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Mushtaq Gunja: Hello, and welcome to dotEDU, the public policy podcast from the American Council on Education. I'm Mushtaq Gunja, and I'm here as always with my wonderful co-hosts Jon Fansmith, Sarah Spreitzer.
Sarah, Jon, how are you?
Sarah Spreitzer: Woo-hoo! I am sitting at my amazing alma mater, Joliet Junior College. They are lending me their recording studio and I'm super happy to be here. Actually I love visiting college campuses, but there's so many kids here studying and people working, and it's really inspiring.
Jon Fansmith: That is also to make fun of Sarah's woo-hoo, but she actually had a really good and compelling reason for woo-hooing.
Sarah Spreitzer: It is.
Jon Fansmith: Now I just feel small and petty.
Sarah Spreitzer: I feel like I should just wander around during this podcast, showing everybody what an amazing functioning college looks like because I think when we're in DC so focused on the policy, we tend to forget about it.
Mushtaq Gunja: I have another woo-hoo, which is that it's not just the three of us today, but we are joined by a very special guest, friend of the pod, Emmanual Guillory.
Jon Fansmith: Woo-hoo!
Mushtaq Gunja: Emmanual, how are you, my friend?
Emmanual Guillory: Doing well. How are you? Thank you for the enthusiastic welcome, Jon Fansmith. But I'm doing well, and very, very happy to join you all today. So thank you for having me.
Mushtaq Gunja: We brought you on, Emmanual, partially because the title of this episode is Big Beautiful Bill to Big Complicated Rules, or something like that. And we can't talk about anything super big and complicated, especially as it relates to regulations, without you, Emmanual, so really excited to be able to dive into all of that. Today we are going to cover a little bit of the government shutdown and the fallout from that as the government reopens today. We'll definitely want to talk about these regulations, major regulation updates. And cover a couple of other things that we're happening in the news, both worrisome and maybe some good news for once as well.
One last shout-out before we start. ACEx, our annual meeting, is going to be February 25 to 28th. We would love to see you there. I teach on the night of the 25th, I was just looking at my syllabus, we're going to be covering hearsay. So if you want to learn about all things hearsay, Sarah, I know that you do.
Sarah Spreitzer: I do.
Mushtaq Gunja: Come over, come to the meeting, and then come to my class afterwards. Jon and I can't wait to meet all of you. Sarah maybe is also excited to meet you guys. And Emmanual will be there too, so you get the-
Emmanual Guillory: Yes.
Sarah Spreitzer: Wait. Are you guys not including me?
Mushtaq Gunja: No, we are.
Sarah Spreitzer: Emmanual's going to be there, so it's just me that's left out?
Mushtaq Gunja: Sarah, obviously you're going to be there, obviously there will be cookies, and we will bake for everybody as well. So looking forward to seeing everybody at ACEx.
Okay, friends, I think that our producers must have been clairvoyant when we scheduled this recording in advance for the day that the shutdown ended and our commutes back to the office got bad again. So let's just, I don't even know how to get into this conversation. Jon, Sarah, Emmanual, what happened, what got resolved, where are we now?
Jon Fansmith: This was the most anti-climactic end to the shutdown I think people probably could have envisioned. Democrats started this with two really driving factors. One, healthcare, especially Affordable Care Act subsidies being extended. And two, a big distrust of the Trump administration, how they're handling funding. And they said, "We want to address these things, this is why we are refusing to participate in an extension." And we went a record-long period of time, over six weeks. And at the end of it, we have reopened the government with only a relatively tenuous deal in the Senate to hold a vote on extending the Affordable Care Act subsidies and not much else different. Some of the things, the attempts to RIF federal employees will be blocked through the end of January. Federal funding will extend through the end of January. Federal employees will get back pay for the time they weren't able to work. But ultimately, in terms of other policy shifts, big changes, we're right back where we were on October 1st when the whole shutdown started.
Mushtaq Gunja: Sarah, remind us. What were the biggest effects on higher ed over the last 41 days of the shutdown? How were our campuses affected?
Sarah Spreitzer: Well, we'd said at the beginning, the longer a shutdown goes on, the more impacts we'll see on our campuses because you can't process any grants. Some stuff is fully automated, like Pell Grants, all of that had gone out in the fall. But if you had applied for a grant and you were waiting to hear back from the agency about whether or not that grant had been funded, that was not going to happen.
It's interesting because I think going into the shutdown, given all of the uncertainty that we had this year, I don't know if campuses even noticed it as much, given the ups and downs we've had from January until now with federal funding. But yes, we were starting I think to see impacts because there was no one to call, there was no one to meet with at any of the agencies. So if you had questions about any of the federal funding that you receive, I don't know if there were any reporting deadlines that happened during that time. There wouldn't be anybody to call to ask questions.
The other thing that was a little different about this shutdown was they didn't extend any due dates for comments. I know both Emmanual and I had several proposed regulations that we commented on that they did not push the date back. But I don't think that they were reviewing the comments and I have a feeling that the shutdown delayed some of the regulatory stuff.
The other thing I'll say in regards to what Jon said about we're in the same place where we are, they did included three bills paired with the CR. There's the ag bill, the ledge branch, and the VA bill. I think the VA one is probably the one that impacts our institutions the most, and then ag because there may be some ag research. But they did get three bills passed and I think that's giving them some hope that they might be able to package a few other bills and move them maybe with the next CR, but we'll see.
Mushtaq Gunja: Emmanual, what will our campuses start to see? How will they be affected now that the shutdown is over? It seems like, as Sarah said, we didn't see the full effects of what a shutdown could do. Loans, for instance, continued to be processed, Pell Grants were there. What should our institutions be looking out for as the shutdown ends?
