Consumer Financial Protection Bureau Proposes Mandatory Registration of Terms and Conditions: Nonbank Student Loan Servicers Among Those Potentially Impacted

On January 11, 2023, the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) announced designs to create a public registry of terms and conditions in form contracts. Under the proposed rule (“Rule”), certain nonbank entities, including nonbank student loan servicers, would be required to register and submit information related to its terms and conditions that purport to waive or limit consumer rights and protections, along with identifying company information. The Bureau has opened up the Rule for a sixty-day comment period (closing on March 13, 2023), after which decisions will be made on its final form. Continue reading “Consumer Financial Protection Bureau Proposes Mandatory Registration of Terms and Conditions: Nonbank Student Loan Servicers Among Those Potentially Impacted”

New CA Bill for Student Proctoring

Student Test Taker Privacy Protection Act (SB-1172), limits the collection of personal data by proctoring services. The pandemic created a surge of online-proctoring services which utilize various types of personal information, such as a driver’s license, other identification and/or biometric data, to verify a student’s identity during a proctored exam. SB-1172 seeks to establish data protections for the online test taker. The Act prohibits a proctoring service from collecting, retaining, using, or disclosing personal information except to the extent necessary to provide the proctoring services. 

Most higher education institutions use outside proctoring services (such as Proctorio, ProctorU, Exmanity and ExamSoft) to administer proctored online exams so the institutions would be directly responsible for regulating the information collected. However, higher education institutions should take steps to ensure that the proctoring services utilized adhere to the bill’s restrictions. Current proctoring service contracts should be analyzed and likely amended to at a minimum include that the service provider will not collect, retain, use or disclose student personal information except to the extent necessary to provide the proctoring services.   

Do College Athletes Have the Right to Join a Union? The Answer is Still “Maybe”

Overview: Back in September 2021, the National Labor Relations Board general counsel issued GC Memorandum 21-08, formally taking the prosecutorial position that certain college and university athletes are employees entitled to all of the rights guaranteed by the National Labor Relations Act. This would include the right to engage in certain protected concerted activities, such as strikes, and to organize to join a union. For private colleges and universities, formal, legal recognition of student-athletes as “employees” would significantly change the relationship between schools and athletes.

Discussion: Back in September 2021, General Counsel Jennifer Abruzzo of the National Labor Relations Board (the “Board”), who leads the enforcement arm of the Board, issued GC Memorandum 21-08, formally taking the prosecutorial position that certain college and university athletes are employees entitled to all of the rights guaranteed by the National Labor Relations Act (the “Act”). This would include the right to engage in certain protected concerted activities, such as strikes, and to organize to join a union.

This is not the first time a Board general counsel has taken this position; Richard Griffin, appointed by President Barack Obama, issued a similar memorandum in 2017 that was later rescinded by his Republican successor, Peter Robb, appointed by President Donald Trump. Abruzzo, however, has taken this legal analysis a step further, arguing that “misclassifying” collegiate athletes as mere “student-athletes,” and leading athletes to believe that they do not have statutory protections, violates the Act in and of itself.

For private colleges and universities (the Act does not apply to public institutions of higher education), formal, legal recognition of student-athletes as “employees” would significantly change the relationship between schools and athletes. To start, schools would have to guess whether an athlete qualifies as an employee in the first place. Guessing incorrectly could have expensive consequences, as merely mislabeling the student could risk violating the Act and require defending against the ensuing charge.

As employees, athletes would have the right to engage in collective action, which could clash with school codes of conduct or campus rules. And, should student-athletes choose to organize and vote to join a union, the school would be required to engage in good faith collective bargaining over wages, hours and other terms and conditions of the athletes’ “employment.” The implications of such an arrangement could be significant: Would this require negotiations over the costs of meal plans and housing? What about school-sponsored health insurance plans? Would student-athletes gain the right to have union representation in disciplinary proceedings? Classifying a school’s athletes as employees would undoubtedly unleash a Pandora’s box of issues and questions.

