Higher Ed Policy Roundup

Week of April 7, 2017

This Week In Washington

In a hearing before the Senate Finance Committee yesterday, IRS commissioner John Koskinen said that the personal information of up to 100,000 individuals may have been stolen by hackers using the IRS Data Retrieval Tool. Koskinen said that of the 100,000 applications that were flagged, some may be from legitimate applicants, but that the IRS will identify all potentially affected individuals out of an abundance of caution. This breach caused the IRS to shut down the tool in early March, and it is not expected to be available until the start of the next FAFSA season beginning in October.

A group of Senators concerned about the U.S. Department of Education’s (ED) recent actions regarding the Public Service Loan Forgiveness (PSLF) program sent a letter to Secretary of Education Betsy DeVos yesterday. The letter identifies issues related to ED’s determination of eligibility for the program for some borrowers and changes that can be made to simplify and improve the application process for borrowers.

On Monday, ED began moving forward with an Obama-era plan to restore the Pell Grant eligibility to students who attended colleges that closed.  While federal law allows students at a closed school to seek a discharge of the federal loans they took out to attend the institution, restoring those students’ Pell Grant eligibility was not available until the Obama administration issued guidance on the matter.  The Trump administration said it would start sending emails to Pell Grant recipients who attended recently-closed colleges to let them know ED is resetting their eligibility for the grants.

However, in another reversal of an Obama-era decision, the Trump administration will reconsider whether to grant contracts to collect on student loans on behalf of the federal government to four companies that had been previously banned from doing so.  In 2015, the Obama administration ended contracts with several debt collection companies because it determined the companies made “materially inaccurate representations” to borrowers who were trying to get their loans out of default. Some companies challenged that decision in court, and in a recent court filing, ED now says its decision to grant these companies new contracts will not be based on the prior administration’s finding.

News You Can Use

Research from the New York Fed shows that for high-debt borrowers, default rates have worsened and repayment progress has slowed in recent years.

The American Bar Association placed Arizona Summit Law School on probation because of its low bar passage rates and its alternative admission program.   

Researchers find that the impact on lifetime earnings for those who attended the most elite colleges versus those with similar SAT scores that were rejected from those schools was “indistinguishable from zero.” However, attendance at the most selective schools did make a significant difference for black and Hispanic students and those whose parents have less education.

In a new brief, the Education Commission of the States recommends that state-level stakeholders be included in discussions about FAFSA simplification.

The new Understanding College Affordability project from the Urban Institute illustrates the nuance surrounding the idea of affordability in higher education.

Recent Legislation

The following bills have been introduced this week for consideration by the 115th Congress:

S. 796 -- Employer Participation in Repayment Act [Sen. Mark Warner (D-VA) and Sen. John Thune (R-SD)] would allow employers to make payments towards their employees’ student loan debt using pre-tax income.

S. 799 – Dynamic Repayment Act [Sen. Mark Warner (D-VA) and Sen. Marco Rubio (R-FL)] would make income-based repayment the default option for federal student loan borrowers.

S. 806 -- College for All Act [Sen. Bernie Sanders (I-VT)] and companion bill H.R. 1880 [Rep. Pramila Jayapal (D-WA-7)] would make public colleges and universities tuition-free for working families, reduce the student loan debt loads for students and parents, cut all student loan interest rates for new borrowers in half, enable existing borrowers to refinance their loans based on the interest rates available to new borrowers and prevent the federal government from profiting off of the student loan program.