The Academic Advisor - Education Law Insights, Issue 10, December 2023

Kevin Carr, Lisa Hawrot, Erin Jones Adams, Malcolm Lewis, Shane Riley
Spilman Thomas & Battle, PLLC
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Welcome

Welcome to the 10th edition of The Academic Advisor for 2023 – our e-newsletter focused on education law insights.

In this final edition of the year, we cover the following issues of import for educational institutions:

  • CFPB scrutiny of college-sponsored financial products;  
  • Changes ahead for Title IV program participants and third-party servicers;
  • Privacy and compliance in teacher communication;
  • Use of biometrics in higher education;
  • Tragic losses associated with school bullying and resulting litigation;
  • Early decision methods since the ruling against race-conscious admissions; and
  • The latest on “Plan B” for student loan forgiveness.

In addition, as we look ahead to 2024, the U.S. Department of Education now plans to release the new Title IX regulations and final rule relating to gender equity in athletics in March. Initially scheduled for publication in May 2023 and later rescheduled for release with the athletics rule in October 2023, the new Title IX regulations will require schools’ attention in 2024. Although the effective date will likely give schools until (and hopefully through) the summer to fully implement policy updates and training, we encourage institutions to consider their stakeholders, institutional procedures, and internal time frames for facilitating these changes well beforehand. Spilman attorneys stand ready to assist our clients with these changes to Title IX. 

We wish you and your institution a joyous holiday season and a prosperous 2024!

As always, thank you for reading.

Erin Jones Adams, Member, Co-Chair of the Education Practice Group, and Co-Editor of The Academic Advisor

and

Kevin L. Carr, Member, Co-Chair of the Education Practice Group, Co-Chair of the Labor and Employment Practice Group, and Co-Editor of The Academic Advisor

CFPB Report Finds Many College-Sponsored Financial Products Charge High and Unusual Fees

"Annual student banking report highlights the steep costs and unfavorable terms of college-sponsored credit cards, deposit accounts, and other financial products."

Why this is important: In a report issued today, the Consumer Financial Protection Bureau (CFPB) has found that many college-sponsored financial products, such as deposit accounts, credit cards, and prepaid cards, have higher fees and worse terms than typical market products. By way of example, the CFPB report highlights college-sponsored deposit accounts with fees above the prevailing marketing rates, which institutions must consider under U.S. Department of Education rules. As a captive audience, the CFPB suggests students are more likely to accept schools’ recommendations relating to financial products without the competitive pressure to lower fees or provide low-cost products traditionally found in the marketplace. Among the student risks identified in the report, the CFPB indicates: 

  • Colleges’ financial product partners may charge students high or atypical fees;
  • Fees paid by students often vary by institution type (with accountholders at Historically Black Colleges and Universities, for-profit colleges, and Hispanic-servicing institutions all pay higher-than-average fees per account); and
  • Students face unexpected fees at graduation (including monthly maintenance, overdraft, and NSF fees). 

In gathering the data, the CFPB reviewed publicly available information on college websites regarding financial products that colleges offer directly to their students or jointly market to their students with third-party providers. According to CFPB Director Rohit Chopra, “[s]chools should take a hard look at the fees and terms of the products they pitch to their students and alumni.” The report notes that the CFPB will continue to examine these practices and identify possible violations of federal consumer financial protection law. --- Erin Jones Adams

Biden-Harris Administration Seeks Nominations for New Higher Education Program Integrity and Institutional Quality Rulemaking Panel

“These nominations are the second step in a process known as ‘negotiated rulemaking,’ which is required under the Higher Education Act for any regulations related to the Federal student financial aid programs.”

Why this is important: The U.S. Department of Education (ED) recently announced its plans to establish a negotiated rulemaking committee that will meet to rewrite regulations addressing the “nuts and bolts” of Title IV programs under the Higher Education Act (HEA). As ED explained in its notice, the committee nominations are the second step in the negotiated rulemaking process required under the HEA for any regulations relating to federal financial aid programs. (The process began with public hearings and a request for public comments in April 2023.) According to ED, the narrowed topics for negotiation include:

  • Recognition of accrediting agencies by ED and related issues;
  • Institutional eligibility, including state authorization;
  • The definition of distance education as it pertains to clock hour programs and reporting for students who enroll primarily online; 
  • Return of Title IV HEA funds; and
  • Cash management to address disbursement of student funds.

