Presented by Tom Netting (Akerman Senterfitt), Brian Newman (APSCU), and Karen Allanson (Pearson Learning Solutions)

1. Federal Legislative and
Regulatory Update
Pearson Learning Summit – Spring 2012
The Phoenix Marriott Tempe at The Buttes
Friday, April 27th
8:30 AM
Federal Legislative and Regulatory Update

3. Federal Legislative and
Regulatory Update
Brian Newman, APSCU
Brian.Newman@apscu.org
Tom E. Netting, Akerman Senterfitt
Tom.Netting@akerman.com
Karen Allanson, Pearson Learning Solutions
Karen.Allanson@Pearson.com

4. 193
Federal Legislative and Regulatory Update

5. Federal Legislative and Regulatory Update

6. POLITICAL ENVIRONMENT
THE RACES: 2012 - 2014
OFFICE 2012 2013/2014
33 33
U.S. Senate 23 Dem, 10 20 Dem, 13
GOP GOP
38
11
Governors 24 GOP, 13
8 Dem, 3 GOP
Dem, 1 Ind
31
Attorneys 10
17 GOP, 14
General 6 Dem, 4 GOP
Dem
Federal Legislative and Regulatory Update

7. 2012 U.S. SENATE RACES
Toss Up Races
Massachusetts
Missouri
Montana
Nevada
New Mexico
N. Dakota
Virginia
Wisconsin
Federal Legislative and Regulatory Update

8. Student Loan Neg Reg
• 25 issues
2 of particular interest to PSCUs
• Very technical in nature
 Create stand-alone Direct Lending regulations; phase out
FFEL rules no longer needed
• 2 NPRMs
 IBR, ICR, TPD – final rule by November 1, 2012; effective
July 1, 2013
 Everything else – Final rule by late January, 2013;
effective July 1, 2014
Federal Legislative and Regulatory Update

9. Closed School Loan Discharges
• Extends the period of time the student may apply for a
closed school discharge from 90 days to 120 days
• Adds examples of exceptional circumstances under which
the Secretary may extend the 120 day time period
Federal Legislative and Regulatory Update

10. 270 Day Delinquency Forbearances
• Loans are technically in default
• Loan holders or the Secretary may, if the delinquency claim
has not been paid, grant forbearance to the borrower for up
to 120 days to allow the borrower to enter into a rehab plan
Federal Legislative and Regulatory Update

11. Protecting Financial Aid for Students
and Taxpayers Act (S. 2296/H.R. 4390)
• Senators Kay Hagan (NC) and Tom Harkin (IA)
• Representative Raul Grijalva (AZ)
• The legislation would specifically prohibit an institution of
higher education or other postsecondary institution from
using “revenues derived from Federal educational
assistance funds for recruiting or marketing activities.”
• APSCU CEO Gunderson: “While the bill introduced by
Senators Hagan and Harkin applies to all sectors of higher
education, it is clearly another attempt by some policy
makers to try and put private sector colleges and
universities out of business.”
Federal Legislative and Regulatory Update

12. Protecting Our Students and Taxpayers Act
POST Act (S. 2032)
• Senator Richard Durbin (IL)
• Establishes an 85/15 metric in the definition of a higher
education institution (Section 102 of the HEA) and requires
all “federal funds” (including Post 9/11 GI Bill benefits, DOD
Tuition Assistance, and Workforce Investment Act (WIA)
funding) to be counted in the 85 percent portion of the
calculation.
• Strips schools of Title IV funding eligibility after only one
year of non-compliance with the 85/15 Rule.
Federal Legislative and Regulatory Update

13. Senate Military & Veterans Education Legislation
 S. 2116 – Military and Veterans Education Protection Act
• Senator Tom Carper (DE)
 S. 2179 – The Military and Veterans Educational Reform Act
• Senator James Webb (VA)
• GOP Co-sponsor: Scott Brown (MA)
 S. 2241 – GI Bill Consumer Awareness Act
• Senator Patty Murray (WA)
 S. 2206 – GI Educational Freedom Act
• Senator Frank Lautenberg (NJ)
• GOP Co-sponsors: Scott Brown (MA) and Marco Rubio (FL)
Federal Legislative and Regulatory Update

14. Improving Transparency of Education
Opportunities for Veterans Act (H.R. 4057)
• Rep. Gus Bilirakis
Key components:
• Tracking Complaints and Enhanced Counseling
• Bill was the result of a dialogue with the Veterans of Foreign
Wars (VFW) that result in a coalition letter to Capitol Hill
and the White House.
• Steve Gunderson testified in support of the bill on March
8th.
Federal Legislative and Regulatory Update

