Federal Update – March 20

• Clock Hour Program Student Protection Act: Anticipated release of the Clock Hour Program Student Protection Act, which preserves the 150% Certification Rule and allows clock hour programs that operate within 150% of its state’s minimum hours requirement for licensure (or another state under limited circumstances) to maintain Title IV eligibility.
• Biden Budget Proposal for FY 2025: President Biden recently released his Budget Proposal for Fiscal Year 2025, which includes an increase to the maximum Federal Pell Grant award for all institutions except for-profit institutions.
• Negotiated Rulemaking Committee: The Department held its final round of Negotiated Rulemaking Committee session, and the negotiators did not reach consensus on any of its proposed changes to regulations on state authorization, distance education, and accreditation.

Congressman Lloyd Smucker (R-PA) is planning to introduce the “Clock Hour Program Student Protection Act,” which preserves the 150% Certification Rule and allows clock hour programs that operate within 150% of its state’s minimum hours requirement for licensure (or another state under limited circumstances) to maintain Title IV eligibility. The legislation responds to the Department’s elimination of the 150% Certification Rule. The new rule, effective July 1, 2024, eliminates Title IV eligibility for all clock hour programs that exceed a state’s (or another state under limited circumstances) minimum hours requirement. This latest effort closely mirrors Congressman Smucker’s previously introduced Amendment to the House, Labor, Health and Human Services, and Education Appropriations Bill (H.R. 5894).

Why This is Important to You

As we are all well aware, the Department’s newly published Certification Rule will result in institutions losing Title IV eligibility for these programs, which will likely lead to significant revenue impacts if not closure of our institutions. In particular, many short-term clock hour programs will not satisfy the new clock hour requirements and, therefore, may not continue their participation in Title IV federal aid programs. The length of educational programs, regardless of industry, is the prerogative of institutions and the purview of accreditors. Institutions are in the best positions to determine appropriate program lengths and curricula.

AACS will be acting quickly on this legislation, and will reach out with ways for our members to support our efforts.

President Biden recently released his Budget Proposal for Fiscal Year 2025, which includes an increase to the maximum Federal Pell Grant award for all institutions except for-profit institutions. The proposal increases the maximum Pell Grant to $8,145, a $750 increase over the current level. The maximum Pell Grant award for students at proprietary institutions will be $7,495.

Why This is Important to You

The President’s Budget Proposal is noteworthy as it excludes students at for-profit institutions from having access to the increased maximum Pell Grant. The President sent his Budget to Congress, specifically to the Appropriation Committees in the House of Representatives and the Senate. The House and Senate will draft their own budget resolutions, and will negotiate and merge their respective proposal together. We expect the Republicans to oppose this Budget Proposal, and this particular provision related to the exclusion of for-profit schools. AACS will continue to oppose any policies that target our sector and our students.

Department Press Release

Budget Proposal

The Department held its final round of Negotiated Rulemaking Committee sessions to develop new regulations on institutional quality and program integrity. The negotiators did not reach consensus on any of its proposed changes to regulations on state authorization, distance education, and accreditation. Two particular topics of note for our membership are: (1) asynchronous distance learning for clock hour programs and (2) the exclusion of books and supplies (which includes kits for beauty and wellness institutions) from the definition of “tuition, fees and institutionally provided food and housing.” With regard to the first, the Department initially indicated that it was open to considering changes that would permit asynchronous distance learning for clock hour programs, however, the Department later rejected proposals from the negotiators on this issue. As to the definition of books and supplies, the Department again did not reach consensus on this proposed language.

Because the negotiators did not reach consensus on the proposed changes to the regulations, the Department may continue to proceed with the rulemaking process and either (1) use the regulatory language developed during the negotiations as the basis for its Notice of Proposed Rulemaking (“NPRM”), or (2) develop new regulatory language for all or a portion of its NPRM. In terms of next steps, the Department will draft its NPRM and publish it in the Federal Register with a request for public comments.

Why This is Important to You

The above referenced provisions may have a significant impact on our institutions. Regarding asynchronous distance learning, many of our schools have incorporated asynchronous distance learning into their programs in recent years. If this provision is adopted in a final rule, these programs that include asynchronous distance learning cannot participate in Title IV federal student aid programs. As to the definition of books and supplies, this proposed language requires institutions to provide students with an option to purchase its kits (and/or other supplies) from a third-party instead of requiring the purchase directly from the institution.

Negotiated Rulemaking Website

Secretary of Education Miguel Cardona sent a letter via email to leadership at all institutions of higher education providing an update on its efforts to help students and institutions that are experiencing challenges associated with the FAFSA delays. The letter highlighted the following efforts over the last several months:

1. The Department sent (and continues to send) Institutional Student Information Records (“ISIRs”) to institutions.
2. The Department’s deployed federal personnel and nonprofit financial aid experts to support nearly 300 schools to assist in the processing of financial aid packages.
3. The Department reduced certain verification requirements and suspended new program reviews through June 2024.

Additionally, the Department announced that it fixed the FAFSA to now allow students with contributors without an SSN to successfully submit the form. Some students are still encountering trouble submitting the form, however, the Department stated that it is working to resolve this issue.

Why This is Important to You

While we are aware that the reduced verification requirements and suspension of program reviews are significant to our institutions, it likely is not a resolution to the challenges that our institutions will face from having students that continue to wait for financial aid awards. We will continue to monitor the Department’s efforts.

Secretary Cardona Letter

ISIR Delivery and Processing Assistance

The Federal Trade Commission is returning approximately $4.1 million in refunds to individuals who were defrauded by student loan debt relief scammers. The scammers lured consumers with fake loan forgiveness claims. The scheme used many names including Mission Hills Federal, Federal Direct Group, National Secure Processing, and The Student Loan Group.

The FTC is sending checks to 27,584 consumers. Recipients should cash their checks within 90 days, as indicated on the check.

Why This is Important to You

Defrauded students will receive checks from the Federal Trade Commission. Individuals with questions about their payment should contact the refund administrator, JND Legal Administration, at 1-844-566-0108, or visit the FTC website to view frequently asked questions about the refund process.

Press Release

If you have any questions about this Update, please email info@beautyschools.org.