Federal action directly impacting higher education moves forward

The United State Congress and U.S. federal agencies have embarked on several actions in recent weeks impacting higher education. A lot of action is still in motion, with much of the focus on tax reform in the coming week. Below is an up-to-date summary of recent actions:

House GOP Higher Education Authorization Bill Released

The House Education and the Workforce Committee and Subcommittee Republican Chairs, Reps. Foxx and Guthrie, released their Higher Education Act (HEA) reauthorization bill, the PROSPER Act, as well as a summary and fact sheet on the bill. The legislation is the first significant step in the reauthorization of the Higher Education Act of 1965, which has remained largely untouched for nearly a decade. The bill proposes, among other changes, the following substantial changes to the HEA:
  • Consolidate the six loans currently available into a new Federal ONE Loan Program with one unsubsidized loan per category of borrower: an undergraduate loan, a graduate loan and a parent loan. The structure of this proposed program is largely similar to the existing Direct Loan program structure. However, the bill would eliminate Grad PLUS loans, which allow graduate students to borrow up to the cost of attendance, and subsidized loans for undergraduates. The bill would also maintain the ability of borrowers to consolidate their loans through the One Loan program.
  • Additionally, under this new loan program, borrowers would not be eligible for loan forgiveness, including Public Service Loan Forgiveness. Loan forgiveness would be maintained for remaining Direct and Federal Family Education loan balances.
  • Create a “single definition” for postsecondary institutions and lump degree-granting colleges and universities in with trade schools.
  • Eliminate the 90/10 Rule and Gainful Employment (GE) requirements from the statute (and thus any provisions that could trigger GE regulations). The bill also prohibits any future regulations on GE and the Secretary from having any role in carrying out or developing a postsecondary education ratings system.
  • Eliminate the SEOG programs.
  • Reduce or freeze discretionary authorization levels at current level, essentially ensuring years of stagnating funding, which would be further diluted as more new providers gain eligibility.
  • Eliminate the Cohort Default rate triggers and replace them with untested program-level repayment rate requirements.
  • Make significant changes to accreditation.
  • Create a new program, and supports partnerships between institutions of higher education and businesses, to expand access to apprenticeships and earn-and-learn programs.
  • Create a $300 Pell Grant Bonus for most students that take at least 30 credit hours each award year.
The House Education and the Workforce Committee commenced mark up on this bill on Tuesday. The process is expected to take two days as Democrats and Republicans plan to introduce nearly 60 amendments. It is expected to pass the committee on a party-line vote, with Democrats opposing the bill.

Tax Reform Updates

The full Senate passed the “Tax Cuts and Jobs Act,” the Senate’s bill to revise the Federal tax code, on a near-party-line vote of 51-49. As a reminder, the bill proposes to, among other things:
  • Match the House bill by allowing only a $10,000 deduction for state and local property taxes.  However, there are discussions to improve this provision by expanding it to cover state income tax, as well. While this improvement would not revert to current law in this area, it could dramatically increase the ability of some taxpayers to deduct a larger share of their state and local tax burden. To get a better sense of the impact of eliminating the SALT deduction the Public Finance Officers released a report on the percentage of filers in each district who took the deduction.
  • Increase the standard deduction to $24,000 from $12,700 for joint filers (and surviving spouses); to $12,000 from $6,350 for individual filers; and to $18,000 from $9,350 for heads of households. The House bill includes the same provisions. Such a change could result in less charitable giving, including giving to institutions of higher education, due to a lack of incentive to itemize deductions.
  • Unlike the House bill, the Senate proposal would not consolidate the American Opportunity Tax Credit, Hope Scholarship Credit and the Lifetime Learning Credit into one education tax credit nor would it repeal the exclusion of income resulting from the discharge of student debt in cases of death or total disability, the deduction for interest paid on student loans, the deduction for tuition and related expenses, the exclusion of interest from savings bonds used to pay education expenses, the exclusion of tuition reductions or the exclusion of employer-provided education assistance.
A House-Senate conference committee is working to resolve differences between this bill and the version of the Tax Cuts and Jobs Act that the House passed on November 16 (the conferees from the House and Senate) Republicans are aiming to agree on and pass tax cut legislation to send to the President before December 22 and the holiday recess.

Government Funding Updates

Congress passed a continuing resolution (CR) that extends the current Federal deadline to keep the government open from December 8 to December 22. This legislation does not presently include a legislative fix for individuals participating in the DACA program.Congress is expected to revisit the issues it is currently facing around an omnibus appropriations bill before December 22 and the holiday recess.
Related to the CR, discussions at the Congressional leadership level continue around increasing the existing spending caps on defense and non-defense Federal spending. We expect Congress to pass legislation raising these caps in some fashion before an omnibus bill is approved.

Senate HELP Committee Hearing on Marcus

The Senate Health, Education, Labor and Pensions Committee held a hearing for four of President Trump’s nominees for positions at the U.S. Departments of Education (ED) and Labor (DOL), including the nomination of Kenneth Marcus to be the Assistant Secretary for Civil Rights at ED. Title IX guidance was a primary focus of the hearing. Chairman Alexander said he was glad that ED Secretary Betsy DeVos is ending ED’s Title IX overreach and that she announced that ED would conduct the public rulemaking process, which he hoped Marcus would continue to do. In addition, Marcus stated that he could not commit to making a list of campus sexual assault and sexual harassment cases available to the public. When asked about a reported ED memo considering removing the word “systemic” from guidelines on how to probe civil rights violations, Marcus said he believes there is a role for systemic investigations, just as there is a role for individual investigations.

Gainful Employment Negotiated Rulemaking Committee

Negotiators charged with rewriting the Gainful Employment (GE) regulations had their first meeting this week. Discussions were focused on negotiators’ viewpoints and recommendations for changes to the existing regulations. Negotiators had divergent points of view on whether GE should continue to have Title IV eligibility implications and whether GE’s metrics used to evaluate the debt-to-earnings ratios of graduates in the current rule should be maintained, changed or eliminated. The Committee’s second meeting will take place February 5-8, and we expect ED to release their initial proposed changes to the current regulation prior to the second meeting.

SCOTUS Rules on Travel Ban

The Supreme Court of the United States (SCOTUS) stayed a preliminary injunction that blocked enforcement of the President’s travel ban pending the Trump Administration’s appeal, allowing the ban to go into full effect. Last month, a Federal appeals court in California ruled that the travel ban could go into partial effect. Inside Higher Ed noted that the President’s travel ban bars all travel by prospective immigrants from six Muslim majority nations, plus North Korea, and imposes various entry restrictions or enhanced vetting requirements on nonimmigrant travelers, including visiting students and scholars, from the affected nations.

Stay Informed

The major higher education national associations are providing regular updates and insights on the activity that is changing daily:

Media Inquiries

Trisha Dugovic
Communications Director