More Federal Rulemaking Excitement for Distance Ed Fans…and Next Steps

Earlier this week, we shared some very important issues from recent Federal rulemaking that will likely have a big effect on distance education. You probably have heard much more about the other “bigger” issues addressed during this rulemaking such as the 90/10 Rule and Gainful Employment. Our reporting on the 2022 Institutional and Programmatic Eligibility Committee has been primarily focused on surprises found in “Section 32” of Issue #6, Certification Procedures due to the potential effect on distance learning providers.

However, we would like to share a bit more about the rulemaking committee’s outcomes and point your attention to a few other issues that could affect serving students by distance education. We will start with a rulemaking timeline recap and close with more information about how you can be involved in the rulemaking process moving forward.

Institutional and Programmatic Eligibility Committee Timeline Recap

• May 2021: Original announcement of U.S. Department of Education Intent to establish negotiated rulemaking committees.
• December 2021: Announcement to establish Institutional and Programmatic Eligibility Committee and the seven issues to be addressed.
• January 2022: The Department used the Federal Negotiated Rulemaking Webpage for all notices, recordings, initial proposal language, and transcripts through the rulemaking process. 
• January 2022-March 2022: Negotiators met for one week during each month to address language proposed by the Department on these issues and develop agreed upon language to address consumer protection for students and protect the integrity of the Title IV Federal Financial Aid process. 
• March 2022: Final voting on the seven issues.
• Two issues reached consensus: Ability to Benefit and 90/10 Rule. These issues can move forward to be released as proposed regulations subject to public comment.
• Five issues did not reach consensus: Administrative Capability, Gainful Employment, Financial Responsibility, Changes in Ownership, and Certification Procedures. The Department may write these rules and move them forward as proposed regulations subject to public comment.
• If final regulations are released by November 1, 2022, they will become effective July 1, 2023.
• If final regulations are released after November 1, 2022, but by November 1, 2023, they will become effective July 1, 2024.

Other Distance Education Related Issues to Watch

Definition of Distance Education

Issue #5 of the rulemaking addressed Changes of Ownership and Change in Control. The Department shared that this issue was important for rulemaking to address the increase in the number of postsecondary institutions converting from for-profit to non-profit status as well as changes in ownership. There is a concern that these changes present a risk to students and the proper use of Title IV Federal Financial Aid funds. The proposed language offered by the Department included a change to several definitions of terms found in 34 CFR 600.2. Proposed language was offered to amend the following terms: Additional location, Branch campus, Distance education, Main campus, and Nonprofit institution. The Department expressed their intention to clarify these definitions as they believed they were the source of confusion.

The Department proposed language for an additional section for the definition of Distance Education:

(6) Except for an additional location at a correctional institution as described in the definition of an additional location in this section, for an institution that offers on-campus programs and distance education programs, the distance education programs are associated with the main campus of the institution. For an institution that only offers distance education programs, the institution is located where its administrative offices are located and approved by its accrediting agency.

A theme of the 2019 regulations was to not regulate through definitions, and there seems to be several issues that are being regulated in this proposed section. This issue did not reach consensus noting nine dissenters. When negotiators provided the reasons for their dissent, several shared concerns about the change to the definition of Distance Education and definition of Nonprofit institution.

Negotiators inquired about use of the word “associated” when indicating that the distance education program is ”associated” with the main campus of the institution. The Department expressed desire to place distance education coming from the branch campus to be the responsibility of the main campus. Many negotiators asked for clarification and expressed concern that, if the language were to become regulation, there would need to be a delay in the implementation as currently, distance education coming from a branch campus is the responsibility of the branch campus in many states. It appears that the Department may want the location that holds the accreditation to be the location for responsibility of all distance education. The question remains–is that how the states desire to provide oversight of the distance education coming from the branch campus? If they proceed down this path, the Department will create a conflict between how states oversee these institutions and how it plans to oversee the responsibility for aid disbursement. We are unclear on the benefit of introducing this conflict between state and federal oversight.

Maximum Number of Clock Hours for Gainful Employment Programs – Section 26

You may recall that, in the previous post, we explained that Issue #6 addressed Certification Procedures. This is the certification process for an institution to participate in Title IV financial aid programs. The Program Participation Agreement (PPA) provides the terms and conditions to obtain and maintain certification. 

The purpose of Section 26 is to address the appropriate length of aid eligibility in a recognized profession. The Department expressed concern in the variation of length of programs for the same occupation across the states.

