Department action on for-profit college fraud claims faces backlash Presented by Comcast

With help from Caitlin Emma, Mel Leonor and Benjamin Wermund

PROGRAMMING NOTE: Morning Education will not publish from Dec. 25-Jan. 1. Our next Morning Education newsletter will publish on Jan. 2. Please continue to follow Pro Education issues here.

RELIEF OR MORE HEADACHES FOR DEFRAUDED FOR-PROFIT COLLEGE STUDENTS? The Education Department has drawn lawsuits and plenty of criticism from the left for putting on ice during the Trump administration more than 100,000 pending fraud claims from former for-profit college students.

— The department sought to change that narrative on Wednesday when it unveiled a new discharge process for “borrower defense” claims and said it’s already ruled on more than 21,000 claims from students who attended now-defunct Corinthian Colleges campuses. The department is now using a “tiers of relief” system to determine how much each borrower should receive — if anything. Education Secretary Betsy DeVos said this better protects taxpayers and allows claims to be adjudicated quickly.

— Critics weren’t celebrating. California Attorney General Xavier Becerra, a Democrat who has a lawsuit pending against the department related to the claims, said by law the department is required to provide full relief to eligible borrowers. “This Department of Education needs to carry out its legal duty and help them rebuild their lives,” he said.

— The partial relief standard “penalizes” students who beat the odds through hard work, says Yan Cao, a fellow at the progressive Century Foundation. “This is comparable to saying that a customer who was defrauded at the car dealership, but who sold the parts for scrap, dipped into personal savings to buy new parts, and put in the labor to build a functioning vehicle, should only be refunded a percentage of what the dealership got for selling a junk car, because now, thanks to the customer, the car works,” Cao said.

— Others challenged how the department is calculating what each borrower receives. Under the system, the department weighs what graduates from the borrower’s program are making against how much graduates of similar programs are earning to determine how valuable their education was and how much to forgive. “This is a bad idea for a host of reasons — it ignores the question of whether you actually got a job in that field, what your long-term career prospects are, the massive cliff effects, and its comparing graduates to some potential dropouts,” tweeted Ben Miller, a higher education policy expert at the Center for American Progress. Read the full story from Benjamin Wermund.

HAPPY THURSDAY AND WELCOME TO MORNING EDUCATION. My kids enjoyed checking out this replica of D.C. made out of gingerbread at the Gaylord National Resort. Tips? Feedback? Let me know: [email protected] or @khefling. Share event listings: [email protected]. And follow us on Twitter: @Morning_Edu and @POLITICOPro.

REPUBLICANS: TAX BILL ONLY HELPS PRIVATE SCHOOL PARENTS: A provision of the GOP’s tax overhaul meant to help families pay for private school will only benefit affluent families, drain state tax bases and undermine the goal of saving for college, some Republicans say. The bill would open up tax-advantaged college savings plans known as 529s to cover up to $10,000 a year in public, private and religious school expenses. But some conservatives and school choice backers believe Congress is rushing the bill and hasn’t assessed the impact it could have on states, poor families and public education. Caitlin Emma reports.

— “This isn’t fiscally responsible and it’s not federalist at all,” said Nat Malkus, deputy director of education policy studies at the American Enterprise Institute, a conservative think tank. “I’m a big school choice supporter, but it’s really hard to get functional school choice programs out there and this isn’t one of them.” According to his own research, Malkus said state tax systems — which pay in part for public schools — could take a hit. Thirty-three states offer tax deductions and credits in some form to incentivize 529 contributions, Malkus noted. These are limited in some states, while in others — like Colorado, New Mexico, South Carolina and West Virginia — contributions are fully deductible.

— “Imagine for instance that a family in New York spends $10,000 on high school tuition but has not yet started saving for college,” he wrote in an op-ed for The New York Times this week. “Congress’s 529 expansion opens New York’s $10,000 state income tax deduction for 529 contributions to private school tuition. This family could now open a 529 savings account, briefly park the $10,000 for private school tuition in it, and avoid about $600 in state income taxes. That modest $600 for families takes a much bigger cumulative toll on New York’s income tax base. With about 465,000 New York private school students, roughly $3 billion might be cut from New York’s income tax base.”

— Malkus’ research assumes that families will take broad advantage of college savings plans to pay for private or religious school, using them more as a transactional account than a vehicle for long-term savings. But administrators of 529 plans across states interviewed by POLITICO don’t think that will happen. “It may be appealing to some of our participants, but I don’t think it’s going to bring in a ton of new accounts,” said Mary Morris, CEO of Virginia529 — the largest 529 plan in the country.