For educational institutions that participate in Title IV programs, 2024 promises new regulatory challenges concerning these subjects.

Importantly, within this announcement, ED also forecasted its plans to revisit the subject of third-party servicers with “updated guidance…in early 2024.” For eligible institutions under Title IV of the HEA and the vendors with which they contract for services, ED guidance issued in 2023 was (and remains) cause for concern. In a Dear Colleague Letter issued in February 2023 (DCL), ED conveyed its plan to significantly expand the scope of functions covered by third-party servicer requirements and in turn subject a broad category of college and university affiliates to HEA regulations. Originally set to take effect May 1, 2023 and later extended through September 1, 2023, ED ultimately suspended the compliance deadline for this DCL. Instead, ED indicated it would “issue a final revised DCL with an effective date at least six months after publication to allow institutions and third-party servicers covered by the final guidance to meet any reporting requirements.” 

Higher education institutions and their affiliates should expect the “updated guidance” slated for early 2024 will address the subject of third-party servicers and functions covered by Title IV HEA requirements. For a covered third-party servicer, among other requirements, this means submitting to an annual compliance audit of the functions it performs on behalf of eligible institutions absent limited exceptions and adhering to other regulatory requirements. For colleges and universities affiliating with a third-party servicer, this means reporting the engagement to ED through the E-App process within 10 calendar days of entering into a contract (or any other written or oral agreement) with the third-party, among other contractual and compliance obligations. Unlike the Title IV rulemaking process for rewriting Title IV regulations, any final DCL will attempt to interpret existing law and impose new third-party servicer requirements without the checks and balances of the rulemaking process. --- Erin Jones Adams

Safeguarding Education: Navigating Privacy and Compliance in Teacher Communications

“Schools must look to contemporary solutions that offer protected communication channels between teachers, students, and parents while safeguarding personal privacy.”

Why this is important: This article emphasizes the importance of effective communication in education, particularly among teachers, parents, and students. While modern technology has made communication more accessible, schools face challenges related to privacy concerns, legal regulations, and evolving communication demands. Direct communication between teachers and students allows for personalized support and timely feedback, while communication between teachers and parents fosters collaboration and support.

However, the practice of teachers sharing personal phone numbers with parents and students raises privacy and compliance issues, particularly under the Family Educational Rights and Privacy Act (FERPA). Challenges include privacy and data security, data retention, access control, and boundary erosion between personal and professional communication.

To address these challenges, schools are adopting innovative strategies, such as combining bring-your-own-device (BYOD) policies with advanced softphone technology. This involves implementing secure secondary phone numbers through a user-friendly mobile application on teachers' personal devices. The advantages of this approach include regulatory compliance, privacy and security, recording and monitoring capabilities, and resource optimization.

By embracing this blend of BYOD policies and advanced communication technology, schools aim to strike a balance between professional communication, privacy preservation, and compliance. This approach enables teachers, parents, and students to engage with each other when necessary while maintaining appropriate boundaries, fostering a connected and protected educational environment.

Educational institutions falling under the purview of FERPA should be keenly aware of the privacy pitfalls that can occur when implementing new technology and should aim to combine policies of technological convenience with strict compliance. --- Shane P. Riley

How Can Biometrics be Used in Higher Education Classrooms?

“Biometrics can be used in the classroom, but schools must manage the data responsibly.”

Why this is important: Although historical evidence dates the first use of biometrics to as early as 500 BC, its modern prevalence begs the question of whether biometrics have become too invasive. With the help of technology trailblazers like Apple, many Americans have accepted the use of biometrics with technology such as fingerprint identification or facial recognition scanners to unlock our phones. For many people, it brings convenience and the excitement of innovation. However, would people feel the same way if biometric devices were being used to determine their attentiveness at school or to assess whether they were cheating on a test? While answers may vary, there is no question that biometric devices are accomplishing much more than their primary purpose.