Emmanual Guillory: I would say that our institutions should be looking out for a delayed response obviously, to any inquiries they may have had during the shutdown. We heard a lot from our members about the e-application, which is basically the application for your program participation agreement, and any updates that need to be made to that had to be approved by the department. And when it comes to your FISAP, which deals with your federal work study funding, your FSEOG funding, and closing that out and getting new funding, you want to make sure all of the names and signatures align because that could impact their program participation agreement. And a number of our members were very concerned because those applications weren't being processed. And even before the shutdown, those applications weren't really being processed. So now that the shutdown is over, it's just a matter of waiting to hear back to make sure that everything is in lockstep and that they are truly in compliance in the way that they need to be, and waiting for those responses that they've been waiting on during the shutdown for certain inquiries that they may have had.
Especially for those institutions that were under investigations, whether it's antisemitism investigations or whatever else. What other activity any other federal agency was doing, it's a matter of following up on that, and what is the current status of where we are in the process.
Mushtaq Gunja: And the department of course was short-staffed, even before the shutdown. Yes, it's going to take them a while to clear out those inboxes I would think and you've got people doing it. But, Jon, I saw an interview with you I think in Inside Higher Ed, in which you were worried a little bit about whether or not the department was going to bring all the Department of Education employees back. Now, part of the deal that the Democrats struck, the Senate Democrats struck with the Republicans was that anybody that had been RIFed in the meantime during the shutdown would be agreed to be brought back, back pay would be issued. So theoretically, everybody should come back. Jon, you still seemed a little worried.
Jon Fansmith: Yeah, and I'm not the only one. Part of the reason why is the actual language in the bill says they must be returned to full employment status. It doesn't actually specify that they have to be fully returned to their previous positions and roles. So there's some thought, and maybe this is just paranoia, I'm not going to say we have any clear indication of the department's intent here, but there has been some concern that those employees who were targeted, about 500 of them at the Department of Education, including a big portion of the people who administer programs for students with disabilities, people who administer programs for HBCUs, people in the Office for Civil Rights.
That they would not be returned to actually working on the issues that they manage, but would actually be returned and placed on administrative leave. Wherein they would not be coming into the office, they would not be doing work, they would not be part of that department's active workforce. Still drawing a salary. For those individuals, their status, they would be as if they're full-time employees, but they wouldn't actually be there doing the work that frankly we need them to do, like keeping the lights on for Sarah at our institutions there.
No, I'm making a joke a bit. But honestly, these areas we talked about where the backlogs are occurring, where we're worried about it, grant program administration. The fact that lots of the FSA regional offices and OCR regional offices have already been closed. You compound that with another 500 people, even if they're still on staff, who are not doing the work, those problems aren't going to get any better.
Mushtaq Gunja: It's interesting. We have a two-ish, three-ish month extension and funding will run out again theoretically in end of January. Except for those three funding bills that Sarah noted. Sarah, what's next year? What happens as it relates to funding and how might that impact our institutions?
Sarah Spreitzer: It's my sense that Congress is done with this year. I think we're all pretty tired. I think they have to still pass the National Defense Authorization Act, but they have been discussing another package of bills that they can move in a minibus, and that would be the Labor H Education Bill, which includes funding for Department of Ed, NIH. CJS, which is Commerce, Justice, Science, which has funding for the National Science Foundation, and NOAA and NASA. Department of Transportation. And then I think the other one, why am I blanking, HUD. Is HUD a separate bill? But there's four bills that they would try and package together.
And Jon and I were talking about this earlier today and I don't think, Emmanual, you were there for the conversation. But I had been hearing that even during the shutdown, that the appropriators were pre-conferencing things to see if they can move another minibus. And I think part of that is because when they did a CR last time, they did a CR, it was one or two pages, they didn't include the tables or any specific instructions to the administration on how to spend out the money and there were a lot of questions about the changes that were made to the congressionally appropriated money in 2025. Ending the TQP grants even though they were fully funded by Congress.
Mushtaq Gunja: TQP, Sarah?
Sarah Spreitzer: Sorry, Teacher Quality Partnership grants. Or perhaps funding for national institutes of health, and taking some of those programs and reallocating them to other priorities for the administration. That was all justified because the CR didn't have specific instructions or program levels of how the spending should be spent.
So I think that there is some will on the part of Congress, especially among Republicans, that don't want to have that fight next year with the administration and they would like to see some of these appropriations bills passed so that it has the clear instructions of how they want the funding spent. Now, I don't know if that just pushes the arguments down line because I don't think that's going to stop this White House from reprioritizing money, but I do think that they'll try and move that next minibus.
My sense, Jon and Emmanual, is that they're not going to wait until January 30th to do that. But curious to know what your hearing?
Jon Fansmith: Yeah, I will say, and Emmanual's I'm sure got a lot of insight. One of the other things that's important to keep in mind here is most of those reports are about what the Senate would like to do and the Senate is a very different place than the House. The Senate approved a number of appropriations bills on a bipartisan basis and those numbers are a lot closer to what's in current funding levels. The House is where we've seen big cuts proposed where the bill's passed in a partisan manner. It's a very different dynamic. The Senate I think can reasonably say, "We have to have agreement, we have to have bipartisan support to move bills in our chamber, so we'd love to see this process." Susan Collins, head of the Appropriations Committee, has talked a lot about frustration with the administration not spending the way they dictated. So all of that lines up really neatly for the Senate and you can see that being an area of priority.
Flip side, the House, much more partisan process, much more reflective of what the president would like to see in the budget. Their cuts aren't nearly as deep as what the president had asked for, but they're still quite deep compared to the Senate, and they don't need bipartisan consensus to move bills. So we find this a lot. In some cases, the fights on funding are a lot more about the House versus the Senate than they are about Republicans versus Democrats. And I'm wondering a little bit, as we get into those remaining nine appropriations bills, how that sorts out because for a lot of conservatives in the House, a continuing resolution may be a lot easier to swallow than a bill that restricts the president's ability. That might include funding priorities they don't appreciate. Even if they can't get the cuts, they might not want what the Senate did.