Since publishing the memorandum over a year ago, Abruzzo’s office has yet to prosecute a test case that would give the Board (currently a 3-2 Democrat majority) the opportunity to formally adopt the position that certain student-athletes are employees under the Act. However, private colleges and universities should not assume that this agenda item has been forgotten.

There are a couple of pending cases against the National Collegiate Athletic Association alleging that it has misclassified student-athletes. And, on December 15, 2022, Abruzzo announced that her office found merit in at least one pending unfair labor practice charge case, which could result in a formal charge (giving her a pathway to litigate the issue up to the Board). Meanwhile, there are other legal efforts to classify collegiate athletes as employees through legislative or judicial action.

In short, private colleges and universities should stay alert to this classification issue and keep an eye out for signs of union organizing among college athletes, particularly football players at Division I Football Bowl Subdivision private colleges and universities. Though it is impossible to predict how this battle over collegiate athletes will unfold, one thing is certain: It is not going away any time soon.

For More Information

If you have any questions about this Alert, please contact Elizabeth Mincer, Zev Grumet-Morris, Katherine Brodie, or any of the attorneys in our Education Industry Group or the attorney in the firm with whom you are regularly in contact.

FTC Postpones Compliance Deadline for Certain Safeguards Rule Provisions Applicable to Title IV Institutions of Higher Education

Last year, the Federal Trade Commission (FTC) amended the Safeguards Rule under the Gramm-Leach-Bliley Act (GLBA). The comprehensive amendment updated data security requirements for financial institutions, including all Title IV institutions of higher education. In response to reports of personnel shortages and supply chain issues, on November 15, 2022, the FTC announced that it has extended the compliance deadline by six months (to June 9, 2023) for provisions of the rule that were originally to become effective on December 9, 2022. 

The GLBA is a federal law enforced by the FTC. It governs financial institutions regarding their use and collection of customer personally identifiable information. The specific cybersecurity requirements of the GLBA are set forth in the Safeguards Rule. The U.S. Department of Educationvia the Program Participation Agreement, several Dear Colleague Letters, the FSA Handbook and the audit guidehas made it clear that Title IV schools are considered financial institutions and subject to the legal obligations to protect student information required under the GLBA. As such, Title IV schools must meet these strengthened security requirements to better protect consumer (student) financial information.

To view details about what Safeguards Rule provisions are included in the extension, please see our Alert. 

These requirements are not policies and procedures that can be implemented overnight. Considering the shortage of qualified personnel to implement information security programs and the various supply chain issues, schools may need every bit of those six months to develop an information security program that meets the rule’s comprehensive requirements. Schools should work with legal counsel and an information security professional to draft or revise a comprehensive cybersecurity program to protect student records and ensure compliance with the updated Safeguards Rule.

USDE Publishes Final Rule on 90/10 Rule and Change in Ownership Regulations

On October 28, 2022, the U.S. Department of Education (Department) published the Final Rule (FR) that makes significant and wide-ranging changes to the 90/10 Rule and the change in ownership and control (CIO) regulations. In the accompanying Fact Sheet, the Department stated that the FR will “promote accountability…and strengthen protections for veterans, service members, students, and borrowers.”

The FR amends Title IV Revenue and Non-Federal Education Assistance Funds regulations to implement the statutory change in the American Rescue Plan Act of 2021 (ARP) and amends which non-Federal funds can be counted when determining compliance with the 90/10 rule. The FR also amends regulations to clarify the process for consideration of changes in ownership and control (CIO).

Below is a high-level summary of the major revisions to the 90/10 and CIO regulations. Continue reading “USDE Publishes Final Rule on 90/10 Rule and Change in Ownership Regulations”

U.S. Department of Education Releases Proposed Title IX Rewrite

On June 23, 2022, the 50th Anniversary of the Title IX statute, the U.S. Department of Education released the Notice of Proposed Rulemaking (“NPRM”) for the Title IX rule. The proposed rule is expected to be published in the Federal Register on June 27, 2022. Following publication, interested parties will have 60 days to submit public comment. 

