House HEA Bill Addresses Need Analysis, State Authorization, Accreditation Standards, and Program Review Timeframe

By Megan Walter, Policy & Federal Relations Staff

Editor's Note: This article is the first in a series that delves into Title IV-related issues contained in the Promoting Real Opportunity, Success and Prosperity Through Education Reform (PROSPER) Act released by House Republicans on Dec. 1, 2017. A markup of this bill took place on Dec. 12, 2017— after the article below was written. An "amendment in the nature of a substitute," replaced the original bill text. The substitute amendment made several minor changes, which are detailed in NASFAA's markup summary.

This article details the proposed changes in the PROSPER Act affecting cost of attendance and other need analysis issues, increased authority of financial aid administrators, state authorization regulations and accrediting guidelines.

Changes to Simplified Needs Test
The simplified needs test (SNT), part of the Federal Methodology used to calculate a student’s Expected Family Contribution (EFC) would receive an update with the introduction of the PROSPER Act. The SNT disregards assets in the calculation of EFC.

Under the proposed legislation, the Adjusted Gross Income limit to qualify for the SNT would be increased from $50,000 to $100,000. These students would still need to meet one of the other eligibility criteria for the SNT. For a dependent student this would include the student’s parents being eligible to file a 1040A or 1040EZ, having at least one parent who is a dislocated worker, or the student or student’s parents having received benefits in the previous two years from a means-tested federal benefit program. For an independent student, the same guidelines apply, with a change from student’s parents, to student, who is a dislocated worker.

Discretion of Student Financial Aid Administrators
Financial aid administrators would get more professional judgment authority with a new proposal that would allow them to reduce a student’s cost of attendance based on the method of instruction, if they determine the instruction delivery method results in a substantially reduced cost of attendance.

The PROSPER Act also proposes striking from the Higher Education Act (HEA) language that prohibits institutions from creating a distinction in determining costs for programs that are instructed by means of telecommunications technology.

Income and Asset Information Used for FAFSA Application
The PROSPER Act excludes 529 Plans from the definition of assets. The bill does maintain the inclusion of prepaid tuition plans offered by a state as well as Coverdell plans as assets in calculating need.

The bill would also codify the use of prior-prior year tax data on the FAFSA, which will continue to allow students and families to receive federal aid eligibility information earlier and make better financial decisions through the college selection process, and improve the chances that students will complete the FAFSA.

The bill also reinforces the importance of the use of the IRS Data Retrieval Tool (DRT) as a tool towards simplification of the application process. NASFAA’s FAFSA simplification proposal incorporates expansion of the DRT, as use of more information obtained directly from the IRS would allow for a simpler application and reduced burden for applicants, but retain a high standard of accuracy.

Repeal of State Authorization Regulations
The proposed language repeals all regulations that define state authorization, including regulations that require distance education-providing institutions to be authorized in each state that has student enrollment as a condition for Title IV federal student aid eligibility. The bill would maintain the requirement that schools be authorized by each state in which the school has a physical location. The bill also preserves current regulatory treatment of religious institutions in that ED will not require religious institutions to have state authorization to operate educational programs beyond secondary education to receive Title IV federal student aid. In addition, the bill would prohibit any future regulations on state authorization by the Department of Education (ED).

The bill further specifies that legal authorization to operate within a state be based solely on state law.

Updates to Accreditation Process
The PROSPER Act would not require that accrediting agencies seek special approval from ED to review institutions with distance education programs, nor to conduct special reviews of the individual distance education programs offered at the institution. These institutions and programs could now be reviewed by accrediting agencies or associations with the same guidelines as any other previously regulated institution or program.

The shift of the burden on special program accrediting would now fall on competency-based education programs. New regulations would dictate that accreditors reviewing these programs would now have to present a process that demonstrates the program is able to be “validly and reliably assessed,” as well as prove the program contains the appropriate competencies that are relevant to the credential being awarded.

For all other programs, the requirement for the standards of accreditation is decidedly more vague. Under the new language in the bill, the original 10 standards that an accreditor must use to assess a program are struck and replaced. The newly proposed standards for accreditation would focus on “the institution’s success with respect to student learning and educational outcomes in relation to the institution's mission.”

Program Review Timeline
Under current legislation, a program review, the process by which ED conducts reviews of institutions participating in the Title IV student financial assistance programs to identify compliance issues with HEA statute and regulations, has no regulated timeline for the process. NASFAA has recommended that ED establish and publicize target processing dates. The new HEA reauthorization bill seeks to establish and enforce a timeline to show how long it should take for ED to conduct, respond to and conclude program review activities, assuming no sufficiently time-consuming complexities arise.

Per the new timeline, after the ED program review team concludes its initial visit, it must submit its finding report to the institution no later than 90 days thereafter, must respond “substantively” to an institution’s response to the findings within 90 days, and must then provide a final program review report as well as any “accompanying enforcement actions” within 90 days of the final response from the institution under review. This bill includes measures that seek to reduce the entire program review process to under two years after initiation.


Publication Date: 12/8/2017

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