IEC Report on Legislative and Regulatory Activities

International Education Council Annual Conference and Workshop

Washington, DC

12 June 2017

Harrison M. Wadsworth

Executive Director, International Education Council

hwadsworth@wpllc.net

+1-202-289-3900, Ext. 303

www.internationaleducationcouncil.org

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The US Process

• US system of government has three branches: Legislative, Executive, Judicial

• President’s Budget is a proposal, no force of law; supposed to be presented to Congress early February – May this year

• Elections scheduled in even years for Congress, every four years – leap years -- for President; timing set by the Constitution, only variations are for vacancies.

• President elected by popular vote in each state, not national popular vote: gives more power to lower-population states

• For second time in past 16 years, popular vote winner lost electoral college

• Political parties relatively weak: party leaders rarely select candidates to stand for election: instead primary elections with popular votes.

• Presidential election campaign has become perpetual • Next Presidential general election: November 2020 • Next Congressional general election: November 2018

• All of House of Representatives, one-third of Senate

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The US Process: Congress • House and Senate – similar powers; make laws, spend

money, levy taxes, declare war • Legislation – may be proposed by President:

• Committees Hold Hearings in House and Senate • Committees write and approve bills • Full House and Senate each amend and vote on their

versions of a bill • A few House and Senate members meet to work out

differences • Final bill – “Conference Report” – voted on again by House and Senate • President signs the bill – it then is law

• Two-thirds of House, Senate can override veto

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The 115th Congress

Republican Majority

controls agenda; majority always rules

House Senate

• 52 Republicans

• 48 Democrats

• Republicans set agenda but 60 votes needed to move most legislation forward

The president, who is head of state, is a Republican:

First time since 2010 both houses of Congress and

president from same party

Presidential Powers

Only Congress can authorize spending, taxation. All changes

in the law and funding are subject to the will of the

Congress.

• Regulations by executive agencies used to interpret the law, often actually stretch the law

President takes the lead on foreign policy, which includes

deploying military. But he has to ask Congress for the money

eventually

As most visible party leader, he is usually best at reaching the

public – the voters.

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New President, Different Views

• Famously, anti-immigrant statement opened the campaign

• Anti-free trade positions, but actions so far more restrained

• Skepticism about multi-national deals • Long history in the USA, going back to George

Washington

• Anti-trade views appeal to former Democratic constituencies, particularly industrial union members – margin of victory for Trump

But What Does It Mean?

• Internationalists in the USA on the defensive

• Ultra nationalists like S. Bannon vs traditional conservatives in White House

• President plays them against each other

• Secretary of State Tillerson, Defense Secretary Miller, Treasury Secretary McNair and others, still exert diplomacy, although tweets make it hard

• USA is a huge, diverse and divided country. “American First” plays well in many places

America First: Historical Note

Led by Charles Lindberg,

group tried to keep US out

of World War II

Disbanded 10 Dec. 1941

What Does It Mean for Us Now?

• Will the US continue to be engaged internationally?

• Yes, it’s not possible for one president to reverse 75 years of an economic and security world system set up with US leadership after World War II

• International Education remains part of the equation – including US students going abroad

• More of an issue: how welcome are foreign students in the USA? • Universities say: most welcome

• Administration says: yes, except for…

Perspectives for IEC Members

• Higher Education Act of 1965 was improved in 2008, but subsequent regulations and their enforcement is much worse

• Note: this happened during the Obama Administration, very aggressive regulatory positions

• Trump Administration is interested in reducing regulatory burden. This could actually be helpful to foreign schools -- Gainful employment and defense to repayment regs are already under review

• Thus: the policies of a more nationalist administration could expand international education options

SCHOOL PARTICIPATION DATA

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Participating Institutions

• Domestic 5,592

• Foreign 404

2014–15 Award Year Funding

• Domestic $129 Billion

• Foreign $1 Billion

Domestic 5,592

Foreign 404

Foreign $1 Billion

Domestic $129 Billion

From: US Department of Education Presentation

December 2016

SCHOOL PARTICIPATION DATA

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Foreign Funding by School Type