Sarah Spreitzer: I like an idiot because I'm really not thinking. They were going to pair Labor H with Department of Defense. That is usually how they get both parties to swallow both bills is that they pair those two together. So it's CJS, Labor H, DOD, and Department of Transportation HUD.
Jon Fansmith: I will say, that's very old school. They always used to do Defense and Labor H together, but the last five years, it's just been omnibuses and your line of CRs, and everything else. Sorry, Emmanual, I totally stepped on you there.
Emmanual Guillory: No, that's okay. I was just going to add, just building on what you said, Jon. The House and the Senate are pretty far apart on their versions of the Labor HHS Bill. As you indicated earlier, the House is more aligned with the president's budget request for the most part and the Senate definitely is further away from that. So in whatever extent that they are attempting to pre-conference and figure something out, I think that it's going to be quite a hurdle as it relates to a number of programs that were proposed to be terminated in the president's budget that were also proposed to be terminated in the House as well.
Mushtaq Gunja: So then what? So let's say they're far apart. They don't have that much time between now and January, Christmas and Thanksgiving are coming, too. What happens if they don't come to an agreement?
Emmanual Guillory: Well, unfortunately it leaves our institutions in a place of limbo and uncertainty. It leaves students in a place of limbo and uncertainty. When we are dealing with programs, like the TRIO program, the Gantt program. Certain student aid programs, like FSEOG even that was proposed to be terminated and the House agreed to that, or the reduction of federal work study funds. All this is going to have an impact on how institutions package that aid, what does that mean, and it'll have an impact on students' choice in how they're choosing.
How well-informed are they truly going to be when we extend this to January? That is the beginning of the them when institutions start to begin to package that aid. And then likely we're going to have some trouble trying to figure out how do we continue to keep the government funded at that time and maybe there's another short term CR. But in a world of a continuing resolution is not a place that we want to be in. It's a constant place of limbo and uncertainty.
Sarah Spreitzer: Yeah. And also, on the research grants, you can't start any new programs under a continuing resolution. So you can continue programs that were funded back in FY24. But again, there's going to be that process by which the White House is likely going to reallocate or reprioritize that funding. So I think for our researchers, it's very bad if we go into a shutdown. I think it's also not great if they have a CR.
Emmanual Guillory: Yeah. And one thing that I'll keep in mind is the continuing resolution, at least the FY25 one for sure, created a gray space as it relates to the authority of the administration to move money around. So the whole talk about the Impoundment Control Act became huge for the Democratic Party because the legislative branch is the branch that legislates and dictates to the executive branch on how to implement those laws. And there's been a lot of questions about whether or not the executive branch is implementing the laws in the ways that the legislative branch has intended. So we are just hoping at the very least that when these bills do come through, that they are truly being implemented the way that Congress indicates for them to be.
Mushtaq Gunja: Well, actually this is a good segue to a question in the Q&A around FIPSE. Because one of the pieces of news that we saw come out this week was Congress had appropriated $170 million for the FIPSE program. The improvement of post secondary ... I can't remember what it stands for now. Funds for Improvements-
Jon Fansmith: Funds for the Improvement of Postsecondary Education.
Mushtaq Gunja: Yeah, you got it. And the department announced Monday that the funds, the $170 million at least, would not go to some of the grants that were allocated under FIPSE. Instead, would go to some version of some special projects fund that would fund things around accreditation reform, and AI, and civil discourse grants. This goes to the previous conversation. Jon, you started this by saying there were really two things that had the Democrats exercised in moving to shut the government down, including some fights around healthcare. But maybe more broadly around the president acting, as the Democrats see, beyond their authority in terms of moving dollars around, not spending dollars that were allocated by Congress. Impoundment control issues, as Emmanual says.
And this seems like it is an example, it happened during the shutdown ironically, of dollars that were allocated by Congress to do one thing, shifted to do something else. So, Jon, Sarah, Emmanual, can they do this? What are our recourse? Actually, let me start here. Which programs that were originally funded under FIPSE, which ones most affect our institutions and which ones should we be worried about going forward?
Jon Fansmith: So, there were seven programs that were directed by Congress to be funded. There's a lot of them in here frankly that very bipartisan popular, like Centers of Excellence for Veteran Students. Postsecondary success grants, basic needs grants. There's an HBCU, TCU, MSI research and development grant funding program. There's a rural postsecondary education improvement program. These are not categories of support that are the targets of Republican fire. So the administration in this case has really defunded things that not only Congress wants, that by and large have been put into FIPSE over the years because they have pretty broad bipartisan support and there's an identified need for funding to improve those areas.
Can they do it? Absolutely. Unlike some of the other things we've talked about there there's at least a debate, and I think probably we know where we would land if polled, about whether the administration's abusing their legal authority in this case. They have the right and the ability to repurpose those funds towards those four priority areas around AI, and civil debate, and accreditation reform that you laid out. That said, is that a good way to use those funds? Is that the best way of making friends in Capitol Hill, both Republican and Democrat? And all of those institutions that were set to receive funding through those programs, really supporting very specific populations and other projects, are now going to have to recalculate what that means for their campus, and obviously find either compromises or abandon the work.
Sarah Spreitzer: But, Jon, just to play devil's advocate. FIPSE has always been a catch all category for Congressional priorities. I think it's an interesting fund to target because it has changed over the years, but some of those programs were actually authorized in the Higher Education Act, or had been authorized through other. So you're also talking about programs that were authorized and funded by Congress, that you're reprioritizing that money.
Jon Fansmith: Right. So they'd been authorized, but it's ... Well, Emmanual, you were going to jump in, so I'm sorry.
