New veterans education law reinstates foreign student recruitment carve-out to incentive payment ban

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After nearly one year of advocacy efforts and watchful waiting by education associations and other stakeholders, Congress has now confirmed via legislation that institutions may approach incentive payment requirements for U.S. Department of Veterans Affairs (VA) administered education programs in the same way institutions have under U.S. Department of Education (ED) rules. On December 21, President Biden signed into law the Responsible Education Mitigating Options and Technical Extensions Act (“REMOTE Act”).  Among other things, the REMOTE Act amends prior legislation to permit incentive payments for the recruitment of foreign students outside of the U.S. who are not eligible for federal student financial aid.

After nearly one year of advocacy efforts and watchful waiting by education associations and other stakeholders, Congress has now confirmed via legislation that institutions may approach incentive payment requirements for U.S. Department of Veterans Affairs (VA) administered education programs in the same way institutions have under U.S. Department of Education (ED) rules.  On December 21, President Biden signed into law the Responsible Education Mitigating Options and Technical Extensions Act (“REMOTE Act”).  Among other things, the REMOTE Act amends prior legislation to permit incentive payments for the recruitment of foreign students outside of the U.S. who are not eligible for federal student financial aid.

Background

In January 2021, the Johnny Isakson and David P. Roe, M.D. Veterans Health Care and Benefits Improvement Act of 2020 (“Isakson Roe Act”) became law.  The Isakson Roe Act modified requirements related to GI Bill and other VA-administered education funds via legislative changes to title 38 of the U.S. Code.  Among its provisions was a prohibition (with limited exceptions) on “inducements . . . for the purpose of securing enrollments” (Section 1018, effective June 2021) and a seemingly blanket prohibition on incentive payments – i.e., “any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid to any persons or entities engaged in any student recruiting or admission activities or in making decisions regarding the award of financial assistance” (Section 1020, effective August 2021).

Prior to the Isakson Roe Act, the relevant statutory provisions had included language indicating that the VA would, “[t]o the degree practicable,” interpret incentive payment requirements “in a manner that is consistent with the Secretary of Education’s enforcement of section 487(a)(20) of the Higher Education Act of 1965 (20 U.S.C. 1094(a)(20)).”  38 U.S.C. § 3696(d)(2).  Under the Higher Education Act and ED’s implementing regulations, use of incentive payments for the recruitment of foreign students is permitted; specifically, the HEA provides that the ban “shall not apply to the recruitment of foreign students residing in foreign countries who are not eligible to receive Federal student assistance.” 20 U.S.C. § 1094(a)(20); see also 34 C.F.R. § 668.14(b)(22).  Although a Fact Sheet issued by the VA later that month indicated that “[t]he new standards would align VA with those applicable for the schools participating in the [ED] Federal Student Aid program,” the plain language of the amended statute did not align with such intent.

Several months later, in June the Training in High-demand Roles to Improve Veteran Employment Act (“THRIVE Act”) became law.  The THRIVE Act further amended the Isakson Roe Act by replacing the Section 1018 language cited above with language tracking Section 1020 and setting an effective date of August 2021.  A subsequent VA bulletin indicated that with respect to the incentive payment ban, “schools are already subject to the requirement under 38 U.S.C. § 3696(d)(1).”  While that provision indeed contained a prohibition on incentive payments, its counterpart – (d)(2) – included the language above regarding consistency with ED enforcement.  Again, a misalignment between apparent intent and the plain language of the amended statute.

The VA permitted institutions to submit a waiver request for Section 1018 requirements, including the incentive payment ban provision, in order to avoid penalties for noncompliance.  No waiver process was offered for Section 1020.  Education associations and stakeholders continued to advocate for a technical corrections bill to address, among other things, the lack of an incentive payment ban carve-out for foreign student recruitment.

REMOTE Act and Incentive Payments

After two bills were introduced in the U.S. House of Representatives in October to address the incentive payment ban and other topics, both the U.S. House of Representatives and U.S. Senate passed the REMOTE Act in December.  With respect to incentive payments, the REMOTE Act:

  • Reinstates the prior carve-out to the incentive payment ban (38 U.S.C. § 3679(f)(2)(B)) to allow institutions to make payments based on success in securing enrollments for recruitment of foreign students who are not eligible for federal student aid consistent with how ED has interpreted the similar HEA carve-out;

  • Provides that the VA “shall construe the requirements [of the incentive payment provision] in accordance with the regulations and guidance prescribed by the Secretary of Education under section 487(a)(20) of the Higher Education Act of 1965 (20 U.S.C. 1094(a)(20))” – i.e., reinstates language deferring to ED’s interpretation of incentive payment requirements (38 U.S.C. § 3679(f)(2)(C));

  • Exempts foreign schools that are participating in the VA program from the incentive payment ban and other requirements identified in 38 U.S.C. § 3679(f); and

  • Permits institutions to request waivers of the incentive payment provision and other requirements identified in 38 U.S.C. § 3679(f) beginning June 15, 2022 (the requirements will be enforced as of August 1, 2022).

Conforming amendments to the foreign student carve-out and ED deference were also made to 38 U.S.C. § 3696(c).  The REMOTE Act, then, effectively “corrects” the Isakson Roe/THRIVE Act Section 1018 and 1020 provisions that previously failed to include this language.

Other Topics Addressed in the Isakson Roe, THRIVE, and REMOTE Acts

Beyond incentive payment matters, the Isakson Roe, THRIVE, and REMOTE Acts address other topics relevant to veterans education programs, including, for example: program-specific eligibility and approval requirements; consumer disclosures, advertising, and recruitment; and policies and flexibilities developed in response to the COVID-19 pandemic.  The VA maintains webpages that provide guidance about the Isakson Roe/THRIVE Acts, the REMOTE Act, and COVID-19-specific information.

Next Steps

We suggest that institutions assess compliance with the various veterans education program laws in relation to institutional policies, procedures, practices, and contractual arrangements, and consider whether to seek available waivers.

We remain available to advise institutions on these and other aspects of veterans education program requirements.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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