Legislative Update

Representative Virginia Foxx (R-NC) Moves to Block Overtime Rule

Representative Virginia Foxx (R-NC) introduced J. Res 95 under the Congressional Review Act to repeal the controversial overtime rule finalized by the Department of Labor (DOL) in May. Under the Congressional Review Act, Congress may pass a resolution of disapproval to prevent, with the full force of the law, a federal agency from implementing a rule or issuing a substantially similar rule without congressional authorization.

Members of Congress are concerned DOL failed to streamline existing overtime regulations and finalized a rule that will be burdensome to small businesses, threaten upward mobility, and will diminish workplace flexibility. Nonprofit organizations and colleges and universities have said this rule will impede their ability to serve communities.

As a reminder, the overtime rule increases the salary threshold for overtime eligibility from  $23,660 to $47,476 per year and is set to go into effect December 1, 2016.

Representatives John Kline (R-MN) and Virginia Foxx (R-NC) Statement on Proposed Rule on Student Loan Debt Relief

House Education and the Workforce Committee Chairman John Kline (R-MN) and Higher Education and Workforce Training Subcommittee Chairwoman Virginia Foxx (R-NC) issued a June 13 joint statement regarding the Department of Education’s new proposed regulation affecting student borrowers. They feel that despite the having the tools to address fraud against students in a responsible way, the Administration has overstepped in an “extreme and partisan way. “  They are concerned the new regulation will cost taxpayers billions of dollars, access to education will be restricted, and they have called on the Department to withdraw the proposal.

This Week’s Hearings: 

• On Thursday, June 23, the House Education and the Workforce Committee will hold a hearing titled, “Next Steps in K-12 Education: Examining Recent Efforts to Implement the Every Student Succeeds Act.” Education Secretary John B. King, Jr. will testify before the Committee.

Regulatory Activity

Department of Education Issues Proposed Rule on Student Loan Debt Relief

The Department of Education announced a 530-page proposed regulation that sets new standards for student loan debt relief, bans mandatory arbitration agreements, and gives the Education Department new tools to crack down on financially-troubled colleges.  This rule comes under the “defense of repayment” provision of the Higher Education Act, which was updated last year after an increase of debt relief claims from students of Corinthian Colleges.

The proposal includes new prohibitions on the use of “mandatory arbitration” clauses in the enrollment agreements of colleges that receive federal student aid. The clauses, typically used by for-profit colleges, keep students from taking their school to court. The regulations would also give the Department of Education more power to require colleges to post collateral when officials are concerned about financial stability and institutions in financial trouble would be required to disclose problems to current and prospective students.

These changes are estimated to cost between $2 billion and $42.7 billion over the next decade. The budget estimates vary widely in part because of the challenge in predicting the extent of fraud among institutions of higher education and how many student loan borrowers would be able to file successful claims.

Department of Education Dear Colleague Letter on Gender Equity in Career and Technical Education

 The Department of Education has released guidance in the form of a Dear Colleague letter reminding Career and Technical Education (CTE) providers that all students, regardless of sex or gender, must have equal access to the full range of career and technical education programs being offered. The letter, sent by the department’s Office for Civil Rights and Office of Adult, Career and Technical Education, does not add to existing law, but represents “significant guidance” that clarifies to K-12 and post-secondary institutions and state and local officials how the Department evaluates compliance with existing CTE regulations.

According to the guidance, under the Perkins Act, Title IX, and other federal laws, institutions are required to identify and remedy practices that have discriminatory effects and proactively expand participation in fields where one sex is under-represented. A main concern in the guidance is how under-representation of girls and women in CTE programs can hinder their earning power in careers and decreases workforce diversity. Further, the letter seeks to increase participation for both men and women in “high-growth fields,” like nursing, advanced manufacturing, information technology, computer science, and cybersecurity.

The Office of Career, Technical, and Adult Education is developing an “advancing equity in CTE” toolkit to provide resources and strategies to implement equitable and high-quality CTE programs in secondary and postsecondary institutions.

This guidance comes at a time when Members of Congress and state leaders continue to grow concerned with the number of Dear Colleagues being issued by the Administration, and the impact they may have on institutions of higher education.

Government Accountability Office Report on Department of Education Student Loan Servicers

 The Government Accountability Office (GAO), the investigative arm of Congress, issued a report saying the Department of Education needs to improve its metrics for evaluating student loan servicers to determine whether they are assisting borrowers as they should, and adjust performance metrics and compensation to keep them in line.

The report notes that last year alone, the Department of Education issued nearly $96 billion in Direct Loans, and it recommends the Department set minimum standards for call centers to operate. Additionally, the GAO said the Department should ensure its complaint tracking system includes “comprehensive and comparable” information about the complaints.

In a written response, the Department agreed with many of the findings, but disagrees that the “program compliance is not reflected in the current performance metrics themselves.”  Further, the report “leaves the reader with the inaccurate impression that changes to compensation and allocation structures represent the only way for the department to affect servicer performance.” Currently, the Department has begun the process of having student loan servicing companies submit new bids for contracts, as it seeks to improve the quality of servicers’ work.

James Runcie, chief operating officer at the Federal Student Aid office, said the Department agrees to set minimum call center hours. He also said an effort to roll out a single web portal for all federal loans will lead to a more-comprehensive complaint system, as recommended by GAO.