Mushtaq Gunja: Hello, and welcome to dotEDU, the public policy podcast from the American Council on Education. I'm Mushtaq Gunja, along with my co-host as always, Jon Fansmith. Jon, how are you?
Jon Fansmith: I'm good. I was going to say, we're flying solo. That's not quite right, but we are Sarah-less today.
Mushtaq Gunja: Sarah is so important that it feels like we are flying solo. I mean, who am I going to ask questions to? I've got to ask them to you now, Jon? This is going to be rough.
Jon Fansmith: I have to answer questions. It's no picnic for me.
Mushtaq Gunja: It's her birthday or something, is that right? She turned 27?
Jon Fansmith: 32, I think. Yeah.
Mushtaq Gunja: Yeah, something like that. Actually, it is true. It is difficult for us to go along without Sarah. So, we are bringing on today CEO of NASFAA, Melanie Storey, to help us unpack so much of what is going on. So it'll be a great show. Despite it being summer, May, June and July have been busy. So. We have a lot to get through and get to.
Thank you for the questions from so many of you in advance. Thank you for the hundreds, 500-ish of you who are with us right now. I can't believe you're with us not watching Egypt, Argentina. And fortunately...
Jon Fansmith: Don't remind people they have options, Mushtaq.
Mushtaq Gunja: Oh, I think they know. Hey, Jon, as a long-suffering Philadelphia sports fan, which way do you prefer to lose? Do you prefer to lose 4-1 in a beat down, or would you prefer to lose in penalties in a close match?
Jon Fansmith: I think it's a whole lot easier to lose in the beat down emotionally, because then you can just sort of say, "Well, we never really had a shot." As somebody who's experienced multiple losses, both close and determinably not close, that's how I've experienced, but other people's mileage may vary. You're an LA sports fan, so you don't know what it's like to lose close, or by big margins.
Mushtaq Gunja: I wish that were true. I wish that were true. But I think I'm with you. I think when you go to penalties, I mean, just the nerves are too high.
Today we are going to do a little bit of a quick hit on a bunch of topics, uniform guidance, the HUD Dear Colleague letter. I want to talk a little bit about the Supreme Court rulings on transgender students. And then we'll bring on Melanie, and we'll talk a little bit about how the O3B, the One Big Beautiful Bill implementation is being experienced on campus, especially with financial aid.
But maybe before we even get there, Jon, I know you have been following the ups and downs of first, the housing bill that the President was set to sign that got passed by both Houses of Congress, bicameral, bipartisan. President was all set to sign, housing. There was a signing ceremony. I think the stage was up. It was all set to go, and then it didn't. This happened last week. Jon, what happened? Why does it matter?
Jon Fansmith: Yeah. This is really a microcosm result of what we have been dealing with all year. I guess we, as a country, but particularly the Congress has been dealing with all year with these tiny margins in both chambers. It's been really, really hard to make things happen. And the president, generally, especially in an election year, their role is to be the advocate for their party in the face of this.
This housing bill in particular is one that both parties really wanted, yes, because there's a lot of concern about the cost of housing in this country, but also going into an election that will be, in many ways, framed around the economy and affordability, and whether voters feel like the economy's working for them. Both sides saw some real benefit in saying, "I did something to address your concerns."
The President, in a way that's really, I think, hurt a lot of Republicans far more than it's hurting Democrats, essentially said, "Look, I am stepping away from signing this bill. I will not do it until Congress passes the SAVE Act." If you are not familiar with the SAVE Act, I know you are, Mushtaq, not everybody viewing may be. This is a incredibly restrictive voting prohibitions bill.
It would essentially eliminate mail-in voting, which is very, very popular, the use of which has grown pretty exponentially over the last decade, certainly through the pandemic. Very tight restrictions on what types of identification can be used to certify the right to vote. Really creating a federal standard that supersedes a lot of different state laws in that area.
It also has no chance of passing. There's a lot of reasons why Democrats would not support it. A lot of Republicans, especially those who represent, if you're a senator, states with large rural areas where mail-in voting has actually been really critical in increasing turnout and participation. I don't want to see that happen going into an election year.
The President's being very inflexible on this, has riled up a number of particularly very conservative members of the caucus, especially in the House. And as a result, what we have got is this paralysis. You don't need a lot of members to move in one direction to throw off the agenda, and what we have seen for the last two weeks.
The House had to adjourn two days in of a scheduled four days of sessions in part, because as of last week at least, they couldn't get the procedural vote to move to open the business of the House, because 12 members of the Republican caucus refused to align with the majority to do that. So, everything is kind of imploding.
Increasingly, given that the Senate is the place where SAVE can't go, the President has directed a lot of attacks at the Senate and Republicans in the Senate, and particularly Majority Leader Thune, who is very well-liked by his colleagues.
As the President's attacks have ramped up, the outside attacks, particularly in social media, other places have ramped up, which has caused a lot of frustration among Republicans, both House and Senate, that this is infighting that's really not only hurting their ability to do the business of the Congress, but also hurting their electoral chances at a time when, for a lot of reasons, Republicans are concerned about what the midterms will look like.
So everything kind of imploding in the same place. We headed into the July 4th recess this week with not a lot of optimism about what Congress could actually achieve, and whether the President could get on board with it. And it's worth noting, we only have six business days of Congress before the August recess, where Congress departs for four or five weeks, depending on the chamber.
