Comment on April 8, 2011 Proposed FERPA Regulations

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INTRODUCTION

The US House of Representatives introduced the American Recovery and Investment Act of 2009 (ARIA), also known as the stimulus bill, on Thursday, January 15, 2009. The tax-related provisions were introduced in a separate bill, the American Recovery and Reinvestment Tax Act of 2009 (ARRTA), and the two bills will be combined after markup is complete.

This legislation includes, among other provisions, several improvements in federal student aid programs. These improvements increase the maximum Pell Grant, increase the annual and aggregate limits for the unsubsidized Stafford Loan for undergraduate students, increase funding for the Federal Work-Study program and AmeriCorps and temporarily expand the Hope Scholarship tax credit. The legislation also includes a temporary fix for the Index Rate Mismatch.

EXPECTED TIMELINE

• Thursday 1/15/09 Stimulus bill introduced
• Wednesday 1/21/09 House Appropriations Committee Markup
• Thursday 1/22/09 House Ways and Means Committee Markup
• Wednesday 1/28/09 House Passes Combined Bill
• Tuesday 1/27/09 Senate Appropriations and Finance Committee Markup
• Tuesday 2/3/09 Senate Begins Consideration of House Stimulus Bill
• Sunday 2/15/09 Complete Passage of Stimulus Bill
• Monday 2/16/09 President’s Day

PELL GRANT INCREASES

Funding for the Pell Grant program is based on a combination of discretionary and mandatory funding. Student eligibility is based on the maximum Pell Grant under discretionary funding levels.

ARIA increases discretionary funding for the Pell Grant program by $15.636 billion over two years and increases the maximum Pell Grant under the discretionary funding to $4,860, a $500 increase. When combined with the $490 in mandatory funding enacted by the College Cost Reduction and Access Act of 2009, this yields an overall maximum Pell Grant of $5,350. The increase in the discretionary maximum Pell Grant will likely expand the pool of eligible students by 800,000 students to a total of about 7 million recipients. The increase in discretionary funding is significant because several other federal grant programs, including the Academic Competitiveness Grant and the National SMART Grant, require recipients to be eligible for the Pell Grant .

In addition, ARIA closes a funding shortfall in mandatory funding for the Pell Grant program by adding $643 million for 2009-10 and $831 million for 2010-11, a total of $1.474 billion.

STAFFORD LOAN LIMIT INCREASES

ARIA increases the annual limit for the unsubsidized Stafford Loan for undergraduate students by $2,000 and the aggregate limit (for both dependent and independent undergraduate students) by $8,000. These changes will be effective retroactively for loans first disbursed on or after January 1, 2009. The increased loan limits will not be treated as revenue from Title IV student aid for the 90/10 rule through July 1, 2011.

The following table illustrates the new proposed annual and aggregate loan limits:

As previously, the amount of any subsidized Stafford loan is subtracted from the loan limits for the unsubsidized Stafford loan.

CHANGES IN EDUCATION TAX BENEFITS

ARRTA increases the Hope Scholarship tax credit for the 2009 and 2010 tax years to $2,500, a $700 increase. The increases are named the American Opportunity Tax Credit. It allows the tax credit for the first four years of postsecondary education and four tax years, instead of the previous two-year limit. It expands the definition of qualified tuition and related expenses to include course materials in addition to tuition and fees. The legislation also increases the income phaseouts and allows the tax credit as an offset to the AMT. Finally, the tax credit is partially refundable up to $1,000 (40%).

The Tuition and Fees Deduction is not repealed, but instead will be allowed to expire at the end of 2009.

The following table illustrates the differences between the current Hope Scholarship and the American Opportunity Tax Credit.

OTHER INCREASES IN STUDENT AID

ARIA increases funding for the Federal Work-Study (FWS) program by $490 million. This yields $613 million in additional funding for FWS when the institutional matching funds are included. This is enough funding for an additional 200,000 recipients.

ARIA also adds $200 million in increased AmeriCorps funding.

