Final Federal Regulations for State Authorization Released!

Without a moment to spare, on Friday, November 1, 2019, the Federal Register shared the release of the long awaited 2019 Final Federal Regulations with the official and concise title: Student Assistance General Provisions, The Secretary’s Recognition of Accrediting Agencies, The Secretary’s Recognition Procedures for State Agencies. These regulations are the final form of the proposed regulations regarding state authorization and accreditation issues released by the Department of Education in June 2019. This is the first of two posts to address the new regulations.

You may recall that we provided analysis of the proposed regulations that were related to State Authorization and also responded to the Department’s request for public comment. In general, we thought that the proposed regulations were an improvement to the 2016 Federal regulations as the new regulations were a result of consensus by the negotiators in the 2019 Negotiated Rulemaking process. Our public comment reflected the questions we had about certain terms for the purpose of regulation implementation as well as a continued need for clarification of the definition of state authorization reciprocity agreement.

In this post, we will review each state authorization related Federal regulation by asking the following questions:

• What does the final regulation say?
• What guidance did WCET and SAN ask of the Department in the public comment?
• How did the Department respond to WCET and SAN’s questions in the preamble of the final regulations?
• What are the implications to the institution for implementation of the regulations?

*Please note that page numbers in the analysis will refer to the draft document released on October 31 as that document is larger print and easier to direct you to the language of the preamble and regulations.

You may recall that the negotiated rulemaking committee was convened to cover many issues including a review and revision of the 2016 State Authorization Federal Regulations that had been delayed in July 2018. That delay of the regulations was then vacated by the U.S. District Court ruling causing the 2016 Federal Regulations to become effective on May 26, 2019. Those 2016 State Authorization Federal Regulations remain effective until July 1, 2020 but are subject to discretionary early implementation as explained below.

Early Implementation Option

Please note that the November 1, 2019 announcement indicates that the state authorization related Federal Regulations are subject to early implementation beginning November 1, 2019 at the discretion of each institution or agency. (p. 7). The Higher Education Act, which is the Federal law from which regulations are created, provides that the Secretary may exercise her authority to designate new regulations for early implementation. At the discretion of the institution, the new regulations listed below may be implemented immediately. The official effective date of the regulations is July 1, 2020. This does not mean that the institution has the option to take no action until July 1, 2020. The 2016 Federal Regulations are still effective until July 1, 2020 when the new regulations will be substituted. However, the institution may elect to move forward now to implement the new regulations designated by the Secretary.

The regulations subject to the institution’s discretion for early implementation include:

• 34 CFR 600.2 – Definitions – state authorization reciprocity agreement.
• 34 CFR 600.9(c) – State Authorization.
• 34 CFR 668.43 – Institutional Information (includes Professional Licensure Disclosures).
• 34 CFR 668.50 – Removal of distance education disclosures substituting a severability section.

Institutions will wish to assess whether it is prudent to continue compliance with the 2016 Federal regulations until July 1, 2020 with an eye toward preparation of compliance management for the 2019 Federal regulations that will be substituted for the 2016 Federal regulations on that date. Alternatively, the institutions may exercise the ability for early implementation of the 2019 Federal regulations immediately instead of the 2016 Federal regulations if the institution is in fact managing compliance with the new regulations. This may be confusing, but SAN will be providing more analysis around information to consider while institutions determine which set of Federal Regulations they will follow.

The 2019 Final State Authorization Final Regulations

State Authorization Reciprocity Agreement – 34 CFR 600.2

What does the final regulation say?

The final regulation is substantially similar to the 2016 version but includes an important difference. Here’s the definition in the final regulation:

“State authorization reciprocity agreement: An agreement between two or more States that authorizes an institution located and legally authorized in a State covered by the agreement to provide postsecondary education through distance education or correspondence courses to students located in other States covered by the agreement and cannot prohibit any member State of the agreement from enforcing its own general-purpose State laws and regulations outside of the State authorization of distance education” (p. 413).

The last clause is where this regulation differs from the 2016 version. This regulation states that a reciprocity agreement cannot prohibit any member State covered by the agreement from enforcing “its own general-purpose State laws and regulations outside of the State authorization of distance education” (p. 413).

What guidance did WCET and SAN ask of the Department in the public comment?

Since the language of the regulation defining State authorization reciprocity agreement was originally released in December 2016, WCET and SAN have sought direction and official clarification from the Department about the language, “prohibit any State in the agreement from enforcing its own statutes and regulations, whether general or specifically directed at all or a subgroup of educational institutions”. We asked the Department to officially provide support for reciprocity by using the language from the January 18, 2017 letter from the Obama Administration Under Secretary of the U.S. Department of Education, Ted Mitchell or provide other clear terms. Mitchell supported reciprocity by writing the following: “In other words, a distance education reciprocity agreement may require a State to meet requirements and terms of that agreement in order for the State to participate in that agreement.” During rulemaking this year, the Department indicated that it supported Ted Mitchell’s reasoning.