Emmanual Guillory: Yeah. Well, I was just going to say there was an eighth program, the transitioning gain-involved youth to higher education program too as well. That was funded at five million, but then proposed at zero moving forward in FY26. But with FIPSE funding and all of these certain programs that exist in the higher education account, because these programs are not actually listed in the statutory text when it comes to the appropriations bills, then it does create the opportunity, the ability, Jon, as you mentioned, for the secretary to be able to do what they will to some degree with the funding.
Until Congress specifically indicates, Sarah, to your point, and Jon, to what you shared earlier, that programs such as basic needs systems grants, which was funded at 171 million. Or Centers of Excellence for Veterans Students success programs, which was funded at 10 million. That the department actually funds those programs at those levels. So until Congress makes that change, I think we're still going to live in a world where, "Hey, we have a total sum for FIPSE overall, so what are we going to do with it? And what does that look like?"
Jon Fansmith: Yeah. And, Sarah, your point is right, too. FIPSE certainly used to be the slush fund for earmarks. The money would pass through FIPSE and it would be essentially in the appropriations process provided by Congress through FIPSE and it would go out to institutions. And that's kind of what's happening here, except these are programs basically that don't enjoy the same legislative status as something like Pell Grants or work study, where there's authorizing legislation on the books, formula funding and whatnot. They're much more vulnerable just as an annual laid out for that reason.
So historically, FIPSE's done a lot of different things, but recently it's Congressional priorities. They're just vulnerable in this cycle and the administration has taken advantage of that.
Sarah Spreitzer: Hold on, let me throw something here to turn the lights back on. Uh-oh, that didn't work. Okay, well, while I'm sitting in the dark, I was just going to say. A few people in the chat are talking about the fact there's only a three-week deadline for theses applications. So is this a serious grant competition or is it already pre-baked?
Mushtaq Gunja: Emmanual, what do you think?
Emmanual Guillory: I would encourage institutions to take this pretty seriously. The department has laid this out, this is what they're wanting to do. If they want to have access to additional federal funds, especially in today's political environment and climate, I think that they should take this very seriously. So it's not a whole lot of time, but the department shared they do expect to make awards by December 31st. It's not ideal, but I think institutions should take it very seriously.
Mushtaq Gunja: So you're saying don't eat turkey because it'll put you to sleep and everybody's got to be up and working over Thanksgiving to-
Emmanual Guillory: We need to be working on these applications.
Jon Fansmith: No Black Friday shopping.
Mushtaq Gunja: Yeah.
Emmanual Guillory: Yeah.
Mushtaq Gunja: I was going to make a joke about Black Friday and grants, but let me not complete the thought. That's probably not a good idea. Just one last question on FIPSE before we move on to a couple of other things. Good question in the chat. Did the funding, this move in funding, did it terminate already competed funds? Or is this talking about future dollars that hadn't already been allocated?
Emmanual Guillory: Well, that's a good question. I know that the Biden administration did move forward with a competition for the Postsecondary Student Success grant program. But all the programs that were listed that Jon had shared earlier, I'm not entirely sure the department actively moved on all of them. So in a lot of ways, institutions weren't necessarily able to benefit from all of the programs that were listed there. So you'll see some that maybe they were going to be able to receive a Postsecondary Student Success Grant, but now this administration is doing something different with it. So I think it's really hard to tell exactly how those two interact together. But as we know since this administration came in and now with this announcement, this is what they want to do with this money. So this is now the new thinking, the new direction, and the old is of the past and now we're in the present.
Jon Fansmith: Yeah. It's worth keeping in mind too generally, generally, there are always exceptions. If a grant has been awarded and the recipient can start to draw down funds, that usually, usually stays. This would prohibit funding going towards new grants being awarded in those areas.
Mushtaq Gunja: Right, yeah.
Sarah Spreitzer: So I would also point out, as we've seen with other things with this Department of Education, they're still under the executive order to shut down the Department of Education. So are these FIPSE grants like a fire sale, "We're just going to push this money out before we wrap up the Department of Ed?" Or is this a grant program we assume is going to go forward?
Jon Fansmith: I think they recognize the Department of Ed itself is not going anywhere. It can't without a statutory change. I really think this is just what it looks like. They have different priorities and have the ability to shift funding to things they think are a more important use of federal dollars. I have no doubt that the intention is to push this money to those areas. I think there's certainly a legitimate argument as to whether that's in the best interest of the nation.
Emmanual Guillory: And one thing I wanted to correct myself on. So the total funding level for FIPSE that was in FY 2025 was 171 million. The Senate's proposed 146 million. The president just completely proposed to zero it out. So the basic needs grants example that I gave earlier, that was previously funded at 10 million. And the Centers for Excellence for Veteran Student Success program was at nine million. So I just wanted to correct those numbers just to make sure that it wasn't confusing to anyone.
Mushtaq Gunja: No, thank you, Emmanual.
Emmanual Guillory: Yeah.
Mushtaq Gunja: I'm going to move us, I want to make sure that we talk about O3B implementation. But before we do, I think we sometimes get asked to give a little bit of good news what is happening, a little bit of a ray of hope. And there were three things that jumped out at me over the course of the last couple of weeks that seemed like some positive news on the higher ed front first.
And I know it's a little bit early, but it looks like, and we'll get full data I think later this week, early next, Sarah, on international enrollment.
Sarah Spreitzer: Yes.
Mushtaq Gunja: But at least as it relates to student visa approvals through the SIVA system, it looks like international enrollment is not down nearly at the rate that we thought that it might. Sarah, you're looking up in the air, you're a little bit worried. But hold up, let's not ...
Sarah Spreitzer: Go ahead.
Mushtaq Gunja: Don't correct me yet because we'll definitely want to talk about it for real once we get the full numbers, but at least some rays of hope there. The National Student Clearinghouse came out with a report a couple days ago about enrollment trends broadly and it looks like enrollment at our community colleges is up something like 3% and maybe it's up a little bit across the board, so that's wonderful news.
