Pay-as-you-Earn Regulatory Package Being Reviewed by OMB

As reported by Regininfo.gov, on June 3, the Department of Education (“Department”) sent the notice of proposed rule making for the Pay-as-you-Earn regulations to the Office of Management and Budget for review.   As reported in Inside Higher Ed on May 1, this regulatory package reached consensus from the negotiating rule making committee on a proposal that would make “new income-based repayment program that is available to all federal direct loan borrowers regardless of when they took out their loans.”  As a result of the consensus, the Department was required to put forth the language agreed to by the negotiated rule making committee.

If anyone wishes to speak with OMB about this regulatory package, you may make a request to do so pursuant to Executive Order 12866.  You should do so fairly soon, however; while OMB typically receives 90 days to review rule packages prior to publication, they may send the package back to the agency before 90 days has run.

HELP Committee to Hold Hearing on College Affordability on June 3

On June 3, 2015, at 10:00 am, the Senate Committee on Health Education Labor and Pensions (“HELP”) will hold a hearing on college affordability as part of their work on reauthorizing the Higher Education Act. The hearing will be held in room 430 of the Dirksen Senate Office Building, and will be live streamed on the hearing website. The witnesses for the hearing are:

  1. Dr. Judith Scott-Clayton,Assistant Professor of Economics and Education, Teachers College, Columbia University
  2. Dr. Elizabeth Akers,Fellow, Brown Center on Education Policy, The Brookings Institution
  3. Dr. F. King Alexander,President and Chancellor, Louisiana State University
  4. Mr. Michael Mitchell,Policy Analyst,Center on Budget and Policy Priorities
  5. Mr. James Kennedy,Associate Vice President for University Student Services and Systems
    Indiana University

As an aside, I had the pleasure of working with Dr. Akers when she was with the Council of Economic Advisers and helping the Department of Education in creating the programs under the Ensuring Continued Access to Student Loans Act of 2008.  Her testimony is well worth reading.

Analysis of APC v Duncan – NY Case Upholding Gainful Employment Rule

On May 27, 2015, in Association of Proprietary Colleges v. Duncan, the District Court for the Southern District of New York ruled that the U.S. Department of Education’s (“Department”) “Gainful Employment” rule was valid in its entirety. The Court also held that:

  • Proprietary colleges do not have a constitutionally protected property or liberty interests in their continued eligibility to participate in federal funding programs under the Higher Education Act (“HEA”), and the GE Rules afford affected schools all the due process that is constitutionally due.
  • The GE rules do not have a retroactive effect.
  • The GE Rules are a reasonable interpretation under the HEA of an ambiguous statutory command.
  • The GE Rules – and the debt-to-earnings ratios (“D/E rates”) contained therein – are the product of reasoned decision making and are not arbitrary or capricious.

For more information, please review our analysis of this decision.

Please Join Me At APSCU from June 2-4, 2015

I will be presenting on two topics at the Association for Private Sector Colleges and Universities Annual Convention and Expo: Outcomes 2025 – being held at the Denver Convention Center from June 2nd to the 4th. On Tuesday, I will be presenting “Title IX, the Clery Act and the Violence Against Women Act” which addresses the concerns about which auditors and CPAs that work with Title IV eligible schools must be aware involving those statues and the recent regulatory developments related to sexual harassment.

On Wednesday, together with colleagues Tim Hatch and Jim Zelenay of Gibson Dunn, Tony Guida of Duane Morris, and Dave Adams, the General Counsel & Senior Vice President, Global Regulatory and Government Affairs of Kaplan, Inc., we will present “Government Regulators & New Theories of Liability: Threat, Menace, Or Much Ado About Nothing?“. My specific presentation will concern the new issue of student loan discharge associated with state law violations committed by Title IV institutions. Its an area in great flux, but could present a significant issue for schools given the Department of Education’s ability to seek recoupment of any discharged loan funds from the institutions involved.

Lastly, on Thursday, together with my colleague Katherine Brodie of Duane Morris, I will present Title IX and Clery Act for Career Schools. This is a broader discussion then the one for the auditors and raises a number of issues for schools.

I hope to see you there.

Court Upholds Validity of Gainful Employment Rule

In a decision issued earlier today, the federal court sitting in the Southern District of New York upheld the Department of Education’s gainful employment rule and dismissed the challenge brought by the NY Association of Proprietary Colleges (APC).   The APC put out a statement disagreeing with the ruling and noting they “will be looking quite closely at all options.”

