dotEDU Live: Why Should Higher Ed Care About Debt Ceilings and Other Budget Battles?


​​​​​​​​​​​​​​Aired May 4, 2023

With the deadline to raise the federal debt ceiling fast approaching, Jon Fansmith and Sarah Spreitzer explain why the outcome matters to higher ed, including how it will impact budget proposals over the next few months. They also give updates on third-party servicer guidance, answer questions about Title IX regulations, and more.

Here are some of the links and references from this week’s show:

Here’s What’s in the GOP Bill To Lift the U.S. Debt Limit
PBS | April 26, 2023

Update on the Department of Education’s Third-Party Servicer Guidance
US Department of Education | April 12, 2023

Letter to the Education Department on Third-Party Servicers
ACE | March 29, 2023

The Department of Education Announces Public Hearings on Higher Education Rulemaking
US Department of Education | March 23, 2023

Comments on the Department of Education’s Proposed Negotiated Rulemaking Sessions
ACE | April 24, 2023

Education Department Unveils Title IX Transgender Sports Eligibility Rule
Politico | April 6, 2023

How New FAFSA Will Change What Students Pay
Inside Higher Ed | April 18, 2023

Clock Ticks on College COVID Relief Dollars
Politico | May 1, 2023

Selective Colleges Lose Diversity With Affirmative Action Ban, Study Finds
Yahoo | March 28, 2023


 Read this episode's transcript

Jon Fansmith: Hello, and welcome to the May edition of dotEDU Live, our monthly policy discussion. I am your host, Jon Fansmith, and joining me today is my wonderful co-host, Sarah Spreitzer. Sarah, how are you doing today?

Sarah Spreitzer: I’m doing great. I’m loving this new live format. I think it’s a great way to interact with folks. I’m still recovering from the annual meeting, where we did two live podcasts, and that was really great. And more importantly, I’m recovering from a vacation that I took after the annual meeting. So just catching up on stuff this week, seeing what’s going on, so did I miss anything big while I was out of the office, Jon?

Jon Fansmith: Yeah, and you were very out of the office, Sarah. Do you want to tell people where you were vacationing?

Sarah Spreitzer: I was in France. Are you going to ask me to say something in French? Because I really can’t do that.

Jon Fansmith: No, I wouldn’t ask. I just want to emphasize that you and another one of our colleagues was also in France immediately after the annual meeting, while I was here, so I don’t, I just-

Sarah Spreitzer: Sorry about that.

Jon Fansmith: There’s a fairness issue.

Sarah Spreitzer: It was a good time to take vacation though. Definitely.

Jon Fansmith: It sounded like a good time to take vacation. But, Sarah, I don’t think people want to hear me complain about not taking vacation. They probably tuned in because they want to hear a little bit more about the things we told them we’d be talking about, which is what’s happening-

Sarah Spreitzer: Oh, yeah, that’s right.

Jon Fansmith: Yeah, right, those things, what’s happening here in Washington. So what’s happening here in Washington?

Sarah Spreitzer: Well, I believe that the House Republicans passed some sort of budget bill while I was gone and attached it to a debt limit increase. So anything interesting in there?

Jon Fansmith: Yeah, so this is big news, right? This is frankly what Congress really is only focusing on at this moment. Stepping back to your point, the House Republicans passed a debt limit bill that would essentially raise the debt ceiling by $1.5 trillion or extend the debt ceiling to March, whichever comes first. In order to do that, they wanted to offset it with about $4.8 trillion in cuts. So pretty significant cuts proposed. Couple things that are interesting about it. The first is that we are looking at fiscal year ‘24. We’re currently in fiscal year ‘23. Now I always forget what the name of this bill, Save Limit Grow? What was the-

Sarah Spreitzer: PAYGO? No, I don’t think-

Jon Fansmith: The House bill has a-

Sarah Spreitzer: I was on vacation.

Jon Fansmith: Fair enough. Anyway, it would take back spending for FY ‘24 to FY ‘22 levels. And if you go back to the FY ‘22 levels, there were big increases in FY ‘23. It’s about a $130 billion cut in funding, and all of that cut would come from the non-defense side. So there are increases to defense, increases to non-defense, but the cuts would come entirely from non-defense. That would be about a 22 or 23 percent cut, depending on which estimates you’re looking at. That would be massive cuts to the programs we care about. Things like student financial aid and scientific research and institutional support. Beyond even those massive proposed cuts, the bill would say that federal spending could only grow by 1 percent each year for each of the next 10 years. That’s far below the average of annual increases Congress puts forward.