Coming back from that recess, there's only eight business days beyond that before the elections themselves. So, we are in a period in which Congress doesn't have a lot of capacity to do things, and they're tying themselves in knots as they try to do the few things that look like slam dunks.
Mushtaq Gunja: So, Jon, I've noticed that the President seems to want to attach the SAVE Act to other unrelated pieces of legislation. So, he said he wouldn't sign the Housing Bill unless the SAVE Act was included. I think he tried to pressure the House to also attach SAVE to the NDAA, the National Defense Authorization Act.
I feel like there's only one of two things that's going to happen. Either the President holds fast to this SAVE Act must just get passed, period, and we'll try to attach it to every piece of legislation, which will then make no piece of legislation go forward, and will just be completely stalled, or he'll give up, or the House will overrule in some way. But the House members will back down. What do you think is going to happen here, Jon?
Jon Fansmith: Yeah, I mean, it's pretty easy. He has also asked that the Senate to blow up the filibuster process to move it. I don't think he would have enough Republican votes, even if that happened to move it. He will continue to hold that. And look, I won't pretend to understand his thought process on this. Certainly, Republicans on the Hill are very concerned about it.
But even more so, there is some belief that he doesn't really care about the chaos that's causing it, that it is building in a justification for losses Republicans might experience in the midterm election, when really what I think most people who do polling and surveying of the American public will say is, a lot of dissatisfaction with the administration's economic policies and foreign policy are driving frustration with Republican candidates.
So, he doesn't have a lot of political incentive to himself of holding the line here. It certainly won't help him get stronger Republican representation in Congress. That said, it doesn't seem to be something he's particularly dialed in on or cares about so far.
Mushtaq Gunja: Well, one other area that he, the President, doesn't seem super dialed in on, but has enormous consequences, are all things uniform guidance. So, over the last couple of webinars, we spent a lot of time talking about OMB's guidance, as it relates to federal contracting. I think, Jon, correct me if I'm wrong, ACE will be submitting our comment letter tomorrow? Anything you want to say about that letter and what our institution should be watching out for, and what we would hope that they might do?
Jon Fansmith: Yeah, a couple quick things. I won't go too deep into this, because we covered it in depth last time, and I know we have a lot to cover, but this is the process by which essentially the entire federal government, they will establish the rules by which federal financial assistance is awarded, particularly thinking about grant funding.
Short and simple version, it would make the entire process highly political, subject to abrupt terminations, cancellations, and wholly aligned with whatever party is in power's political ideologies.
We are submitting our comments tomorrow. We've had a really strong response among other higher education associations. There's over, I believe at this point, 90,000 comments have been filed on the website. Impacts things way beyond higher ed. So, not all of those are from the higher ed world, or the scientific research world.
The reason we are releasing ours tomorrow, the deadline is actually Monday. We want to make sure that any institutions are out there that want to weigh in, have a template they can use, can see some of the points we've made. I know some other associations are getting their comments out early. They're individual ones that may speak to specific sectors. So, keep an eye on those. I would encourage you, if you have the ability and the desire to file comments, everyone helps.
I'll also note today, Senator Susan Collins, Republican Chair of the Senate Appropriations Committee, put out a statement on, and I think it's important on the Appropriations Committee's website, not on her own website, asking OMB to both take out the pieces that would hurt scientific research, as well as small and rural communities, and also extend the comment period by 90 days.
The reason I said notably on the appropriations committee's website, I think a lot of people believe the only way this rule gets blocked, not that the administration will heed the criticism coming from both left and right about this proposal, but that the Congress may step in and block it through Appropriations.
And certainly having the Republican chair of the Appropriations Committee send a signal like this, that she is already unhappy with the direction it's going, and wants major changes, that's, again, not a very subtly veiled threat about what might happen in the alternative, if they don't listen.
Mushtaq Gunja: Well, that's good news.
Jon Fansmith: Very good news.
Mushtaq Gunja: Yeah, and I would think that all the more important, given that there might be a little bit of a crack in the door here for us to get those comment letters in. The audience is not just the administration, but potentially members of Congress here as well. So, please, please do.
Two other quick topics. The Department of Housing and Urban Development, an agency we don't usually spend a lot of time talking about here on this Public Policy Education podcast, had a letter last month, a Dear Colleague letter, arguing that race-based affinity housing on our campuses may violate the Fair Housing Act, and urged colleges to eliminate housing programs that are organized around race or ethnicity, or at least I they think they did. Jon, what do we know about that Dear Colleague letter?
Jon Fansmith: I mean, there is so much about this that I guess it raises questions, further questions. One is that the letter itself, as far as we are aware at this point, has not been disseminated on HUD's website, or to institutions where people have been able to see copies of the letter has been shared with associations. It was shared with a couple media outlets, the New York Post being the most prominent.
It was then posted on the LinkedIn page of the Assistant Secretary at HUD who the letter is from. It's also worth noting that individual was formerly at the Office for Civil Rights at the Department of Education, and was the author of the February 14th, 2025, letter that touched on things like affinity housing, what the department at that time saw as acceptable practices by institutions that three courts overruled, and the department eventually had to rescind, because it was so clearly indefensible legally.
