Federal Update: January 15, 2025

January 15, 2025

GOVERNMENT RELATIONS HIGHLIGHTS

Beginning of the 119^th Congress: The 119^th Congress kicked off on January 3, 2025, though Congress has been tied up with procedural tasks and confirmation hearings for President-elect Trump’s cabinet.   

Reconciliation/College Cost Reduction Act: As Republicans in Congress look to advance President-elect Trump's agenda through the budget reconciliation process, they are eyeing potential provisions in the College Cost Reduction Act (CCRA) to help pay for the cost of the legislation.

BDR Lawsuit Update: On January 10, 2025, the Supreme Court announced that it would review the decision by the Fifth Circuit Court of Appeals to stop the enforcement of the Biden Administration’s 2022 Borrower Defense to Repayment (“BDR”) regulations.

Biden Administration Guidance: With only days left in the Biden Administration, the US Department of Education released new Frequently Asked Questions (FAQs) on Administrative Capability and Financial Responsibility.

Fair Value Transparency and Gainful Employment Reporting: On January 15, 2025, the window closed for reporting data required by the Department’s Financial Value Transparency and Gainful Employment (“FVT/GE”) rule.

BEGINNING OF THE 119TH CONGRESS

What You Need to Know

The 119th Congress kicked off on January 3, 2025, with Republicans reelecting Speaker Mike Johnson (R-LA) on the first ballot. House Committees are still finalizing membership rosters, which are expected to be completed by the end of the month. The Senate rosters have been announced, and much of the Senate’s early business has been consumed with consideration of President-elect Trump’s cabinet nominees.

Why This Is Important

Education Secretary-designate Linda McMahon has not yet had her confirmation hearing scheduled before the Senate HELP Committee due to reported delays in completing her disclosure paperwork. Her confirmation is not expected to be as contentious as some of the other nominated cabinet officials. To date, the Trump Administration has not announced any other nominees for the Department, including the Under Secretary of Education, who will be the lead on higher education policy.

RECONCILIATION/COLLEGE COST REDUCTION ACT

What You Need to Know

As Republicans in Congress look to advance President-elect Trump's agenda through the budget reconciliation process, they are eyeing potential provisions from the CCRA to help pay for the cost of the legislation. The CCRA cleared the House EdWorkforce Committee last year but was not brought forward for a full vote in the House. Due to the arcane nature of the reconciliation process, which allows Republicans to bypass the traditional 60-vote threshold in the Senate but limits policy changes, it is not yet clear which elements from this legislation may be considered.

Why This Is Important

Republicans have laid out an ambitious agenda to pass reconciliation, with Speaker Johnson announcing his goal to have a completed bill to President Trump by Easter. This may be overly ambitious because Republicans need to reach consensus on the scope and cost of the package, which is expected to include an extension of the previous Trump tax cuts, immigration-related provisions, and other GOP priorities. For context, President Biden’s Build Back Better plan took nearly 11 months from introduction to passage as the Inflation Reduction Act, and it ultimately saw a significant reduction in size and scope due to opposition from Senate Democrats.

BDR LAWSUIT UPDATE

What You Need to Know

The Supreme Court announced on January 10, 2025 that it would review the decision by the Fifth Circuit Court of Appeals to stop the enforcement of the Biden Administration's 2022 BDR regulations. The Supreme Court will decide if the Department of Education has the authority to grant borrower defenses before a borrower defaults, in administrative proceedings, or on a group basis. The Department is appealing a case brought by Career Colleges and Schools of Texas challenging the Biden BDR rules. The Fifth Circuit stayed the implementation of the new BDR rules in April 2024, finding “a strong likelihood that the plaintiffs will succeed on the merits in demonstrating the Rule’s numerous statutory and regulatory shortcomings.” The Fifth Circuit also stayed implementation of the Biden Administration’s 2022 Closed School Loan Discharge regulations, which the Supreme Court has indicated it will not consider on appeal. 

Why This Is Important

The stay of both the BDR and Closed School Loan Discharge regulations will remain in effect pending the Supreme Court's decision. The Supreme Court's announcement did not include a timeline for next steps, but a decision on the appeal is expected later this year. The incoming Trump Administration has not indicated its position on this matter.

BIDEN ADMINISTRATIVE GUIDANCE

What You Need to Know

Last week, with only days left in the Biden Administration, the Department announced the publication of new FAQs on Administrative Capability and Financial Responsibility. The Administrative Capability FAQ covers topics including financial aid counseling, validating high school diplomas, and geographically accessible clinics or externships, among others. The Financial Responsibility FAQ focuses on procedures for implementing the Department’s new requirement, effective July 1, 2024, that an institution use the same fiscal year for Title IV purposes as it uses for submission of its tax returns to the Internal Revenue Service.

Why This Is Important

The staying power of these FAQs remains to be seen. Like all other sub-regulatory guidance, President-elect Trump’s Department of Education could rescind the FAQs.

FVT/GE REPORTING

What You Need to Know

On January 15, 2025, the window closed for reporting data required by the Department of Education's FVT/GE rule. The rule directed institutions to submit a range of student-specific and programmatic data, intended to facilitate the Department’s calculation of the debt-to-earnings and earnings premium metrics. Institutions were also able to make updates to the draft Completers Lists through the January 15 deadline. The litigation AACS brought challenging the FVT/GE rule is expected to be fully briefed by the end of January, at which point the case will proceed to a decision on the merits. A court ruling is expected sometime in Spring 2025.

Why This Is Important

If the Trump Administration decides to rescind the FVT/GE rule, it would likely need to proceed through negotiated rulemaking and would be subject to the master calendar. This means that, at the earliest, the Trump Administration would not be able to officially rescind the rule until July 1, 2026, although it would have regulatory tools at its disposal to slow-walk implementation of the rule until July 1, 2026, if it chooses to do so.