Federal Update - August 13

August 13, 2025

GOVERNMENT RELATIONS HIGHLIGHTS

Despite Recess, Tensions Simmer: Congress departs with major funding issues unresolved 

ED Issues OB3 Guidance: DCL outlines immediate changes and delays 

ED Expands FAFSA Verification: New methods and DHS data match aim to curb identity fraud 

Neg Reg Public Comment Open: ED seeks input ahead of fall OB3 rulemaking sessions 

ED Publishes Nonpayment Rates: New report highlights borrower delinquency 

DEEPER DIVE Kent Confirmed: Former sector ally to oversee federal postsecondary policy

AUGUST RECESS UNDERWAY

What You Need to Know 

Congress has entered its annual August recess, with most members returning home to spend time with their constituents or traveling abroad on official trips. Lawmakers are scheduled to return to Washington on September 2. The recess follows a busy legislative period, but several key issues remain unresolved. 

Why This Is Important 

The Senate adjourned without reaching agreements to unfreeze already-approved spending, confirm additional Trump Administration nominees, or set a baseline for FY2026 funding. This sets the stage for a high-stakes September as the end of the federal fiscal year approaches on September 30. Senate Democrats have signaled reluctance to engage in bipartisan negotiations if the Administration and their Republican allies in Congress pursue a second rescissions package that undermines existing funding agreements. The first rescissions package, passed in July, was the first successful effort to claw back already-approved funding since 1999, and the next rescissions package could propose negating funding for education programs. 

ED ISSUES CLARIFYING GUIDANCE ON OB3

What You Need to Know 

President Trump signed the One Big Beautiful Bill Act (OB3) into law on July 4, setting in motion a sweeping overhaul of federal higher education policy. On July 18, ED issued a Dear Colleague Letter (DCL), which outlines certain OB3 changes that became effective upon enactment. The DCL addresses several loan repayment and forgiveness concepts in OB3, in addition to confirming that the statute delays implementation of the Biden Administration’s Borrower Defense to Repayment (BDR) and Closed School Loan Discharge (CSLD) regulations. As a result, the BDR regulations at 34 C.F.R. Part 685, Subpart D and the CSLD regulations at 34 C.F.R. § 685.214 that became effective on July 1, 2020, remain in effect for loans originated prior to July 1, 2035.  

Why This Is Important 

We emphasize that, even though the Biden-era BDR rule has been sidelined, borrowers may still file claims, and ED still has a framework pursuant to which those claims are to be assessed and adjudicated. Similarly, the pre-Biden version of the CSLD rule continues to be in effect, and closed school discharges remain available to students. ED states that it will implement OB3 changes not addressed in the DCL by promulgating new regulations, beginning with negotiated rulemaking sessions scheduled for later this year. 

ED CONTINUES ITS FOCUS ON FAFSA VERIFICATION

What You Need to Know 

Earlier this summer, ED stated that rates of identity fraud were causing harm to the federal student aid programs and that ED would be ramping up identity verification. Recently, ED published a Federal Register Notice, which details the FAFSA information schools and applicants will be required to verify, as well as the acceptable verification documentation for 2025-26 Award Year. The Notice provides two new methods schools may use for identity verification: (1) video calls between the student and institutional personnel; and (2) documentation that the student’s identity was verified by an approved third party. Relatedly, last week, ED issued another Federal Register Notice, announcing the re-establishment of a matching program between ED and the US Department of Homeland Security (DHS). This program enables ED to use DHS data to verify the immigration status of FAFSA applicants. The program is intended to ensure that only eligible non-citizens receive federal aid. ED is accepting public comments on the Notice through September 5, 2025. 

Why This Is Important 

Given the recent stream of ED publications on identity verification, it is clear that this topic will continue to be a priority for this administration. We are aware that institutions are beginning to receive increased verification requests from ED. We suggest that institutions ensure their financial aid staff have a plan in place for responding to a potentially higher volume of verification requests than normal. 

NEG REG PUBLIC COMMENT PERIOD REMAINS OPEN

What You Need to Know 

As we reported in July, ED announced plans to convene two new negotiated rulemaking committees to address Title IV changes, including those required by the OB3. The Reimagining and Improving Student Education (RISE) Committee will focus on student loan issues such as loan limits, repayment plans, institutional flexibility, and defaults. The Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) Committee will address accountability, Pell Grants, Do No Harm, and Workforce Pell eligibility. RISE will meet in September, October, and November; AHEAD will meet in December and January.  

Why This Is Important 

ED continues to seek public input as it prepares draft proposals for both committees. Comments are due to ED no later than August 25. In addition to submitting comments, AACS will participate at every step of the process.  

ED PUBLISHES NONPAYMENT RATES BY INSTITUTION

What You Need to Know 

On July 23, ED published a report that details the percentage of Direct Loan borrowers who entered repayment since January 2020 by institution and whose federal student loans were more than 90 days delinquent at the time of the data pull (mid-May 2025). 

Why This Is Important 

This report follows earlier ED communications strongly encouraging Title IV-participating institutions to perform outreach to borrowers to remind them of their federal student loan obligations and options for managing their debt. Combined with the OB3’s focus on repayment, it is evident that loan delinquency and default will be an area of focus for the Trump Administration.  

DEEPER DIVE...UNDER SECRETARY NICHOLAS KENT: WHAT SHOULD AACS SCHOOLS EXPECT AHEAD FROM ED?

What You Need to Know 

Before leaving Washington for the summer, the Senate confirmed Nicholas Kent as Education Under Secretary in a 50–45 vote. He was sworn in last week by Secretary McMahon and will oversee ED’s postsecondary, career and technical, adult education, and federal student aid programs. Kent previously served as Deputy Secretary of Education in Virginia under Governor Youngkin and held senior roles at CECU. He began his career in accreditation and is a first-generation college student and Pell Grant recipient. His background should give him fluency on the federal regulatory landscape and the challenges facing states, institutions, families, and students. 

Why This Is Important 

Kent’s confirmation drew mixed reactions due to his ties to the for-profit sector, but many in the education community praised his experience in accountability and career-focused education. Kent was a critic of the gainful employment rule during the Biden Administration, and we hope that he will carry that critical eye into how the Trump Administration designs the new Do No Harm accountability framework mandated by OB3 and hopefully moves past gainful employment. In his welcome letter to ED employees , he noted his embrace of alternatives to traditional four-year degrees, “promoting vocational training, apprenticeships, and innovative credentials that align education with the in-demand needs of today’s workforce.” James Bergeron will return to his role as Deputy Under Secretary and continue to play a substantial role at ED, particularly around FSA and financial aid issues. 

For More Information

If you have any questions about this Update, please email info@myaacs.org.