— State administrators are a little worried, however, about the families who want to take advantage and might lose sight of saving for college. They stressed the plans are really a vehicle for long-term investments: Families can invest their after-tax money into a college savings plan and, through compound interest, accrue earnings rapidly over time that aren’t taxed. The benefit isn’t quite the same in the short term, administrators say.

— “We want make sure that people aren’t jeopardizing their college savings for K-12,” said Grant Hewitt, chief of staff in the Nevada State Treasurer’s Office. Hewitt said he supports school choice. But he envisioned a scenario in which a family has long been saving for higher education, but decides to pull off that path to pay for private high school “and the kid gets gypped out of last two years of college. It’s a decision that families will have to make,” he said.

— DeVos and George Murry, chairman of the U.S. Conference of Catholic Bishops Committee on Catholic Education, have praised the provision as a step in the right direction while acknowledging that it does little to assist low-income students. Research has shown that 529 families tend to be more affluent and are more likely to have a college education. But state administrators of the plans say that’s not quite right. “The vast majority of our participants are middle America,” Morris said. “It’s a misperception that we’re often used by wealthier families.”

— Speaking of school funding, the U.S. Commission on Civil Rights is scheduled to discuss and vote on a report today that explores how underfunding in public schools has “exacerbated the academic achievement gap.” The commissioners will meet by teleconference at 3:30 p.m.

A message from Comcast: With an uncertain school year underway, Comcast’s Internet Essentials Partner Program is helping communities work together to connect low-income students to the Internet. Since 2011, Comcast has connected more than 8 million low-income families so they can have the tools they need to be ready for anything. Learn more.



LAWMAKERS VOW TO HELP BEREA COLLEGE: Republican lawmakers say they will help Berea College in Kentucky avoid having its endowment taxed, after a provision meant to protect it was removed from the tax overhaul bill because of a procedural glitch. “I commit to working with you to find a permanent solution to this problem as soon as possible,” said Ways and Means Chairman Kevin Brady on the House floor to Rep. Andy Barr (R-Ky.) during a colloquy. Senate Majority Leader Mitch McConnell also said he’s working with his Kentucky colleagues to “protect Berea and its students.” Berea has a large endowment, but doesn’t charge tuition and serves a low-income population. The bill passed by Congress includes a new 1.4 percent tax on certain private university endowments.

RURAL SCHOOLS GET SOME LOVE: The Education Department is seeking the public’s input about steps it can take to better consider the needs of rural schools. A preliminary report looking at the department’s work to engage rural schools can be viewed here. The department will take public comment until Feb. 20, according to a Federal Register notice.

MARK YOUR CALENDARS: The Supreme Court has scheduled oral arguments for Feb. 26 in a high-profile case challenging the legality of union fees. The case, Janus v. AFSCME, argues that public-sector unions should not be permitted to require non-members to pay so-called fair share or agency fees to cover their portion of costs associated with collective bargaining in their workplace.

DECODING THE PROSPER ACT: House Republicans' lengthy proposal to rewrite the nation's higher education law would overhaul the government's student aid programs. The so-called PROSPER Act, H.R. 4508 (115), promises to simplify an intricate web of programs — streamlining applications and easing requirements for higher education institutions. A look at how the law would impact student loans and federal financial aid, from Pro DataPoint's Tucker Doherty is here.

ICYMI: FLORIDA’S ACCOUNTABILITY SYSTEM DOESN’T FLY? The Education Department appears to be raising some of the same issues as civil rights groups when it comes to Florida's plan under the Every Student Succeeds Act. In a letter sent to the state on Tuesday, federal officials said Florida must look at how individual groups of students are performing and consider whether English language learners are making progress toward learning English when it comes to holding schools accountable. Civil rights groups have urged DeVos to reject Florida's plan for these reasons and others. More.

MOVERS AND SHAKERS

— New York City schools Chancellor Carmen Fariña will leave the Department of Education in the new year, possibly before the end of the school year in June, reports Eliza Shapiro.

SYLLABUS

— Ending the DACA program would create ‘palpable’ hardship for immigrants, judge says: PBS News Hour.

— Document reveals federal government paid $13K to settle Haskell student’s lawsuit: Lawrence Journal-World.

— Dropout rates at Oregon's alternative high schools cry out for better oversight, audit says: Oregonian.

— Former Alabama superintendent draws questions over dual paid roles: AL.com.

— Michigan must repay $554M to school employees, state's high court rules: USA Today.

— Testing would have a smaller role in Ohio teacher evaluations under new bill: Cleveland.com.

— State officials are panicked over children’s health: POLITICO.

The Pro Education team is celebrating that Santa Claus is Comin’ to Town. @caitlinzemma ( [email protected]), @khefling ( [email protected]), @mstratford ( [email protected]) and @BenjaminEW ( [email protected]).

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