And then really, maybe the thing that was most interesting is how much of this bill focused on higher ed specifically. There were really five big components of the bill: the limits on spending; rescinding money that hasn’t been spent yet, that was COVID relief money that was sent out; rolling back a bunch of green energy tax credits and programs; things around limiting social benefit programs like SNAP, essentially tying eligibility to those programs to more stringent work requirements and expanding the ages at which people have to participate in those. So really five things; those are the other four. The fifth was higher ed.

And there was a lot on higher ed there, and it’s really reflective of how strongly congressional Republicans dislike what the Biden administration is doing around student loans. This bill would propose that the student loan forgiveness program, which is currently awaiting a decision by the Supreme Court, it would bar that from going forward. It would bar the administration… The Department of Education has a proposal for income-driven repayment program that would be the most generous loan repayment program out there. It would bar that from going into effect. It would end the student loan repayment pause, so that’s set to resume likely around the end of August. It would end that immediately.

And then one thing that’s kind of unusual and pretty interesting: it would also bar the Department of Education from doing any regulations that increase the cost of the student loan program. So anything that would make the student loan programs more generous, they would be barred from doing. So as you can see, not just this heavy emphasis on higher ed, but a really tight focus on limiting what the Biden administration has done on student loans.

Sarah Spreitzer: Well, and thanks to our wonderful colleague, Amanda Wintersteen from Penn State; she reminded us that the bill’s called the Limit, Save, Grow Act. And, Jon, we saw the president released his budget early in March. Now we have the Republican budget. Does any of this actually matter?

Jon Fansmith: Yeah, so it matters for a couple reasons, and I think in some ways I buried the lede here a little bit. The reason we care about the debt ceiling limit is there’s lots of reasons to care about this. There’s global economic implications beyond even the House proposal, which has a big impact on higher ed. Most importantly, we don’t have a whole lot of time, right? Yesterday, Treasury Secretary Janet Yellen said that they believe the X date, the date at which Treasury’s ability to keep meeting our obligations through so-called “extraordinary measures,” that date is June 1st. So we hit the limit on June 1st according to Treasury. No need to remind folks, today is May 2nd. That’s not very far away.

The other thing to keep in mind is the president has put forward his proposal. What he said is just raise the debt limit. They did it three times. Congress did it three times during the Trump administration with no ties to spending cuts or anything else. Just clean increases in the debt limit. That’s what the president would like. As we’ve seen, the House has a much more aggressive approach to cutting spending that they want to accompany any increase in limit. They are very far apart. And again, it is May 2nd. X date is apparently June 1st. There’s not a lot of time to close the gap between two proposals that are so far apart. It’s not a great situation.

The president has invited the four majority and minority leaders from both chambers into the White House to meet on May 9th, next week, a week from today. That will be the first time the president has spoken with Kevin McCarthy directly about the debt ceiling limit since the beginning of February. So there really has been no progress, and we have two very strong oppositional positions. The Senate’s not doing a whole lot in this debate, although Majority Leader Schumer is apparently preparing a clean debt limit increase bill just in case they can get agreement to do that. It seems unlikely they will, but there is a lot happening here. There’s not a lot of time to do it, and a lot of ground to cover up in their negotiations.

Sarah Spreitzer: Yeah, and one of the questions that we got, Jon, for this public policy update was, “If we actually default with our creditors or Congress is unable to raise the debt limit, what does that mean for institutions of higher education?”

Jon Fansmith: Yeah, so it’s a good question, in part because we have never defaulted. We don’t know exactly what will happen in the case of a default. It doesn’t work the same way, or at least the expectation is it will not work the same way, a government shutdown will. The government will not shut down because we’re defaulting on our obligations. What we have seen in previous times when we’ve even gotten close to not meeting the debt limit is the markets react, interest rates start to skyrocket, there’s some other economic impacts. The broad expectation if we do default is that it might trigger a global recession.

Again, this is not specific to higher ed, but we saw the impact of a global recession in 2008. States started cutting back their support for higher education. Lots of people suddenly became unemployed. Large numbers of them enrolled in higher education to improve their skills in the competitive job market. You combine those two things, both surging enrollments and declining state support, you really put a lot of financial struggle into institutions who are really struggling with the impact of that. You add to that the fact that in a recession you have lots more students with significantly higher financial need. It’s a very, very difficult environment for higher ed. And the federal programs, particularly things like Pell that are tied to financial need, the costs of those programs begin to skyrocket too.

