Battle Over Student Loan Collection Fees
July 21, 2016
By: Michael Stratford, Politico
July 21, 2016
POLITICAL MUSCLE TO PROTECT FEES: Amid a brewing political and legal battle over student loan collection fees, United Student Aid Funds — a guaranty agency at the center of the fight — is stepping up its lobbying game. Records filed this week show the organization spent $90,000 in the first half of 2016 to lobby against an Obama administration directive that limits its ability to charge certain fees to defaulted borrowers— the same amount it spent in lobbying during all of 2015.
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— At issue is whether guaranty agencies collecting federally-backed loans are allowed to impose collection fees when a borrower defaults on his or her debt but quickly agrees to start repaying. The Obama administration says no. But USA Funds argues that the Higher Education Act permits them to impose such fees, and that the fees were longstanding industry practice before the Education Department’s directive upended it last year.
— USA Funds is now fighting that guidance in federal court, where its attorneys and the government’s lawyers sparred in filings this week over whether Congress originally intended to allow the fees. An attorney for USA Funds previously said that “hundreds of millions of dollars” are at stake in the case for his client and other guaranty agencies.
— But the non-profit organization — which is led by Bill Hansen, a former top education official in the Bush administration — is also waging a political fight against the Obama administration’s prohibition on the fees. In recent months, USA Funds hired lobbyists such as Ed Pagano, who was Obama’s deputy assistant for legislative affairs and a former Sen. Tom Harkin staffer, and Arshi Siddiqui, a former senior adviser to House Minority Leader Nancy Pelosi.
— A legislative provision blocking the administration’s ban on the fees was slipped into the education funding bill that House Republicans initially proposed earlier this month . But lawmakers removed the policy rider from the bill last week after Rep. Marcy Kaptur (D-Ohio) indicated she would fight the measure. In an email to Morning Education, her office called the rider “particularly insidious for disadvantaged student debtors.”
— An appeals court last year sided against USA Funds on this issue, ruling that a Minnesota woman was incorrectly charged $4,547 in collection fees (on her roughly $18,000 in outstanding debt) as she was trying to get her loans out of default. The Supreme Court declined to hear an appeal and that case is back at the district court . A judge is now weighing a decision in the separate lawsuit between USA Funds and the Education Department.
GOOD THURSDAY MORNING. WELCOME TO MORNING EDUCATION. A Sydney, Australia elementary school has banned clapping out of consideration for students who are sensitive to noise . The school says acceptable alternatives include “punching the air,” which sounds like a very angry version of a fist pump. Send tips and feedback: mstratford@politico.com or @mstratford. Share event listings: educalendar@politicopro.com. And follow us on Twitter: @Morning_Edu and @POLITICOPro.
NODS TO SCHOOL CHOICE AT RNC: Republicans made only fleeting references to education during their presidential nominating convention Wednesday night. But when speakers did weigh in on education, they focused almost exclusively on one issue: school choice.
— Sen. Ted Cruz may not have endorsed his party’s nominee for president, but he did enthusiastically express support for school choice. Calling for “a return to freedom,” Cruz discussed the importance of “your freedom to choose your child’s education, even if you aren’t as rich as Hillary Clinton or Barack Obama.”
— Former House Speaker Newt Gingrich said that Donald Trump would “rebuild our education system and give every parent of every income and every ethnic background a choice about where their children go to school.”
— And Trump’s VP pick, Indiana Gov. Mike Pence, said his running mate “loves educational choice.”
TEACHER PREP EFFORT TAKES NEXT STEP: A joint effort of the Woodrow Wilson Foundation and the Massachusetts Institute of Technology now has approval from the Bay State to start licensing STEM teachers through its competency-based teacher preparation program. The Woodrow Wilson Academy of Teaching and Learning was launched last summer with the goal of “throwing out the clock” when it comes to teacher preparation and “shifting the focus of certification from ‘hours in class’ to proven competency in the skills and knowledge every teacher and education leader needs to succeed.” More: https://bit.ly/2ahwkN6.
— ASCD on Wednesday named 17 teachers who will be the first to receive Teacher Impact Grants — funding announced at the White House earlier this year, which is designed to support teacher leadership projects. The grants range from $5,000 to $15,000, and the projects will be carried out during the upcoming school year. Details: https://bit.ly/1TtQgXv.
