NASFAA Provides Testimony During Negotiated Rulemaking 90/10 Public Hearing

By Hugh T. Ferguson, NASFAA Staff Reporter 

Higher education stakeholders continued to provide public comment concerning the “90/10 loophole” during the Department of Education’s (ED) negotiated rulemaking public hearing on Wednesday. Those who spoke, including student advocates and policy experts, urged the department to ensure that regulatory changes best benefit students.

During the public hearing, NASFAA Policy Analyst Jill Desjean provided testimony aiming to highlight the ways in which ED should work to ensure students are protected during the impending regulatory changes and that unintended consequences are averted.

“The inclusion of veterans educational benefits in the 90% revenue calculation beginning in 2023 will likely cause a significant number of institutions to become out of compliance,” Desjean said. According to studies, she added, this could result in the displacement of roughly 127,000 students. “That level of potential student displacement should be alarming.”

Desjean went on to urge ED to take proactive steps to prepare for the potential impact on current and future students.

Among a number of suggestions, NASFAA recommended that ED consider examining the regulations on teach-out plans to ensure that institutions at risk of closure due to the new 90/10 rule have an alternative for their students to continue their education with minimal disruption.

Additionally, ED should consider whether it provides adequate disclosures to students about the potential impacts of 90/10 changes on their schools.

“Currently, when an institution fails the 90% federal revenue thresholds for one year, institutions must disclose the failure to students as well as whether they've been required to develop a teach-out plan,” Desjean said. “The department also publishes 90/10 Rule failures on the College Navigator website. These disclosures should be re-examined to ensure that students aren't left in the dark.”

Separate from regulations and negotiated rulemaking, NASFAA has asked ED to be proactive in anticipating potential closures as a result of the 90/10 rule changes, especially with respect to offering automatic closed school loan discharges.

“As noted in the ongoing affordability and student loan negotiations, many students are unaware that the option for a closed school discharge even exists,” Desjean said. “Granting those discharges automatically, using data that the department already holds, helps the greatest number of students and removes burden from them at a time when they may already be under considerable stress.”

Throughout the morning session, a number of the nearly two dozen speakers went on to urge ED to impose strong implementation of the American Rescue Plan Act of 2021, which made changes to the 90/10 rule.

Stephanie Hall, a senior fellow at The Century Foundation, urged ED to keep the needs of vulnerable student populations at the forefront of regulatory changes and better improve guardrails for student protection.

“A closed 90/10 loophole is not meant to drive proprietary schools out of business, but it is meant to adjust incentives to get them closer to those already baked into public and nonprofit organizational structures.”

Student veterans also provided testimony, sharing their experiences with the 90/10 loophole. Many reiterated the need for ED to keep protections for students at the forefront of regulations.

Hugo Lentze of the Travis Manion Foundation advocated for keeping the law strong as a means of protecting student veterans.

“Schools need to know veterans aren't a lifeline to inflate their programs. Closing this loophole has been a long time in the making,” Lentze said.

There was also commentary from proprietary institutions that sought to ensure students retained access to choice and that new regulations wouldn’t curtail the educational pursuits of nontraditional student veterans looking to enroll in more flexible programs.

The ongoing negotiated rulemaking session will reconvene next week when committee members are expected to discuss updated language. Stay tuned to Today’s News for coverage throughout the negotiated rulemaking process.


Publication Date: 10/28/2021

Parker C | 10/28/2021 8:51:35 AM

Jeff A- thank you for your comment as this article seems to be misleading.

It is a shame that NASFAA chooses to ignore its tax paying (for-profit) members by only providing one small paragraph at the end of the article to present the for-profit school comments. The vast majority of tax paying schools (for-profit) are run by very dedicated educators who put their students' interests first. But again NASFAA chooses to only report on the very small portion of bad actors in the sector.

Jeff A | 10/28/2021 8:41:03 AM

If you want A balanced perspective on the hearing, watch the recording. 49% of those making statements over the two days recognized the faults with this rule and had constructive recommendations. comments were from various constituencies, not just from one direction.

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