The Department of Education announced on June 16 that it is indefinitely postponing implementation of rules approved by the Obama administration pertaining to borrower defense to repayment. The rules, including a number of revisions to the financial responsibility standards, had been scheduled to take effect on July 1.
ED also announced that it would begin new rulemaking efforts to revisit these rules and gainful employment regulations that were finalized in 2014 to set stricter standards for vocational programs.
ED is soliciting written comments, due by July 12, on the topics that should be addressed at the upcoming negotiated rulemakings and will hold public hearings on July 10 at the Department of Education in Washington, DC, and on July 12 at Southern Methodist University in Dallas.
Had the borrower defense rule gone into effect, independent colleges and universities would have been required to report new triggering events to ED in a timely manner and may have been subject to recalculation of their composite scores in the middle of a fiscal year if certain events occurred.
As part of the Obama rulemaking package focused on borrower defense to repayment—the ability of students to have federal loans cancelled due to closure, fraud, or misrepresentation by the institution they attended—the financial responsibility standards were revised to provide additional protection to ED and to better ensure that it would have financial recourse to cover forgiven loans.
NACUBO will continue to advocate for reasonable and sound improvements to ED's financial responsibility standards. During the 2016 rulemaking process, NACUBO raised a number of concerns. The association also reached out to ED last year about the changes to not-for-profit accounting standards, facilitating a meeting between ED officials and Financial Accounting Standards Board staff in July 2016.
Gainful employment reporting and disclosures are still required during this revision process. The deadline for updating the required disclosures using the 2017 Disclosure Template is July 1. Gainful employment rules apply to all non-degree programs, including certificate programs, offered by public and nonprofit institutions and virtually all academic programs offered by proprietary institutions.