And then I don't know if you three saw it, but yesterday Governor Elect Spanberger said that she was interested in what was going to happen with the new president at UVA and was going to try to take a little bit of control over what was happening at the board there. And I think after a little bit of political interference in what was happening in Virginia, I think it's just positive to be able to see that this is not just going to move in the direction that it had been.
So some pieces of good news that I saw. Sarah is looking at me like I'm a little bit crazy.
Sarah Spreitzer: I would just say our producers put this in the outline as Good News Corner. I don't know if that's going to stick.
Mushtaq Gunja: Yeah, it is.
Sarah Spreitzer: We are? We're going to have Good News Corner every time? Okay, that's great.
Mushtaq Gunja: We sure are.
Sarah Spreitzer: But on international students, I understand people seem it's not going to be hopefully as bad as some have predicted, like a 40% drop in international enrollment. But I think we're still going to see a substantial drop, and a drop on things that were created by our own government. This isn't the COVID era where we have a global pandemic that's blocking people from coming to the United States. These are things that have been created by ourselves that are likely leading to a very historic drop in international student enrollment. But we will see those numbers, the Open Doors Report gets released on Monday, November 17th by our friends over at the Institute for International Education, IIE. And they always do a great job pulling the numbers for the 2024 academic year, but then they also do a national survey to see what it looks like for the 2025 to 2026 enrollment. So we'll see. I'll keep my fingers crossed.
Mushtaq Gunja: Sarah, can I ask? You and I have had this conversation a few times, but one of the things we're hearing from institutions and you've been talking about different institutions, it looks like their international student enrollment will look differently. Do you want to elaborate is what I'm asking?
Sarah Spreitzer: Yeah. I think a lot of very large institutions that may have a lot of name recognition in other countries, I think they're going to be fine. And we saw this during COVID, also. It's really going to hit our smaller institutions. There may also be regional differences because during the drop in COVID, we saw that more students were remaining on the East and the West Coasts, rather than choosing institutions in the Midwest. So it'll be interesting to dig into the numbers next year, but I really don't want to put too rosy of a picture on it because I think there will be institutions that are going to see substantial drops. Even if we only have a drop in the teens nationwide, I think some of our institutions, it will be closer to that 20 to 40 percent that I think people are predicting.
Mushtaq Gunja: So, Sarah, we're going to have to workshop Good News Corner as we go forward.
Sarah Spreitzer: Jon might have good news. The National Student Clearinghouse Report?
Mushtaq Gunja: Yeah. Yeah, and I would love to talk about it more, but I'm going to move us because I want to make sure that we get to negotiated rulemaking and all the impacts of the One Big Beautiful Bill. So let's start at the highest level. Give me a 30,000-foot view, Fansmith? The One Big Beautiful Bill, O3B as I'm going to call it, had many impacts on higher ed. What were they and what was left open for us to negotiate?
Jon Fansmith: Yeah. And I'll be super brief because Emmanual's really the expert here. I'll also say, Mushtaq, I call it OB3 not O3B, so we're at a bit of odds right there.
Mushtaq Gunja: In the chat, tell us which one is better. Which one do you like more, me or Jon?
Jon Fansmith: That sounds fair.
Sarah Spreitzer: There's also OB3A. Which I like because then it sounds like a droid from Star Wars.
Jon Fansmith: I feel like OB3 is Star Wars-y.
Sarah Spreitzer: No, OB3A. That's way better.
Emmanual Guillory: I haven't heard of that. That's news to me.
Sarah Spreitzer: I feel like you've been converted, Emmanual. You heard it here first.
Mushtaq Gunja: All right. Spreitzer goes to Joliet and the whole podcast goes to hell. Fansmith, what happened? What impacts are there on higher ed for the One Big Beautiful Bill?
Jon Fansmith: So a ton happened, it probably is the biggest higher ed bill we've passed maybe since HEA reauthorization. Changes to loans, changes to eligibility, accountability provisions. The creation of workforce Pell eligibility. Changes to how Pell Grants get awarded. There was a lot there and I think probably the biggest ones, and I know Emmanual's going to walk us through the two different rulemaking committees and the whole process there. But the ones that have certainly got the most attention is this change in graduate borrowing, where there are now two different categories of graduate programs, either graduate programs or professional programs.
Mushtaq Gunja: Right.
Jon Fansmith: And professional programs have a broad definition in the statutory language. And graduate programs are everything that aren't professional programs. So that definition of what makes a professional program, as we're going to talk about, was hugely important and it's been a lot of focus of attention.
There's changes to how student loans are re-payed, the repayment procedures. The new accountability provisions where programmatic eligibility for student loans is tied to the earnings of graduates of programs. So not institutional level accountability, but programmatic level accountability where those programs can lose participation Title IV student aid federal loans if they fail the test two out of three years.
A lot in there to talk about. The big thing is this bill was moved really quickly. A lot of the language is pretty broad. We're used to frankly Congress writing pretty broad bills without a lot of very specific clarifying details. So it's moved to the Department of Education to implement and that's a lot of gray space for them to start drawing in the lines. And we're getting a real sense of what the administration's priorities as they come to the table with negotiators and talk about what they are trying to accomplish and what they think this language means. And I think Emmanual is going to fill in those gaps for us, too.
Mushtaq Gunja: Yeah. Let me just set that up for you, Emmanual. So as soon as the shutdown happened, next week or maybe that week, the department engaged in negotiated rulemaking. Side note, not sure they were exactly able to do that, but whatever. Negotiated rulemaking happened starting in early October, and then they met again last week and they were tackling issues around these loan programs in what was graduate, what was professional. What happened? What were they tackling for real, Emmanual? Give the audience the actual answer, and what was the result?
