While some Election Day outcome uncertainty still lingers, the landscape for higher education federal policy is starting to emerge. A Biden administration will lead to a significant shift in priorities—and even a reversal of position on certain issues. However, the small margins for the parties in power on Capitol Hill and turnover in committee leadership will make it even more difficult for lawmakers to come to agreement on legislation, including a reauthorization of the Higher Education Act.
Over the past four years, NACUBO’s policy experts have been advocating on behalf of college and university members and analyzing new rules and regulations, the 2017 Tax Cuts and Jobs Act, new reporting and composite score calculations from the Department of Education, and more. Liz Clark, vice president, policy and research, asked NACUBO’s policy team about what they are preparing to see in the coming months:
Liz: What issues do you think will be on the front burner that business officers should consider given the election results? What does this mean for any further pandemic relief?
Megan Schneider, senior director, government affairs:
As with any federal administration change, business officers should be prepared for a good amount of regulatory transition and shifting compliance requirements. In some instances, this will mean an easing of current regulations; in others it will mean an expansion of current requirements. In all cases, we know that a changing compliance burden represents additional expense for colleges and universities as they overhaul institutional practices to adapt.
We expect the Biden administration to make sizeable regulatory changes in the areas of Title IX, borrower defense to repayment, the treatment of Deferred Action for Childhood Arrivals (DACA) program participants, the handling of , and recently made changes to the H-1B visa process. We also anticipate that recent Executive Orders pertaining to protections for faith-based student groups and the role of diversity in workplace trainings will be rescinded by the new administration. While we do expect that regulatory concern about Section 117 foreign gift reporting will continue, it is our hope that the new administration may be more willing to provide the additional regulatory guidance in this area that higher education advocates have been requesting for years.
On the congressional front, neither party was able to capture a sizeable majority in either the House or the Senate, and both House Democrats and Senate Republicans saw their majorities shrink. From a functional perspective, this will make it more difficult for Congress to advance legislation with a chance of passage. In terms of pandemic relief, the still-outstanding Senate results in Georgia and the existing narrow margins make it somewhat unlikely that Congress will pass another large package of pandemic relief before the new year. After the new year, we may begin to see movement on reauthorization of the Higher Education Act, which was sidelined in 2020 due to the pandemic. However, longtime Senate Health, Education, Labor, and Pensions Committee Chair Lamar Alexander is retiring, and a change in Republican leadership may make it more difficult for a bipartisan bill to be crafted. We do anticipate that lawmakers will continue their interest in crafting bipartisan legislation related to student-athlete compensation for use of their name, image, and likeness.
Liz: What are the implications for student aid and regulatory concerns that affect student financial services?
Bryan Dickson, director, student financial services and educational programs:
There are two topics that I have my eyes on. First, I am curious to see what the new administration does with the work that the Department of Education’s Office of Federal Student Aid (FSA) has been doing on their NextGen financial services environment. Over the last several years, FSA has been working on a payment vehicle to provide a no-fee payment option to participating students while streamlining schools’ processing of Title IV credit balance refunds. NextGen also would call for a reduction in the number federal loan servicers. Though FSA has made progress on these components of NextGen, it is unclear how committed a Biden administration would be to continuing, or modifying, the initiative.
We could also see an increase in activity from the Consumer Financial Protection Bureau (CFPB). In addition to reviewing student loan borrower complaints, the CFPB also monitors debt collectors, student loan companies, and agreements between credit card issuers and higher education institutions. While it is an independent agency, the CFPB has been highly politicized since its creation in 2011.
Liz: How will the election results alter the financial responsibility regime?
Sue Menditto, senior director, accounting policy:
The new administration may want to repeal the Trump administration’s borrower defense to repayment regulation, and as a result the new financial responsibility rules could change. I have mixed feelings about this. The current (new) financial responsibility rule corrects known issues with ratio formulas related to endowments and defined benefit pension plans. However, the corrections bring the burden of a new audited schedule and complex long-term debt rules, which may prove problematic over time.
Liz: What should campus tax professionals consider? What tax highlights from candidates’ platforms should we be aware of?
Mary Bachinger, director, tax policy:
Looking beyond any tax credits that could be included in a COVID relief package, it may be quite some time before we see any movement on larger tax measures in Congress.
The Biden administration’s tax priorities on the corporate side call for an increase in the corporate rate from 21 percent to 28 percent. Any increase to the corporate rate will directly affect the amounts colleges and universities pay in unrelated business income tax (UBIT).
On the individual side, the incoming administration proposes a 39.6 percent top tax rate, taxing capital gains and dividends as ordinary income, and reinstating the estate tax to 2009 levels. Any of these, if enacted, could drive charitable giving from high-income donors.
Given the small majorities that leadership in each chamber of Congress will have, it is difficult to forecast now what lies ahead for future tax provisions that are palatable enough to both parties to be enacted, or any potential new issues that members of Congress might take up.
For now, campus tax administrators should anticipate the publication of final regulations in the coming months on the excise tax on executive compensation (for private institutions) and the UBIT basketing rules.
Liz: What should NACUBO members know about our policy and advocacy work, and how can they stay informed?
Neil Gavigan, policy and advocacy manager:
With the high level of uncertainty in Washington right now, this is one area where little is likely to change. In my mind, NACUBO’s policy and advocacy work exists to create understanding between policymakers and NACUBO members. It is vitally important to campus operations that our members stay abreast of the latest updates from Capitol Hill, the administration, and the judiciary. Conversely, good policy is not made in a vacuum—legislators and regulators rely on input from practitioners and professionals in the field.
As the 117th Congress and new administration get to work, NACUBO will continue to make every effort to keep its members informed. Weekly editions of Current, each of which will feature the advocacy-focused column NACUBO On Your Side, will continue to serve as our primary means of communication to members. We also will continue to produce quarterly Washington Update webinars and host NACUBO Town Halls, where attendees can pose questions and concerns to our policy team. NACUBO members seeking deeper understanding of our advocacy priorities can always find more information our advocacy issues page and Advocacy Tools and Resources page.