In early April 2019, after months of work, the U.S. Department of Education Accreditation and Innovation Negotiated Rulemaking Committee reached consensus on a package of new regulations, which are also referred to as rules. Comprising higher education stakeholders representing the federal government, institutions, accreditors, states, students, and employers, the full committee was tasked with rewriting numerous federal rules related to accreditation, distance learning, state authorization, federal Teacher Assistance for College and Higher Education (TEACH) grants, and more. Reaching consensus was a significant achievement given the unusually wide range of issues covered by the committee.
This recent negotiated rulemaking process, which is also known as a “neg reg,” marked the Trump administration’s most sweeping and comprehensive attempt at higher education reform to date. It followed similar efforts from the Trump administration to overhaul gainful employment and borrower defense rules, two marquee Obama-era regulations governing postsecondary education. The Trump administration’s continued efforts to rewrite Obama-era rules highlights a shared recognition among Republicans and Democrats that the higher education sector needs reforms, but it also underscores the parties’ diverging views on what those reforms should look like.
Lawmakers on both sides of the aisle are searching for greater efficiencies in postsecondary education and more accountability from institutions. To that end, Democrats have focused largely on championing consumer protections and tightening regulations to prevent bad actors from fleecing students and improperly accessing taxpayer-funded federal student aid. In contrast, Republicans have generally sought to address complaints that overregulation has throttled innovation, forcing schools to operate within a flawed system while closing off avenues for exploring innovative new solutions to access, affordability, and completion.
Ultimately, both political parties are responding to a shift in how education is delivered and who is delivering it. However, to fully grasp the sweeping changes proposed by the rulemaking committee and their implications, it is important to understand how we got here.
In Uncharted Waters
Technological innovations have transformed the way higher education institutions fulfill their missions, changing everything from how students register for classes to the way they interact with their instructors. These advancements have created new opportunities for distance learning, affording students greater flexibility regarding when and where they pursue their studies. The benefits of these programs are considerable, allowing schools to shed a one-size-fits-all model of delivery, often at a lower cost to students. The ability to earn a degree or certificate without stepping foot on campus is a key perk of distance education for many students, particularly adult learners working full time, but it also presents new problems for the regulatory entities tasked with ensuring academic quality standards.
While schools across all institution types have embraced distance education, for-profit schools have been particularly enthusiastic about building education models based on online instruction. Although many of these for-profit institutions deliver a quality remote education, the increasing prevalence of digital instruction among these schools has tracked with a rise in negative educational outcomes, such as students completing programs that unexpectedly did not meet the licensure requirements in their states.
The Triad and Navigating New Obstacles
The U.S. Department of Education (ED) is just one leg of the “triad” that upholds quality standards in the American higher education system, alongside states and recognized accrediting agencies. Together, these three regulatory entities act as gatekeepers, determining whether an institution or program is eligible for federal Title IV financial aid. However, the rise in distance learning and the growing influence of for-profit schools has created new challenges for each member of the triad, forcing them to adapt in innovative ways.
State authorization. Institutions must gain state approval before performing regulated business operations within state borders. What constitutes a regulated activity varies from state to state, but can include online learning, faculty instruction, marketing, and more.
The prevalence of distance learning has posed a particular challenge to state regulating authorities because their jurisdictions are geographically bounded in ways that the other two members of the higher education triad are not. Beforethe digital age, it was reasonable to assume that most students attending a college or university lived near its campus. Now, however, state residents can attend a school based anywhere in the world without ever leaving home. This complicates the process of granting and obtaining state authorization, both for institutions and for the state bodies that regulate them.
Increasingly, states must balance their responsibilities to protect consumers with the legitimate desire of schools to expand remote learning opportunities. More and more, students want the flexibility that comes with an online or distance education, and institutions are trying to meet this growing demand. However, the application process, cost, and activities subject to state regulation are different in every state. Consequently, the expenses and resources needed to operate in multiple regions can quickly become prohibitive for many institutions.
ED did not successfully finalize state authorization rules until 2016, roughly a month before President Obama left office. Then in May 2018, ED formally postponed the date these rules would go into effect to July 2020, indicating that the department might revisit the regulations in an upcoming neg reg. This proved to be the case, and state authorization was among the many areas included in the ambitious agenda set for the 2019 accreditation and innovation neg reg. However, on April 29, 2019, a court declared ED’s decision to delay implementation of the state authorization rules illegal, though the department still has time to file an appeal as of this writing.