So there’s a lot of cyclical impacts that happen. Again, we don’t know exactly what might happen if we default. We’ve never done it. But it’s not going to be good news. Very unlikely to be anything other than a lot of hardship for people.

Sarah Spreitzer: Yeah, and there seems to be at least bipartisan agreement that it will be bad if it does happen.

Jon Fansmith: Yeah, although how bad seems to be a matter of dispute, but yes.

Sarah Spreitzer: Right, right. But you started out by talking about there’s only one thing that Congress needs to get done this year and it’s the debt limit, and actually, there’s a few other things that they’re working on. I’ve been following the National Defense Authorization Act, as I do every year, and they’ve actually started scheduling the markup, at least in the House, of that bill at the end of May. And it’s been interesting, because the last couple years, as Congress has stopped passing bipartisan legislation frequently or as often as they previously did, the NDAA has become that vehicle for a lot of amendments, some of which don’t really relate to defense.

But I think this year, as we’ve seen in previous years, we’re going to see a flurry of language around research security, around relationships between institutions of higher education and China. I’ve already seen some language around Confucius Institutes, of which there’s only five, I think, named Confucius Institutes still in the United States, but obviously still a concern for Congress. And so I think that I’m going to be very busy at least this month and into the summer on NDAA. So while they’re working on the debt limit, I think they’ll still be moving the NDAA forward. And I know approps, the annual appropriations process that actually funds the federal government, is starting and there’s been hearings asking for agency heads and secretaries to go up and defend the president’s budget request.

Jon Fansmith: There’s been a number of hearings. I think probably more importantly, the House has already announced that they’re going to start doing markups of their bills, really starting mid-May and moving forward through the subcommittees and out to the full committees. That’s obviously important for a lot of reasons moving the bills forward, but one of the things about these bills is they now have a level, right? I talked about that FY ‘22 levels, the cuts to the non-defense side of the budget. These bills are going to be marked up at those levels. I said earlier, right? A 22, 23 percent cut in funding. You’re going to have to start seeing proposals put forward that are going to implement cuts at that level in the House.

And again, it’s highly unlikely that that will be the ultimate outcome. It would be very surprising if at the end of these negotiations on the debt ceiling, the president and congressional Democrats agree to go along with cuts at that level, but we’re going to see proposals. They’re going to have very scary numbers in them, things that are going to slash student aid programs. The idea of certain programs being proposed for elimination entirely seems very likely when we start to see these bills coming out of committee. I don’t want to frighten people. That will not be what we ultimately see. This is a long process. It involves lots of parties and extended negotiations. Probably won’t be resolved till closer to the end of the year, but the early phase is going to look very worrisome for higher ed.

Sarah Spreitzer: Yeah, and obviously, the Senate is going to be a completely different place. So I think more so than in previous years, there’s going to be a lot of differences between those bills. And will there even be a way for them to conference those two together?

Jon Fansmith: Yeah, even in the best of times, that hasn’t really worked out the last few years. The House, because it’s the House and the structure of the House, they have always moved their appropriations bills for the most part through the process.

The Senate side, we have not really seen the same process through the Senate, in part because it’s harder to move bills through majority control in the Senate. We have seen for the past few years, frankly, the Senate simply announcing what their levels will be, putting bills out that they don’t mark up, that they don’t put to a vote. And then the negotiations go on at really a pretty limited leadership level. It’s senior leadership looking at the top lines. Once those top lines are determined, that filters down to the bill.

So we will see really frightening numbers from the House side. We probably won’t see anything from the Senate side until we get past the debt limit, until we get a little bit further down the road and there’s some clarity about where there could be agreement on overall spending. Again, most likely to be at the end of the year. Most likely, if past is prologue, big omnibus bills, wrapping it all together in one way.

Where that ultimately ends up, hard to say. We haven’t had quite the commitment to budget cuts that we’re seeing from the House Republicans in the last few cycles, but obviously, if failure to do so means the government shuts down, there is some motivation to do that. Government shutdowns are politically unpopular. We’re in a really important election cycle. I don’t think either party wants to be seen as causing those kinds of disruptions. Easy for me to say, who knows? But we’re at the beginning of a long process and, frankly, one that’s a lot more complicated-looking than it has for the past few years.

Sarah Spreitzer: And we got a question about who’s lobbying for higher education interests in Congress while these discussions are going on, and of course I would say the American Council on Education. We’re very active in making sure that members of Congress understand the importance of robust funding for our institutions, for student aid, for research funding, and we will continue to carry that message. But, Jon, beyond what Congress is working on, the Department of Education has been extremely busy, and I know, when we were at the annual meeting, there was a lot going on regarding third-party servicers and a guidance letter that the department had put out that had caused a lot of concerns about how institutions were going to have to report third-party servicers or TPS services and where does that stand?