There's a little bit of a continuation here, that that person has moved over. They're sort of beating the same issue. It is very likely to be defeated in a legal challenge. I think it's probably meant more to scare institutions. The one thing, before we move on to anything else, I wanted to share this quote with you, Mushtaq, because as a constitutional law scholar and a scholar of American history, I would like to get your take on this.
The second paragraph of the letter, don't know if you read it, but it starts with this sentence. "For decades, American youth had the privilege of growing up in a post-civil rights movement America, completely removed and repaired from its past tolerance for racial injustice."
I'm just curious if that description of where we have been over the last few decades jibes with your understanding of both where discrimination law is in this country, as well as the American experience?
Mushtaq Gunja: Somebody notes in the chat, "Yikes."
Jon Fansmith: I'm not going to actually ask for a response from you on that, but yeah, I was gobsmacked.
Mushtaq Gunja: Yeah. Let's do this. Institutions shouldn't confuse, to the extent that this is a Dear Colleague letter, it actually is, and not just disseminated on somebody's LinkedIn page, actually gets disseminated. We should remember, that Dear Colleague letters are not binding law, right? They are merely statements of how the administration is interpreting a particular segment of the law. Until we know what the courts say, we don't know.
It doesn't mean that we should ignore it to the extent that it comes out. We should inventory our affinity housing programs. We should make sure that they comply with the law. We should review admissions criteria. We should do all the things. General counsels on our campuses should be aware. But as you said, Jon, this may be an attempt to have us over-comply, and let's just take a deep breath before we go too much further. And if it becomes a thing that we need to discuss, certainly we will discuss it in future episodes of dotEDU.
Last topic, Jon. The Supreme Court ruled last week on a bunch of rulings, including on executive power, and on geo-fence warrants, and the Fourth Amendment, which I enjoyed reading. And then a ruling, of course, on transgender students. This was a decision that was anticipated by us under this court.
The Supreme Court upheld Idaho and West Virginia's laws restricting participation on girls and women's sports teams, based on biological sex, holding those laws do not violate Title IX, and they rejected an equal protection challenge as well. Jon, what do we need to know about this ruling, and what it might mean?
Jon Fansmith: Yeah. I think, and you've hit on the high points, what they ruled in the majority opinion by Justice Kavanaugh, was not, as some of the proponents of these rules would've hoped to have seen, that there would be a national ban on the participation of transgender athletes in women's or girls' sports.
What they essentially affirmed is that states have the right to maintain those. As you pointed out, that those bans are, to the court's interpretation, not violating the Title IX protections. Certainly been pointed out in other areas, there's some inconsistency in how the court has ruled as recently as, I think, 2020, on the treatment of sex and gender as it relates to transgender individuals in the workplace, and what discrimination looks like in that context versus in this context.
But functionally, there's about 24 states, I believe, that currently have bans in place, three other states that have bans in law, but not currently in effect. Those will be allowed to go forward. The Court is upholding those. It does not mean in states in which those bans are not in place, that they will have to adopt limitations on the participation in athletics.
The other thing, of course, is that as a result of this, the NCAA had already put in place a policy that effectively mirrors this. So, to the extent in the higher education space there is a impact on our athletics programs, that impact's already been in place. Certainly, institutions in certain states could have club teams, or other recreational teams in which that participation would be allowed.
But certainly for sanctioned NCAA competitive collegiate athletics, that has not been the case, and the Supreme Court's decision doesn't fundamentally change that.
Mushtaq Gunja: Well, thanks, Jon, for helping us explain that. One piece of financial aid news, as we transition to having Melanie on one piece of welcome news maybe for campus employees, two federal district court judges recently blocked the Department of Education's recent rule that it would've excluded employees of organizations deemed to have a substantial illegal purpose from the Public Service Loan Forgiveness Program.
The courts concluded that the department likely exceeded its statutory authority, and that aspects of that rule violated constitutional protections. That rule has been vacated for now, at least while litigation continues. So, that probably didn't affect, it may have affected every institution, probably didn't affect that many students, but it's good that the courts have ruled, at least temporarily, for that way.
It's funny, just one common theme across these topics, it feels to me like the federal government continues to use guidance, document, litigation, executive action, to reshape higher education policy. But many of those actions are not the final word. I mean, we need to distinguish between policy announcements, LinkedIn announcements, and binding court decisions, because the difference there is huge.
I think that the administration might be tempted to try to make us conflate what is binding and what is not. And with that, if we could bring on Melanie Storey. Melanie is the President and CEO of the National Association of Student Financial Aid Administrators. Melanie, I think you've been in that role for just over a year, if I'm remembering that right? Anything happen in that year?
Melanie Storey: A peaceful, quiet entry into the role.
Mushtaq Gunja: And Melanie, we're going to ask you, if I can see you, we are going to ask you a whole set of questions about... there you are... what financial aid administrators are dealing with right now. I don't know how often you join this webinar, but often we end by telling everybody to go find their nearest financial aid administrator and give them a big hug, and wish them strength through this trying time. And so, thank you for joining us. Can't wait to unpack some of these changes with you.
Jon Fansmith: Melanie, just to start.
Mushtaq Gunja: Yeah, go ahead, Jon.
