Will Trump administration enforce Obama-era arbitration ban?


By Michael Stratford 
With help from Kimberly Hefling

WILL DEVOS ENFORCE OBAMA-ERA COLLEGE ARBITRATION BAN? Months after losing a court battle to stop a wide-ranging package of Obama-era student loan regulations, the Trump administration last week took its first steps toward carrying out the rules. The Education Department announced it would grant more than $150 million worth of loan discharges that students are entitled to under the rules.

— But there’s still uncertainty over how the department will carry out another part of those rules, which bans colleges from requiring students to settle their complaints through arbitration rather than in court. They also prohibit colleges from requiring students to sign away their legal right to band together in class action lawsuits against their school.

— The policies have long been pushed by consumer advocates and Democrats, who argue they’re important protections for federal student loan borrowers. For-profit colleges, which primarily rely on arbitration agreements, say they’re more efficient to settle disputes.

— The Trump administration has made clear it doesn’t like the Obama-era ban, arguing that the Education Department lacks the authority to prohibit colleges from using mandatory arbitration agreements. Education Secretary Betsy DeVos has instead proposed greater disclosures to students about their legal rights.

— Several prominent for-profit education companies dropped mandatory arbitration as the Obama administration first moved to ban the practice. Yet several colleges that are still using either mandatory arbitration agreements or class action waivers told Morning Education in recent weeks they’re waiting to see Trump administration guidance before taking any action.

— Adam Pulver, a litigation attorney with Public Citizen that sued the department over its handling of the regulation, told Morning Education the department absolutely should be enforcing the prohibition.

— It’s not clear, for instance, whether the Education Department will require colleges to retroactively cancel arbitration agreements in existing contracts with students. Or how it will make sure that colleges comply with the ban.

— Liz Hill, a department spokesperson, said in an email: “Guidance to schools is forthcoming on mandatory arbitration agreements.”

IT’S THURSDAY, DEC. 20. WELCOME TO MORNING EDUCATION. Drop me a line with your tips and feedback: mstratford@politico.com or @mstratford. Share event listings: educalendar@politicopro.com. And follow us on Twitter: @Morning_Edu and @POLITICOPro.


SENATE PASSES BIPARTISAN STUDENT AID SIMPLIFICATION BILL: The Senate late Wednesday passed bipartisan legislation that’s aimed at simplifying how students apply for financial aid and repay their student loans. The bill, S. 3611 (115), known as the FAFSA Act, cleared the chamber through unanimous consent. It now heads to the House.

— The bill allows for more seamless sharing of data between the IRS and Education Department. That would make it easier for students to verify their income on the Free Application for Federal Student Aid and to enroll in — or renew — income-based repayment plans. Read more here.


OVERSIGHT GROUPS QUESTION DEVOS FINANCIAL DISCLOSURES: A trio of government oversight groups today is asking DeVos to release more details about her financial holdings and produce evidence she complied with her ethics agreement.

— The National Student Legal Defense Network, American Oversight, and the Revolving Door Project wrote in a joint letter to DeVos that the complexity of her financial disclosure report “does not do enough to assuage our concerns” about potential conflicts of interest. “Americans should not require a degree in forensic accounting to have trust in their government,” they wrote.

— The groups urged DeVos to release more information about her assets and how she divested from holdings that ethics officials identified as potential conflicts. Greg McNeilly, the chief operating officer of DeVos’ family investment office, The Windquest Group, told POLITICO last May that DeVos had “completed the divestiture process and is in full compliance with her agreement.”

— DeVos is one of Trump’s wealthiest Cabinet members. She and her husband took in at least $59.4 million in 2017, according to an annual disclosure released at POLITICO’s request last month. The Office of Government Ethics later signed off on the paperwork Dec. 3.


DEVOS OUTLINES GOALS FOR MAJOR HIGHER EDUCATION OVERHAUL: In remarks at the American Council on Education, DeVos pitched a “rethink” of American higher education to college and university leaders, invoking a term she’s used most frequently so far to call for greater school choice in K-12 education.