Jon Fansmith: Yeah, this has all been quite a whirlwind and, frankly, really unusual in a way that we haven’t really seen around guidance from the Department of Education. I think people, probably if you are joining this session, have some basic familiarity with the issues. I’m not going to go through the whole thing. But mid-February the department put out guidance that really radically changed the definition of what a third-party servicer is, essentially outside entities that contract with institutions to do things. Traditionally, it’s been understood as administrative support for the financial aid office. The new revised definition that the department put out would pull in a huge number of entities that we’ve never before considered third-party servicers.

It raised a lot of concerns. It raised a lot of concerns from lots of different areas of higher education. ACE filed a comment letter to the Department of Ed that had 85 different organizations on it. Maybe more importantly even than the broad community letter was that there were about a thousand other comments, overwhelmingly from institutions themselves talking about what this would mean for them, made it really clear what the impact would be for individual institutions. And to their credit, the Department of Education saw that. They reviewed the information, they reviewed the comments, and very quickly they reversed themselves.

Kind of unusual, right? The comments were due on a Thursday, and then on the subsequent, or I guess a week and a half later in a blog post, the Department of Education announced that they were indefinitely suspending this guidance that they would say, “Schools, it will only go into effect six months after revised guidance is put out. Schools wouldn’t have to report on those relationships until that same point.” So really functionally, there is a huge amount of time before we see this, and, frankly, we may never really see that coming out given some of the backlash and the concerns they have.

Now, the big qualifier there is one of the topics that the department is looking at for negotiated rulemaking, which is this process by which the Department of Education brings stakeholders together to negotiate around different regulatory proposals. They’re looking to do a big rulemaking session this year. One of those topics is third-party servicers. So they will have an opportunity to bring in representatives of institutions and student groups and consumer groups and accreditors and all sorts of others to talk about what this might look like, maybe get a little bit more informed discussion around where changes could come from.

Underlying all of this, really we’re talking about third-party servicers. What the department is really thinking about is online program managers. They are thinking about the relationships colleges and universities have with outside entities that, in many cases, provide educational content, program administration, other services to institutions. That’s what they’re getting at, so that’s likely to be what the bulk of that rulemaking process is about.

Sarah Spreitzer: And negotiated rulemaking takes quite a while to actually go through, because guidance, obviously, the department thought we can issue this and institutions will have to start responding immediately. But negotiated rulemaking is such a much more involved process. And you talked about the fact that TPS is going to be one of the topics, but can you talk a little bit about the calendar and how long it’s going to take?

Jon Fansmith: Sure, and there are six other topics the department proposed in addition to third-party servicing, and they also asked about income-driven repayment plan changes. That plan I talked about that the House bill would have barred them from going forward with, they want comments on that as well. They just closed, as of Monday, the comment period for people to say what they thought about those topics. Did not get a very strong response. I filed ACE’s comments Monday night, and at that point only 10 other comments had been filed. Some may have come in after we did ours, but not a strong response. It’s really just, I think, a recognition of the fact that the topics the department has put forward in previous rounds of rulemaking are generally the ones they’ve then gone ahead with the rulemaking on. So they’re likely to pursue those seven that I referenced.

Now that they’ve closed that period for the comments and topics, we expect to see probably within a month or so the department formally announce that they’re moving forward on rulemaking on those seven issues and then ask for negotiators to be nominated. This is a process by which associations and institutions and other organizations look at the different spots that are reserved for negotiators at the table and submit people they think would be good candidates to represent the interests of their sector in those negotiations. The expectation here in DC is that they will assemble the negotiating panels, announce them, and then begin rulemaking sessions probably in September. And what they have done so far, which is traditional, is to do three rounds of rulemaking, one each month, each taking about a week. So you’d see one week in September, one week in October, one week in November. That’s the likeliest outcome.

Again, these are big technical issues that they’re talking about, things like return to Title IV and cash management, accreditation, distance education. These are not really simple or easy to grasp concepts. So getting this right, having a lot of informed technical expertise at the table, is going to be important.

That’s why the comments that we did file around the topics essentially didn’t speak to the topics themselves, but said it’s really important that you start thinking about splitting up these topics into different committees. Because the trend has been one rulemaking committee that covers seven, eight, 10 issues, usually very different in terms of what they are. And that for things like this that are so technical, having the right experience at the table is going to be really important to getting it right. So instead of trying to find 20 or so people who have expertise across all of these areas, which is just highly unlikely you’d be able to do that, we’re asking them to think about splitting it up in a way that makes a little bit more sense so that you have the right people at the table for that.

