Federal Update - June 18

June 18, 2025

GOVERNMENT RELATIONS HIGHLIGHTS

Senate Reconciliation Draft: HELP drops risk-sharing but keeps gainful employment 

Delinquent Borrowers Report: ED releases new tool to help combat defaults 

ED Targets Identity Fraud: New Title IV verification rules coming 

Last Day to Comment on BDR Form: ED seeks feedback on revised application 

SENATE HELP UNVEILS OBBBA TEXT

What You Need to Know 

Last week, the Senate HELP Committee released its proposed reconciliation text for inclusion in the One Big Beautiful Bill Act (OBBBA). The Senate version drops the House’s controversial risk sharing proposal in favor of a “Do No Harm” approach based on median earnings, which appears to exclude nondegree programs from its scope. However, the HELP Committee did not include the House language that would eliminate the statutory language for gainful employment.  

Why This Is Important 

The AACS community is engaging with Senate Republicans to push for the removal of the gainful employment statutory language, consistent with the House bill. The Senate Parliamentarian is expected to begin reviewing the legislative text this week for conformity with Senate reconciliation rules, and changes to the Senate draft are likely before floor consideration. The OBBBA still faces hurdles in the Senate, where divisions remain over issues like Medicaid cuts and deficit reduction. Leader Thune remains focused on having a Senate vote on the OBBBA before July 4. 

NEW ED "DELINQUENT BORROWERS REPORT"

What You Need to Know  

On June 9, ED announced the release of a new Delinquent Borrowers Report to support institutions in borrower outreach. The report includes contact details, loan types, balances, and payment amounts for borrowers who are currently delinquent. This follows a May 5 Dear Colleague Letter urging institutions to contact delinquent borrowers by June 30, 2025.  

Why This Is Important 

While outreach is not mandatory, ED has resumed collections on defaulted loans, and institutions risk losing Title IV eligibility if their cohort default rate (CDR) exceeds federal thresholds. Borrowers whose delinquency or default status was reset in September 2024 could be delinquent beginning in June, leading to default this summer. Proactive outreach could help borrowers avoid default and concurrently help institutions improve their CDRs. 

ED'S EFFORTS TO REDUCE TITLE IV IDENTITY FRAUD

What You Need to Know 

On June 6, ED issued new guidance warning that identity fraud has reached a level that threatens the integrity of federal student aid programs. The announcement outlines a nationwide effort to combat fraud, with a new identity verification process for FAFSA applicants set to launch in Fall 2025. 

Why This Is Important 

In the meantime, ED will increase the number of applicants selected for verification, focusing on those expected to receive Title IV aid for the first time this summer. The guidance also updates acceptable documentation standards for identity verification. Notably, schools may now verify a student’s identity via video call if in-person verification is not possible.  

LAST CHANCE TO PROVIDE BDR APPLICATION FEEDBACK

What You Need to Know 

On May 19, ED opened a public comment period on proposed updates to the Borrower Defense to Repayment (BDR) application. The changes reflect alignment with the 1995, 2016, and 2020 BDR rules, following the April 4 injunction that blocked the 2023 version.  

Why This Is Important 

This is an opportunity for stakeholders to weigh in on how the BDR application should function moving forward. Comments must be submitted electronically through the Federal eRulemaking Portal. The deadline to submit feedback is today, June 18.  

For More Information

If you have any questions about this Update, please email info@myaacs.org.