Bipartisan Solution

The potential effects of the borrower defense rules the U.S. Department of Education released last week have generated disagreements -- and some uncertainty. But an accompanying announcement restoring Pell Grant eligibility to students of shuttered colleges was widely praised.

The department's decision to exercise that authority is part of a bipartisan push by the U.S. Congress to find solutions for students whose progress toward a degree was cut short by the recent closures of for-profit institutions such as ITT Technical Institutes and Corinthian Colleges.

The borrower defense regulations seek to create a standardized framework for students who were defrauded or misled by such colleges to have their student loans forgiven. They also add protections for student borrowers and taxpayers, the department said. While the implications of those rules will be picked over and debated by policy makers and people in higher education, the Pell announcement was praised for removing an obstacle for students as they seek to earn degrees.

The decision also establishes a clear precedent for Pell recipients who may be affected by future closures of institutions, say consumer groups and financial aid policy experts.

Congress in 2008 limited a student’s total number of Pell-eligible semesters to 18, and in 2012 lowered the restriction to 12 total semesters. The department had previously said it did not have the authority to restore semesters of Pell Grant eligibility for students who attended closed institutions, but reversed itself after lobbying by Senator Patty Murray, the ranking Democrat on the Senate's education committee, and Republican Congressman Luke Messer of Indiana.

The Institute for College Access and Success (TICAS) said 28,000 students could be affected by the decision. Messer’s office said the Pell restoration could help more than 16,000 students, while Murray’s office deferred to the department, which is still calculating how many students may be affected and how much it will cost.

Both Messer and Murray on Friday took credit for a victory for students.

“For many low-income students, Pell Grants are their best shot to attend college and secure a better future for themselves,” Messer said in a written statement. “I’m relieved that the Education Department is doing right by these students and ensuring they have a path forward to continue their education.”

Murray said the announcement was great news for students who face the abrupt closure of their college or university.

“As someone who was only able to go to college myself because of the federal support that is now called Pell Grants, I know firsthand how much of a difference this will make for students in my home state of Washington and across the country who are working hard and scrambling to continue their education at a new school,” Murray said in a written statement.

Senate Democrats had previously introduced legislation to extend Pell Grant eligibility for students affected by college closures, such the shutdowns of the two for-profit chains. Messer also has introduced separate legislation to restore Post-9/11 GI Bill benefits for veterans affected by the closures of their institutions.

Ted Mitchell, the U.S. under secretary of education, said in a letter sent to Murray and Messer that a staff review of the Higher Education Act found that the period of a student’s attendance at an institution that closed would not be considered in calculating their total eligibility for additional federal financial aid.

“It is our further intention to establish a process that may be used in the event of future institutional closings that similarly affect students,” Mitchell wrote.

The announcement Friday was hailed by student advocacy groups like TICAS and members from both parties. But some lawmakers said they still had concerns over details of the Pell Grant restoration. A spokeswoman for North Carolina Republican Virginia Foxx, who is widely expected to become chairwoman of the House education committee in the next Congress, said Foxx has concerns about whether the department has the authority to make the policy change and that she wants to hear more information about the plan.

Center for American Progress Senior Fellow David Bergeron, the former acting assistant secretary for postsecondary education at the department, said before 2008 there was no limit on Pell eligibility, so the need was itself a recent concept.

Bergeron said he did not expect the restoration of eligibility for those students to create significant new costs for the department. But he said it sends an important message to students who otherwise might not continue their education by allowing them to use their Pell benefits elsewhere.

“For a $30 billion Pell Grant program, I don't think this is a big deal,” he said. “It's important because it sends a message to students harmed by the closing of a school that they should continue with their education by finishing somewhere else.”

The nearly $6,000 per year Pell Grant award could mean the difference between continuing a degree or not for many of the students affected by recent closures.

Justin Draeger, the president and CEO of the National Association of Student Financial Aid Administrators, said restoring Pell Grant eligibility was exactly what was needed to address the needs of students who had their education halted by closures.

“I’m grateful the department is taking steps in this direction,” he said. “I’m doubly grateful that Congress applied pressure on them to do it.”

Draeger said a key part of the announcement was that the department appeared committed to making Pell Grant restoration automatic for affected students.

“Explaining the lifetime Pell eligibility to students is tough on its own -- let alone in the context of a closed school,” he said. “To the extent that [the department] can find a way to automate this for Pell recipients is all the better.”