Sarah Spreitzer: Well, in the leadup to the presidential election next year, which I know is going to be a really exciting time here in DC. Being sarcastic, if folks can’t hear that over the mic. But once something goes through actual rulemaking, it’s much harder to unwind for the next administration. They have to go through their own rulemaking process. And that’s something that we saw with the Trump administration when they did Title IX. Unlike other things that the Trump administration did through executive authority, through letters, or through guidance, the Biden administration couldn’t just unwind the Title IX campus sexual assault rules. And so we are still waiting for those final rules to come out around that, but we did see something on Title IX college athletics, and can you say a little bit about that?

Jon Fansmith: Yeah, and this came out partly as a result of the negotiations around the broader Title IX package and particularly the Biden administration’s response undoing the Trump administration’s regulations that they had passed around Title IX and the emerging issue in states, particularly we’ve seen this around bans on participation in women’s sports by trans students who identify as women, whose gender identity aligns with women. The Department of Education essentially announced that they would address this issue in a separate Title IX rulemaking. For a while, there was an expectation we’d see that relatively soon. It took a while, but the department released it at the beginning of last month. They have it out for comment.

The rule is kind of interesting, right? There was some expectation that they would very rigorously block bans on participation by trans students in college athletics. And I should say in athletics generally because it’s K-12 as well as higher ed, but that’s not what they actually proposed. Instead, what they said was each institution has the responsibility to determine, really on a sport-by-sport basis, not a broad policy even for their campus, but on a sport-by-sport basis, the ability of students to participate in athletics as it relates to their gender identity. And the only criteria you can use to make those evaluations is around issues of competitiveness and competitive fairness and safety of the student-athletes.

It’s an interesting regulation in particular because a lot of times we tend to see very specific requirements in regulations on institutions. The federal government setting rules that are very clear. “You have to do X, Y, and Z and you have to do them in this manner.” And this is really leaving it up on an institution-by-institution basis, on a sport-by-sport basis within the institution, how you make those determinations. In some cases, that’s probably a really good thing. It gives schools the flexibility to think about their mission and their campus culture and how they approach athletics and make the determinations that make the most sense for them.

On the flip side, this is an incredibly controversial issue. The flurry of state legislation in this area, which is getting a lot of public attention, which is getting a lot of media attention, it’s going to put institutions in a difficult place. You have to make those determinations, again, not just institution-wide, but on a sport-by-sport basis. And there will likely be people, regardless of the determination, who are unhappy with what you decided. And without that clear, prescriptive federal rule saying, “you have to do X, Y, and Z,” then the challenge falls on that institution’s choices there.

So it’s a difficult place in some ways for institutions to be in. Comments are coming up. I think there’s a lot of concern, particularly from the institutional side, about what this looks like in being implemented. Not just the issues I talked about, but you think about athletics. Almost all athletics take place under the spectrum of conference participation at all levels of collegiate athletics. Most institutions participate in a conference. Those can be very local, or they can cross multiple states and regions. How you determine the fact that every institution is responsible for making their own individual determinations, what that means for competitive fairness and equity issues and others across a conference where institutions may be making very different decisions, that’s going to be hard to sort out, and the rule doesn’t allow for that sort of collaborative approach to making those determinations.

So a lot to follow here, really, again, a very charged issue area, one that’s getting a lot of public scrutiny and attention, and it really will, once implemented, I think, put institutions in a difficult position of thinking through very clearly what their policies are and how they implement them and how they justify them to the public.

Sarah Spreitzer: Do you think that’s one that’s likely to end up in the courts?

Jon Fansmith: I think that’s a pretty safe assumption. That’s what we’ve talked about a lot with the bigger Title IX package, the assumption that, as soon as it is finalized, there will be legal challenges. My guess is that would be the case here. And something worth noting is the athletics piece came out of the discussions around the broader Title IX regulations. How these are going to be coordinated; will they be finalized around the same time; what’s their release schedule; I think people still are very unsure of how that will work. So you may have them be introduced, finalized two separate points in time, both subject to separate court challenges. Maybe they’ll be finalized at the same time, put forward as a total package, just not clear at this point.

