Federal Update - July 24

GOVERNMENT RELATIONS HIGHLIGHTS

NPRM on Distance Education, R2T4 and Federal TRIO Programs: The Department published its Notice of Proposed Rulemaking on Distance Education, Return to Title IV (R2T4), and the Federal TRIO Programs. The NPRM’s Proposed Rule on Distance Education includes provisions which prevent clock-programs participating in Title IV federal student aid programs from offering asynchronous instruction.

eZ Audit System: The Department released an Electronic Announcement which informs proprietary institutions that the eZ-Audit system is now ready to receive annual financial statements and compliance audits.

Relevant Legislation: Congress has introduced several pieces of legislation that impact the beauty and wellness industry including the POST Act, Texture Positive Act of 2024, a resolution blocking enforcement of the Title IX Final Rule, and the FAFSA Deadline Act. 

NPRM on Distance Education, R2T4, and Federal TRIO Programs

What You Need To Know

Last week, the Department published its Notice of Proposed Rulemaking on Distance Education, Return to Title IV (R2T4), and the Federal TRIO Programs. The NPRM’s Proposed Rule on Distance Education includes provisions which prevent clock-programs participating in Title IV federal student aid programs from offering asynchronous instruction. In the Department’s Press Release, Secretary Cardona stated,

Under President Biden’s leadership, we continue our relentless push to make higher education more affordable and accessible to all Americans. The regulations proposed today, if enacted, would help expand both access and affordability to our most disadvantaged students: those from low-income backgrounds, students without immigration status, and students with disabilities. By broadening eligibility for federal programs and placing guardrails that help protect against situations that leave students with debt but no degree, we can open more doors to the life-changing potential of higher education.

The NPRM will be formally published in the Federal Register this week. The public is provided with a period of 30 days to submit public comment on the draft language. The draft language for the Proposed Rule was formed via the Negotiated Rulemaking Committee process, which held three sessions between January and March, 2024. The Negotiated Rulemaking Committee additionally considered regulations on Accreditation, State Authorization, and Cash Management, which will be released in a separate NPRM.

Why This is Important to You

AACS is concerned with the Department’s proposals on the distance education, and its elimination of asynchronous instruction for clock-hour programs. This language was included in the NPRM. As a result of this language, cosmetology institutions that have incorporated asynchronous distance learning into their programs will lose flexibility to allow its students to participate in Title IV federal student aid program. AACS will continue to monitor this Proposed Rule, and will update membership on how to submit public comments.

For more information:

Department Press Release

NPRM

eZ Audit System

What You Need To Know

On July 11, 2024, the Department released an Electronic Announcement which informs proprietary institutions that the eZ-Audit system is now ready to receive annual financial statements and compliance audits. If a proprietary institution has already submitted its documentation via the Common Origination and Disbursement website or via email at FSAFinancialAnalysisDivision@ed.gov, it still is required to resubmit the Annual Submission through eZ-Audit within three weeks of the notification (July 11, 2024).

Why This Is Important to You

The revised 90/10 regulations took effect on July 1, 2023. The new 90/10 Rule requires institutions to submit annual financial statements and compliance audit submission guidance, including the 90/10 revenue footnote disclosure to the Department via the eZ-Audit system.

For more information:

Electronic Announcement

POST Act

What You Need To Know

House Democrats introduced the Protecting Our Students and Taxpayers (POST) Act which proposes to prohibit for-profit institutions from receiving more than 85% of revenue from federal funds (including the Department of Veterans Affairs GI Bill and Department of Defense Tuition Assistance benefits). This Act was introduced by Rep. Steve Cohen (D-TN) and does not currently have any cosponsors. Sen. Dick Durbin (R-IL) has published a companion bill in the Senate. Given the nature of this legislation, it is unlikely that it will receive sufficient Republican support to advance out of the House Education and Workforce Committee or the House of Representatives.

