Change in Washington, D.C. looms in light of the results of the recent presidential election. Institutions of higher education are asking what they can expect in the short term from the exiting Biden administration, and how policy and regulatory changes brought in by the incoming Trump administration will unfold, including the legal steps the new administration will need to take to enact its stated priority policy agenda items. This alert addresses these questions.
What You Need to Know:
- The Biden administration has two months remaining to implement priority agenda items, but any final regulations are subject to reversal under the Congressional Review Act (“CRA”).
- Sub-regulatory guidance, including Dear Colleague Letters, are also vulnerable to revision or withdrawal.
- Many of the incoming Trump administration’s priority policy agenda items, such as Title IV regulatory changes, must go through the negotiated rulemaking process and are not subject to immediate enactment.
- Other priority policy agenda items, like those that pertain to governmental influence over curriculum, may face other administrative hurdles, such as the U.S. Department of Education Organization Act, which prohibits exercises of control over curriculum.
Remaining Months of the Biden Administration
Based on the Biden administration's Unified Agenda of Regulatory and Deregulatory Actions, previously articulated United States Department of Education (“ED” or the “Department”) priorities, and practical considerations, there are several issues on which the Department is most likely to take action during the lame-duck period. These include:
- Withdrawing the 2011 Incentive Compensation Dear Colleague Letter (bundled services exception)
- Expediting Borrower Defense to Repayment claims
- Making Title IV regulatory changes, including issues related to R2T4, Distance Education, Accreditation, State Authorization, and Federal TRIO programs
- Reissuing third-party servicer guidance
- Proceeding with student debt relief initiatives
- Ceasing consideration of new accreditation agencies to be “recognized” by the Department
- Publishing a final rule on campus cybersecurity requiring institutions to implement NIST SP 800-171 cybersecurity standards
Please note, even if the Biden administration pushes through these initiatives, there is likely to be Congressional pushback. Congress can pass a joint resolution to overturn any final regulation within sixty (60) Congressional session days under the CRA. The CRA requires federal agencies to submit new regulations to Congress for a period of congressional review — 60 session days in the Senate and 60 legislative days in the House — after the rule or regulation is submitted to Congress. During the review period, Congress can introduce and act on a joint resolution that, if enacted, would disapprove the rule.
If Congress does not approve of a rule, it can enact a resolution of disapproval. In that case, the new rule has no force or effect. The CRA has been applied to Department regulations in the past. In 2017, for example, Congress passed a joint resolution disapproving a Department rule on Accountability and State Plans under the Every Student Succeeds Act.
In addition, any sub-regulatory guidance, such as a Dear Colleague Letter and Electronic Announcement, can be immediately withdrawn by the new administration.
Priority Items for the Incoming Trump Administration
The power to immediately withdraw sub-regulatory guidance does not imply that this will occur on January 20. It will take time for the administration to be populated within the Department. On November 19, President Trump nominated Linda McMahon as Secretary of Education, which requires Senate confirmation. Former ED Secretary Betsy DeVos was confirmed in February 2017, and current Secretary Miguel Cardona was confirmed in March 2021. The Senate will likely consider McMahon’s nomination on a similar timeline.
Many senior-level positions impacting higher education also require confirmation, including the Deputy Secretary, Undersecretary, Assistant Secretary for the Office of Postsecondary Education, Assistant Secretary for the Office for Civil Rights, and General Counsel. Senate consideration of these nominations can take months. However, other important senior leadership positions, including the chief of staff and other senior advisors, do not require confirmation and may be filled more quickly.
There has been some discussion of circumventing the confirmation process and placing cabinet-level positions through the “recessing appointee.” However, recess appointments expire at the end of the next congressional Session. This has been used before, but rarely for cabinet-level posts.