First, the Department proposed to amend Title IX regulations to:
Require recipients to adopt grievance procedures that provide for the prompt and equitable resolution of complaints of sex discrimination and take other necessary steps to provide an educational environment free from sex discrimination;
Clarify the Department’s view of the scope of Title IX’s prohibition on sex discrimination, including related to a hostile environment under the recipient’s education program or activity, as well as discrimination on the basis of sex stereotypes, sex characteristics, pregnancy or related conditions, sexual orientation, and gender identity; and
Clarify a recipient’s obligations to students and employees who are pregnant or experiencing pregnancy-related conditions.

With regard to sex-based harassment, the proposed regulations would:
Define sex-based harassment to include but not be limited to sexual harassment;
Provide and clarify, as appropriate, definitions of various terms related to a recipient’s obligations to address sex discrimination, including sex-based harassment;
Clarify how a recipient is required to take action to end any sex discrimination that has occurred in its education program or activity, prevent its recurrence, and remedy its effects; and
Clarify a recipient’s obligations related to the grievance procedures and other necessary steps when it receives a complaint of sex discrimination. 

With regard to discrimination against individuals who are pregnant or parenting, the proposed regulations would:
Define the term “pregnancy or related conditions” and the term “parental status,” and prohibit discrimination against students and applicants for admission or employment on the basis of current, potential, or past pregnancy or related conditions; and
Clarify a recipient’s obligations to students and employees who are pregnant or experiencing related conditions. 

In addition, the proposed regulations would:
Articulate the Department’s understanding that sex discrimination includes discrimination on the basis of sex stereotypes, sex characteristics, pregnancy or related conditions, sexual orientation, and gender identity;
Clarify and streamline administrative requirements with respect to designating a Title IX Coordinator, disseminating a nondiscrimination notice, adopting grievance procedures, and recordkeeping;
Specify that a recipient must train a range of relevant persons on the recipient’s obligations under Title IX;
Clarify that, unless otherwise provided by Title IX or the regulations, a recipient must not carry out any otherwise permissible different treatment or separation on the basis of sex in a way that would cause more than de minimis harm, including by adopting a policy or engaging in a practice that prevents a person from participating in an education program or activity consistent with their gender identity; and
Clarify a recipient’s obligation to address retaliation.

Duane Morris is in the process of reviewing the proposed rule in detail and will prepare bullet points and a full summary in the coming days.

The Federal Motor Carrier Safety Administration Waives Certain Skills Test Requirements for School Bus Drivers

On Tuesday, January 4, 2022, the Federal Motor Carrier Safety Administration (FMCSA), in coordination with the Department of Education, announced that it was relaxing certain standards of the commercial driver’s license (CDL) skills test for school bus driver applicants. Specifically, the action would give States the option to temporarily waive one provision of the skills test that requires applicants to identify the “under the hood” engine components. Effective January 3, 2022, this temporary waiver expires on March 31, 2022. The remaining elements of the test (outlined in 49 CFR 383.113(a)(1)(ii-ix) remain effective. Continue reading “The Federal Motor Carrier Safety Administration Waives Certain Skills Test Requirements for School Bus Drivers”

U.S. Department of Education Negotiated Rulemaking – Session One Recap: Part Three

To close out this series of summaries of the first session of Negotiated Rulemaking, today UpdateEd looks at the U.S. Department of Education’s proposed changes to regulations regarding pre-dispute arbitration and class action waivers. We will also analyze the “neg reg” session as a whole.

As identified in the Department’s issue paper (see here), the proposed changes to pre-dispute arbitration and class action waivers are very significant, constituting a return to the 2016 BDR rule’s prohibitions as well as the addition of new provisions. Proposed changes are as follows. Continue reading “U.S. Department of Education Negotiated Rulemaking – Session One Recap: Part Three”

U.S. Department of Education Negotiated Rulemaking – Session One Recap: Part Two

Yesterday, October 14, 2021, UpdateED published the first of a three-part recap of last week’s U.S. Department of Education Negotiated Rulemaking Session, focusing on the proposed Borrower Defense to Repayment provisions. (see here)

Up today: the proposed changes to Closed School Loan Discharges (CSLD) and False Certification Discharges (FCD). Continue reading “U.S. Department of Education Negotiated Rulemaking – Session One Recap: Part Two”

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