Jon Fansmith: Before you start, I actually, and I apologize for putting you on the spot here, Melanie, but I wanted to ask you, what I have heard is the singular most pressing issue among your membership, that in over a year of your leadership you've yet to address, which is, when will you bring Jon Fansmith back on the Off the Cuff podcast? I get it all the time. It seems like you're dodging the issue, and I don't want to create a leadership crisis, but...
Melanie Storey: Well... I was going to say, Sarah is a tough act to fill in for, but that I would do my best to pick on Jon in her stead, because it's like a sport. But apparently you've beaten me to the punch here.
Jon Fansmith: I knew it was coming. I had to get my shots in first. Yeah.
Mushtaq Gunja: Melanie, just to start-
Melanie Storey: Well, I don't know, Jon. We'll still have to wait and see. We'll wait and see if you're... I mean, Off the Cuff is one of the premier podcasts of higher ed, predating dotEDU.
Jon Fansmith: Some would argue it slipped recently, but fine. I accept that.
Mushtaq Gunja: Okay. So, Melanie is definitely doing her best Sarah. Feel free to keep making fun of Jon, and just arguing. I think that generally...
Melanie Storey: I mean, I just like to keep the tone consistent for everyone, if that's good.
Mushtaq Gunja: Melanie, all right. So, July 1st has come and has now passed. There were a whole set of new loan changes that will impact campuses. What are you most paying attention to, and what can campuses do to support our students with these new loan models?
Melanie Storey: Yeah, thanks. So, yeah, July 1 has come and gone, and the sky hasn't fallen, but we're barely holding it up, I think, right now, on all of the changes. I'm just coming off of our national conference, so really had the opportunity to talk with financial aid administrators who... I mean, really, July 1, people were like, "Get to July 1."
Well, for financial aid professionals, July 1 is really the starting gun of a marathon that's going to continue into the fall, at least through the next year, likely more, depending on how some of these lawsuits go. Quite frankly, we're entering that marathon already pretty tired. It's been sort of a ultra-marathon, if you will, that we're still running.
But by and large, I mean, I came out of the conference feeling like this is an incredibly resilient group of folks. I said I would retire the word unprecedented, because I'm just convinced that it no longer means what you think it means, because it just keeps happening. But clearly, our focus leading up to this and going forward is all, we call it OB3, having One Big, Beautiful Bill, Working Families Tax Cut Act, HR1, reconciliation, call it what you like. That remains our focus.
I mean, really, I think right now where my members are, are really desperate for information that they can count on, and that they can clearly communicate to students and families. These are really complex changes. Some of them seeming very behind the scenes and hard to relate to students and families about how very important they are.
Unfortunately for financial aid, so much is in the details that then we have to translate it to what is the real impact on students and families, and on institutions. That can often sound really weedy. And so, we're constantly trying to help our members identify the issues in a broader context.
Something like schedule of reductions, which I'm sure we'll talk about going forward, but can have huge impacts not just on how a student finances their post-secondary education, but it could have impact on the enrollment and the financial stability of an institution going forward, depending on some of the really weedy impacts.
And so, making sure that college and university leaders are aware that these seemingly minute changes can have huge impacts. But being able to communicate the details to different audiences that will be significantly impacted is front and center. I personally, on behalf of NASFAA, just really worry, thanks for the hugs at the end of the podcast, but I do worry about just the ongoing volatility for the financial aid profession.
It was already a challenge to staff offices with the appropriate expertise and sufficient resources. It isn't characterized as an easy place to work these days. And so, not an easy place to recruit. Maybe not quite as hard to recruit as federal student aid is right now, but still pretty hard to recruit folks into the profession.
And so, just really being an advocate for the profession for your members, to college and university leaders, that hugs are great. Resources also super important, and really critical broadly to the institution and to the students and families who enroll.
Jon Fansmith: And you're getting lots of hundreds and other affirming comments.
Melanie Storey: Did I load the audience with all my members?
Jon Fansmith: Well, they're always welcome. No, but let me dig in a little bit on this, too, because I think I spend a lot of time trying to explain to people what's happening. There's the 30,000-foot analyst level of talking about these things. And then there is, take grad professional definition, for example.
We had a definition that was in the statute that was very, very different than how the department chose to interpret it in the regulatory process. And then what, three days before the July 1st deadline? We had a court weigh in to say that the department erred in the regulations, and that they needed to follow a new four-point definition reflecting language from their own regulation, and then the department amended which field.
Just maybe for our broader audience who aren't living this nightmare, how do you explain to a student what this means? What does that actually look like on a campus when you're having these conversations when literally, within days, the rules are changing?
Melanie Storey: Yeah. Well, it's a lot of what you started with. Trying to wrap your arms around it. So, right, just on the Friday before July 1, the court issued a temporary stay, but then you get complicated. It's a stay not on the merits, it's a stay on the process, without even getting into that level of detail.
So financial aid professionals immediately have to read it, look at, ACE, NASFAA, everyone, try to figure out what does this really mean today and in four days? What does this look like? They have the added pressure of particularly graduate students who are watching this issue very carefully. So they are immediately calling their financial aid office. I sometimes joke that financial aid offices are the Ghostbusters of campus. Who are you going to call? They're the ones that take the calls.
"Am I eligible for $50,000?" Our advice to our members has been, "I know it's frustrating. But we all have to take a beat." We need to take a beat on this, because while yes, some additional fields were designated as professional in this temporary order, we need to look at the long-term implications of that, while we are in this time of uncertainty.
