Since November 9th, all schools have been asking the same question—what does the election mean for higher education? During President Obama’s administration, higher education has experienced a dramatic increase in the number of Dear Colleague Letters (“DCL”) and enforcement by the Department of Education (“ED”). Specifically, President Obama’s ED has focused on Title IX and Title IV. President-Elect Trump may cease enforcement of all the DCLs issued by President Obama’s ED. President Bush set this precedent in 2001 when he directed ED to cease all enforcement of DCLs issued under President Clinton’s administration.
Although enforcement of DCLs may cease, many of the requirements outlined in the April 4, 2011 DCL and the follow-up Q&As have been codified in the Violence Against Woman Act (VAWA) as well as state laws. VAWA requires all institutions to have a policy and investigate and prevent sexual assault, stalking, dating violence, and domestic violence. In addition, VAWA requires primary and ongoing prevention programing. However, VAWA does not require institutions use a specific standard of proof as required by the April 4, 2011 DCL. Prior to April 4, 2011, many institutions used a “clear and convincing standard.” Thus, if the DCLs are no longer enforced, each institution would be able to set its own standard of proof.
Arguably one of the biggest enforcement objectives of President Obama’s administration has been Title IV. Requiring schools to be transparent in reporting cost of attendance, matriculation through programs of study, the 90/10 rule and gainful employment are just a few of the enforcement steps taken over the last 8 years. On October 28th, ED published proposed regulations to go into effect on July 1, 2017. The new regulations would:
- Broaden borrowers’ defenses to include “substantial misrepresentation”, breach of contract by, or a contested judgment against the school. In addition, the definition of a misrepresentation would also be expanded to include omissions of information and “statements with a likelihood or tendency to mislead….”
- Prior to the rules, borrowers were only able to assert a defense to repayment on the basis of intentional fraud or violation of state law.
- The rules also prohibit schools from imposing pre-defense arbitration agreements on students and having students waive their rights to participate in class action lawsuits.
- Schools that violate these consumer protections can be subject to penalties (fines, limitations, suspension or termination) under the regulations.
- Finally, the regulations provide the Secretary authority to impose financial protections (requiring a letter of credit) to protect students and taxpayers from potential liabilities in the event borrowers are successful in asserting defenses to repayment against a school. Triggers of potential liability include suits filed against the school by a government agency, debt and liabilities from borrower-based administrative actions, lawsuits against the school that get to summary judgment, and risk of closure due to noncompliance with 90/10, CDR or GE rules.
- As is the case with the financial responsibility regulations, the letters of credit required under these regulations for potential liabilities could be substantial, up to 10% of Title IV revenue for each incident.
What this means to you?
It is likely that many of the final regulations promulgated by the Obama administration will be vetoed through the Congressional Review Act. The Act states, no “major rule” can take effect until 60 legislative days after the agency submitted a copy of the rule, a concise general statement relating to the rule, and a variety of other documents (e.g., any cost-benefit analyses of the rule) to both Houses of Congress and the Comptroller General. During that period, Congress can veto the rule by enacting a joint resolution of disapproval subject to presentment and potential veto by the President. The critical term “major rule” is defined broadly to include both any rule that has an annual effect on the economy of $100 million or more, and any rule that would cause “a major increase in costs or prices” or “significant adverse effects on competition, employment, investment, productivity, innovation,” or global competitiveness. Compliance with the amendment is not subject to judicial review. This Act was used by the Bush and Obama administrations and will likely be used by the Trump administration to veto any rules that conflict with the new administration’s agenda.
Thus, either through the Congressional Review Act or ceasing to enforce the DCLs, higher education is likely to see a substantial change with the new administration. If history is a guide, the likely enforcement will come through the courts as individuals will continue to press for enforcement.