Sarah Spreitzer: That’s great. So a lot going on in DC. It sounds like I did miss a little bit of stuff while I was out, but we do have some questions that were submitted beforehand, and I just remind everybody listening or who are participating in our live podcast to please submit questions through the chat. And one question that we had, Jon, was the College Transparency Act. This has been something that a lot of the higher education community has championed over the years. It’s been introduced in multiple Congresses. It’s been reintroduced now in this Congress. Does it have a path forward? Is this the year that we will see it passed?

Jon Fansmith: Yeah, College Transparency Act. So it was reintroduced this week on Tuesday. It keeps gaining momentum and there’s some things where you look at and you say, “This might be the Congress where there’s a chance for it to advance.” I should say ACE is supportive of the College Transparency Act. We would like to see it advance and enacted into law.

Some things that are positive signs if you are supportive of its passage. The lead Republican sponsor of the College Transparency Act in the Senate is now the ranking member on the Health Education, Labor and Pensions Committee, Senator Cassidy of Louisiana. So that is a very powerful position to be in, and you have a piece of legislation that is very clearly identified with you.
And somebody just asked, “What does it do?” which is a very good question, right? Maybe we should start it there, Sarah.

Sarah Spreitzer: Yeah, that’s a good question. Sorry.

Jon Fansmith: The College Transparency Act is a few things, but the most important thing it does is it would create a student unit record level database at the Department of Education. People might be surprised to know this or maybe not, but the Department of Education doesn’t have a lot of information on students. They have data on students who get financial aid, which is roughly two-thirds of all students, but that’s a big portion of the student population they don’t have any information on when they start, when they complete. CTA would have a lot more information. It would do things, for instance, like allow us to understand how often students transfer between schools. Right now, the Department of Education can’t follow somebody when they move from school to school.

So it would provide an incredibly rich data set to help us better understand the implications of federal policy on student outcomes, institutional and programmatic level implications for students, where we’re seeing successes, where we might not be seeing successes. It gives us just a much clearer picture of what’s happening in higher ed. That’s what the bill proposes to do.

And, again, possibilities, there’s a strong advocate for it now in a position of prominence in the Senate. The counterpoint, though, is one of the biggest, if not the biggest, opponent of the College Transparency Act is Representative Virginia Foxx, who is now the chair of the House Education and Workforce Committee. She is a very strong opponent of this bill and has been for a long time. Really has zero interest in seeing this advance. And in many ways, especially since she is in the majority in the House, that’s a stronger position to block it than Senator Cassidy and the Senate has to advance it.

That’s been the dynamic for a long time. There’s essentially not enough ability to get agreement between the parties and between the chambers to move it forward. It’s been proposed in a number of areas, added to other bills as an amendment text. There will continue to be efforts to move it forward, never say never, but with Virginia Foxx in that position, it is hard to see a clear path forward.

Sarah Spreitzer: Yeah, we’ve seen this attached to the NDAA in the past. I think there was also an attempt to try and move it as part of CHIPS and Science Bill, which passed last year. But when these things get attached, it usually has to go back to the four corners or the authorizing committees and they have to give signoff to allow it to move forward. And I think you’re right. I don’t think Chairwoman Foxx is going to be supportive of that. Now, there is also a lot of bipartisan support for short-term Pell, and last year they tried to package the two things together. So I don’t know if that will help move it forward, but I think we’ll at least see it try and move this year.

Jon Fansmith: Yeah, I think that’s a great point too, Sarah, and a little bit of insight into how these decisions are made. A lot of times, when they’re put as part of a bigger bill, as you pointed out, the four corners, the chairs and ranking members of the relevant committees in the House and the Senate, essentially they’re asked if they approve of it, and they’re asked by the leadership who’s trying to shepherd the bill forward. You wonder why one of the four can block something. Well, it’s because leadership is weighing hundreds of possible pieces of legislation and they just don’t want a problem. There are many things where they can get bipartisan consensus between the two chambers that’s easy to move forward. If even one member objects, it can really throw a roadblock into getting that considered as part of a final package.

So that is part of the problem here. Still, again, as you point out, could be bundled with things that have bipartisan support like workforce Pell. So never say never. Just the chair of the authorizing committee being an opponent is a big obstacle to overcome.

Sarah Spreitzer: Yeah, a pretty big one. So speaking of bipartisan legislation, the FAFSA simplification that passed a few years ago with bipartisan support, but the department is working to implement it. Where are they on that?