How did the Department respond to WCET and SAN’s questions in the preamble of the final regulations?

The Department was “persuaded by the commenters who suggested that we modify the definition to clarify that such an agreement cannot prohibit any member State of the agreement from enforcing its own general-purpose State laws and regulations outside of the State authorization of distance education” (p. 41). In other words, the Department codified and clarified the reasoning from the Ted Mitchell letter. The final regulations support reciprocity agreements as a means to achieve state authorization by limiting the power of states to use general laws as additional hurdles for out-of-state institutions seeking higher ed authorization. The Ted Mitchell letter resulted from concerns raised in a Frontiers blog post at the time and a subsequent joint request for clarification from WCET, WCET State Authorization Network, and NC-SARA. We are grateful that the collaboration between Russ Poulin, Cheryl Dowd, Marshall Hill, and the Department will benefit students now and in the future.

What are the implications to the institution for implementation of the regulations?

Institutions can feel confident that state authorization reciprocity agreements provide a method for achieving higher education authorization in other states. Questions remain as to how the exact definition of a regulation as “general-purpose” or related to “authorization of distance education.” But, overall, this regulation is a boost for state authorization reciprocity agreements–and the students who benefit from them.

State Authorization – 34 CFR 600.9(c)

What does the final regulation say?

The language of this final regulation is the same as was proposed. We previously shared that 34 CFR 600.9(c) provides the following:

An institution that offers postsecondary education through distance education or correspondence courses to students located in a State for which the institution is not located must meet state requirements in that state or participate in a state authorization reciprocity agreement. Upon request, the institution must document the state approvals or the coverage by a reciprocity agreement to the Secretary.

Failure of an institution to have the proper approvals in a state makes the institution ineligible to grant federal aid to students in that state.

The institution must make a determination of the location of the student based on institution policies and procedures that are consistently applied to all students. Upon request, the institution must provide written documentation of the determination of location to the Secretary. The time of determination of state location of the student will be upon initial enrollment and, if applicable, when a change of state location is obtained due to formal receipt of information from the student through institution procedures.

One difference between the proposed and final regulation is that the definition of state authorization reciprocity agreement was updated to reflect the revision of that term in 600.2 (p. 62-63).

What guidance did WCET and SAN ask of the Department in the public comment?

While the regulation indicates that the institution must meet state requirements for approval where the student is located based on “time of enrollment”, we asked the Department to clarify how the institution should determine this “time of enrollment”. We expressed concern about the Department’s intention as the student may be completing the required institutional documentation while located in one state but intends to take face to face classes in the home state of the institution.

Additionally, we requested clarification about determining a change of location. We are aware that students may move to another state while participating in an online program or may participate in a field experience in another state. The regulations indicate that the institution will revise the information on the student’s location based on a “formal receipt of information”. We asked whether the student must make a specific affirmative declaration of change or location or can the change be part of an institution’s processes such as documentation for clinical placement affiliation agreements, internship location documents, or academic session registration. We asked if each of these documents constitute “information” and what does the Department mean by “formal receipt.”

How did the Department respond to WCET and SAN’s questions in the preamble of the final regulations?

The Department explained that location is determined at the time of a student’s initial enrollment in a program, not the initial enrollment in the institution:

“With respect to determining “time of enrollment” for determining a student’s location, we specify in the NPRM that the location is determined at the time of a student’s initial enrollment in a program (as opposed to the time of a student’s initial application to the institution). We did not attach any further conditions to this determination” (p. 59).

In reply to WCET and SAN’s questions regarding what documents constitute “information” and what does the Department mean by “formal receipt,” the Department urged institutions to draft a clear and formal policy and stick to it. The Department defers to the institution to focus on specific details:

“As discussed in the preamble to the NPRM, we believe that we should avoid subjecting an institution to unrealistic and burdensome expectations of investigating and acting upon any information about a student’s whereabouts that might come into its possession. It is in the interest of both institutions and students to have understandable, explicit policies that pertain to the maintenance of student location determinations” (p. 58-59).

Policies and procedures regarding student location must be written and apply to all students, regardless of modality:

“The institution would need to establish or maintain and document the change of address process. Finally, as we discuss in the preamble to the NPRM, we expect institutions to consistently apply their policies and procedures regarding student location to all students, including students enrolled in “brick-and-mortar” programs (p. 59).