15. STATE AUTHORIZATION/CLOCK HOUR
S. 1297 (Burr/Nelson) and H.R. 2117 (Foxx)
• Repeals new Department of Education regulations
determining whether a school is eligible to participate in
programs under the Higher Education Act of 1965 (HEA) by
(1) requiring institutions of higher education and
postsecondary vocational institutions (except religious
schools) to be legally authorized by the state in which they
are situated, (2) delineating what such legal authorization
requires of states and schools, and (3) defining "credit
hour."
Status:
• House of Representative approved H.R. 2117 on 2/28.
• Vote: 303-114 (69 Democratic Ayes)
Federal Legislative and Regulatory Update

16. CLOCK HOUR ISSUE
• OPE staff are considering an interpretation that if a state has
any requirement that an institution provide any information
to it relating to the number of clock hours in a
program, even if solely to confirm that the program includes
sufficient hours to comply with the state’s clock to credit
hour conversion ratio, that the program will be considered
to be a clock hour program for federal aid purposes.
• In this interpretation, the Department of Education (“DOE”)
will not defer to the state’s interpretation as to whether it
considers the program to be required to measure student
progress in clock hours.
Federal Legislative and Regulatory Update

17. STATE TRENDS
• State Attorney General Advocacy: Kentucky Attorney
General Jack Conway Working Group
• Pressure on State Legislatures to become more active due
to State Authorization rule and State AG activity
• State and local GR/PR efforts and community outreach by
sector continues to be critical
Federal Legislative and Regulatory Update

18. Federal Fiscal Interests Driving Policy
Decisions
"Show Me The Money!"
Federal Legislative and Regulatory Update

19. Federal Budget & Appropriations
College Cost Reduction and Access Act
Student Aid and Fiscal Responsibility Act
Consolidated Appropriations Act
Federal Legislative and Regulatory Update

20. Federal Budget & Approps.
FY2013 Budget Proposals
House Proposals Senate Proposals
• Pell:
• Annual Funding – Discretionary
• Fiscal Commission Budget Plan:
• Maximum Award – $5,550 • Cuts Discretionary Spending Caps
• Eligibility –
• Income Cap
• Strengthens Enforcement
• No Less Than ½ Time
• IPA Lowered
• Admin Costs – Repealed
• FDSLP:
• FDSL: • Interest Subsidy – Repealed
• Interest Subsidy – Repealed
• In-school
• In-school
• Grace-period • Grace-period
• Savings – Recalculated
• Fair Value Accounting
• IBR – Repealed
• College Access Challenge Grants – Repealed
• Servicer Funding – Discretionary
• DOD/VA:
• Tuition Expenses – Capped @ 3%
Federal Legislative and Regulatory Update

21. Federal Budget & Approps
Federal Pell Grants
• FY2013 Appropriations
 $7 Billion Additional Mandatory Funds
 $2 Billion Surplus
• FY2014 Appropriations & Beyond
 No Additional Mandatory Funds
 Surplus OR Shortfall?
Federal Legislative and Regulatory Update

22. Federal Budget & Approps.
Current Funding of
Federal Pell Grants
Unsustainable
Federal Legislative and Regulatory Update

23. Consequences of Federal Fiscal Decisions
Federal Pell Grant
• Establishment & Removal of Year-Round Pell Grants
• Revisions of Auto-zero and Income Protection Allowance
• Others
Student Loan Interest
• 2 Yr. Elimination of Grace Period
Federal Legislative and Regulatory Update

24. URGENT - July 1, 2012
Elimination of ATB
Doubling of
Student Loan Interest Rates
Federal Legislative and Regulatory Update

25. Ability to Benefit
APSCU, AACS & HEAL Task Forces
Federal Legislative and Regulatory Update

26. Student Loan Interest Rate
Federal Legislative and Regulatory Update

27. Cost for One-Year Delay(s)
Student Loan Interest =
$6 Billion
ATB = $18 Million
Federal Legislative and Regulatory Update

28. S. 2343
Federal Legislative and Regulatory Update

29. There Are Still Policy Discussions
President's Executive Order
New Negotiated Rulemaking
Gainful Employment
Federal Legislative and Regulatory Update

30. Gainful Employment
SAIG Sign-up
Release of Initial Data
April 27th
May Disclosure Templates
July 2nd 2010-2011
Reporting
October 15th
Federal Legislative and Regulatory Update

