December Federal Rulemaking Activity – New Final Regulations & Withdrawn Provisions

T’was the final weeks of December when most of higher education was not stirring – except for the U.S. Department of Education (Department). The Department was preparing gifts announcements finalizing the regulatory issues from the Winter 2024 rulemaking.

In late December, the Department released two important announcements:

• December 26, 2024: Termination of negotiated rulemaking process for State Authorization, Cash Management, Accreditation and Related Issues.
• December 30, 2024: Final Regulations – Program Integrity and Institutional Quality: Distance Education and Return of Title IV, HEA Funds (unofficial version with large print).

These announcements separate the Winter 2024 issue areas discussed during negotiated rulemaking into two groups.

1 – Formal End of State Authorization, Cash Management, and Accreditation Rulemaking Process

This termination announcement formally ends the rulemaking for the issue areas of State Authorization, Cash Management, and Accreditation. In order for new rules on these issues to move forward, a new rulemaking must be initiated to develop or amend regulations on these issue areas.

2 – Release of the final regulations for Distance Education, Return to Title IV (R2T4), and TRIO Programs

The second announcement is the release of the final regulations for Distance Education, Return to Title IV (R2T4), and TRIO Programs. It is important to note that several provisions, which many of you addressed in your public comments, were removed from the final regulations. The Department did not include final regulations requiring distance education attendance taking, ineligibility of Title IV aid for asynchronous clock hour programs, and the definition of virtual location.

The Department acknowledged that the receipt of so many public comments during the 30-day comment period influenced the final regulations. Despite the Department’s belief that 30 days is adequate, we appreciate the community coming together so quickly despite the brevity of time.

Rulemaking Process Recap

The Department convened a negotiated rulemaking committee that met in Winter 2024  on the six issue areas shared above. At the end of the committee meetings in March 2024, the committee members did not come to an agreement (consensus) on the language of new and amended rules, except for the TRIO programs. When there is no consensus from the committee, the Department then writes the proposed rules.

In July 2024, the Department released proposed regulations on three of the six issue areas:

1. Distance Education,
2. Return to Title IV, and
3. TRIO programs.

Upon release of the proposed regulations, the public was invited to participate in a 30-day public comment. After the public comment, the regulatory process included the Department’s review of all public comments, development of responses, and writing of the final rules. On December 9, 2024, the final draft package of regulations was sent for the executive branch review by the Office of Management and Budget (OMB) Office of Information and Regulatory Affairs (OIRA). This served as the last step before final regulations were publicly released. Despite a process to include public testimony for the OIRA Review called an EO 12866 meeting, OMB canceled the SAN and WCET request for a meeting. We observed on the OMB/OIRA website that no EO 12866 meetings were taken on this final regulatory package. Final regulations were released as the unofficial version on December 30, 2024, and published in the Federal Register on January 3, 2025. The effective date of the regulations is July 1, 2026. However, the distance education data reporting into the National Student Loan Data System (NSLDS) will not be required until July 1, 2027.

The remaining issues of State Authorization, Accreditation, and Cash Management did not move forward in the regulatory process, and no proposed rules were released. These issue areas are now formally discontinued from the rulemaking process and would require new negotiated rulemaking on the issues for any changes to existing regulations.

Analysis of Program Integrity and Institutional Quality: Distance Education and Return of Title IV, HEA Funds – New Rules

Below, we analyze the provisions that SAN and WCET have followed closely, specific to this regulatory package of Distance Education and Return to Title IV.

Removed Provisions –

The Department indicated in the preamble of the Federal Register announcement that public comments persuaded them not to finalize provisions related to the definition of virtual location, ineligibility of asynchronous clock hour programs for Title IV aid, and required distance education attendance taking. To be clear, there are no new regulations on those provisions listed above.

New Final Provisions –

Definition of Distance Education Course (34 CFR 600.2)

 New Language-

A course in which instruction takes place exclusively as described in the definition of distance education in this section notwithstanding in-person non-instructional requirements, including orientation, testing, and academic support services.

The purpose of the new definition of Distance Education Course is to clarify what in-person non-instructional requirements that are to be considered as part of a distance education course.

The term “residency experiences” was removed from the proposed regulations version of the definition. The Department acknowledged public comments expressing that a definition that included “residency experiences” would be inconsistent with the IPEDs definition of a distance education course and could create confusion because “residency experience” indicates an undefined period for in-person coursework in a particular class.