Because if they were to borrow $50,000, and they get their first 25,000, let's say in the first semester, and then the court rules in the department's favor, now you have exhausted your loan eligibility for this year, and you may have no resources available to you. So, I understand the urgency of there it is. I've filled the gap. But you are entering a different level of danger zone, in terms of what that might mean for your full pursuit of your program.
So, we are really very much, and trying to get this message out to students and campus administrators, because it's not shocking and not unreasonable that deans of these programs are also calling the financial aid leadership, and saying, "Oh, great. Now our students have these additional monies available." I urge the campuses to proceed with caution, to really think about what are the right financial choices for both the students that you're supporting, and the institution, and trying to balance that out.
That is a super unsatisfying answer to students. I just own that. But if the goal is really to get you through the program, we have to ride some of the uncertainty. This is really an exercise in living with ambiguity, and it's not comfortable for anyone. Not comfortable with campus leaders, miserable for students, and it's really hard for financial aid professionals who are in the middle of it.
But I think each campus needs to come together, and all of the relevant offices from the Chief Financial Officer to Financial Aid, the deans, all of it, and figure out what is the right path for our students, based on your price point, your length of program, all of these things.
So while we are glad that the courts are weighing in on this to make sure that we are on the right path, it does add yet another level of complexity for the counseling of students and for the administrating of the programs.
Jon Fansmith: Well, and pulling at some threads there, too, talking about the ambiguity, and the choices that are being made, and decision points, and the overlapping factors, students wanting to know what they can borrow, making a decision about enrolling, programmatic choices having such a huge impact on what aid may be eligible to them.
When these rules were being proposed, frankly, when the department first announced rulemaking, we said repeatedly, the master calendar would dictate that implementation starts July 1, 2027, not July 1, 2026. I think anticipating that the timeframe to put these changes into effect and to understand them, and for students to have the information in front of them, and financial aid offices to be able to clearly explain and the department hasn't done that, I'm not going to revisit that.
But has there been any consideration by the administration about the fact that all this externally imposed ambiguity might result in choices being made that ultimately have consequences that weren't intended, or desired, and that there might be some sort of hold harmless period, or safe harbor provision, where some of these changes, given the rushed implementation, could be reexamined and maybe addressed retroactively, given the sort of nightmarish environment financial aid offices find themselves in? I don't know what a better way to put it is.
Melanie Storey: Nightmarish situation. I mean, it really is, though. So, of course, the master calendar was in place for just this purpose, to smooth out these rough edges that are going to happen in the policymaking process. It's complicated. I agree. Ideally, we would've had a master calendar implementation that clearly was made clear to all of us, but that was not going to happen.
NASFAA did send a letter to the department asking for flexibilities, safe harbors, call them what you will. But that particularly schools, I don't want to get into the nuances, but summer headers. So, if you have a summer session, it can be the beginning of the financial aid year or the end. It's in the beginning. Those often start in May or June before crossing over this period. They had to make decisions on the '26-'27 award year, before we had even published rules, no less we don't understand some of the interpretation of the published rules.
So, we did ask for those flexibilities. What we have heard, and Under Secretary Kent said this at our conference last week, they are signaling that they will look at institutions, as long as they are doing their due diligence, doing their best to implement based on the information they have at the time.
Now that is not a very comfortable space for financial aid administrators who are important stewards of billions of dollars, and take compliance very seriously. Now, while it's helpful to hear that from the department, and as that relates to program reviews, that's somewhat helpful. Document, show what you did on the time you did it, what was in effect at the time that you did it.
That said, we have other auditors, institutional auditors and state auditors and others, for whom that may or may not prevail in any way. And that is a very disconcerting place for financial aid administrators, and should be for the entire campus leadership team, because non-compliance issues can result in serious financial fines and implications there.
So, we continue to press for that, to try to document things as they evolve. That gets increasingly complicated now that we're in these kind of stays and different court actions. The most we can do is try to do our due diligence each day, based on where we are, and try to work students through it.
The hardest part, of course, is that changes result in the needing to reduce aid or take aid back. And so, schools are very reluctant, and are very careful about over-rewarding, because that can really be devastating to a student's enrollment, and stop-outs often become drop-outs. And so, with an eye to that, it is a really nightmarish kind of time, given all of the different moving pieces right now.
Mushtaq Gunja: Three quick thoughts from me. One, this is precisely why we have been harping on the master calendar now for a year. We haven't been doing it to be obstinate. I mean, if you don't give institutions enough time to be able to comply, then things will fall through the cracks. I mean, so that's point number one.
This might just be my lawyer hat being put on, but for those financial aid administrators that are here listening to this, I would urge, probably it's useful to call over to general counsel, to your counsel's office at your institution.
As you document what you're seeing in your records as you're administering this aid, let's make sure that we've got the right memos to file, that's documented and saved in the right places, just in case, God forbid, some dollars go out that aren't supposed to go out. At least we'll have them in the right places. So this is a whole of institution approach, I think, for sure.
And third, I mean, and this is the heartbreaking part, the folks that are most going to be affected are those that are the least able to afford our campuses, and need the financial aid. Our more wealthy students are able to go to campus. But these are the folks that are... It's always those that need it the most that have the most hurdles to jump through. So, I really do salute you and everybody here.
