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Business Officer Magazine
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Federal File

Coverage of legislation and regulatory activity that affects higher education

By Bryan Dickson

Expected Regulations Published at the 11th Hour

In what has now become an anticipated ritual, the Department of Education (ED) published during the last weeks of October final rules addressing sexual assault on campus, PLUS loan eligibility, and programs that prepare students for gainful employment in recognized occupations. The timing is driven by a statutory requirement that, for the rules to take effect the following July 1, the department must publish the final versions by Nov. 1.

Crackdown on Sexual Assault

The public spotlight on institutional responses to sexual assaults on campus continues unabated. Implementing changes to the Clery Act as a result of the reauthorization of the Violence Against Women Act, the department issued regulations designed to help combat domestic and dating violence, sexual assault, and stalking on campus. The rules change some of the crime statistics that institutions must report, and require the inclusion of specific policies in annual security reports.

The rules change some of the crime statistics that institutions must report, and require the inclusion of specific policies in annual security reports.

The regulations also require institutions to provide information to victims about existing counseling, health, victim advocacy, and legal assistance programs, as well as financial aid counseling. In addition, schools will have to offer training designed to prevent sexual assaults on campus (see sidebar, "White House Campaign to Prevent Campus Sexual Assault").

It is important to keep in mind that the statutory changes took effect last March, so even though the final rules are not effective until July 1, colleges and universities should already be making a good faith effort to comply.

Adverse Credit Defined for PLUS Loans

Under the PLUS Loan program, parents and some graduate students can borrow money from the federal government to help finance their or their children's education. Unlike the Federal Direct Loan program, which lends money without regard to the borrower's credit worthiness, to be eligible to receive a PLUS Loan, an applicant must not have an adverse credit history. ED conducts credit checks to make sure that applicants meet this requirement.

Several years ago, ED changed its criteria for these credit checks. The move drew considerable criticism from advocates for low-income students as well as institutions that serve large numbers of such students, as it resulted in their refusing too many parent borrowers and jeopardizing students' ability to attend school.

The final rules stipulate that an applicant has an adverse credit history if he or she has "one or more debts with a total combined outstanding balance greater than $2,085 that are 90 or more days delinquent as of the date of the report, or that have been placed in collection or charged off during the two years preceding the date of the credit report." The $2,085 balance threshold is indexed to inflation. ED has chosen to implement these regulations as soon as possible and will publish a notice when it is ready to do so.

This issue was originally part of a larger package of topics on the agenda of last spring's Program Integrity and Improvement rulemaking committee, but ED decided to issue the PLUS Loan rules separately.

New (Old) Hurdles for Gainful Employment Programs

ED backpedaled from its proposed rules on gainful employment programs, when it published the final version on Oct. 31. Now, instead of measuring both debt-to-earnings (D/E) ratios and program cohort default rates, the D/E ratios remain the sole metric in determining program eligibility.

The institution must provide several disclosures to enrolled and prospective students for any program that could become ineligible based on its debt-to-earnings rates.

These rules apply to thousands of nondegree programs at public and nonprofit institutions as well as nearly all programs at for-profit institutions. The D/E ratio was one of two measures included in the original version of the gainful employment rules that didn't pass muster when challenged in court after the rules' release in June 2011.

In this current version, however, the bar is set higher. The department will calculate ratios of student debt payments to discretionary income-or to total annual earnings-for program graduates, using income figures provided by the Social Security Administration. The rates, which will be calculated only if at least 30 students have completed the program during the applicable cohort period, would have to remain under certain thresholds determined by ED in order for the program to continue to be eligible for Title IV aid.

The institution must provide several disclosures to enrolled and prospective students for any program that could become ineligible based on its D/E rates. Further, if a program fails the D/E rates test for two years, the institution would be prohibited for three years from disbursing Title IV funds to students enrolled in that program.

Based on estimates from ED, these rules would have little impact on public and nonprofit colleges and universities, while for-profit institutions would likely feel the brunt of the regulations. As expected, the Association of Private Sector Colleges and Universities, a trade group representing for-profit institutions, has filed suit once again to block the rule, claiming that it is unlawful, arbitrary, and "will needlessly harm millions of students" attending private sector institutions.

What's Next?

Since the Program Integrity and Improvement negotiated rulemaking committee did not reach consensus during its meetings last spring, the department is free to draft rules as it sees fit. However, because of the complexity of the state authorization for distance education and cash management issues (see April 2014 Federal File for details on the debit card/cash management discussion), as well as an agency focus on the gainful employment regulations, the department was not able to issue final rules by the Nov. 1 deadline. This means that while proposed rules could come out at any time this winter or spring, the earliest the rules could take effect would be July 1, 2016.  

RESOURCE LINK Detailed analyses of these three regulations are located on NACUBO's website at www.nacubo.org.

NACUBO CONTACT Bryan Dickson, policy analyst, 202.861.2505

White House Campaign to Prevent Campus Sexual Assault

The White House launched in September a public awareness and education campaign to end campus sexual assault through bystander intervention. "It's On Us" calls on colleges and universities to implement education and training programs to help raise awareness and provide skills to bystanders so that they can intervene safely and effectively to prevent sexual assaults on campus.

The initiative aims at changing how people think about campus sexual assault and engaging college students and members of campus communities in prevention efforts. In addition, the campaign advocates for everyone on campus to create an environment where sexual assault is unacceptable and survivors are supported.

The "It's On Us" website (http://itsonus.org) is a resource that provides videos and organizing tools for colleges and universities, and allows individuals to take a personal pledge to help keep women and men safe from sexual assault.

After the Violence Against Women Act of 2013 (VAWA) was signed into law on March 7, 2013, the White House has committed to combating sexual assault on campuses and adopted a multifaceted approach to the issue. For more information, click on the "Risk Management" tab under "Business & Policy Areas" at www.nacubo.org.

Khesia Taylor, NACUBO policy assistant, 202.861.2576