In President Trump’s second term, it is anticipated that the Department will focus on what it views as reducing the regulatory burden on institutions, holding institutions in all sectors equally accountable (for-profit, private non-profit, and public institutions), restoring the regulatory triad by more clearly defining the roles and responsibilities of accreditors, states, and the Department in oversight of institutions, promoting the administration’s social values agenda – including pertaining to all things DEI, and promoting career education. These goals could be accomplished by:
- Reviewing all agency regulations and policy guidance and making recommendations on which regulations to repeal, modify, or retain, as was done during President Trump’s first term.
- Repealing or amending Title IV regulations, including those pertaining to Gainful Employment, Borrower Defense to Repayment, Financial Value Transparency, Administrative Capability, and Cash Management.
- Removing barriers to recognizing new accreditation agencies, reinforcing that all institutional accreditors are “national” in scope, and limiting the authority of the National Advisory Committee on Institutional Quality and Integrity (“NACIQI”).
- Promoting the administration’s views on the inclusion of transgender individuals by restoring a definition of “sex” that is limited to sex assigned at birth, rather than gender identity, through revised Title IX regulations, and promoting the right of students to hold institutions accountable for perceived free speech violations by extending borrower defense claims (to the extent the framework is retained) to claims related to such alleged violations.
- Increasing the pace and vigor of investigations related to foreign gift and contracts reporting requirements under Section 117 of the Higher Education Act (“HEA”), and potentially updating related guidance and reporting requirements.
Timeline for Implementation
Under the HEA, the Department must engage in negotiated rulemaking to amend, rescind, or develop Title IV regulations. This process includes a series of meetings during which stakeholders work with the Department to come to a consensus on the Department’s proposed regulations, publish proposed regulations, review public comments, and publish the final regulations. In addition, the “Master Calendar” requirement specifies that new regulations must be issued by November 1 of any calendar year in order to be effective the following July 1. This means that the earliest changes will be effective is July 1, 2026.
On the other hand, unlike Title IV, regulations under Title VI, Title IX, and the ADA do not require negotiated rulemaking, and the Master Calendar requirement does not apply. Moreover, the new administration can rescind any agency guidance by simply announcing that it no longer reflects the agency's position.
Other Legal and Procedural Limitations
Other legal and procedural constraints limit the Department’s ability to implement changes current regulations and policies. These include the following:
- The Department is prohibited from interfering with the educational programming of an institution pursuant to the Department of Education Organization Act (the Department’s organizing statute), which broadly prohibits the Department from “exercise[ing] any direction, supervision, or control over the curriculum, program of instruction, administration, or personnel of any educational institution.”
- Under Executive Order 12866, the Office of Management and Budget, Office of Information and Regulatory Affairs (“OIRA”) is required to “clear” significant regulatory actions (e.g., new regulations) and, in doing so, coordinate with other agencies that may have overlapping interests. When OMB believes that an agency rule is not consistent with the principles set forth in Executive Order 12866, OIRA "returns" the rule to the agency for further consideration. "Returning" a rule means that OIRA has concluded that the draft is not consistent with the principles of Executive Order 12866 and that further agency effort is needed before the agency may publish the rule.
- Parties affected by a regulation could potentially bring legal action under the Administrative Procedure Act. Consistent with the Supreme Court’s decision in Loper Bright Enters. v. Raimondo, courts have expanded power to review and reject interpretations of statutes adopted by federal administrative agencies.
Other federal agencies also play a significant role in shaping the higher education landscape, including the Federal Trade Commission, Department of Justice, Department of Veterans Affairs, Department of Defense, and Consumer Financial Protection Bureau, each of which has the authority to shape key issues under their purview including enforcement of private student loan regulations, implications of any “travel ban,” and taxation of institutional endowments.
Additionally, state attorneys general are expected to take an increasingly active role in consumer protection enforcement, as they did during President Trump’s first term. Of particular note is the likelihood of lawsuits targeting for-profit colleges for violations of state consumer protection laws. Such actions are especially anticipated in states like California and Massachusetts, where attorneys general have a history of aggressively pursuing claims against for-profit institutions.
Looking Out for Your Interests
The Higher Education Industry Group at Saul Ewing will continue to monitor key regulatory changes during this period of transition.
