 2016, Figure 5

20. Average Annual Amount Borrowed in Federal Loans20
SOURCE: The College Board, Trends in Student Aid 2016, Figure 7B

21. Amount of Outstanding Education Debt21
SOURCE: The College Board, Trends in Student Aid 2016, Figure 8

22. Repayment Status of Federal Direct Loans22
SOURCE: The College Board, Trends in Student Aid 2016, Figure 10B

23. Honoring the Past and Building the Future
Election Outlook
TASFAA 2018
Honoring the Past and Building the Future

24. Election Outlook TASFAA 2018 Key Questions Going Into November 2018
Can Democrats defend all of their vulnerable seats and pick up a few seats to claim a majority in the Senate?
Can Democrats pick up the House with a lack-luster agenda or will gerrymandering save Republicans?
Will the President’s low approval ratings drag down his party, similar to historical projections?
Can Democrats pick up a significant number of Governor seats in the 36 states that have elections?
TASFAA 2018
Honoring the Past and Building the Future

25. Election Outlook - Senate
RCP: Democrats – 44/ Toss-Up – 7 / Republicans - 49

26. Aftermath of the Nov Election - Senate
If the chamber flips, same Democratic and Republican leadership – Schumer/Durbin and McConnell/Thune
Same narrow majority on the floor and in committee – 51-49/52-48 either way
New Committee Chairs (Murray at HELP and Sanders at Budget)
New Ranking Members (Alexander or Enzi at HELP? Shelby at Appropriations)
What does this mean for reauthorization of the Higher Education Act? What priorities will be on the table?

27. Election Outlook - House
Breakdown by Part – 218 to Claim Majority
Democrats - 201
Republicans - 204

28. Aftermath of the Nov Election - House
Speaker Ryan will not seek re-election and likely will be replaced by McCarthy or Scalise. No Changes to Democratic leadership
If House Education and the Workforce Committee Chair changes hands PROSPER Act dies and a new bill emerges.
House Appropriations Committee Chair changes hands either way; Rep. Frelinghuysen retiring, Reps. Aderholt, Granger, Cole, etc. are running
What does this mean for H.R. 4508, the PROSPER Act and reauthorization of the Higher Education Act?

29. Changes in November Senator Bob Corker is not running for re-election
Phil Bredeson – Democratic Ticket Expectation
Marsha Blackburn – Republican Ticket Expectation
Congressman Jimmy Duncan – Retiring
Congressman Diane Black – Running for Governor
Congressman Marsha Blackburn – Running for Senator
Governor Haslam – Term Limited
Numerous candidates running for Governor
Changes in November

30. Honoring the Past and Building the Future
Thank you!
Any Questions?
TASFAA 2018
Honoring the Past and Building the Future