What are the implications to the institution for implementation of the regulations?

We have advocated that institutions have a “defensible” plan for tracking the location of their students. The final regulations confirm this obligation. The regulations indicate that the institution must maintain consistent policies and procedures that are applicable to all students for the determination of location. The final regulation requires the institution to determine the student’s location when the student initially enrolls in a program.

Although the regulation allows the institution to revise the student’s location based on formal receipt of information from the student, we believe that an institution following this Federal standard could find themselves out of compliance by state standards. In the preamble to the final regulations, the Department reinforces the importance of following state regulations and NC-SARA policies that may impose more stringent definitions of formal receipt of a student’s change in location:

“Regarding the concern that, because institutions already have to do more than the proposed regulations would require to meet State or NC-SARA reporting requirements, an institution would solely follow the Federal standard, believing this standard supersedes State requirements, and could thus be found to be out of compliance in a State or with NC-SARA, these final regulations do not absolve institutions from complying with State laws nor do they require participation in reciprocity agreements or override the requirements of such agreements” (p. 57).

In other words, the Federal requirements recognize that institutions may use information such as clinical placement affiliation agreements, internship placement reports, academic registration documents, or other information to constitute formal receipt of knowledge of a student’s change in location. The institution would have to document these procedures and provide them to students; the Department also has a right to see them. Also, the bottom line is that the institution will need to be aware of both state and federal requirements to stay in compliance.

Professional Licensure Notifications – 34 CFR 668.43 (a) (5) (v) and 34 CFR 668.43 (c)

What does the final regulation say?

The language of these final regulations is the same as was proposed. We previously shared that 34 CFR 668.43 (a) (5) (v) and 34 CFR 668.43 (c) requires disclosures by institutions regarding educational requirements for programs leading to professional licensure or certification regardless of modality. 34 CFR 668.43(a)(5)(v) requires an institution to make readily available to enrolled and prospective students whether programs leading to professional licensure or certification meet educational requirements. The regulation requires the following:

• A list of all States for which the institution’s curriculum meets State educational requirements for professional licensure or certification,
• A list of all States for which the institution’s curriculum does not meet State educational requirements for professional licensure or certification, and
• A list of all states for which the institution has not made a determination of whether the curriculum meets educational requirements.

A direct disclosure is required by 34 CFR 668.43(c) by the institution to the student in writing if the program leading to professional licensure or certification falls in one of the latter two categories above (the curriculum does not meet educational requirements, or the institution has not made a determination) for the state in which a student is located. In those two situations, the institution must inform the student directly of that status. This direct notification (typically by email or letter) must occur prior to the student’s enrollment in the program.

Alternatively, for a student enrolled in the program, if the institution makes a later determination that the program does not meet educational requirements for licensure or certification in the state where the student is located, the institution must provide notice directly to the student within 14 calendar days of making that determination. The direct disclosures must be in writing. It is anticipated that this provision would happen most often when a program loses its approval in a state.

Determination of the location of the student is consistent as is required in 34 CFR 600.9(c).

What guidance did WCET and SAN ask of the Department in the public comment?

We were pleased that the requirements for determining student location for disclosures are consistent with 600.9(c). However, we again asked the Department to clarify the exact time and location intended for the “student’s enrollment in the program”. Additionally, we asked for clarification about determining a change of location by the student specifically the term, “formal receipt of information from the student”. We shared with the Department that institutions must maintain good tracking practices to be in compliance with state regulations and state professional licensure boards where an activity occurs as well as SARA requirements including annual data reporting.

How did the Department respond to WCET and SAN’s questions in the preamble of the final regulations?

The Department addressed our question about time of enrollment and formal receipt of information from the student by reinforcing its direction that the institution may develop procedures that are best suited to the institution and the students for which they serve (p. 287). The Department went further to indicate that it expects the institution will provide this disclosure prior to the student signing an enrollment agreement or before the student makes a financial commitment to the institution. (p. 284). The Department further expects that the institution will have published policies that include the determination of student’s location.

Regarding our concern that institutions must maintain good tracking practices to be compliant with States regulations, SARA requirements, and any profession licensure board requirements, it is worth repeating what was previously shared in the reciprocity definition analysis above. The Department indicated that the final regulations do not absolve the institution from complying with requirements of the State or for participating in reciprocity agreements. The Federal regulations do not override the requirements of the State or requirements through a reciprocity agreement (p. 57).

What are the implications to the institution for implementation of the regulations?