The Department proposed language to place in the PPA:

….the Secretary limits title IV, HEA eligibility for the program to the lesser of:

(A) The minimum number of hours required for training in the recognized occupation for which the program prepares the student, as established by the State in which the institution is located, if the State has established such a requirement, or as established by any Federal agency; or

(B) If at least half of States license the recognized occupation for which the program prepares students, the national median of the minimum number of hours required for training as established in those States, as determined by the Secretary for the year of the effective date of these regulations and published in a notice in the Federal Register adjacent to the State in which the institution is located; and published in a notice in the Federal Register…

Issue #6: Certification Procedures did not come to consensus with six dissenting votes. The negotiators expressed concern about a variety of components of this issue. Specifically, regarding Section 26, several considerations remain unaddressed:

• Negotiators were very concerned that this section would punish students who have no control over the hours required by the institution or the State.
• The Department appears to be attempting to direct States to conform to a uniform structure at the insistence of the Department of Education.
• It appears that the Department is not taking into consideration the decisions of the States to determine the education/training hours necessary in occupations that could have regional concerns and priorities being addressed by the state causing the variation of hours.
• The national median number of hours provided in (B) will be determined only one time. What is the plan for adjustments that could be necessary in future years to meet technical and digital advancements or other timely changes?
• Of greatest concern is that the proposal would set an unfortunate precedent that a student could be admitted to a program, but not be eligible for all the aid necessary to complete the program.

Again, the Department is creating a conflict between state laws and federal regulations.

For additional information about the more prevalent issues of 90/10 Rule and Gainful Employment, you may wish to review the daily Negotiated Rulemaking meeting highlights from our colleagues at NASFAA (National Association of Financial Aid Administrators).

What Can (Should) You Be Doing?

In the first blog post, we used the word “excite” in two ways. For “March Madness,” people can get “excited” or hyped-up at the anticipation. For the second meaning, we thought that the proposed language might “excite” some of our members (as in stir you to action). Here is our current best thinking on actions to take.

Politically

The Department of Education was very clear that they will not be accepting any comments until it releases the proposed regulations for the official public comment period. To publish the final version next fall (they have many that they have to publish), the Department will need to seek public feedback in late Spring to early Summer. Meanwhile, start communicating. As a benefit of SAN and/or WCET membership, members will soon receive access to a two-page synopsis that you can share with your institution colleagues.  

• Inform Your Leadership. It is always good to operate with the “no surprises” strategy relative to those to whom you report. You want them to hear any possible “bad news” from you first to show that you are in the know and are looking into it. You can give them the heads-up, but they will probably ask questions that will quickly lead you to the practical actions outlined below.
• Notify Your Institutional Government Relations Staff. They may want to work with your Congressional Representatives or Senators especially if they are in the House Education & Labor Committee or the U.S. Senate Committee on Health, Education, Labor, & Pensions (HELP). Additionally, if you have a governor who was involved in your state joining SARA, they may be interested that a state-to-state agreement is being greatly affected by regulation.
• Prepare to Officially Comment. Department personnel hope to release the language for comment in late Spring or early Summer. Stories about institutional burden will not gain much traction. Stories about negative impacts on students will be more accepted as the goal of this proposal was to protect students as consumers of higher education. It will take time to gather your thoughts and stories to comment.

Practically

• For Professional Licensure: Start Assessing Your Institution’s Professional Licensure Status in Each State in Which You Intend to Serve Students. Remember, the expectation is that you can “ensure” that your program meets the educational requirements of each state in which you plan to disburse Title IV aid. There are some parts of the rules (especially around student notifications) for which we are at a loss as to what they will propose. Also, remember that you do not need to serve students in every state. You don’t need to do this right away, but you will be asked what impact these rules have on your institution and for each program. It will be good to start estimating soon.
  • Determine your target states. Each program that leads to licensure probably primarily targets a set number of states that contain the bulk of your enrollments. Note that the word “licensure” might be “certification,” approval,” “authorized,” or “permitted” for the profession in question. All of those terms are included under the concept of “licensure” for this purpose.
  • Ask the hard question. Ask the question: “do you have proof that you met the educational requirements for licensure in that profession in that state?” Assume that you have a financial aid official sitting across from you asking that question. We have heard of program personnel waving their hands in the air and saying, “we don’t have to do it.” Prove it.
  • Conduct scenario analyses. Given the answers to the hard question, what are the best and worst-case scenarios?
• For State Authorization Reciprocity… Remember that the intent of the rule is to limit reciprocity only to the act of applying for institutional authorization in a state and any associated fees. This one is harder to estimate because it will be dependent on a variety of independent actions (by states, reciprocity agreements) in response to this regulation. Meanwhile:
  • What are your target states? Create a list of the states where you serve the most students.
  • Watch for more information from WCET & WCET/SAN on State “Consumer Protection” Laws. We will make our best estimates on a few of the “consumer protection” laws that will come into play and for how many states. We will share that information with you.
  • Be prepared to do some scenario analyses. For the states that you target, what additional costs might you incur? How would you recover those costs?

Send Us Your Stories

Above all, we suggest that you gather stories about students who will be affected.

If you have good stories, share them with us.

Beyond student stories, we are also interested in stories of great impact on a small institution, impact on institutions serving minoritized or rural students, or that offer other examples of broader impact on student population.

Send your stories to us so that we can share them more broadly.

Finally…

While we are for increased consumer protection, we feel that these proposed regulations overshoot their goal more often than necessary. We agree that bad actors should be driven from the higher education field, but the resulting collateral damage could be widespread. The beneficiaries will be large, well-funded institutions while smaller and growing institutions will become non-competitive.

We too will be working to try to improve the proposed language as much as possible and to understand the impact.

We will continue to keep you updated as we learn more.

---