The White House’s October 30, 2023, Executive Order on Safe, Secure and Trustworthy Artificial Intelligence provides insight into the future of regulating the development and use of artificial intelligence models in the United States.
The executive order identifies education as a critical field where the federal government will take advantage of advances in AI technologies, but also needs to protect consumers and the public from adverse impacts. Job training and education will provide access to students to learn about AI. Resources will be made available to those who experience displacement in the workforce due to AI. The order makes clear that the federal government will continue to enforce existing consumer protections as AI evolves. These include those safeguarding consumers from “fraud, unintended bias, discrimination, infringements on privacy, and other harms from AI.”
The executive order also directs the Secretary of Education to develop policies concerning the use and impact of AI in education in consultation with stakeholders. This will include the creation of an “AI toolkit” for institutions to use in implementing the department’s recommendations concerning appropriate use of AI, including human review of AI decisions, the design of AI to enhance trust and safety, and alignment of AI systems with U.S. privacy laws and regulations, among other things.
Read our full cross-practice alert about the Executive Order here.
COVID-Related College Tuition Refund Claims Dismissed
Since the global pandemic forced most college campuses to resort to online instruction in March 2020, college students across the country have filed more than 150 lawsuits against their schools seeking refunds of tuition and related fees.
This month, a federal judge in Boston made the first dispositive ruling in such a case against Northeastern University – tossing out most of the claims asserted by the students in a putative class-action matter. Judge Richard G. Stearns of the District of Massachusetts found in Chong v Northeastern University, 20-10844-RGS, that the contract between the university and its students (the Financial Responsibility Agreement, “FRA”) did not specifically include a right to in-person instruction. The Judge noted that the FRA ties the payment of tuition to the registration for courses, “not to the receipt of any particular method of course instruction.”
The Judge also dismissed the students’ claims seeking a refund of certain student fees, such as student activity fees, finding that they paid the fees to support certain campus facilities – not necessarily to gain access to them. Thus, the Court gave no credence to the students’ claims that they should receive a refund of activity fees because the school prevented them from accessing those facilities due to the pandemic.
However, the Court did allow the students’ claims seeking a refund of campus recreation fees to go forward, finding that the students’ payment of those fees may have implicitly created a right to attend home athletic events and use the campus gym and fitness facilities, which ceased on March 12.
Judge Stearns’ ruling may be a sign of things to come for the many similar lawsuits currently pending against colleges and universities throughout the country. However, as in this case or any breach of contract action, these rulings will likely turn on the specific language of the applicable contract between the institution and the student.
COVID-19 Can Change Everything—If We Let It
According to Dave Clayton, senior vice president of consumer insights at Strada Education Network, hybrid education “was a consistently popular option” throughout a recent survey taken by his organization. It beat out both online and in-person when it came to which option Americans were likely to recommend, as well as which option offered the best preparation for joining the workforce.
Will this change higher education? Of course it will. The market to find students gets more competitive for colleges every year. That trend is predicted to continue long into the future. If today’s junior high schoolers already know that they want “both,” this shift in consumer demand won’t go unnoticed. If college leadership wants the freshman class of 2026 to enroll in their institution, they would be foolish not to adapt.
To read the full text of this article by Duane Morris partner Edward M. Cramp, please visit the University Business website.
Active Ransomware Campaign Targeting Education Institutions
The Department of Education issued a security alert stating that multiple schools have reported that they have suffered ransomware attacks. Ransomware is a type of malware that uses encryption to block access to a computer system unless a ransom is paid. Ransomware is commonly embedded in email attachments that infect a computer when opened. However, the Department of Education states that phishing attacks have been the primary method used in these reported cases, where the attackers used phishing schemes to gain access to account credentials and then used those credentials to install the ransomware.
The Department of Education recommends that schools implement the following cybersecurity practices to protect against such attacks:
- Establish a data backup process, ensure the backups are available and accessible, and store the backups offline
- Implement multi-factor authentication to mitigate account compromises
- Regularly patch hardware and software
- Continuously monitor institutional network to detect unauthorized access and malware
- Create and update your Incident Response Plan
- Ensure training resources emphasize phishing, as it is frequently the compromising entry point for cyber attacks
The Department also reminds schools that ransomware attacks should be reported immediately to the FSA security team.
U.S. Department of Education Posts Updated COVID-19 Guidance for Institutions Following Enactment of CARES Act
Late on Friday, April 3, the Department posted updated guidance for institutions that recognizes the regulatory flexibilities authorized by Congress in the CARES Act, but also addresses other areas including Clery Act, Distance Education, Foreign Schools and FERPA, among other issues relevant to the COVID-19 interruption. The guidance is effective through June 30, 2020 unless otherwise extended by the Department. The Higher Education Relief Fund portion of CARES ACT is not addressed and will be the subject of future guidance.
ELECTRONIC ANNOUNCEMENTS
– April 03, 2020
(OPE Announcements) Subject: UPDATED Guidance for interruptions of study related to Coronavirus (COVID-19)
https://ifap.ed.gov/electronic-announcements/040320UPDATEDGuidanceInterruptStudyRelCOVID19
U.S. Department of Education Rejects California’s Student Complaint Process But Provides Path to Compliance
Late on Friday, August 2, 2019, the U.S. Department of Education sent a letter to the California Department of Consumer Affairs that rejected California’s proposed complaint process for Californians attending online programs offered by out-of-state public and nonprofit institutions, but provided a clear path to compliance and a promise not to disrupt federal student aid, assuming California takes the steps outlined in the letter. We previously summarized aspects of the 2016 State Authorization Rule in our July 23, 2019, and July 26, 2019, Alerts.
Here are four key takeaways from the Department’s letter.
1. Federal student aid to Californians will not be disrupted IF California takes the steps outlined in the letter to meet the 2016 State Authorization requirements.
The Department’s August 2 letter “assumes” California will do three things: (1) modify its plan to refer student complaints to a California state agency for adjudication, (2) require a California state agency to oversee the investigation of the student complaints and resolve them, according to applicable California state law, and (3) receive complaints regarding issues starting from at least May 26, 2019, the date that the 2016 regulations went into effect.
To read the full text of this Alert, please visit the Duane Morris website.
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.
Implementing the 2016 Borrower Defense to Repayment (BDR) Rule – Arbitration Agreements and Class Action Waivers
This Alert addresses the actions that postsecondary institutions participating in the federal Direct Loan Program must take now and in the near future if they require students to enter into binding pre-dispute arbitration agreements or class action waivers with the institution. Below, we address how the guidance may affect ongoing arbitrations and current and future arbitration agreements. We will cover the financial responsibility reporting requirement triggers in our next Alert.
The March 15, 2019, guidance makes clear that the 2016 BDR Rule is now in effect. Accordingly, schools are no longer permitted to rely on binding pre-dispute arbitration agreements and class action waivers with Direct Loan borrowers in connection with so-called “borrower defense claims.” Borrower defense claims are those based on an act or omission of the institution attended by the claimant student that relates to the making of a Direct Loan for enrollment at the institution or the provision of educational services for which the loan was provided. The guidance excludes, for example, personal injury tort claims and sexual and racial harassment claims from being categorized as borrower defense claims. Other claims, such as educational malpractice claims, may also be excluded, so long as they do not meet the definition of a borrower defense claim.
Schools should keep in mind certain key deadlines as they work with counsel to determine the best path forward for complying with the 2016 BDR Rule.
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To read the full text of this Alert, please visit the Duane Morris website.