Melanie, I know almost everybody here has been following along, but just so that we're clear, where did we land on which programs are considered professional degrees, and which ones are graduate degrees? What impact, if any, do these recent court decisions have on that question?
Melanie Storey: Oh, I don't have the list in front of me, but there was an expansion from 11 to 20-ish, I think is the number, maybe 21 additional. So, it was an expansion of the definition. So, for this interim stay period, institutions can... And the department, just to say, the department issued an electronic announcement to clarify their approach to the judge's order. Oh, thank you. I see that that was linked. So that will have the list of CIP codes. These are the actual program codes that are now eligible.
But the department was also clear to say that while institutions, after July 1, could award loans at the higher loan limits for those programs, there could be issues on the backend. And I referred to that earlier, in terms of hitting your aggregate limit, depending on where the courts may go, once they rule on the merits of the issue.
But you saw an expansion to a number of the programs that were identified in the lawsuit, although some would argue not all of them. So, this is not a closed issue. We also see significant activity in Congress on this, on both sides of the aisle. I think some recognition that the implementation and the regulation on this was not maybe as they had anticipated it to go.
And to your point, Mushtaq, the people who are most impacted are those with least availability to access any kind of private loan capital. Even at the undergraduate level, for students whose families may rely on the PLUS loans, that those limits also impact them. And so, this is a kind of ongoing challenge. I mean, I keep saying it and I'm tired of the word complexity, too, but as these program lists potentially shrink and expand, it's very hard to speak with any kind of clarity and one voice on it.
Jon Fansmith: Related to that actually, too, Melanie, I'll say, so you just had your annual meeting last week, which I know very well attended as always, I'm sure, and a great and vocal group of attendees, if it's anything like my previous experiences with the meeting.
We are trying to figure out, and we hear so many anecdotal reports about this, about the kinds of changes as a result of OB3 and what they mean for student choices. Are they moving away from programs where they think financial aid might not be available to them? Are they changing behaviors in ways that are reflective of the policy changes?
Given this very ambiguous and uncertain and lots of gray, not lots of black and white environment, some of this has to resonate with students who are applying and making these decisions, even if it is the uncertainty maybe makes me more hesitant. Were you getting a sense of that from your members, or is it just all over the map?
Melanie Storey: I mean, I think you see a difference by type of institution. I think certainly those who are at a, I can't say it's either just private nonprofits or just public fors, because, depending on your out-of-state population, they're going to have a different financial picture.
But I did hear overall, it does throw the admissions calculus into some disarray as well. Say what you will about enrollment management, but it is about building a class and doing all that. But it's based on data, historical data, in terms of choices and aid, and all of the things that are offered.
When you have this kind of significant impact on what's available, people are looking at their choices differently. How far away from home they'll go, what kinds of direct expenses can they tolerate if they can moderate their indirect expenses, which are the things they can control, transportation, those kind of things.
And then I don't know that, particularly at the undergraduate level, I don't think that program choices have really kicked in yet. We may talk about the accountability rule. I think that's where you'll start to see real impacts on program choices. I think, based on what has happened over the last year and a half, we have already seen challenges for graduate and professional students, in terms of their enrollment.
I think in today's trades, there was a significant decrease in PhD enrollment was reported. We're starting to see that, how it's a confluence of issues. It's international students, it's challenges to research dollars. But all of this ties into the financial picture for colleges and universities, and what kind of aid is available, either from the institution, from the state, from the feds, is part of that aggregate pot of monies available.
Ultimately, I think it's reasonable that we're going to start seeing shifts in enrollment. It may be starting at the graduate level, but I think that's not going to be the end of it, going forward.
Jon Fansmith: Yeah. I think obviously, institutions will have a better sense of what's happening on their own campus, but I don't know that there'll be any more closely watched enrollment reports over the last two decades than the ones we're going to see in the fall, and what the trends are looking, especially like you said, at the graduate level.
Melanie Storey: Yeah. And summer melt, we know what it looks like now. But come August and September, who arrives on campus will be very, very closely watched.
Jon Fansmith: Well, you mentioned... Oh, sorry.
Mushtaq Gunja: Go ahead, Jon. Go ahead, Jon.
Jon Fansmith: Aren't we polite? You mentioned the accountability rule, and I think people, if they've been watching us regularly, have a general sense of where we stand with that. This was part of OB3 as well. This was the idea that every academic program from certificate through PhD level would be assessed. Essentially its quality and ability to access federal financial aid would be determined on a pretty simple earnings premium test.
If your graduates, four years out, were earning more on average than a comparison peer group of either high school graduates, 25 to 35 for undergraduate programs, or graduate programs measured against BAE recipients, 25 to 34 within their state or nationally, and other sort of criteria, as long as their earnings exceeded those averages, program retains eligibility.
If they fail it for one year, every student, current and prospective, applying to those programs gets a notice that this is a financially non-beneficial program. And then two out of three years, you lose access to federal student loans. And then, in some cases, if a large enough portion of your students or the Title IV aid going to that program, 50% or more, then you lose access to all federal financial aid, for students in the program.
