Gainful Employment Rescinded with Option for Early Implementation

On July 1, 2019, the US Department of Education published a Final Rule addressing Program Integrity: Gainful Employment (“GE”) in the Federal Register. The regulations rescind the 2014 GE regulations and remove them from subpart Q (gainful employment programs) of the Student Assistance and General Provisions in 34 CFR part 668. The regulatory action also rescinds subpart R (program level cohort default rates) of the Student Assistance and General Provisions in 34 CFR part 668. The regulations are effective July 1, 2020, however, the Secretary is exercising her authority to allow any entity subject to the regulations to choose early implementation.

On June 28, 2019, the Department published Electronic Announcement #122 to provide additional guidance to institutions regarding early implementation of the rule. If an institution chooses early implementation, they must document the early implementation decision internally.  An institution does not have to publish its decision to do so; however, it must make such documentation available upon request by the Department.  Institutions that do not early implement the rule are expected to comply with the 2014 GE regulations until the rescission becomes effective on July 1, 2020. Continue reading “Gainful Employment Rescinded with Option for Early Implementation”

U.S. Department of Education Confirms New Reporting Requirements Apply to Public Colleges and Universities

On June 3, 2019, the U.S. Department of Education issued a Q&A document regarding compliance with the BDR Rule that confirmed that the reporting requirements for certain “triggering” events will be enforced at all institutions, including public colleges and universities. This information supplements the Department’s March 15, 2019, guidance regarding the 2016 BDR Rule.

The Department’s Q&A makes clear that public institutions are required to report, pursuant to 34 C.F.R. 668.171(h), the following events within the stated time periods:

  • Borrower-defense-related lawsuits brought by a federal or state authority: within 10 days after the institution is served with the complaint and then again within 10 days after the suit has been pending for 120 days.
  • All other lawsuits: within 10 days after the institution is served with a complaint, then again within 10 days after the court sets certain deadlines relating to motions for summary judgment (MSJ) or disposition, and then a third time within 10 days after certain events relating to an MSJ or dispositive motion occur.
  • Any debt or liability arising from a final judgment in a judicial or administrative proceeding: within 10 days after a payment was required or the liability was incurred.
  • Any settlement, including settlements reached prior to the initiation of a formal legal proceeding: within 10 days after a payment was required or a liability was incurred.

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To read the full text of this Alert, please visit the Duane Morris website.

Deadline Draws Near for Compliance with U.S. Department of Education’s 2016 Borrower Defense to Repayment (BDR) Rule

The deadline for complying with certain provisions of the U.S. Department of Education’s borrower defense regulations is Tuesday, May 14. These requirements are summarized briefly below and in greater detail in our March 21, 2019, Alert and April 9, 2019, Alert.

Arbitration Agreements and Class Action Waivers

Starting Tuesday, May 14, schools must either stop using binding predispute arbitration agreements and class action waivers or include the language from the regulation removing borrower defense claims from the scope of these agreements. In addition, starting May 14, students who previously signed a binding predispute arbitration agreement must be provided with specified notice language no later than upon exit counseling or the filing of the school’s initial response to a demand for arbitration or service of a complaint involving a borrower defense claim.

To read the full text of this Alert, please visit the Duane Morris website.

The Trouble with Triggers: Newly Effective Postsecondary Institution Reporting Obligations Under the Borrower Defense to Repayment Rule

Specifically, this Alert explains the obligations of postsecondary institutions participating in Title IV, Higher Education Act (HEA) programs to affirmatively report to the Department the occurrence of certain “triggering” events that occur after March 15, 2019, many of which must be reported to the Department within 10 days of occurrence.

This Alert also describes the “grace period” provided by the Department in the guidance for institutions to affirmatively report to the Department certain triggering events that have already occurred between July 1, 2017, and March 15, 2019 (the period from the effective date of the 2016 BDR Rule to the date of the guidance). The deadline for reporting events occurring during the grace period is May 14, 2019.

As explained below, the 2016 BDR Rule contains both “mandatory” and “discretionary” triggering events that, after reporting, may cause the Department to recalculate the institution’s composite score—a ratio used by the Department to measure an institution’s financial health. If the recalculated score fails or is in the zone, it could lead to a letter of credit or letter of credit alternative requirement, heightened cash monitoring restrictions, provisional Program Participation Agreement status and/or other Title IV participation restrictions.

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To read the full text of this Alert, please visit the Duane Morris website.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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