Why This Is Important to You

The POST Act aims to revise the current 90/10 regulations, which imposes a cap of 90% for the amount of federal funds that for-profit institutions of higher education may receive. Democrats have historically attempted to strengthen accountability efforts via the 90/10 rule, however, it is unlikely that this legislation will have much traction in the House of Representatives. 

For more information:

Bill Summary

Senate Companion Bill

Texture Positive Act of 2024

What You Need To Know

Representative Velazquez (D-NY) recently introduced the Texture Positive Act of 2024 which proposes to provide additional grant opportunities for cosmetology schools that train students in working with textured hair. In its current form, the Act excludes participation from institutions that participate in Title IV federal student aid programs.

Why This Is Important to You

AACS is monitoring this legislation and is looking for opportunities to include participation from all cosmetology schools. 

For more information:

Texture Positive Act of 2024

FAFSA Deadline Act

What You Need To Know

The House Committee on Education and the Workforce recently passed the FAFSA Deadline Act (H.R. 8932), which requires the Department to release the annual FAFSA form on October 1^st of each year. The legislation was introduced by Representative Erin Houchin (R-IN) and has seven Republican cosigners. Ranking Member Bobby Scott (D-VA) expressed his concern with the legislation, and how imposing a deadline may lead to additional mistakes in the future. Sen. Bill Cassidy (R-LA) introduced a companion bill in the Senate.

Why This Is Important to You

The FAFSA Deadline Act will now advance to the House floor for consideration. Members of Congress from both sides of the aisle expressed outrage following the failed rollout of the FAFSA. However, it remains to be seen whether Democrats will support this legislation, especially given Ranking Member Bobby Scott’s comments.

For more information:

FAFSA Deadline Act

Title IX Lawsuit Updates

What You Need To Know

The states of Louisiana, Mississippi, Montana, and Idaho along with the Louisiana Department of Education, Rapides Parish School Board, and seventeen Louisiana School Districts filed suit in the United States District Court in the Western District of Louisiana against the Department on April 29, 2024. The court granted the motion for preliminary injunction on June 13, 2024. The Department recently has appealed to the Supreme Court to request that it allow most of the Final Rule to take effect as of August 1, 2024.

Tennessee, Kentucky, Ohio, Indiana, Virginia, and West Virginia filed suit in the United States District Court in the Eastern District of Kentucky against the Department on May 3, 2024. The Plaintiffs moved for a preliminary injunction and the court granted their motion on June 17, 2024. Again, the Department appealed to the Supreme Court to request that it allow most of the Final Rule to take effect as of August 1, 2024.

Additionally, Rep. Mary Miller (R-IL) introduced a resolution to block enforcement of the Final Rule, however, it is not expected to receive bipartisan support.

Why This Is Important to You

On April 19, 2024, the Department released its final rule on Title IX (“Final Rule”). The Final Rule and its accompanying regulations are slated to go into effect on August 1, 2024, when federally funded education programs and activities must comply or they will be denied federal funding. Title IX institutions in the ten states referenced above will not be bound by the Final Rule and will prepare for the 2024-2025 school year based on the 2020 Title IX regulations until the cases are decided in court.

For more information:

H.J. Res. 165

Preliminary Injunction Order – Louisiana

Preliminary Injunction Order - Tennessee

Appeal

SAVE Plan

What You Need To Know

The United States Court of Appeals for the Eighth Circuit granted an injunction preventing the Department from implementing its SAVE Plan. This ruling prevents the Department from implementing many provisions of the SAVE Plan, which were set to take effect as of July 1, 2024. The SAVE Plan was officially launched in Fall 2023. It is estimated that the SAVE Plan will cost approximately $230 billion over the next decade.

Why This is Important to You

President Biden is determined to enact policies to carry out his campaign promise to provide student loan debt relief to borrowers. This case is noteworthy for its potential impact on our students and, additionally, for the impact that the SAVE Plan may have on future accountability metrics that measure student loan debt.