Jon Fansmith: And this is another one, kind of like TPS, it’s been a bit of a saga. And actually relevant to some of the other things we talked about too. FAFSA simplification was a bill, it was included in a big end-of-year spending bill, so it wasn’t passed on its own through traditional lawmaking order. And by and large, we think that this is going to be a good thing. It is simplifying the form. It should help more students access financial aid, particularly around things like Pell Grants. There’s a very clear benefit that we think more students will be eligible for Pell Grants and a larger percentage of those students will receive a larger Pell Grant as a result. Around the other aid eligibility, it’s harder to tell because we haven’t seen these changes in action.

But more importantly, the department’s having a really hard time doing this and understandably so. This is both complicated and really important. They have been trying ... They were supposed to have everything in place last year. They knew that they couldn’t do it, so Congress essentially gave them a one-year extension. They have to do it by this year. The goal, really the target deadline has always been October 1st. October 1st is a deadline that we use for FAFSA.

We’ve gone to what’s an early FAFSA application the last few years. That’s primarily to help low-income students have more time to see what their aid offers are, look at them across different institutions, help inform their search, so that they have the most information they can make when they’re trying to make a decision about an institution. It’s also really important to schools because it gives them additional time for enrollment decisions and to understand what aid applications is, to help shape a class, as they’re considering enrollment and admissions decisions.

The department’s going to miss that October 1st deadline. They’ve announced this publicly. They have said it would take ... They will be able to have the FAFSA out sometime in December. Originally, they said early December. Now, they’re talking more about maybe mid-December. They are required by law to have it in place by January 1st. They have said absolutely they will hit that target, but they seem to be creeping closer and closer to that January 1st deadline as it is.

It will only happen this year. That delay will only happen this year. It should be in place for next year. It will return to normal operations, the October 1st target date, but it’s going to be meaningfully impactful. We were at our annual meeting, and I don’t know, you were in sessions with me, Sarah, right? How many people stood up and said, “Look, by November, I’ve already packaged 7,000 students, right? I’ve already made acceptances out to 11,000 students.” This is going to have a big impact on campuses and, in particular, a big impact on low-income students, who are the ones we’re most worried about, who have the hardest time entering college and managing the system. So it is a problem.

The department, to their credit, is doing as much as they can. They take the seriousness of this to heart. They want to make sure there aren’t the kind of problems you see sometimes when programs are rolled out by the federal government. They are doing what they can to assure quality here, and they’re working on, frankly, limited resources. The last funding bill did not give the federal student aid office, the office that oversees this at the Department of Education, kept them level funding, so no new money. You think about all the other things they’re being asked to do around loan forgiveness and student loan repayment resumption, all these big other things they have to do as well as change the entire financial aid calculation system. It’s not surprising they’re having a hard time with it, especially without any additional resources.

That said, we can’t ignore those concerns. These are really meaningful to institutions, really meaningful to low-income students and, frankly, an area of great concern for us right now.

Sarah Spreitzer: So speaking of deadlines, the department also recently granted an extension for the spending of HEERF dollars, the Higher Education Emergency Relief Funds, that were included in the COVID relief bills. What’s the new deadline, Jon, and does anybody still have HEERF dollars left to spend?

Jon Fansmith: Yeah, so actually I spoke with Politico about this last week, I think, and I was a little bit surprised by the amount. It’s not that much. The department estimates that there’s roughly $5.5 billion in unspent HEERF funds. These were the COVID relief funds, the Higher Education Emergency Relief Funds that came out of the COVID bills. There were approximately 700 institutions that still have some money left that they haven’t spent out. This is actually in marked contrast to K-12 where there are tens of billions of dollars that have not been obligated yet. And we’ve been tracking this money for a while, really throughout the process.

What we’ve heard from campuses is that this is not sort of an omission. It’s not like they forgot they had HEERF money lying around. It’s that in a lot of cases you have things like you contracted with a vendor, say a telehealth provider for mental health services, and you pay them monthly and you have a contract for two years. So you’re holding the money, but paying it out over time. Or other things, your air ventilation system, you want to add purification elements to it. Well, everybody was doing that during the pandemic. So supply chain issues and other things made the equipment and the vendors who could install it for you harder to access. You might have budgeted money towards that and simply not been able to spend that money out because the equipment’s not available, the vendors who install it are busy with other things. It’s not like you’re not using it, it’s just obligated, but you haven’t had the ability to spend it.

So relatively not that much money in the grand scheme of things, only again about $5.5 billion out of about $77 billion total, relative to a lot of the other COVID relief programs where you see... We talked about the House bill would rescind a lot of that COVID relief money. Higher ed’s done a great job. Higher ed got the money in and got the money out to students. In particular, the student aid portion of that went out the door very quickly. The institutional side, there is some remaining money, but, again, usually, it’s very much accounted for and obligated in institutional expenses.