Reporting Enrollment in Distance Education or Correspondence Courses (34 CFR 668.41 (h))

New Language-

(h) Reporting of student enrollment in distance education or correspondence courses. For each recipient of title IV, HEA assistance at the institution, the institution must report to the Secretary, in accordance with procedures established by the Secretary, the recipient’s enrollment in distance education or correspondence courses.

The purpose of the reporting was expressed in the preamble, “It is the Department’s belief that all parties—the Department, Congress, researchers, institutions, students, and the general public—can benefit when they have program outcome data by modality when making decisions.” The Department indicated that the final rules set an implementation date of July 1, 2027, to require institutions to report this information to the National Student Loan Data System (NSLDS). 

The Department received public comments expressing concern over the possibility of future data analyses that might look at the effectiveness of a modality without also taking into consideration other student characteristics that might impact student success. Commenters shared that additional factors must be considered to address differences in the student populations. Although not stated in regulation, the Department assures the public in the preamble that a variety of demographic factors would be considered when developing policies around distance education. Specifically, the Department states, “With respect to the use after collection, the Department would not evaluate information about distance education in a vacuum.” We welcome the new data collection and are pleased to see the Department take our and others’ comments that nuanced analysis of any student success data is needed. We look forward to working with the Department and the distance education community in developing nuanced research on all the characteristics that can impact student success in various modalities.

Determination of Withdrawal Status (34 CFR 668.22(b)(2)) – 14-day rule

 Amended Language–

(b) * * * (2) An institution must, within 14 days of a student’s last date of attendance, document a student’s withdrawal date determined in accordance with paragraph (b)(1) of this section and maintain the documentation as of the date of the institution’s determination that the student withdrew.

The purpose of this 14-day rule is to set a regulatory timeframe to document a student’s withdrawal for purposes of returning Title IV funds. The preamble indicates that the Department is codifying in regulation what has been in guidance since the 2005-06 award year for institutions that are required to take attendance. This requirement applies regardless of modality.

The Department indicates that this provision of the 14-day time frame only applies to institutions required to take attendance under 34 CFR 668.22 (b)(3). Commenters, who were primarily concerned about the proposed requirement for distance education attendance-taking, expressed concern about this 14-day provision. The commenters interpreted that the proposed regulation directed that a student must be administratively withdrawn after 14 days of non-attendance. The Department dismissed this notion by indicating that guidance (not cited) directs that the institution has an additional 45 days before any calculated return must be made. Further, if the student returns within that 45-day time frame, no further action is required. We are pleased to see the Department provide this clarification and that institutions would not be required to administratively withdraw a student after 14 days of non-attendance.

Future of the Rules

The future of the rules and provisions raised during the Winter 2024 rulemaking will fall into two general categories.

First, a new negotiated rulemaking would provide a future pathway to create new or amended rules for State Authorization, Cash Management, and Accreditation. Additionally, all provisions not finalized from the proposed regulations for Distance Education, Return to Title IV, and TRIO Programs can only be raised again through a new negotiated rulemaking. The Department indicated that further assessment and evaluation would benefit the possible future development of regulations on these issues.

Second, the final regulations announced in the Federal Register on January 3, 2025, will become effective on July 1, 2026, with the data reporting regulations effective as of July 1, 2027. The new administration does have access to tools to deregulate. As previously discussed, regulatory challenges could occur through the Congressional Review Act, Executive Orders, and possible court challenges. Additionally, the next administration could initiate a new negotiated rulemaking.

However, institutions must prepare for compliance with new regulations and continue compliance with existing regulations despite discussions of potential deregulation. As we have maintained, the rules are the rules until they are no longer the rules. WCET and SAN will continue to follow and report to you any activities that affect new or existing regulations.

Final Thoughts

We are glad to see the finalization of the Winter 2024 rulemaking process. The final regulations appear to address concerns raised by our public comments and those of our members. To be clear, SAN and WCET maintain a common goal with the Department to ensure student protection and success. Our initial concerns, which we raised in our public comment at the outset of this rulemaking in April 2023, included:

1. Additional consumer protections are needed, but they need to be targeted to the areas of risk rather than targeting all of distance education.
2. All instructional modalities should be treated the same.
3. The Department should provide clear and concise regulatory language.

Thank you to all who provided input during this negotiated rulemaking process to help us elevate your views to the Department. WCET and SAN will continue to monitor the developments and report them to you. Stay tuned!

This post was written by Cheryl Dowd and Van Davis, WCET

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