Emmanual Guillory: Yeah, thank you so much for that, Mushtaq. So the most contentious conversation was around the definition of professional student. So as Jon had alluded to, in the One Big Beautiful Bill Act, the O3B, the OB3 or the OB3A, according to Sarah Spreitzer, there's many different ways you could refer to it, but it does set different annual and academic loan limits depending on what type of graduate student you are. If you are a first-time graduate student, your annual loan limit is still the same, but your ac decrease to 100K from the 138,500 that exists. If you are a first-time professional student, that increases to 200K. But if you are a second-time graduate student, you also have access to that 200K, but you have to subtract what you borrowed before. Same thing for second-time professional students.
So there's some nuances there. But because of the change in access, on one side of the coin, you have the department saying we only believe a certain amount of programs should be able to charge students potentially, if the Bennett Hypothesis is indeed true and truly happening, which is very debatable and arguable that it's not, but that those programs should not charge more than what's allowed to borrow, which is 200,000. So that's one side of the coin of the argument.
The other side of the coin of the argument is let's look at these families. Let's look at these families, yes, these are students who have a bachelor's degree already. But just because a student with a bachelor's degree who comes from a low income, low wealth family doesn't mean that all of a sudden, they can still afford all the things that you need to afford, and sometimes borrowing a little bit more on top of what's required for tuition and fees is needed in order to obtain that particular degree. And you're forcing that very demographic of a person to have to then go to the private market where loans are less forgiving, higher interest rates. The loan repayment plans are not as flexible as what the federal government would provide for them. So you're creating this situation where you want to work on college cost and reducing that to increase affordability, but at the same time you could be arguably increasing the cost of college for the very students that need it to be more affordable in whatever way.
So with that being said, while there was consensus ... So I'll want to note, there was consensus on all of this language. But even with the consensus that was taken, there was the thinking of the negotiators, especially those that represent institutions of higher education, that we will still be able to continue this dialogue and conversation around the definition of a professional student.
So to sum it up, there are only 11 programs that the department believes students should be able to borrow up to 200K in. Those programs include pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine optometry, osteopathic medicine, podiatry, theology, and clinical psychology. Out of those programs, the first 10 programs currently exist in the Code of Federal Regulations, so the department just kept those as they are, but they did add clinical psychology. And at the very end, they added the PhD because the PsyD was already there. But they, in this particular proposal that came from a negotiator might I add, but they did add the PhD portion there. That was the most contentious topic.
And other topics that were discussed were things that the negotiators were happier that the department worked with them on. Some of that language includes borrowers who, for example, will make an advanced payment, and instead of that advanced payment going toward advancing the due date of their next payment, that the borrower would have the opportunity and ability to talk to their servicer and say, "Hey, if I make more, a higher payment this month, I would want that to actually not advance the due date. I want that to go toward my principle." Concessions along those lines.
Also, borrowers who currently have HEAL loans because they have access to additional funds outside of the aggregate loan limits, that those borrowers were grandfathered in to what they already have access to once July 1st, 2026 comes around. And the same thing for Parent PLUS loan borrowers too as well. So certain concessions like that were important to negotiators, that they didn't want those to go away.
The loan proration, the department did clarify how if a student takes out a loan and if they are under full-time enrollment, then that will be prorated down based on the intensity of their enrollment. That's something that they have to do based on what is in actually the Reconciliation Bill. We have heard from our members that there are concerns around that, but the department's hands in a lot of ways are tied to whether or not they can or cannot do that. But the language that they included in order for that to happen was language that the negotiators felt largely okay with for the most part.
So with all of this being said, there are a couple of things that we're thinking about here. The first thing is the implementation date for most of all of this, especially this particular section. July 1st, 2026. So institutions of higher education, you can arguably say they are aware and they know what's going on right now. But at the same time, they are faced with a lot of other things coming at them that they're paying attention to, there's a lot of fires that they're trying to put out. So until we get a final rule on this, we really don't know where the department's truly going to land because there still can be room for fluctuation. But because there's consensus language, then we know that they don't have the ability to just write whatever they want. So with what was discussed, we pretty much can be more confident that this is what it is actually going to be.
But with the final rule coming out at the earliest we would think would be June, if you think about the process and how it all operates since the negotiated rulemaking entire process is going to end in January. Then that does leave not very much time before everything kicks in July 1st, 2026. The department believes that they can do this and they should because in OB3, it dictates that this is going to go into effect July 1st, 2026, so that's where they put their foot down there.
But I would say to counteract that, we do have to look at the Higher Education Act too as well. It is the law that governs all postsecondary education. And that law, it makes it very clear that if the department's going to do anything within Title IV, they have to go through the Negotiated Rulemaking Committee, which stems from the Negotiated Rulemaking Act. But in Section 482 of the HEA, there's language around a master calendar and what the department should abide by. And with that master calendar, there has to be a final rule before November 1st in order for that rule to take effect the following July 1st of the next year. It makes sense because it gives institutions time to comply, to get their ducks all aligned in a row, to update systems, to hire new staff if they need to. To just wrap their minds around what's coming down the pike and making sure that they're ready and that they're good to go.
Now there is language in the HEA that gives the secretary the ability to not necessarily abide by that. And what that language says, and I quote is, "Unless the secretary determines that applying such a requirement with respect to the given regulations is impracticable, unnecessary, or contrary to the public interest," then the secretary can articulate that as long as they publish that, that determination when they publish the proposed regulations.
So I think we can argue that this particular bill and implementation of it, going back to what Jon shared, that it's probably the largest effort in reauthorizing HEA since the reauthorization of the HEA. That it is indeed practicable and necessary, and it's non-contrary. So there's a lot that can be argued here around that.
Sarah Spreitzer: Hey, Emmanual?