TEMPORARY FIX FOR CP-LIBOR DISLOCATION

FFEL program lenders receive special allowance payments on Federal education loans pegged to the 3-month Commercial Paper Rate (CP), but their cost of funds is pegged to the 3-month LIBOR index. However, the Federal Reserve intervened in the Commercial Paper marketplace by establishing the Commercial Paper Funding Facility (CPFF) in October 2008. This caused the CP to no longer be a market rate of return, compressing margins on approximately $300 billion in existing FFELP securitizations. This threatened to destabilize the FFELP industry by eliminating residual income on the securitizations and payments to the lower tranches of the securitizations, potentially leading to widespread downgrades. ARIA includes temporary relief for the CP-LIBOR dislocation by substituting LIBOR – 13 bp for CP in the definition of the special allowance payments for the last quarter of calendar year 2008.

HELPFUL RESOURCES

American Recovery and Reinvestment Act of 2009

American Recovery and Reinvestment Tax Act of 2009

House Appropriations Committee Press Release & Summary of the ARIA

House Appropriations Committee Minority Website’s Fact Sheet

House Appropriations Committe Minority Website’s Press Release

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Click here to view this file as an Adobe Acrobat PDF.

Introduction

On June 25, 2008, the United States House overwhelmingly passed, by a 402-17 vote, its version of the ADA Amendments Act of 2008 (H.R. 3195). On September 11, 2008, the Senate passed its version of this bill (S. 3406). This bill likely will become law soon.

In general, the ADA Amendments Act would expand the scope of the Americans with Disabilities Act of 1990. There is no question that the legislation will increase the number of individuals considered to have a “disability”—that is one of the key objectives of the new legislation. As a result, it also means colleges and universities will have to provide reasonable accommodations to more students and employees.

There are questions though as to the potential impact the legislation would have on entities that must comply with the ADA. This report is designed to inform readers about some of the key changes that would be made to the ADA if the legislation becomes law, and provides analysis on what it could mean to colleges and universities.

Definition of a “Disability”

Under current law, there is a three-prong test to determine if an individual does in fact have a “disability.”

The term disability means with respect to an individual:

• a physical or mental impairment that substantially limits one or more of the major life activities of such individual;
• a record of such an impairment; or
• being regarded as having such an impairment.

“Substantially Limits”

Both the House and Senate versions of the ADA Amendments Act attempt to redefine what it means for an impairment to “substantially limit” a major life activity.

The House bill literally defines the term to mean “materially restricts.” This change is in response to the United States Supreme Court case Toyota Motor Manufacturing, Kentucky v. Williams, in which the Court interpreted “substantially limits” to mean “prevents or severely restricts.” Proponents of the legislation contend that this is an excessive standard.

The proposed change provides little guidance to entities that must comply with the law. The goal of the legislation is to expand the ADA’s coverage so it is reasonable to assume that it means something less than “prevents or severely restricts.” The question is how much less.

The House report on H.R. 3195, which may or may not be used as guidance by a court if faced with interpreting this language, states:

In the range of severity of the limitation, ‘‘materially restricted’’ is meant to be less than a severe or significant limitation and more than a moderate limitation, as opposed to a minor limitation.

The Senate bill does not redefine the term “substantially limits” but instead indicates that it should be interpreted consistent with the findings and purposes section of the legislation. In that section of the bill, the standard espoused in the Toyota case (“prevents or severely restricts”) is rejected as being too demanding. No further guidance is provided.

Unless more clarity is provided in the legislation, there will be significant confusion as to what constitutes “significantly limits.” This would be one of the core issues colleges and universities would have to wrestle with when complying with the changes to the ADA.

“Major Life Activities”

The proposed legislation identifies numerous examples of major life activities. Many of the activities, such as “learning,” already have existed through regulations. However, two new activities are particularly worthy of attention: “thinking” and “concentrating.”

In an academic setting, the potential for problems due to these new activities is significant. Students that have either a thinking or concentration “problem” could take advantage of these new “major life activities.” The underlying flaw is the difficulty in documenting such problems.

Eight organizations, including the Association of American Medical Colleges (AAMC) sent insightful analysis to members of Congress regarding the proposed legislation. In discussing the accommodations made for students with learning disabilities (LD) and Attention Deficit/Hyperactivity Disorder (ADHD) on standardized tests, they wrote, “these requests are based upon diagnoses that are often poorly documented and as to which considerable room for professional disagreement is possible.”

The inclusion of thinking and concentrating is problematic because testing is done in order to measure a student’s ability to think and concentrate. If students have an impairment that substantially limits their learning, then the ADA already protects those students.

