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Business Officer Magazine
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Federal File

By Liz Clark

Coverage of legislation and regulatory activity that affects higher education

Ten Federal Policy Changes to the Business of Higher Education

Although Washington was largely mired in gridlock last year, Congress passed a number of laws, and federal agencies implemented a host of new regulations that require campuses to take actions and implement new policies and procedures.

Congress notably passed a budget that allows for a $100 increase in the maximum Pell Grant award and also mandated that states pick up more of the tuition tab for veterans. Additionally, last year, there was no shortage of executive action.

In chronological order:

  1. Office of Management and Budget Grant Reforms. Technically released on Dec. 26, 2013, OMB issued a new "super circular" providing uniform guidance for management of federal awards.
  2. New Online Complaint System for Veteran Students. In February, the Department of Veterans Affairs (VA) launched a tool to help veterans decide which school to attend and an online system for logging veterans' complaints regarding their educational experience.
  3. Employer Obligations Under the Affordable Care Act. The final Internal Revenue Service rules, also announced in February, solidified proposed definitions and requirements related to adjuncts and students; and additional rules, which were published later, addressed contraceptive coverage.
  4. In-State Tuition Mandate for Service Members, Veterans, and Their Families. Under a new statutory provision—as a condition of participation in VA education—public institutions must now charge in-state tuition and fees to veterans and their dependents who currently reside in the state. The bill was signed into law on Aug. 7, 2014.
  5. Money Market Fund Reform. On August 14, the Securities and Exchange Commission issued final rules that fundamentally altered the way money market funds operate. However, government and retail money market funds (which, for many colleges and universities, are a preferred vehicle for cash management) are allowed to continue using the amortized cost and/or penny-rounding method of pricing.
  6. Updated Tuition Assistance MOU. Colleges and universities that wish to participate in the Department of Defense's voluntary education programs were required to sign by September 5 a revised memorandum of understanding.
  7. Violence Against Women Act. On October 20 the Education Department (ED) finalized rules that address sexual violence on college campuses, requiring changes to the crime statistics reported by campuses, inclusion of specific policies in annual security reports, and training efforts to prevent sexual assaults on campus.
  8. PLUS Loan Eligibility. On October 23, ED issued final rules revising the definition of "adverse credit" for PLUS loans, to better balance higher education access with protection from overborrowing.
  9. Final Accountability Measures for Gainful Employment Programs. Gainful employment programs that do not meet debt-to-earnings requirements will be ineligible to receive Title IV funds when the new standards are fully phased in, based on final rules issued by ED on October 31.
  10. Increased Pell Grant Maximum. In December, Congress passed a $1.1 trillion FY15 budget, that includes increasing the maximum Pell Grant award for academic year 2015–16 by $100, to $5,830.

Throughout 2014, headlines focused on campus sexual assault, proposals for comprehensive tax reform, and reauthorization of the Higher Education Act. Congress introduced measures, but never passed any major pieces of legislation in these areas into law.

Unfinished Business

Throughout 2014, headlines were often focused on campus sexual assault, proposals for comprehensive tax reform, as well as reauthorization of the Higher Education Act (HEA). Congress introduced measures, but never passed any major pieces of legislation in these areas into law. These issues remain on the table, with further attention and action expected by the new Congress this year.

NACUBO also anticipates further activity on a number of regulatory fronts, with new rules expected on cash management, state authorization, and teacher training. Here are the top 10 issues higher education business officers will want to follow in 2015:

  • HEA Reauthorization. In 2014, policymakers released draft plans for reauthorization of the HEA with the goals of making college more affordable, providing students with better information about college costs and student aid, and increasing institutional accountability for student access and success. Turnover in the leadership of Congress, as well as the authorizing committees, will bring new ideas and a new timetable for action. A reauthorization is possible this year, but some believe final action will slip beyond 2015.
  • Perkins Loans. The Perkins Loan Program is scheduled to expire on Sept. 30, 2015. As campuses plan for the 2015-16 academic year, several questions about Perkins Loan processing have emerged. In December, a Department of Education official announced that institutions can award Perkins Loans for academic year 2015-16 provided the first disbursement is made before Oct. 1, 2015. The long-term outlook for the program is uncertain and will be dealt with during reauthorization of the HEA.
  • Campus Sexual Assault. In 2014, concerns about sexual assaults on campus reached new heights, drawing the attention of Congress and the White House. A report released in July 2014 by Sen. Claire McCaskill (D-MO) asserts major lapses in institutions' responses to campus sexual violence. We expect to see a new, updated version of McCaskill's Campus Safety and Accountability Act released early in 2015.
  • College Ratings. The Department of Education released on December 19 a draft federal college ratings proposal and requested comments from the public, which are due by February 17. In the draft framework, ED officials set out to define metrics around access, affordability, and outcomes. The department plans to develop and publish a college ratings system by the 2015–16 school year.
  • Campus Banking Products. Student debit card arrangements were at the forefront during the meeting of a negotiated rulemaking committee convened by the Department of Education last spring to review its cash management regulations, state authorization for distance education and foreign campuses of domestic institutions, and several other topics. NACUBO expects to see in 2015 new rules on credit balance refunds, and it's possible that congressional interest in these relationships may continue as well.
  • State Authorization. ED's 2014 negotiated rulemaking effort on state authorization did not lead to a consensus. However, department officials are expected to issue new rules on state authorization for distance education this year.

In December, the Department of Education released a draft federal college ratings proposal and requested comments from the public. The department plans to develop and publish a college ratings system by the 2015–16 school year.

  • Teacher Training. The Department of Education wants to change the way states rate their teacher preparation programs and proposed new rules on December 3. The rules would require states to collect new data and evaluate teacher education programs based on specified indicators. Final rules are expected to follow later in the year.
  • Tax Reform. In general, most members of Congress agree that the tax code is enormously complicated and that simplification would benefit both the government and taxpayers. However, there are deep divides on fundamentals, including the role taxes will play in addressing the deficit and economic growth. The Republican-led Congress is expected to discuss a major tax overhaul this year, but it is more likely lawmakers may try to move piecemeal reforms to the federal tax code.
  • IRS Form 1098-T. An October 28 letter from the Internal Revenue Service to NACUBO stated that no further blanket waivers will be offered related to penalty notices sent to colleges and universities applicable to 1098-T reporting for tax year 2012. This is a top priority for NACUBO, which is appealing to senior leadership at the IRS on this issue in order to identify solutions and process improvements that make sense for colleges and universities as well as the IRS.
  • Regulatory Burden. This month, the Task Force on Federal Regulation of Higher Education is expected to release a report on the federal regulation of higher education. The pending reauthorization of the Higher Education Act provides a vehicle to address a number of concerns and onerous regulatory requirements. Sen. Lamar Alexander (R-TN) now chairs the Senate's education committee and has expressed an interest in streamlining regulations.

NACUBO CONTACT Liz Clark, director, congressional relations, 202.861.2553,