31. What Else Can We Expect
Near-term
• More Introduced Legislation
• More Hearings & Mark Ups
• Possible Enacted Legislation
Longer-term
• HEA Reauthorization
• Budget Reconciliation
• Pell Grant Cliff
Federal Legislative and Regulatory Update

32. ATB Ruling – effective July 1, 2012
Ability-to-Benefit - Public Law 112-74 amended HEA section 484(d)
to eliminate Federal student aid eligibility for students
without a “certificate of graduation from a school providing
secondary education or the recognized equivalent of such a
certificate.” The law makes an exception for students who have
completed a secondary school education in a home school setting
that is treated as a home school or private school under State law.
Therefore, students who do not have a high school diploma or a
recognized equivalent (e.g.,GED), or do not meet the home
school requirements, and who first enroll in a program of
study on or after July 1, 2012, will not be eligible to receive
Title IV student aid. Students will qualify for Title IV student aid
under one of the ability-to-benefit (ATB) alternatives if the student
was enrolled in a Title IV eligible program prior to July 1,
2012. Those alternatives include the student passing an
independently administered, approved ATB test or successfully
completing at least six credit hours or 225 clock hours of
postsecondary education.
Federal Legislative and Regulatory Update

33. Remaining Options:
o GED Test ®
o High School Diploma
o Home School Certification
Federal Legislative and Regulatory Update

34. The GED® Reality
More than 39 million U.S. adults without a high school
credential
10.5 Million are age 18-34
1.4 million U.S. high school
dropouts annually
~ 770,000 GED®
Candidates
~ 450,000
credentials
Federal Legislative and Regulatory Update 33

35. GED® Test Facts
2014
General Educational
Development tests NEW GED TEST
1 in 7 high school credential
1978-2002:
holders are GED; 1 in 20 college
Gradual shift to
students
college readiness
1942
Just passing shows level that Post-WWII: Assimilation
meets/ exceeds 60% of for returning vets
graduating seniors
A 65-Year History
Federal Legislative and Regulatory Update

36. We know…
$
50% indicate 2-4 yr. 78% go to 2-year College On average they earn $3,500
college as their post- inside the first 3 years of more a year than non-GED
GED goal passing holders
Prep with a
Practice Test 76% pass the GED on But helping them pass
yields better 1st attempt helps them succeed.
scores
What can happen after a highly supportive
learning experience… Something Life Changing
Data from: Crossing the Bridge: GED Credentials and Post-Secondary Educational Outcomes by Becker
Patterson, Zhang, Song, Guison-Dowdy-April 2010, GED ® Testing Service (American Council on Education-sponsored study)

37. Operational Strategies for
Implementing GED Prep Programs
Federal Legislative and Regulatory Update

38. Alternate program for schools with
ATB students
Federal Legislative and Regulatory Update

39. Low-cost avenue for
generating qualified leads
Federal Legislative and Regulatory Update

40. Community Service:
Campus resources / build loyalty
Prep –
Test –
Enroll –
Federal Legislative and Regulatory Update

41. Why a Self-Study Test Prep Course?
2009 study of 90,000 GED candidates concluded:
•On average, those who studied individually using a
practice test scored the highest.
•Thelowest scores were attributed to those who studied in public
school without using a practice test.
•Those with the highest pass rate were the individual study
candidates who used a practice test.
•Those with the lowest pass rate were the public school candidates
who did not take a practice test.
The study “Preparation for and Performance on the GED® Test” by Joseph
W. McLaughlin, Gary Skaggs, & Margaret Becker Patterson (GED Testing
Service ® Research Study, 2009-2), examined the most and least effective
GED prep strategies after surveying more that 90,000 GED candidates in the
United States.
Federal Legislative and Regulatory Update

42. Studies show that preparing for the GED with a
practice test* results in higher test scores.
Federal Legislative and Regulatory Update

43. The new GED® test in January 2014:
• Joint venture between the American Council on Education
and Pearson
• Computer-based testing in Pearson VUE testing centers
• New test aligned with Common Core standards, certifying
preparedness for careers and college
Federal Legislative and Regulatory Update

44. Online Resources
• GED Testing Service website:
– www.GEDtestingservice.com
• Information about the new assessment:
– www.GEDtestingservice.com/assessment
• Information about fraudulent online programs – fake GED®
programs and online high schools
– www.GEDtestingservice.com/fraud
Federal Legislative and Regulatory Update

45. Q&A
Federal Legislative and Regulatory Update

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