The joint analysis (that included the AAMC) argues:

We are particularly concerned about the addition of the terms “thinking” and “concentrating” as independent major life activities. These activities should be excluded from the bill. Including elements such as “thinking” and “concentrating” as major life activities in defining whether a person has a disability is extremely problematic in an instructional or testing context. For example, individuals who have an LD or ADHD diagnosis but have not experienced substantial limitations in the long-recognized major life activity of learning will nonetheless claim to be entitled to course waivers, note-takers, additional testing time, or other accommodations because of purported limitations in their ability to “think” or “concentrate.”

Ameliorative Effects

In 1999, the United States Supreme Court in a case called Sutton v. United Air Lines, held that the ameliorative effects of mitigation measures, such as contact lenses, can be considered in determining whether an individual has a disability. In plain English, if an individual can correct the impairment, then there is no disability.

The proposed legislation attempts to overrule this decision by expressly prohibiting these corrective steps from being considered. Both the House and Senate bills have similar language as to what types of corrective measures may not be considered. The following is not exhaustive:

medication, medical supplies, equipment, or appliances, low-vision devices (which do not include ordinary eyeglasses or contact lenses), prosthetics including limbs and devices, hearing aids and cochlear implants or other implantable hearing devices, mobility devices, or oxygen therapy equipment and supplies.

The legislation also has a provision that would expressly allow ordinary eyeglasses or contact lenses to be considered. However, for some reason, the mitigation measures that can be considered do not include hearing aids and other measures that arguably are comparable with glasses and lenses.

Given the exclusion of hearing aids, it would be difficult to identify what measures other than glasses and lenses could be considered—likely none. It also is strange that individuals with visual problems have less protection than individuals with hearing problems.

Transitory and Minor

The legislation excludes impairments that are transitory and minor when determining if an individual is “regarded as” having an impairment. An impairment is transitory if it has “an actual or expected duration of 6 months or less.”

This exception though does not apply to the first two prongs (i.e. ways) of determining if an individual is “disabled.” It is limited only to whether someone is “regarded as” having a disability (the third prong of the disability definition).

As a result, it could mean that a transitory and minor impairment could constitute a disability in some situations (i.e. when a person has a “disability” but is not “regarded as” having a disability).

For example, consider someone that has a disability based on an impairment that substantially limits a major life activity (the first prong). The term “substantially limits” may suggest that the impairment could not be “minor.” However, the meaning of this term would be put into question because of the legislation’s attempts to redefine the term.

More troubling though is the transitory issue. There is nothing in the term “substantially limits” or “major life activity” that would negate the possibility that a transitory impairment (one that lasts six months or less) would not qualify as a disability.

The United States Office of Management and Budget (OMB) also identified this problem, and another critical problem regarding the transitory and minor language:

The bill does exclude impairments that are both transitory and minor; however, those that are one or the other would be covered. As a result, the bill could extend ADA protection to a short bout with the flu or a mild seasonal allergy. The Administration believes that the bill should exclude from coverage impairments that are either transitory or minor.

Finally, the placement of the “transitory and minor” exception of the “regarded as” prong within H.R. 3195 could lead to an unintended and undesirable interpretation of the definition of disability. Specifically, the bill does not explicitly apply the “transitory and minor” exception to the definition of disability in general. This means that some transitory and minor impairments could be covered as actual disabilities.

Broad Interpretation

Both the House and Senate bills direct that the definition of “disability” be interpreted broadly. Due to this language, if there are any questions as to whether someone has a disability, courts likely will conclude that a disability does exist. There already were concerns that the law would be overbroad—this general requirement to read the law broadly makes it even more likely that its scope will be expansive.

Conclusion

If the ADA Amendments Act becomes law, which is likely, its effective date would be January 1, 2009. Several agencies, including the Equal Employment Opportunity Commission (EEOC) would have to interpret the law and publish regulations.

The law’s changes would be significant. For nearly two decades, case law has been developed regarding what it means for an individual to be “disabled.” This past precedent may have little value now. Attorneys and administrators are going to need to work together regarding what this law means both legally and practically.

There is no crystal ball that can provide a clear answer as to whether the law would cause as many unintended consequences as is feared by some individuals, including this author. However, the language of the bill is problematic and is likely to lead to at least a significant number of unintended results.

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Daren Bakst, J.D., LL.M. is the President of the Council on Law in Higher Education

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