• For-Profit 59%

• Non-Profit 11%

• Public 30% Foreign For-

Profit 59%

Foreign Non-Profit

11%

Foreign Public 30%

From: US Department of Education Presentation

December 2016

METHOD OF PAYMENT

• Refers to the Way an Institution Receives Title IV, HEA Program Funds • Advance Payment

• Heightened Cash Monitoring 1 (HCM1)

• Heightened Cash Monitoring 2 (HCM2)/Reimbursement

• HCM1, HCM2 and Reimbursement Used to Mitigate Risk and Protect Title IV, HEA Funds

• Secretary’s Discretion

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From: US Department of Education Presentation

December 2016

2017-2018 Interest Rates Note: Fees to be 4.56% for PLUS; 1.14% for DL

CONTACTS

• Email: FSA.Foreign.Schools.Team@ed.gov

• Phone: 202-377-3168

• Fax: 202-377-3486

• Mail: U.S. Department of Education Multi-regional and Foreign School Participation Division Union Center Plaza, 7th Floor 830 First Street, NE Washington DC, 20202 (20002-5340 if Overnight/Courier)

• Foreign School Information Page

https://ifap.ed.gov/ForeignSchoolInfo/ForeignSchoolInfo.html

• Information Page for Financial Aid Professionals

https://ifap.ed.gov/ifap/

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Key Office Initials • FSA: Office of Federal Student Aid at the US Dept. of Education

• Led by Acting Chief Operating Officer Matthew Sessa • Multi Regional and Foreign School Participation Division covers foreign schools and for-

profit US schools • Division is led by Michael Frola

• OPE: Office of Postsecondary Education, Kathleen Smith, Acting Assistant Secretary for Postsecondary Education, Deputy Lynn Mahaffie and other political appointees and civil servants: it sets policies, writes regs that are carried out by FSA

• GAO: Government Accountability Office: the investigative agency of the Congress.

• IG: Inspector General. Each agency of US govt. has one. Law enforcement powers, can review any allegation of wrongdoing involving federal funds or personnel. Oversees and critiques ED functions

• NCFMEA: National Committee on Foreign Medical Education and Accreditation – panel of US doctors that decides if other countries have standards equivalent to US

• USMLE: United States Medical Licensing Examination

• NBME: National Board of Medical Examiners -- writes USMLE and accredits US and Canadian medical schools

• ECFMG: Educational Commission for Foreign Medical Graduates – administers the USMLE testing

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Jargon 101 • Foreign schools: US law for tertiary institutions or institutions of higher

education outside of the United States of America

• Neg reg (some call it reg neg): Negotiated Rulemaking

• Federal Register: Daily publication of US Govt. rules, actions

• NPRM: Notice of proposed rulemaking – draft regulations

• GAAP: Generally Accepted Accounting Principles

• GAGAS: Generally Accepted Government Auditing Standards • Requires financial statements done according to US GAAP

• HEA: Higher Education Act of 1965, the base law governing loan programs that is amended on a regular basis. Last done in 2008, due in 2014.

• HEOA: Higher Education Opportunity Act of 2008 – the last full reauthorization of the HEA

• SAFRA Act: name of the legislation that amended HEA to kill the FFEL Program, made foreign schools eligible for Direct Loan Program

• The Healthcare and Education Reconciliation Act of 2010: law changing healthcare system that includes the SAFRA Act.

• Note: SAFRA originally stood for “Student Aid and Fiscal Responsibility Act”

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HEA Reauthorization

• The US Government Student Loan Program was created by the Higher Education Act of 1965, as modified many times over the years

• Entire Higher Education Act up now for a rewrite • I’ve been saying that for five years!

• HEA includes Direct Loan Program, many other programs (650 pages)

• Many big ideas are being proposed for the loan program, including limits on borrowing

• IEC Advocating for many specific changes

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Some HEA Issues

• Control campus prices

• Default risk sharing

• Student loan costs

• Income based repayment simplification

• Refinancing of existing student loans

• Servicing problems with Direct loans

• Aid application (FAFSA) too complex

• For-profit schools – good or bad?