For example, the key benefits of utilizing biometrics in the classroom could include instructors’ use of cameras with facial recognition technology to determine when students are actively engaged, identify when students are struggling with the material, and/or reveal students’ mental and physical processes as it relates to their learning styles. Conversely, however, such activities might also result in the collection and handling of students’ biodata such as fingerprints, eye color, retinal activity, facial expressions, and voice by third-party service providers with which an educational institution has contracted to use their biometric software. In this scenario, the sharing, storage, and processing of students’ biodata by an outside third party raises an array of privacy and ethics concerns, including the disclosure of such information without consent.  

As biometric devices continue to make headway in the education field, it will be interesting to see how the use of this technology evolves. Importantly, before partnering with a third-party vendor for this purpose or launching any biometric software for educational uses, schools must undertake the regulatory review and due diligence needed to mitigate related risks and ensure compliance with applicable laws. --- Malcolm E. Lewis

When Bullied Students End Their Lives, Parents are Suing. And Schools are Paying.

“Families argue that schools have a legal obligation to keep children safe, and many political leaders agree: Fifty states have enacted laws to combat school bullying.”

Why this is important: In recent years, parents devastated by the loss of their bullied children who took their own lives are seeking accountability from schools. These tragic cases are shedding light on the pervasive issue of bullying within schools across the nation and sparking legal action and calls for policy reforms. As parents push for justice, schools are grappling with the consequences of their perceived failures in addressing bullying and are being forced to reevaluate their anti-bullying protocols.

According to reports, there have been nearly 200 student suicides since 2016 linked to school bullying, with parents filing lawsuits against schools in response to these tragic outcomes. In 2023 alone, a Utah school system settled for $2 million, a Connecticut district settled for $5 million, and a New Jersey school system agreed to a $9.1 million settlement. These settlements are sending a powerful message to schools nationwide that they must take proactive measures to protect students from bullying or face severe consequences. The lawsuits are not only seeking compensation for the families, but also advocating for systemic changes to prevent future tragedies.

Despite anti-bullying laws in all 50 states, the day-to-day enforcement and effectiveness of these policies vary. Some communities still view bullying as a normal part of childhood, contributing to a lack of urgency in addressing the problem. The aftermath of the pandemic has further complicated anti-bullying efforts, diverting resources and attention away from the issue.

The tragic stories of bullied students taking their own lives are prompting a reckoning within the education system. Legal action, high-profile settlements, and policy reforms are forcing schools to confront the inadequacies in addressing bullying. Ultimately, efforts to combat bullying must extend beyond reactive legal actions. The prioritization of comprehensive anti-bullying programs, including education, training, resources, and robust enforcement of policies by schools, are essential in creating a safe environment where no child feels driven to such drastic measures. --- Erin Jones Adams

Affirmative Action for Well-Off Students’: Why Early Decision is Under Fire

“Scrutiny over the practice heightened after the Supreme Court struck down race-conscious admissions earlier this year.”

Why this is important: Highly selective colleges utilize a range of tools in shaping their incoming classes, but the spotlight has fallen on admissions practices that critics argue perpetuate inequality in higher education. Among these practices, early decision admissions policies have faced significant scrutiny, with calls from advocates for low-income students to bring an end to such practices.

Critics, including Marcella Bombardieri of the Center for American Progress, have characterized early decision as a form of "affirmative action for well-off students." The contention arises from the requirement that students to commit to attending an institution if accepted before knowing the extent of financial aid available. In turn, this raises questions about the fairness and inclusivity of a system that appears to advantage those with greater financial resources.

Despite the criticism, colleges continue to embrace early decision for practical reasons, including the increase in yield and simplification of enrollment that provides colleges with a clearer picture of expected matriculation numbers. Early decision also allows institutions to secure highly qualified students promptly, reducing the risk of losing them to other competitive colleges. While the U.S. Supreme Court ruling against race-conscious admissions in June prompted expectations of changes in admissions policies to promote diversity, the anticipated decline in the use of early decision policies has not materialized.

As the conversation continues, the focus remains on striking a balance between the competitive needs of colleges and the imperative to create an equitable pathway for all aspiring students. --- Erin Jones Adams

Biden's Reforms and 813,000 Student-Loan Borrowers

By Lisa M. Hawrot

The White House recently announced that approximately 813,000 borrowers whose accounts were adjusted in August 2023 will receive an email from President Biden that their loans are being forgiven. This is based on the U.S. Department of Education undertaking a one-time account adjustment to evaluate which borrowers meet the qualifying threshold on their repayment plan.  

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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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