Even with this movement in the courts, there has been a substantial gap in federal guidance on state authorization for years. In the absence of federal regulations, states and other stakeholders established the National Council for State Authorization Reciprocity Agreements, a voluntary organization designed to help member states implement reciprocity agreements and set standards for interstate distance education. Any eligible institution located in an NC-SARA state can decide to participate, allowing it to operate distance-learning programs out-of-state with significantly less hassle and expense. Currently, 49 states and the District of Columbia have joined NC-SARA, with 1,960 institutions choosing to participate.
Accrediting agencies. In addition to adhering to federal regulations and obtaining state authorization, institutions must also receive a recognized accreditor’s approval before becoming eligible for Title IV funds. Accreditation is a voluntary process by which colleges, universities, or individual programs demonstrate that their academic courses, faculty, and student outcomes meet minimum quality standards.
There are two types of accrediting agencies: regional and national. As their names suggest, regional accreditors operate within a well-defined region, while national agencies generally accredit schools across the country. Typically, national accrediting agencies serve for-profit institutions offering vocational, technical, or career-based programs, while regional accreditors predominantly serve academically oriented public and nonprofit institutions. ED recognizes both types of accrediting bodies, but regional accreditation is generally regarded as more prestigious because, in many cases, its academic standardsare more rigorous.
Transferring credits between institutions with different accreditation levels can therefore be difficult for students moving from a nationally accredited school to one with a regional accreditation, largely because many regionally accredited institutions will not accept course credits from nationally accredited schools. In practice, this results in a two-tiered system, with for-profit institutions largely comprising the bottom tier. In an effort to increase their legitimacy, some accreditors and for-profit schools have begun questioning the very accreditation process itself.
Negotiated Rulemaking on Accreditation and Innovation
The Accreditation and Innovation Negotiated Rulemaking Committee gathered for four sessions in Washington, D.C., beginning January 2019. Although the process was originally slated to end after three sessions, a fourth and final meeting took place in early April—a last-minute addition designed to make up for earlier sessions cut short by winter storms. Under the leadership of Secretary of Education Betsy DeVos, the Department of Education has listened seriously to concerns voiced by for-profit institutions. Consequently, the agenda for the 2019 accreditation and innovation neg reg predominantly featured issues raised by for-profit schools regarding the subsidiary status of national accreditors.
The scope of this neg reg was unusually broad and also included state authorization, distance learning, TEACH Grants, return of Title IV funds (R2T4), and more. To accommodate its supersized agenda, ED instituted a handful of procedural changes. In an unprecedented move, it circulated draft regulatory language for the committee to consider prior to the committee’s first session. The department also organized three subcommittees to provide recommendations to the full committee on the following “buckets” of issues:
- Accreditation, Definition of a Credit Hour, and Byrd Scholarship.
- TEACH Grant and Religious Freedom.
- Distance Education, State Authorization for Distance Education, and Competency-Based Education.
In a further departure from previous neg regs, ED gave the full committee the opportunity to reach consensus on each bucket independently, a move that ultimately proved unnecessary when the committee unanimously approved the proposed changes to all three buckets.
ED credited the neg reg’s ambitious scope as the reason for necessitating many of these format changes. By circulating regulatory language prior to the beginning of the process, the department likely achieved its intended goal of accelerating the committee’s discussions—but it also influenced the course of the deliberations. Rather than relying on the existing regulations, committee members used ED’s proposed language as the starting point for negotiations. Although the department’s proposals did not make it into the final agreement in many instances, this approach let ED set the tone of the discussions. Given the positive outcomes of this negotiated rulemaking approach for ED, it is likely that the department will employ this tactic for future neg regs.
Because the negotiated rulemaking process ended in consensus, by law the department must adopt the committee’s regulatory language. ED released the proposed draft language in mid-April and is expected to publish at least one notice of proposed rulemaking in the Federal Register for public comment before the end of summer, which will detail the proposed regulatory changes in accordance with federal law. Under the master calendar provision of the Higher Education Act of 1965, ED has until November 1 to finalize the new rules for them to go into effect by July 1 of the next calendar year.
The final regulatory changes resulting from this neg reg will be far-reaching, and NACUBO is still determining how some of the new regulations could impact college and university business officers. However, those representing institutions with sizable distance-education portfolios may see potential opportunities, new areas of accreditation flexibility, and new disclosure requirements.
