Negotiated Rulemaking on State Authorization, Accreditation and Other Issues Continues

The Department of Education held the second of three negotiated rulemaking sessions on Program Integrity and Institutional Quality this week. On the agenda were revisions to the regulations governing accreditation, state authorization, distance education, cash management, return of Title IV funds (R2T4), and TRIO. At stake were a number of issues of fundamental importance to private, nonprofit institutions, particularly as it relates to their historic relationship with state governments. 

Other proposals on the table could impact the scope of distance education reciprocity under NC-SARA, the accreditation process, inclusive access programs for books and supplies, and more.

During the session, negotiators agreed on a number of non-controversial changes to various provisions. Nevertheless, negotiators appear to be deeply divided on some of the more concerning provisions, many of which have the support of the Department and the consumer advocates at the table. Below is a summary of the issues NAICU considers to be most problematic for private, nonprofit colleges and universities, and the reasons why it is concerned:

• State authorization. The Department has proposed changes to current regulations that allow states to exempt institutions from state authorization or licensure requirements if: (1) the institution is established by name as an educational institution by a state through a charter, statute, constitutional provision, or other action; and (2) state law provides an exemption to institutions based on an institution’s accreditation by an accreditor recognized by the Secretary of Education or based on the institution being in operation for at least 20 years.
    
  Specifically, the Department would sunset these state authorization exceptions by 2030. NAICU is concerned that eliminating these exceptions would cause significant disruption for both states and private, nonprofit institutions. Namely, it would force states to pass new legislation to reauthorize institutions that have long been recognized by the state or risk having their institutions lose access to Title IV aid. NAICU has worked with the private, nonprofit negotiators at the table to develop an alternate proposal and supporting rationale for retaining the current exceptions.

• Reciprocity agreements. The Department has proposed amendments to state authorization reciprocity agreements that would, among other things: (1) allow states to propose and adopt changes to reciprocity agreements; (2) require institutions to have a system to report student complains to the states in which the students reside; and (3) require that the governing board of any entity that oversees a state reciprocity agreement include representation only from state regulatory bodies, enforcement agencies, and attorneys general offices. NAICU is concerned that these proposed changes could impose a significant burden on institutions and limit the input of distance education stakeholders.

• Accreditation. The Department has proposed numerous changes to the accreditation regulations, including: (1) requiring accreditors to establish minimum performance standards based on metrics; (2) establishing new requirements around teach-out plans and agreements, including a provision that would require every institution to submit a teach-out plan when seeking accreditation renewal; (3) increasing the number of actions subject to substantive change review; (4) mandating that accreditors conduct site visits to every additional location during every accreditation cycle; (5) adding new requirements to ensure that an institution’s choice of accreditor remains voluntary; and (6) requiring accreditors to act more quickly to address areas of non-compliance. NAICU is concerned that some of these changes may impose an unnecessary burden on institutions or involve unwarranted federal interference with the accreditation process.

• Cash Management. The Department’s second set of proposals have largely consolidated around two key ideas: (1) requiring institutions to return unused ‘flex account’ funds to students instead of retaining them; and (2) changing the circumstances in which schools can bundle the cost of books and supplies into tuition and fees. The Department adjusted its proposal around flex account refunds to clarify that they only refer to cash-value accounts, not those that provide a certain number of meals per day. Concerns from institutional negotiators centered around whether the Department had the authority to require this change and whether this change potentially harms students because the lost funds would need to be offset through increased costs elsewhere. NAICU is concerned that the Department has not fully considered the potential ramifications of making such a significant change, especially for institutions that only use cash-value meal plans. It is also concerned about whether the Department even has the authority to require this policy.
    
  Discussion around the proposed changes to books and supplies charges garnered the most attention. The Department proposed that students must opt into books and supplies bundling programs every term instead of the current opt-out policy, unless there is a compelling health or safety reason. Negotiators raised concerns that such a model would diminish or eliminate the cost savings these programs currently provide through bulk purchasing, while others supported the Department’s position that giving students the ability to opt in provides them with greater control of their own Title IV funds. Even though students have always had the ability to opt out of these programs, the Department is concerned that bad actors have used this provision to inflate the cost of materials. Given that this provision has only existed for a few years, and that available data appears to show significant increases in first-day access to course materials, in addition to lower overall costs for students, NAICU believes students may be better served by strengthening disclosure and opt-out requirements in lieu of effectively eliminating these programs altogether.

• Return to Title IV (R2T4). The Department’s R2T4 proposals to simplify and streamline the R2T4 process for institutions were largely unchanged from the prior round and generated little opposition. The one contentious item is the proposal that would require all distance education courses to formally take attendance. Currently, most traditional credit hour programs are not required to take Negotiators were not primarily concerned with the substance of the proposed requirement itself, but that the Department’s proposed language would require the entire institution to take attendance for all classes if it had a single distance education course. The Department said this was not its intent and that it would review the language ahead of the third and final session. NAICU’s concerns mirror those raised by negotiators about the proposed language.

The Program Integrity and Institutional Quality committee will convene for the third and final time during the week of March 4. If negotiators fail to reach consensus, the Department may rewrite the regulation as it wishes, and the agency is not bound by language proposed by the committee. If negotiators reach consensus, the Department is bound to publish proposed rules that are based on the agreed-upon regulatory language.

Contact: Jody Feder

Contact: Justin Monk