Emmanual Guillory: Yeah.
Sarah Spreitzer: Can I ask a question about the grad versus professional degree programs? Because I wasn't following it as closely as you. Will there be ... Is there going to be some sort of process for people to apply in the future for their program to be put in the professional category? And the reason I'm asking that is there is a process for the CIP codes for things to be updated between a STEM, a science, technology, engineering, math field, to a non-STEM. Will there be a process, or is that something you think the department is open to creating, where you could come in with certain data points and argue that you should be shifted into that professional category? Or would that have to be decided by Congress?
Emmanual Guillory: That's going to have to be something that's decided by Congress. The department's made it very clear that they believe those 11 programs that I indicated are the programs that, if students are enrolled, they're considered professional students in those programs.
There was a proposal that was put on the table by the department to actually delay this for one year, something that we asked for was for this to be delayed by one year given the timeline and the master calendar. The department considered that, but then withdrew that proposal, and so we are where we are now. So institutions will not be able to argue that.
Now in looking at the IPATS data, there's over 2000 programs that are doctoral degree programs. And those are not over 2000 unique programs, so they're just 2000 programs that exist that institutions are offering that are considered doctoral professional degrees. One thing to note about that is there hasn't been a threat of loan limits or anything of the sort. These programs are truly doctoral professional degree programs, as indicated by these institutions. In the definition that IPATS uses for a doctor's degree professional practice, that definition, actually it incorporates the ability for institutions to articulate to the secretary, "Hey, this is a doctoral professional degree that's beyond the 10 that's listed currently in the regulations."
But if you look at the first professional doctoral degree definition in IPATS, then that definition doesn't include that language and that's the definition that the department based what they ultimately came up with on. So not to get too in the weeds on that because it can get a little confusing, but we still believe that there should be a delay. We want there to be enough time for institutions, for students and institutions to understand what, A, they're actually going to have when they sign that master promissory note, and we want this to all operate and work smoothly in the end.
Mushtaq Gunja: Emmanual, just keeping an eye on the clock, so I just want to make sure that we can get into just a couple of quick thinks. Emmanual, we have 11 programs that are now considered professional programs that trigger that $200,000. Is there anything that can be done to expand that list from 11 to something that is broader than that? The negotiators reach consensus, when consensus is reached, that means that that's basically the rule. That it's very difficult then for the department to do something different than what was reached in consensus.
Emmanual Guillory: Yeah.
Mushtaq Gunja: That said, anything that our institutions can do at this point to expand that list? Because you can see in the chat, many people are rightfully pointing out that there are a whole set of programs-
Emmanual Guillory: Absolutely.
Mushtaq Gunja: ... that aren't included here that either require $200,000 in borrowing are certainly professional programs. What are we supposed to do now?
Emmanual Guillory: Talk to your members of Congress. We now have to talk to Congress. Congress is the branch of government that can influence the department to make a change. In our letter in our comments to the department, we indicated other programs that should be considered professional degree programs, such as architecture, law, social work, nursing, occupational therapy, physical therapy, those types of programs. There were negotiators that continued to beat this drum at the table too as well. They offered proposals, the department shot them down. Again, from the angle of, "We don't believe these programs should be charging this much money." There's always two sides of a coin to a debate. But Congress is now where we need to divert our attention and that's where you can be the most influential at this point.
Jon Fansmith: Yeah. Sorry, Mushtaq. The one thing I would add is I think there's very likely to be some legal challenge to this interpretation of the regulations. There are so many inconsistencies in the way the department's applying this, and Emmanual I think touched this. The statutory language in the Senate included, specifically identified those 10 program areas as examples of programs that would meet the criteria for professional program, not to be an exhaustive list of those programs. So the department's coming in and saying, "This is all there is," and not even coming up with a workable definition. And then when put on the record about what are the criteria, the criteria they put forward as being key to that would exclude master's in theology, which was one of the 10 they identify.
So there are multiple things about how they went through this process, even with consensus, that certainly raise a lot of flags. And I would expect, given the impact Emmanual's talked about on schools that we've seen in the chat, that there's going to be some challenges. But he is absolutely right, the point of emphasis now, reach out to your members of Congress. Let them know what this is going to mean for your students and your programs.
Mushtaq Gunja: Well, maybe more importantly, what it means for our communities.
Sarah Spreitzer: Yeah.
Mushtaq Gunja: Yes, it's impacts on our schools, but the reason that we have these programs, the reasons why higher ed exists is to benefit society. The clinical psychologists that are now added to the list, it's because we need clinical psychologists out in the marketplace.
So I think one of the things to do here is really be able to identify how many people are graduating, how many of those people that are graduating from our institutions are filling critical jobs in the labor market. And then ask, does Congress not want those people to occur? The charging of tuition at $200,000 or something like that, it's not like this is profit that's coming on. It's not a couch that we're just marking it up. These programs cost money. They are not cheap to administer. And I think it's really important for Congress to be able to hear that because the impacts of not having these graduates in our communities will be devastating. Our regional colleges are powering this.
I'm sorry, Sarah. I'm sorry to soapbox this.
Sarah Spreitzer: No, I was going to say the same thing, Mushtaq. And I wonder, to Emmanual's point about contacting Congress, tying this to some of our high needs fields where you're likely going to have fewer graduate. Because once you get into those private loans, what is your credit check going to look like? Is somebody going to want to take on those private loans? Or are schools going to reduce the number of people they admit because they're going to try and reduce their tuition which means that they'll be able to admit fewer people? Yeah, it's going to have an enormous impact, and all of the fields being talked about in the chat are high needs fields that we need. So yeah, maybe it's not the next Congress, but I would think they would likely start seeing this impact pretty quickly.