So something to track. The department is offering extensions. You have to apply for an extension of one more year. Last year, they granted them automatically. For those institutions and those situations I talked about they will apply, it is very likely the department will accept it, but it’s good due diligence by the department. They want you to explain why you need it, an extension, why you need the additional time. They’re not looking to penalize institutions. They just want to make sure that these are thoughtful and intentional decisions by a campus before they grant the extension.

Sarah Spreitzer: So, Jon, we have about four minutes left and it might be good just to wrap up with a looking forward to the summer type thing, what we’re waiting for. Somebody asked about Department of Labor, rules around FLSA, which has to do with exempt employees and nonexempt employees and who you’re paying overtime. I think that’s something that we’re going to continue to watch for, to see whether or not it’s going to be issued this summer. We also have the Title IX rules, the large package that we’re waiting to see if that happens this summer. And then one of the big things that we’re watching is the UNC Harvard race-conscious admissions case that the Supreme Court is expected to issue a ruling on< and I know we talked a lot about that at our recent annual meeting.

Jon Fansmith: You and I both have the same experience there. I don’t know how many presidents and other senior administrators wanted to talk about that and what the possible impact will be. And I should say, actually at that meeting, we had a session led by or organized, I should say, by ACE’s general counsel, Pete McDonough, where you had general counsels and college presidents and other folks talking about what the environment looks like, what schools can do to prepare, what schools can do to keep building diverse classes if, as is widely expected, the Supreme Court strikes down the consideration of race in admissions.

It’s a difficult situation. We have looked at all sorts of things. I know Georgetown Center for Educational Workforce did a report on this where they looked at alternative methods schools used to increase the diversity of their classes and found that, while helpful, all of them fall short of being able to consider race in admissions.

We did our own research at ACE where we looked at states that had implemented bans on the consideration of race in admissions. And what you found out when you looked at those states is that for selective institutions, even in states where population enrollment overall was jumping by double-digit percentages, the percentage of Black students, for instance, declined. So even as overall enrollment was surging at those institutions, the percentage of the Black students there declined.

You flip that around to open-access institutions, places that are admitting 80% or more of their applicants, and in states where you banned the consideration of race, even in those states where enrollment overall was declining by huge percentages, the percentage of students of color at those institutions, the open-access ones, grew significantly. So you are seeing a marked impact of a shift away from selective institutions to less selective institutions of students of color in those states. That is likely what we will see nationally when the Supreme Court rules.

Other things to consider: the Supreme Court is looking very much, there seems likely that consideration of race as it relates to an individual’s lived experience might still be part of the admissions process, but it will undoubtedly have an impact on what our college classes look like, especially at selective institutions. But yeah, Sarah, lots to look forward to. Not all of it, sadly, good news, but much going on and much going forward. We’re just about to wrap up, timewise. Is there any final thoughts?

Sarah Spreitzer: No, I would just say I think we talk about this a lot. Although it doesn’t seem like Congress is moving many things forward, we’re staying very busy talking about the importance of higher education. And so I think, for this group, there will still be a lot to update them next month.

Jon Fansmith: Yup, and thank you everyone for joining us. Thank you for the very good and thoughtful questions. Sarah mentioned, we are really liking our live podcast and dotEDU Live opportunity. So hey, invite us to your campus. We’d love to come out and do this with a live audience again and have some fun and meet with people. So thanks again for joining us and hope you enjoy the rest of your day.

Sarah Spreitzer: As always, you can check out earlier episodes and subscribe to dotEDU on Apple, Google Podcast, Spotify, Stitcher, or wherever you listen to your podcast. For show notes and links to the resources mentioned in the episode, you can go to our website at While there, please take a short survey to let us know how we’re doing. You can also email us at to give us suggestions on upcoming shows and guests.

And finally, a very big thank you to the producers who helped pull this podcast together. Laurie Arnson, Audrey Hamilton, Malcolm Moore, Anthony Trueheart, Rebecca Morris, Jack Nicholson, and Fatma Ngom. They do an incredible job making this happen and making Jon, Mushtaq, and I sound as good as possible. Finally, thank you so much to all of you for listening.

About the Podcast

​Each episode of dotEDU presents a deep dive into a major public policy issue impacting college campuses and students across the country. Hosts from ACE are joined by guest experts to lead you through thought-provoking conversations on topics such as campus free speech, diversity in admissions, college costs and affordability, and more. Find all episodes of the podcast at the dotEDU page.

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