The Department is aware that the ability to ascertain requirements for licensure and certification may be difficult in some states and that the institution may not be able to make the determination in all states or offer programs that the curriculum meets educational requirements in all states (p. 279). However, the Department wishes to encourage the institutions to conduct this research. By offering flexibility to the institutions to indicate that the institution has not made a determination of the curriculum meeting the State’s education requirements, the Department believes the institution is not incurring any additional burden if the determination has not been made (p. 286).

Although public commenters challenged the Department whether a student should be responsible for making their own determination whether an institution’s curriculum meets a State’s educational requirements, the Department stated their reasoning that students may not have access to the necessary information to make the determination of requirements without assistance from program experts at the institution (p. 282).

It cannot go without saying that the Department is emphatic that they believe that providing disclosures on all programs that lead to licensure or certification regardless of modality provides transparency for the student to make informed decisions about the program’s ability to prepare the student to pursue licensure or certification in their desired profession. Additionally, the Department concedes that institutions that do make the determination regarding their curriculum may find that they have obtained a marketing advantage as students will find they are better informed of their choices through these determinations (p. 285).

Removal of 34 CFR 668.50 disclosures for distance education was explained as being duplicative of disclosures already required through 34 CFR 668.43. Those disclosures that were not already part of 34 CFR 668.43, such as the professional licensure disclosures, were added as well as disclosures related to adverse actions. The new adverse action disclosure found in 34 CFR 668.43 (a)(20) requires an institution to disclose enforcement actions or prosecutions by law enforcement that upon final judgment would result in an adverse action or revocation or state authorization or some impact upon the ability to participate in Title IV. (p. 294 & 300) Finally, somewhat related to the other adverse action disclosure is a disclosure associated to accreditation agencies. Instead of an adverse action by an accreditation agency, the Department indicated that it is more prudent to require an institution to disclose if an accreditation agency required the institution to maintain a teach out plan and why that plan was required. Therefore, 34 CFR 668.43(19) addresses the concerns of adverse actions by an accreditation agency and broadens the disclosure requirement to accommodate all programs not just those offered through distance or correspondence education (p. 302).

Next Steps

In addition to institutions ensuring that they are compliant with either State by State requirements or reciprocity requirements for their out-of-state activities, the institutions have a choice to make about moving forward with Federal compliance to participate in Title IV programs. Early implementation options provided by the Secretary cause the institution to reflect upon their current compliance processes to determine if it is prudent to move forward immediately with these new regulations or continue compliance with the 2016 Federal Regulations (focused on residency) until July 1, 2020 when the institution must change to compliance with these new regulations. Under no circumstances should the institution think that they may wait until July 1, 2020 to be in compliance with Federal regulations. The WCET/State Authorization Network (SAN) will be continuing to address these new regulations and compliance best practices.

Please look for another post later this week that will address the accreditation related regulations that were part of this new release of final Federal Regulations. You can expect WCET to continue to share information about these regulations and the next package(s) of regulations that were part of consensus from the 2019 Federal Negotiated Rulemaking Process.

Watch for more from WCET and the WCET/State Authorization Network (SAN)!

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Resources

The state authorization and higher education resources below were created for the WCET Annual Meeting 2019  – DC Update session. Click here for a printable version of this document.

DC Update Part 1:

 House Committee on Education and Labor – the base text & amendments for College Affordability Act. https://edlabor.house.gov/imo/media/doc/BILLS-116hr4674ih.pdf

https://edlabor.house.gov/imo/media/doc/HR4674ANS1.pdf

Senate Committee on Health, Education, Labor and Pensions bill: https://www.help.senate.gov/imo/media/doc/ROM19662.pdf

Negotiated Rulemaking for Higher Education 2018-2019 – https://www2.ed.gov/policy/highered/reg/hearulemaking/2018/index.html

Federal Register Announcement for Final Regulations: https://www.federalregister.gov/documents/2019/11/01/2019-23129/student-assistance-general-provisions-the-secretarys-recognition-of-accrediting-agencies-the

DC Update Part 2:

“Final Federal Regulations for State Authorization Released!” November 2019 Article in WCET Frontiers: https://wcet.wiche.edu/frontiers/2019/11/04/final-fed-regs-for-state-auth-released/

WCET Frontiers article about issues included in 2019 Negotiated Rulemaking Consensus: https://wcet.wiche.edu/frontiers/2019/04/12/negotiated-rulemaking-reaches-consensus/

WCET/State Authorization Network (SAN) website: https://wcetsan.wiche.edu/

Federal Register Announcement for Final Regulations: https://www.federalregister.gov/documents/2019/11/01/2019-23129/student-assistance-general-provisions-the-secretarys-recognition-of-accrediting-agencies-the