Distance and correspondence education. With a policy focus on increasing the role distance education plays in our higher education system, ED’s neg reg agenda considered how proposed changes would balance incentives to institutions and accreditors with proper guardrails to protect consumers. Early on, the department stated its high-level goals of providing innovation; easing the credit-transfer process, especially between regionally and nationally accredited institutions; and eliminating unnecessary impediments to new accreditors. In a sign of things to come, negotiators at the subcommittee and committee levels met these goals with a mixture of apprehension, questioning, and nervous excitement.
The subcommittee was immediately confronted by ED’s controversial proposals to do away with the Obama administration’s definition of “credit hour” and to formally define “regular and substantive.” While most of us are familiar with the concept of a credit hour, if only from our days as students counting and re-counting progress toward graduation, “regular and substantive” is not as widely understood. However, the term’s relative obscurity belies its importance.
Any distance education offering must have interaction between student and instructor that is demonstrably “regular and substantive” to be considered anything other than correspondence education, which is broadly ineligible for Title IV aid. More specifically, an institution is ineligible for Title IV aid if it offers more than half of its programming through correspondence courses or if half or more of its regular students are enrolled in such courses. Access to federal dollars provides a clear incentive for institutions to ensure that their programs meet these requirements, however they are defined. Therefore, the effects from a new understanding of “regular” or “substantive” could ripple extensively throughout the higher education ecosystem.
After discussing the merits of various instructional methods, the committee came to consensus on the definition of “regular and substantive” distance education instruction, providing clearer guidelines that institutions can reference and follow to ensure they remain compliant. This more standardized set of rules will also benefit students, as institutions should be able to more effectively craft educational programming.
The new language changes the way institutions will be required to count correspondence students. As a result, some institutions that rely heavily on correspondence courses may gain new access to Title IV aid. Previously, institutions were instructed to count a student as a correspondence student if they were enrolled in any correspondence courses during an award year. Per the new language, only those students who take 50 percent or more of their courses through correspondence will be counted.
In addition to opening these doors for institutions and accreditors, the department initiated some discussions about the need to protect consumers. As more students receive credentials online, so, too, will the number of required state-by-state licensure disclosures increase. To this end, the committee agreed on two changes that will regulate how institutions locate students and ensure that institutions disclose relevant information.
First, institutions are instructed to use a consistent method for determining the state in which a student is located at the time of enrollment or if the student formally notifies the institution of a move. Second, institutions must disclose if an educational program is designed to meet requirements for a professional license or certification that is required for employment in a field in the state in which a student is located. Together, these changes attempt to ensure that students enroll in programs that lead to necessary certification, while minimizing institutional reporting burden.
Accreditation. Assuming ED will finalize the new rules, institutions will have much more time to comply with accreditor standards following a finding of noncompliance. Additionally, an institution’s accrediting organization will have more flexibility in overseeing this process.
Following significant debate by the committee, the updated rules contain program- and institution-level changes. For programmatic accreditation, compliance must be reached in a time that does not exceed 150 percent of the length of the program in question. For instance, a two-year program that is found noncompliant would have three years from the time of notification to make necessary changes.
For institutional accreditation, the return to compliance cannot take longer than the length of the longest program offered by that institution. In both cases, accreditors are expected to provide a written plan for regaining compliance. Previously, institutions had between 18 months and two years to regain compliance, which has been an insufficient timeframe according to institutional and accreditor representatives on the committee.
On the Horizon
The Accreditation and Innovation Negotiated Rulemaking Committee met for the last time on April 3, 2019. But, as a negotiator said on that day, “Now the hard work begins.” Despite more than 100 hours of discussion among the committee and subcommittees, some questions remain unanswered. Issues with NC-SARA still linger, and ED has not released the final rules.
Because NC-SARA is a voluntary membership organization and not a government body, consumer protection advocates have criticized the organization for its outsized influence on the higher education system, all without proper government oversight. Such criticisms threatened to derail negotiations during the accreditation and innovation neg reg, however nonfederal negotiators agreed to convene separately at a later date to discuss these complaints outside the framework of the negotiated rulemaking process.
Final language is expected by November 1, at the very latest; it may come much sooner. If these rules are finalized by November 1, they will go into effect July 1, 2020. NACUBO is still determining how some of the new regulatory changes could impact college and university business officers, although we expect that many of the effects will be felt indirectly. As the situation evolves, NACUBO encourages members to visit the Advocacy section of its website.