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Specifically: IEC HEA Proposals

• The 20% Rule: If fewer than 20% of students are Americans, and college is fully accredited by home country, exempt it from the myriad rules

• Eliminate requirement for institutions with more than US$3 million in loans to do financials according to US GAAP • Was $500K before law changed in 2008

• Costs hundreds of thousands – Waste!

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Distance Ed/Written Agreements

• Make Distance Ed available to students at foreign institutions

• Allow US students on loans to take some classes at US institution or at ineligible institution without being punished • US students on loans are second class citizens

• Access is being denied

• Makes it harder to get a job in USA post-graduation

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Medical School IEC Ideas

• Improve medical exam pass rate administration • Use aggregated USMLE scores for the 75 percent pass

rate calculation,

• Realistic reporting requirements

• Number of test-takers for scores to be counted needs to be higher than 8!

• Allow foreign nursing programs again

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Other IEC Proposals

• Greatly simplify consumer report rules, exempting foreign schools from many of them

• Exempt from Gainful employment regs

• Make sure foreign schools not unfairly impacted by new “defense to repayment” regulations

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Laws Beget Regulations

• Higher Education Act requires “negotiated rulemaking” to write or change regulations in most cases. • Negotiating committee of interested parties appointed

by Secretary of Education

• 1st “Foreign School” negotiation in 2010;

• Next one: after HEA reauthorization

• In the meantime, IEC comments on proposals that affect members – Latest was on 1098-T tax form

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Default Rate: 3.6% = LowestRates

FS Default Rates: Low!

• Cohort loan default rate of all “foreign schools” is lowest of any category calculated by the US Department of Education

• 3-year Cohort Default rates • 3.6% -- a very low result. • 11,272 students entered repayment, 407 defaulted during

three-year period from 2011-13 • Looked at another way, of the 593,182 who defaulted in that

period, only 407 were from foreign schools -- 0.07 percent – seven hundredths of a percent

• US Public 4-year universities rate: 7.3% (an improvement)

• Question: Where’s the big risk to the US Taxpayer that requires all these difficult rules?

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IEC: Much To Do!

• IEC advocates, informs, unites • Strength in numbers: students and their parents

are a great (voting) asset • Higher Education Act up for rewrite by Congress –

major chance to change the law • New Administration wants deregulation • IEC meets regularly with top Ed. Department

officials, Congress • Works with key embassies • Member support absolutely needed!

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IEC Members • American University of Beirut;

• Ben-Gurion University of the Negev;

• Bond University;

• College of Health Studies Brampton

• Concordia University, Montreal;

• Concordia University, Edmonton

• Dalhousie University;

• Essec Business School;

• Goldsmith’s, University of London

• HEC Paris;

• IESE Business School

• Liverpool Institute for Performing Arts;

• The London Film School;

• London School of Economics;

• Macquarie University;

• Massey University;

• McGill University;

• Medical University of Lublin/Hope Medical Institute;

• National University of Ireland, Galway;

• Queen's University;

• Ravensbourne

• Royal College of Surgeons in Ireland;

• Royal Veterinary College, University of London;

• Sackler School of Medicine;

• School of Oriental and African Studies;

• St. George’s University of London;

• St. Mary’s University;

• The Graduate Institute of International and Development Studies

• Trinity College, Dublin;

• Universidad Autonoma de Guadalajara;

• University of Adelaide;

• University of the Arts London;

• University of Aukland

• University of British Columbia;

• University of Cambridge;

• University College Cork;

• University College, Dublin;

• University of Greenwich;

• University of Kent;

• University of Limerick;

• University of Melbourne;

• University of Otago;

• University of Oxford;

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• University of Queensland;

• University of Sydney;

• University of Technology, Sydney;

• University of Toronto;

• University of Western Australia;

• University of Westminster;

• University of Windsor;

• University of Wolverhampton

• Atlantic Bridge;

• Bender, Ciccotto & Co., CPA'S LLP;

• Global Education Management

Services;

• Western Union Business Solutions

Question Time!