Cases & Developments

Order and Final Judgment Permanently Enjoining Defendants. Plaintiff, the United States of America, brought suit against the State of Texas alleging that the Texas Education Code allows people who are not lawfully present in the United States to qualify for reduced tuition at public state colleges. Plaintiff contends that such action is prohibited by federal law and asked the Court to permanently enjoin the enforcement of certain provisions of the Texas Education Code that it asserts are in conflict with federal immigration law. Plaintiff maintains that since 2001, Texas law has allowed undocumented migrants who establish residency in Texas to benefit from reduced, in-state tuition rates while denying the same benefit to U.S. citizens who are not residents of Texas through the Texas Dream Act. Plaintiff alleged that defendant violated the supremacy clause as it expressly violates federal immigration law’s prohibition on providing postsecondary education benefits based on residency. Within the same day of plaintiff filing its complaint, the Court ruled in plaintiff’s favor permanently enjoining defendant from enforcing the Texas Education Code as applied to aliens who are not lawfully present in the United States. 

U.S. Department of Education (the Department) announced plans to address fraud in student aid after a recent comprehensive analysis found “nearly $90 million disbursed to ineligible recipients.” The Department plans to (1) strengthen real-time data-sharing with the Social Security Administration to prevent identity theft and avoid erroneous distribution to deceased individuals; (2) gain additional specificity on student status from the Department of Homeland Security (DHS) to prevent disbursement to individuals granted immigration parole status (individuals who are not immediately eligible for student aid); (3) resume National Student Loan Database System post screening for the 2024-25 and 2025-26 FAFSA cycles to ensure that students only access aid they are eligible to receive; and (4) use data models to flag applications with suspicious or inconsistent information to identify individuals suspected of using someone else’s identity to complete FAFSA forms.  

NACUA’s new Practice Guide on Race Conscious Scholarships and Financial Aid. The Practice Guide reviews the necessary steps postsecondary institutions should take to verify that financial aid awards and scholarships are structured and administered in a race-neutral manner in light of heightened scrutiny accompanying changes in the legality of race-based affirmative action in admissions. It provides a primer on the relevant legal and regulatory background and reviews methods for navigating existing restricted scholarships, such as “pool and match” methodology. NACUA thanks its Saul Ewing members Josh Richards, Amy Piccola, and Matt Reinhart for their assistance in preparing this Practice Guide on Race Conscious Scholarships and Financial Aid.  

U.S. Department of Education Office of Federal Student Aid (the Department) announced the extension of flexibilities for late disbursements to all students who filed a FAFSA form for the 2024-25 award year who were or are impacted by a known issue announced by the Department, which prevented their official Student Aid Index (SAI) from being calculated by the FAFSA Processing System (FPS) prior to the end of their enrollment. The Department shared that it is aware of the ongoing FPS issues, stating that in some cases, records with a reject code can be resolved by the applicant or the school, but if both are blocked from resolving the issue and thus from obtaining an official SAI by the known system issue, they should “document the issue in the student’s file and wait for a resolution from the Department” while the Department works to implement permanent fixes for the issues. It also encouraged institutions to “utilize the additional flexibilities provided … to award … aid and make late disbursements to students who would have otherwise been eligible to receive Title IV funds prior to the end of their enrollment.”  

U.S. Department of Education’s Office of Federal Student Aid (the Department) announced an updated Borrower Defense Application and application for Request for Reconsideration and has issued a request for comments on the forms. Following the April 2024 preliminary injunction granted by the Fifth Circuit enjoining the rule and postponing the effective date of the regular pending final judgment in the case, the documents were drafted to conform to the enjoined provision of the 2023 Regulation. The request for comments is to revise currently approved information collection to comply with the effective borrower defense regulation requirements and are distinct from the 2023 Regulation’s provisions. This revision is part of contingency planning in case the 2023 Regulation is permanently struck down. Commenters are due by June 18, 2025.  

U.S. Department of Education’s Office of Federal Student Aid (the Department) announced that as of May 18, 2025, several changes will be implemented that will impact users of the Access and Identity Management Systems (AIMS). Previously, if a user did not access a specific system behind AIMS for 90 calendar days, their access to that system was disabled; that number has now been reduced to 30 calendar days. This change is intended to ensure that the systems containing sensitive information remain as secure as possible.  

U.S. Department of Education (the Department) announced its intention to establish a negotiated rulemaking committee to prepare proposed regulations for the Federal Student Aid programs authorized under Title IV of the Higher Education Act. The Department intends for the committee to include representatives of organizations or groups with interests that are significantly affected by the subject matter of the proposed regulations and formally requested nominations for individual negotiators who represent key stakeholder constituencies for the issues to be negotiated to serve on the committee. The committee will address topics which may include Public Service Loan Forgiveness (PSLF), Pay As You Earn (PAYE), Income-Contingent Repayment (ICR), and other topics, which would streamline and improve federal student financial assistance programs and related regulations. Nominations are due by June 2, 2025.