We are still reviewing this decision, but wish to note that there is still a pending lawsuit in the DC federal court being brought by the Association of Private Sector Colleges and Universities.  Argument was held in that matter on May 20, 2015.  Although the Court in DC will likely need to address the points raised by the APC court (especially if the DC court disagrees with the APC Court), the APC Court decision is not dispositive on the matter and the DC Court is free to rule as it sees fit.

MAY 28, 2015 UPDATE: Here’s Inside Higher Ed‘s report on the decision.

HELP Committee to Hold Hearing on Institutional Risk Sharing

On May 20, 2015, at 10:00 am, the Senate Committee on Health Education Labor and Pensions (“HELP”) will hold a hearing on institutional risk sharing as part of their work on reauthorizing the Higher Education Act. The hearing will be held in room 430 of the Dirksen Senate Office Building, and will be live streamed on the hearing website. Institutional risk sharing is the idea that rather than comply with the myriad other institutional quality metrics, that institutions of higher education should be liable to the Department of Education of the amount of loans in default exceeds some threshold.  Once the threshold is crossed, the institution would have to refund to the Department an amount to cover the risk of default.  Its a very interesting idea that HELP Committee Chairman, Senator Lamar Alexander, is very interested in.  In addition, the first panel witness, Senator Jack Reed (D-RI) has a bill that would impose risk-sharing on institutions.  The witnesses for the hearing are:

Panel 1
The Honorable Senator Jack Reed

Panel 2
1.  Dr. Andrew P. Kelly, Director, Center for Higher Education Reform, American Enterprise Institute
2.  Robert S. Silberman, Executive Chairman, Strayer Education, Inc.
3.  Jennifer Wang, Policy Director, Young Invincibles
4.  Dr. Douglas A. Webber,Assistant Professor,Temple University

Please Join Me at the PCCS Conference in Chicago, May 18 & 19

I will be presenting on two topics at the Regions PCCS Conference in Chicago on May 18.  My first presentation will be “The Americans with Disabilities Act & Section 504 of the Rehabilitation Act: Obligations for Title IV Schools.”  This is largely a primer on ADA and Section 504 concerns, as enforced by the U.S. Department of Education’s Office for Civil Rights.

My second presentation, which has become fairly popular as of late, “Converting to a Non-Profit” addresses the issues associated with converting a for-profit school to a non-profit school.  I may do a post on this in the future addressing these issues.  It’s a fairly interesting transaction that, despite recent scrutiny, many for-profit institutions are considering right now.

Also, my Hogan Marren colleague Pat Edelson will be giving her well regarded presentation “What’s New in Program Reviews: What to Expect, How to Respond” also on May 18th at the PCCS conference.  For those of you who don’t know, Pat is a Title IV expert, having served as a institutional program specialist for over 20 years in the New York Region of the Office for Federal Student Aid, and having served for ten years as a campus director in a publicly traded proprietary school chain before that.  There is simply no one better at understanding FSA, program reviews, and the intricacies of Title IV better than Pat.

HELP Committee to Hold Hearing on The Role of Consumer Information in College Choice

On May 6, 2015, at 10:00 am, the Senate Committee on Health Education Labor and Pensions (“HELP”) will hold a hearing on the role of consumer information in college choice as part of their work on reauthorizing the Higher Education Act. The hearing will be held in room 430 of the Dirksen Senate Office Building, and will be live streamed on the hearing website. The HELP Committee Chairman, Senator Lamar Alexander, has issued a white paper on this topic. The witnesses for the hearing are:

  1. Mark Schneider, Ph.D.,Vice President and Institute Fellow, American Institutes for Research and President, College Measures
  2. Deborah Santiago,Chief Operating Officer and Vice President for Policy, Excelencia in Education
  3. Stacy Lightfoot,Vice President of College & Career Success Initiatives, Public Education Foundation
  4. Taleah Mitchell, Graduate, Seattle Central College

Please Join Me at the Practicing Law Institute’s Higher Education Law Workshop on May 1

Please join me on May 1, 2015 in New York at the Practicing Law Institute where my colleague Jane Sovern – the Deputy General Counsel of the City University of New York – and I will be discussing “Title IX and Claims of Sexual Harassment and Sexual Violence in Higher Education” as part of PLI’s “Higher Education Law 2015: Current Issues & Recent Developments.”

This is very much a graduate seminar, where, in addition, to discussing the events of the past year, we try to deal with some of the more thorny issues in Title IX compliance, such as confidentiality requests, the use of mediation, how to handle a concurrent criminal investigation that relates to a mater under Title IX review and the use and limitations on interim measures.  We will also present an analysis of the last year’s enforcement actions from the Department of Education’s Office for Civil Rights that I performed with my former colleague at DLA Piper, Rebecca Smock.

Although there is a cost to the seminar, attorneys do receive continuing legal education credit for attendance.