That went into effect July 1st. There's some tweaks in the final rule that we saw in the last couple of weeks that just came out. What I think most of the coverage followed in on, and one of the reasons I asked about trends in enrollment, was certificate programs, certainly certificate programs being held against the earnings of high school graduates, who in some cases may be 8, 9, 10, 11 years older, further in the marketplace than them.
Challenges, religious programs, social work programs, programs leading to fields that are generally low earnings, all of those being at risk. Certainly the department, their final rules included delaying for a year tip income, because now tips are not taxable anymore. I think cosmetology programs in particular look like they're going to be very hard hit by the accountability rule.
You mentioned we might see the trends coming from that. Has there been a lot of discussion in the financial aid community about what this accountability rule will mean for the programs on their campuses? Whether they're seeing trends in participation or interest in those programs yet, or is it too early?
Melanie Storey: So, I want to say yes, but I'm going to say no. I mean, in candor, there's an awareness of it, and there's been some really good analysis done to try to get at what programs are going to be impacted, whether campuses are doing it on their own programs, trying to gather the data or other folks are doing it.
But from the financial aid office perspective, the loan, the Workforce Pell, the other changes were so immediate and enormous. The truth of the matter is, the accountability stuff is on a more delayed timeline. The first reporting this October, as you highlighted, first year impacts, but significant impacts not until '28. That feels like a luxury at this point, that kind of timing.
And so, I think you're starting to see schools gather their own data to do their analysis, because no one wants to be in the headlines that they have programs that don't pay off, whether or not that really is what the data says, as you outlined. But I don't think we have put our full attention to it just yet. Trying to get to July 1, and I would say at least get through this fall, to understand with all of the changes.
And then I think we'll see more attention to the accountability data and what that's going to look like. Also, we just got the final rules. I suspect we'll get some more guidance on that. Although guidance has been hard to come by in the traditional sense, through this process, I'm hopeful that on the accountability pieces we'll see that.
But program level accountability is a big deal. It can have huge impacts on an institution, depending on the makeup of their programs. But it's kind of like a quiet killer in some ways. I mean, for some schools that won't have the, they may quietly close programs before it becomes an issue, as kind of a preventative effort.
But again, I don't want to get into the data details. But is it really saying what the concept that you should have greater employment outcomes with higher education, is not an unreasonable concept. But how one measures that is incredibly complicated, and the timing of that, like you said, certificates versus degrees, those kind of things.
And so, I'm also, as you know, the GE financial value metrics that we were living with before, I think we're on, I don't know, round four of those because of the complexity? There's this part of me that feels like we're not done yet. I mean, when the data starts rolling in, I think there'll be a lot of questions.
We'll also be in an election year, when some of that starts rolling in, and members of Congress are sensitive to colleges and universities and as important parts of their community, employers. So, I think there's probably still more to be written on this. So, financial aid professionals are watching it, with probably a little less close scrutiny than they are on some of the other things.
Mushtaq Gunja: Melanie, good questions in the chat I might direct your way, and Jon, feel free to weigh in, too, if you see them. First, the question's come up a couple times. Lifetime limits on Parent PLUS Loans per student and per family. I know that our Parent PLUS borrowing rules have changed. What are they now, Melanie?
Melanie Storey: So, 20,000 annually, with an aggregate of 65,000. So, you do the math there, for a four-year degree. We have a misalignment there, a little bit, one could say. But, yeah, the new limit is an annual 20,000 per dependent. And so, you have multiples in college, you have a little bit more, but only 20,000 per student, and then an aggregate PLUS of 65,000 per dependent. So, that's a big change.
Mushtaq Gunja: Yeah, a huge change. Melanie, there are a couple of references here to something I'm a little unfamiliar with. The Minnesota Grad PLUS model? Can you explain what that is, if you know what it is? I don't.
Melanie Storey: Yeah, so I think I know what it is. So, we're seeing a number of states, Minnesota being one, and some institutions, in response to the loss of Grad PLUS, are creating their own loan programs, backed by either state bonds, backed by the state, or by the institutions. And so, I think there was an expectation, and I think it's a reasonable expectation, that the private loan market would step in to fill some of the gap, at least.
At least what I'm hearing from my affiliate members, they want to create new products and tools to help these students. But quite frankly, they are also bound by new lending rules and important underwriting rules. We've been through other financing crises in the housing market and others when we react without data.
And so, I think we're in a really painful place right now, where the private market needs to gather some data before they can figure out what kinds of products and services they can offer to a wide swath of students who perhaps don't have the kind of credit availability, or co-signer access than others.
And so, in recognition of that, I think you're seeing states and institutions who have the resources and the wherewithal, the political will to do that, to find some, I don't know if it'll be permanent or bridge funding until this shakes out. But the loss of Grad PLUS, I mean, there is a three-year grandfathering or legacy, call it what you will.
But for new students, for those who were planning to enter this fall, that was a real shock to the system. They applied last fall, and all of a sudden... So the Minnesota plan is one of those that we're seeing emerge.
Mushtaq Gunja: Well, would love to gather as many examples of what is actually happening in what states, and others might be able to do, because I think Jon and Sarah and I have been discussing how do the private lenders come in? How might states bridge? It's a real challenge.
Melanie Storey: I think we will see the private lenders come in, but more slowly than the students who are entering right now need.
Mushtaq Gunja: Questions in the chat about... Oh, go ahead, Jon.