Emmanual Guillory: Yeah. One quick thing I want to add because I know we only have five minutes I think. But programmatic accreditors are going to play a big role in the costs of these programs because the number of times institutions actually want to decrease costs in programs, but programmatic accreditors require certain standards that then prevent institutions from being able to do so in a way that they would like.
For example, if a program wants to go from fully in-person to hybrid. Some programmatic accreditors don't believe that that is indeed quality and it forces institutions to keep a program that costs a little bit more than they would like. So just wanted to throw that as an example out there, as one of the negotiators shared that with me.
Mushtaq Gunja: Yeah.
Emmanual Guillory: Which was good.
Mushtaq Gunja: Jon Fansmith, what does the private market loan market look like? President Eddinger noted that many of her students would not qualify to borrow. Certainly, that seems like the case, and the interests rates that the private market will charge will make this cost prohibitive I would assume. But what is this going to look like?
Jon Fansmith: Right. And this is an interesting thing because even those programs that are professional, their students will likely need to borrow in the private marketplace. You both touched on it, but offering a program that trains doctors is hugely expensive and it should be because of what's involved in making sure that person has the training to deal with the situational things. The private market for borrowers at those professional programs probably will be accessible because these are generally, if they are accepting at these institutes, high rates of repayment. They call it the SOFI model where graduate borrowers tend to have higher earnings outcomes, they tend to be more reliable borrowers.
That said, there's a lot of graduate students at all levels, both in those professional programs and lower level programs, who are low income, who do not have somebody who can cosign a loan to them, who may not have access to this. And you will see a gradual phasing where essentially low income individuals won't have the same access for financial reasons solely to the kinds of graduate level training we absolutely would benefit from as a country having those people in it.
The other thing is those people who can get loans, the private market works to generate profit. It's not a negative thing. But private lenders will make loans on the assumption that they will have losses, and the rates they will charge will be set to recoup the losses and return a profit. If you look at what the federal government charged student lenders now, six to eight percent or so on loans, the private market conservatively for student loans is 18 to 20 percent. That will vary, you can probably get a better rate with great credit and a cosigner. You can maybe get a worse rate if you don't have any of those things. That's a significant increase in the cost of college on the backend and you don't have any of the protections, the repayment plans that are offered through the federal lending program. So there's multiple levels of the impact of this.
Finally, I could talk about this for a while. It's not clear there's a ton of capacity in the private student lending market to take up all this volume. I think certainly, people expect that people will rally to this and that may be the case. But what we've tended to see is these are risky loans. These are non-collateralized loans. There will probably be efforts to reduce the risk by redlining certain programs that will have low repayment rates. There will be large lenders who won't want to be involved in doing this. And what we've seen before, there will be predatory lenders who will rush in with terms, and balloon payments, and other things that would be deliberately harmful to the borrower.
So will the private market step in? Yes. Will that work? Maybe for some students. The net result is everybody's going to be paying more as a result of their larger role.
Mushtaq Gunja: Yeah. And I know that the federal loan system is complicated and I know there are multiple parts of it. I know that folks don't like it, but it does have a lot of built in protections for students and it has allowed many, many students to be able to access the promise of higher education move in social and economic mobility. And if we're systematically going to make it very difficult, prohibitively expensive for low income students to be able to become a doctor, that is devastating for this country. So please, please, I know that there's cynicism around Congress right now and whether they'll be able to move, but I think I'm more optimistic here than I am in some of the other things, other places where we sometimes ask Congress.
I know we're a little bit past time. Last question here, just to close us out. What's the next set of rulemaking? What else needs to be get colored in? What lines need to be drawn? What's next, Emmanual?
Emmanual Guillory: So what's next is actually the Accountability in Hiring Education Access Through Demand-Driven workforce Pell committee, also known as the AHEAD committee. They will be meeting at the beginning of December and also meeting again in January. So they will be looking at the workforce Pell program, they will be looking at the Pell Grant eligibility changes, they will be looking at the new accountability construct and measure which is huge. So those types of elements of the One Big Beautiful Bill is what they're going to consider.
And I wanted to quickly clarify for people. With the clinical psychology addition for PsyDs and PhDs of clinical psychology, not all PhDs. So I saw in the chat questions around that, so I just wanted to clarify. It's not all PhDs, just only those in clinical psychology.
Mushtaq Gunja: Jon, Sarah, anything else to close this out?
Sarah Spreitzer: I think, Mushtaq, talking about Congress, I am hopeful that they'll pass more appropriations bills. And I think by doing that, they are going to start to assert their authority over how this White House has been spending out the money that's been appropriated. So I guess that's my hopeful news for this podcast. Not as much Good News Corner, but that's my hopeful.
Jon Fansmith: I'll say my hopeful super quick. I've talked about this in various steps, but we didn't get to enrollment, we didn't get to public opinion. I think one of the things we're seeing is Congress, and Sarah's point about Congress in a bipartisan way, trying to get appropriations bills because they don't like giving the administration that authority. There's a lot of rebounding that's going on right now in response to this administration's actions and that's not quite a groundswell yet, but it's building in a lot of ways that I think very, very good for higher education. We're not where we want to be, we're not where we need to be, we've got a lot of work to undo some damage, but you can see around the corner a little bit and it's really been the first time you could say that in so many different places.
Mushtaq Gunja: Sure. All right, friends. Well, I'm going to close this out now. We will undoubtedly be back to talk about the next set of negotiated rulemaking. We're going to spend some real time talking about enrollment, international and otherwise next time. Thank you all for joining. And happy Thanksgiving. Eat that turkey-
Sarah Spreitzer: Happy Thanksgiving.
Emmanual Guillory: Happy Thanksgiving.
Mushtaq Gunja: ... but maybe do the grants applications before you eat the turkey.
Emmanual Guillory: Yeah, that's right.
Sarah Spreitzer: Make sure it's fully cooked.
Mushtaq Gunja: Thanks, all. Thank you.
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