— The Education Department circulated two documents after her speech: The first paper outlines broad principles for “student-centered reforms that empower students, empower institutions, and empower innovators.” A second document lays out the Trump administration’s specific goals for revamping how the federal government oversees college accreditors.

— What to watch next: The department is selecting members of the negotiated rulemaking committee that will hash out the details of the Trump administration’s proposed changes. The panel begins negotiations on Jan. 17.

IG WILL REVIEW RESTORATION OF FOR-PROFIT COLLEGE ACCREDITOR: The Education Department’s independent watchdog plans to open an inquiry into DeVos’ decision to reinstate the Accrediting Council for Independent Colleges and Schools, according to spokesperson Catherine Grant.

— The inspector general review comes after Sen. Patty Murray (D-Wash.) and Rep. Bobby Scott (D-Va.), the top Democrats on the congressional education committees, this week requested an investigation into the Trump administration’s decision to revive ACICS. Democrats are faulting the department for its reports that overstated the endorsements other accreditors made in favor of ACICS.

— The Trump administration is pushing back on that criticism. “To claim that an editing error, which was quickly corrected, invalidates the thorough 77-page recommendation is ridiculous political theater,” spokesperson Liz Hill said in an email. She did not comment directly on the inspector general opening the review.


WHY STUDENTS DON’T COMPLETE THE FAFSA: Nearly one-quarter of students who graduate from high school don’t apply for federal student aid, according to a new study by the Education Department’s National Center for Education Statistics. Researchers examined why they didn’t fill out the FAFSA — looking at a cohort of students who entered high school in fall 2009.

— About one-third of students said they didn’t apply for aid because they thought their family could afford college without it. Another roughly third of students said they didn’t think they would qualify, and 27 percent said they didn’t want to take on debt.

— The least common answer: Only 9 percent of students said they thought the FAFSA was too much work or too time-consuming. Read the full study here.


SCHOOL SAFETY COMMISSION FALLOUT: Officials from education associations representing superintendents and school boards say the federal school safety commission’s recommendation this week to rescind Obama-era school discipline guidance won’t likely cause a sea change in school policies.

— The recommendation caused an outpouring of opposition from civil rights groups and Democrats concerned that killing it would cause a rollback in efforts around the country to address disparities in school discipline practices. “I understand and I respect the views of some of these other groups that have reacted the way they did. We don’t agree with their assessment of it, fundamentally,” says Thomas Gentzel, the executive director and CEO of the National School Boards Association.

— Read more from Kimberly Hefling here.


 Veterans Education Success is out with an issue brief examining the closure of Education Corporation of America.


HOW TO SHRINK THE DEFICIT: CBO’s annual compendium of options for shrinking the federal deficit, which stands at $779 billion, includes eliminating Head Start and downsizing Pell Grants, among other things.

View the full DataPoint graphic here. Want to add DataPoint to your Pro account? Learn more.


— James Elias and Lauren Salay have both been promoted to vice president at the communications firm Hager Sharp.


— Kraninger reverses Mulvaney’s CFPB name change in first move as director: POLITICO.

— Los Angeles teachers set to strike Jan. 10 as union says it has no plans to keep negotiating: The Los Angeles Times.

— New Orleans schools expected to allow bulletproof backpacks: The Associated Press.

— Failure 101: colleges teach students how to cope with setbacks: The Wall Street Journal.

— West Virginia assistant principal accused of bullying transgender teen: The Washington Post.

— The scandal that reveals the fiction of America’s educational meritocracy: The Atlantic.

CORRECTION: The Dec. 19 edition of Morning Education contained a graphic that incorrectly labeled mandatory and discretionary spending.

Follow the Pro Education team: @khefling (khefling@politico.com), @mstratford (mstratford@politico.com@BenjaminEW(bwermund@politico.com) and @JaneNorman(jnorman@politico.com).