The future of higher education: Legislative updates and noteworthy industry changes for December 2015

The higher education landscape is constantly transforming. Read more to learn about recently passed and pending legislation, including the Safe Campus Act and Higher Education Act reauthorization, and how these may impact your institution.

Featured industry development:

Commission on the Future of Undergraduate Education

Last month, the American Academy of Arts and Sciences announced $2.2 million in funding from the Carnegie Corporation of New York and the appointment of a commission to “examine the vast and expanding array of learning options now available to students and identify the challenges and opportunities higher education will confront in the next 20 to 25 years.” The commission’s three year effort will first focus on topics such as college costs, enrollment and completion trends, demographic trends, and expectations about labor markets, and then dive into the major considerations of the future, including federal and state policy modifications, technological advances, and other forces affecting traditional higher education. The commission is expected to issue its report by 2017, after the presidential election and potentially after the next reauthorization of the Higher Education Act.

Recently passed legislation:

Department of Education Cash Management Rules

The U.S. Department of Education published the final version of its Program Integrity and Improvement regulations on October 30. Cash management rules are being revised and will have significant impact on colleges and universities that offer bank accounts to students through agreements with financial institutions as well as those that use third-party servicers to process Title IV credit balance refunds. In addition, other cash management changes will impact all colleges and universities. The rules, with a few exceptions, will be effective July 1, 2016.

The new rules include provisions that apply broadly to all institutions, including:

  • Allowing students to use Title IV aid when retaking coursework in some circumstances
  • Prohibiting cash sweeps of Title IV funds and requiring them to be maintained in insured accounts
  • Restricting an institution’s ability to include charges for books and supplies in tuition and fees
  • Requiring institutions on the heightened cash monitoring payment method to pay credit balances to students before requesting reimbursement of Title IV funds
  • Clarifying the use of Title IV funds to pay for minor prior year charges
  • Streamlining clock-to-credit-hour conversions

Pending legislation:

Higher Education Act Reauthorization

The Higher Education Act (HEA), the law governing federal financial aid programs, which was set to expire at the end of 2013 but was extended through 2015, is now in the reauthorization process. The Higher Education Extension Act of 2015 passed the House without amendment on September 28, 2015, to provide certainty to students and institutions as policymakers continue to work on the HEA reauthorization. However, this bipartisan legislation, which would extend the Perkins Loan Program and other higher education provisions and committees through FY 2016, was defeated by the Senate, causing the current legislation to lapse. In an effort to reauthorize the HEA as soon as possible, bipartisan working groups have been formed to draft a reauthorization. The working groups, which have been meeting throughout 2015, specifically address accreditation, accountability, affordability and financial aid, and sexual assault and campus safety as part of the reauthorization draft.

The Senate’s education committee has been hosting two hearings per month since May to solicit testimony about HEA reauthorization. However, getting a signed bill in the next two years is far from certain, as a busy congressional calendar and upcoming 2016 presidential politics could hold up the reauthorization.

Federal Perkins Loan Program

Since establishment in 1958, the Federal Perkins Loan Program, which provides higher education financial aid loans, was unexpectedly allowed to lapse on September 30, 2015. Federal Perkins is reported as the “government’s oldest student loan program.” As mentioned above, H.R. 3594, Higher Education Extension Act of 2015, which would have renewed the loans program, passed the House but failed to be brought to the floor in the Senate. With the Senate defeat, Rep. Mike Bishop has sponsored the Perkins renewal bill, which is still pending.

Under the current Federal Perkins Loan Program, colleges will be able to continue making Federal Perkins loans if a college first disburses a loan for a student for the 2015-2016 academic year prior to October 1, 2015, and/or if a student is “grandfathered in” to the program. If a student received a Federal Perkins loan in 2014-2015 or a prior academic year, the student may continue to receive loans from the college for up to five more years to continue or complete their education.

Colleges may not make loans to new borrowers for whom the first disbursement occurs after October 1, 2015.

Safe Campus Act

The Safe Campus Act is proposed legislation that would bar colleges from investigating incidents of sexual assault unless the alleged victim reported the crime to law enforcement. This bill would also require colleges to allow both accusers and the accused to have access to lawyers during the investigation and hearing processes and would allow institutions to choose what standard of proof they use for deciding responsibility in cases of sexual misconduct.

National college organizations, like the North American Interfraternity Conference and the National Panhellenic Conference, recently withdrew their support of the bill. Both groups continue to support the Fair Campus Act, which includes many of the same provisions as the Safe Campus Act, but would not require students to report an assault to police before allowing a campus investigation.