Jon Fansmith: I was just going to, we've seen some of the analysis, some of the reports. Really good research on this that it's going to be challenging, because there are only so many lenders who will be in this market who are set up to do this, given all the really difficult constraints, in terms of offering these products.
And then a lot of students, I think 40% of students, [inaudible 00:55:17] Philadelphia Feds Analysis, fall below the credit threshold that is generally the underwriting standard for loans. So, you're going to have to figure out the private lenders may move in, but it may not necessarily be a full solution to some of the existing gaps, which are likely to be pretty big.
Mushtaq Gunja: And probably won't have all the protections that the federal student loan program used to have, which is...
Melanie Storey: No, of course not. Right.
Mushtaq Gunja: Couple references, questions about Workforce Pell. And Melanie, I know you made reference to it, too. It's early days, still. I mean, it will be for a little while, but what do we know? Jon, any changes on the Workforce Pell side? Melanie, what are financial aid administrators doing to prepare?
Jon Fansmith: Yeah, I don't think the regulatory process, at least, implemented significant changes, and credit to the department. I think I can say on this one, that they did their best to anticipate some of the concerns and provide some flexibilities. Curious to hear what Melanie has to say.
I think what I've heard from campus folks and workforce folks, is that the process in the statute was already so explicit, and so, I mean, there are multiple separate entities that have to weigh in at different stages of this. There's some real lack of clarity necessarily about whether a program would meet some of... The idea being essential within the state workforce, and is it aligned with area needs and other things?
And then earnings and placement outcomes that a number of programs that you might think naturally would be able to fall under the Workforce Pell expansion. Schools are being a little cautious about what they want to go forward with. I've said this, and I think on this podcast, but I think we see the hockey stick effect. I think we're going to see a small number of programs across the country for a while, until lessons are learned and pathways are built, and then they'll start to accelerate down the road.
But it seems like a lot of people waiting to see how things will sort out, and credit to the people who are forging ahead and trying to make it work, but I think it's probably going to be a pretty small group in the near future.
Melanie Storey: That's what I'm hearing from my members, too. They're anticipating it to be kind of a slow burn, and then the hockey stick effect, or a flywheel. From an administration point of view, it's just Pell. It's just we need the programs to be approved by the department, and then there's some work on the financial aid office end for the eligibility on that side. But there's not a whole lot more that they need to take on. It's really on the front end, as Jon said, what programs will apply, and the states will approve, and then the feds approve.
Mushtaq Gunja: We are almost at time. Let me ask one last question, Michelle's question from the chat. What's one thing that you think we should be looking out for with our financial aid administrators, Melanie, maybe you can take that, and Jon are, the administrators on this call. What's the next thing to watch out for over the next few weeks? Melanie?
Melanie Storey: Oh, a few weeks? Oh, goodness. I was hoping we were like, next year. What should we be worried about next year? Can we please have a breath of... I'll take it first. So, in the next, I'll say semester, I'm going to say few weeks, this semester.
I do think the schedule of reductions is a sleeper issue. We have very limited guidance on it, although the department assured us they would be putting out more. It is a very complicated process, despite being told that it is very simple, just because of the level of nuance and circumstances that are there. So it tends to be outrageously manual.
I mean, even though the systems are racing to catch up, there still will be so many adjustments, and the workload of that is panning out to look really extraordinary, and has incredibly difficult implications for some of the students on campus. So, schedule of reductions is going to anger students and families, I think, this fall and into the spring, and as I mentioned earlier, could have enrollment impacts.
If I'm pushing out the lens a little bit further, I do think some of the additional regulatory efforts are something that financial aid administrators continue to need to watch. Accreditation, some of the other return of Title IV Christmas tree ornament issues that Under Secretary Kent mentioned last week, can be really complex and sleeper issues for my folks.
Everybody sees it as a financial aid problem, but it really ultimately becomes a campus problem. So, those are the things we're really keeping an eye on.
Mushtaq Gunja: Jon?
Jon Fansmith: I mean, Melanie hit all the key ones. I'd say the one other thing just dropped last week following up on her point about regulatory rules changes. The department last week announced their unified agenda, what they plan to do more rulemakings on, and there is a lot in there around Title VI and Title IX civil rights, and what they intend to do.
Given what we've seen from them so far, I think certainly lots of reasons to be concerned about the changes they'd like to make additionally going forward. So, be paying a lot of attention to that.
Mushtaq Gunja: Well, at least it gives us something to talk about in future episodes, Jon. And hopefully Melanie will join us again if we didn't scary jump Melanie. You did an amazing job of walking us through all of this.
Jon Fansmith: No, it was so gentle. She could destroy me if she chose, and she didn't.
Melanie Storey: I'll invite you back to Off the Cuff, and I'll do it in my own house. I won't destroy you at your house.
Mushtaq Gunja: Well, Melanie, thank you for your leadership. Thank you for joining us. Thank you everybody for joining us here today. Please do take a look at our uniform guidance letter, and the others of the associations. Please, please weigh in, and we will see you at least one more time before the end of the summer, Jon. I think that's right?
Jon Fansmith: I think we've got one more before we break over August, yeah.
Mushtaq Gunja: Yeah, we do. And anyway, thank you all for joining, and happy 4th, everybody.
Jon Fansmith: Bye, all.