USDA FINALIZING SMART SNACK, SCHOOL WELLNESS POLICIES: The Agriculture Department today is finalizing nutrition standards for school snacks and updating requirements for wellness policies, which will be formally announced by Deputy Under Secretary Katie Wilson. The Smart Snack standards for foods sold a la carte, in vending machines, school stores or at fundraisers already were implemented during the 2014-2015 school year under an interim final rule, so today’s move is largely to give people confidence that “these are the rules schools have to operate under for the foreseeable future,” said Jessica Donze Black, director of the Kids’ Safe and Healthful Foods Project at Pew Charitable Trusts.
— Donze Black said the forthcoming guidance on local wellness policies is expected to strengthen what school districts must address in terms of nutrition, physical education and food marketing, along with the level of engagement with the community when developing a policy and implementation plan. School districts will likely be directed to prohibit the marketing of foods that aren’t also sold in school.
— The rules fall under the broader school nutrition reforms made under the Healthy, Hunger-Free Kids Act championed by First Lady Michelle Obama, and are some of the final changes to be carried out by the USDA.
CHIEFS FOR CHANGE ON ESSA ACCOUNTABILITY: The education reform group Chiefs for Change is weighing in on the Education Department’s draft rule for holding schools accountable under the Every Student Succeeds Act. They’re happy with the requirement that states come up with summative ratings — essentially a concrete score or evaluation for schools rather than a “dashboard” of data — and a requirement that states test at least 95 percent of students each year, and factor it into their accountability systems. But the chiefs — along with a number of other groups — have concerns about the timeline for implementing the draft rule. And when it comes to summative ratings, they’d like the Education Department to give states examples of different models they can use, without requiring them to use a particular one, since there’s a concern that the draft rule limits states to A-F grading systems. More: https://bit.ly/29WsneS.
ICYMI: OBAMA ADMIN UNVEILS LOAN SERVICING DETAILS: The Obama administration on Wednesday outlined in greater detail how it plans to overhaul the government’s system for collecting payments from federal student loan borrowers. The Education Department released a 56-page memo that describes the new standards it intends to set for the companies it hires to collect federal student loans.
— Among the changes: a “specially-trained unit of high-touch servicing staff” to help borrowers who are at risk of default. The policies would also require better communication with borrowers and tweaks to how servicers process payments so that they are more beneficial for borrowers. And the department pledged to make more detailed information public about how its loan servicers are performing, along with other new data points about how well borrowers are repaying their loans. More: https://politico.pro/2aaxLMi.
LAWMAKER REMEMBERED: Hawaii state schools Superintendent Kathryn Matayoshi honored Hawaii Democratic Rep. Mark Takai on Wednesday as a “staunch advocate for Hawaii’s public schools.” Takai, 49, died earlier in the day from complications from pancreatic cancer. Matayoshi said Takai “advocated tirelessly for funding and resources to help the Department’s efforts in providing quality education for all children.” She said he was a role model and remains an “example of leadership and service to communities.” Takai was a member of the Hawaii National Guard and served in Iraq. In Congress, Takai served as ranking member of a Small Business subcommittee and was also a member of the House Armed Services Committee.
MOVERS AND SHAKERS
— Pamela Moran has been made a senior adviser for American Student Assistance’s consumer advocacy group. She previously spent 29 years at the Education Department.
— Randi Weingarten was re-elected to her fifth term as president of the American Federation of Teachers at the union’s annual convention in Minneapolis. She won with 97.6 percent of the vote, the AFT said.
REPORT ROLL CALL
— Mark Zuckerman, president of the Century Foundation, makes recommendations to improve the Income-Based Repayment and Public Service Loan Forgiveness repayment programs: https://bit.ly/29W6Z5U.
SYLLABUS
— The Boston Globe finds 15 instances of retaliation at New England private schools against students or employees who raised concerns about sexual abuse by staffers: https://bit.ly/29Wl4As
— Sen. Richard Burr (R-N.C.), a high-ranking member of the Senate education committee, says that this is his last election. Stars and Stripes: https://bit.ly/2aaG8Y6
— At GOP convention, even some delegates clueless on Trump's education stance. Education Week: https://bit.ly/29PnIrZ
— Wisconsin school district facing suit over treatment of transgender student says it is following the law. The Washington Post: https://wapo.st/2ad8TSe
— Rhode Island’s education commissioner defends decision to drop testing for 10th graders. Providence Journal: https://bit.ly/29WOIGq
— Florida Board of Education approves improvement plan for Pinellas schools. Tampa Bay Times: https://bit.ly/29W4FMw
— The scariest student loan number. The Atlantic: https://theatln.tc/2aaHfqJ