The self-proclaimed “policy nerds” at WCET and WCET/SAN began looking forward to 2022, and we started to marvel at all the policy issues for digital learning in higher education that will be in play this year. Some significant changes for online and distance learning with significant implications for student consumer protection are on the horizon.

Big Professional Licensure Proposal

Negotiated Rulemaking provided a “plot twist.” For programs leading to professional licensure, ED proposes:

–       Drop student notifications.

–      Require programs to ensure compliance to state licensure rules.

With that insight, we wish to give you a preview of “coming attractions” of actions that will (or may?) occur in the coming months. There have already been some unexpected plot twists,  especially regarding proposed changes to student professional licensure notifications and requirements.

Today’s post focuses on the main issues with the current U.S. Department of Education Negotiated Rulemaking process that started last week. The next post will focus on other issues (outside of rulemaking) at both the state and federal level that will be considered or pursued in 2022.

So, pop some popcorn and join us as the first feature in our twin bill begins with proposed changes to federal rules…

2022 Negotiated Rulemaking

The second Biden administration U.S. Department of Education Negotiated Rulemaking began January 18 and will continue through March 2022. The Department announced that the Institutional and Programmatic Eligibility Committee will address seven topics, many of them around protecting students as consumers:

  1. Ability to benefit under 34 CFR 668.156;
  2. Standards of administrative capability under 34 CFR 668.16.
  3. Gainful employment (formerly located in 34 CFR part 668, subpart Q);
  4. Financial responsibility for participating institutions of higher education under 34 CFR 668.15 and 34 CFR part 668, subpart L, such as events that indicate heightened financial risk;
  5. Change of ownership and change in control of institutions of higher education under 34 CFR 600.31;
  6. Certification procedures for participation in title IV, HEA programs under 34 CFR 668.13; and
  7. 90/10 rule under 34 CFR 668.28.

To begin the committee discussions, the Department shared draft proposals, as hyperlinked above, for proposed introductory regulatory language. These draft proposals are merely a starting point for committee conversations. The committee is not obligated to follow the Department’s proposals. The Federal Negotiated Rulemaking webpage contains updated information on the negotiators, the documents they consider, the schedule for meetings, and recordings of those meetings.

“Certification Procedures:” Proposed Change to Professional Licensure Requirements

To be eligible to participate in Department of Education financial aid programs, institutions are expected to follow the provisions of the Program Participation Agreement (PPA). The regulations institutions must follow, including the certification process, can be found in 668.13 and  in 668.14.

Critics have expressed the opinion that some PPA provisions are insufficient to adequately protect students and taxpayers. One of the terms under the microscope is the requirement that arose out of the 2019 rulemaking process (34 CFR 668.43(a)(5)(v) and 34 CFR 668.43(c)) that institutions notify students regarding professional licensure programs offered in each state. The Department’s proposal is to eliminate the student notification about whether an institution does, does not, or has not determined if its program meets the educational requirements for a student to obtain licensure in a state—but,  the trade-off would be a new requirement in the PPA.

The Bar Would Be Raised for Professional Licensure Programs: Must Ensure Compliance

The Department is proposing that student professional licensure notification would be removed and that the following proposed (and more stringent) requirement be added to the PPA (see page 8 of the proposed language):

(32) In each State in which the institution is located or in which the institution is otherwise required to obtain State approval under 34 CFR 600.9, the institution must—

(i) Ensure that each program is programmatically accredited, if such accreditation is required by a Federal governmental entity or by a governmental entity in the State; and

(ii) Ensure that each program satisfies the applicable educational prerequisites for professional licensure or certification requirements in the State so that a student who completes the program and seeks employment in that State qualifies to take any licensure or certification exam that is needed for the student to practice or find employment in an occupation that the program prepares students to enter.

As we read it, the institution would be required to “ensure” that it meets any state educational professional licensure requirements to be eligible to offer aid to a student in that program in that state. We were surprised at this proposal.

The proposal is a major change, and we find it to be problematic. On January 21, Cheryl Dowd provided a public comment to the Committee about the need for clarity on how institutions would demonstrate that they “ensure” compliance and suggested that a carve-out is needed for students who wish to enroll, even if the program does not meet the requirements where the student is currently located. Additionally, she suggested that the Committee interact with state licensing boards on these requirements since they will be greatly affected and can help shape the language.

Please be advised that this proposal is the starting place for a discussion of the Committee, which also provides an avenue for public comment during these Committee proceedings. Near the end of this post, we include  information about how you can provide comments if you have opinions you’d like to share. We will be following this issue closely. Watch  for more updates on it.

Gainful Employment

The “gainful employment” rule is meant to ensure that students completing programs at for-profit institutions and non-degree programs at public and private institutions are gainfully employed in a “recognized occupation” per the Higher Education Act.

Why Now for Gainful Employment?

During his presidential run, President Biden’s higher education platform included language about greater accountability for for-profit postsecondary institutions, and many see gainful employment as a critical component of that greater accountability and oversight.

Gainful Employment History
The debate over gainful employment regulations dates back to 2009 when the Obama administration Department of Education entered into negotiated rulemaking to establish the metrics by which one could determine whether completion of certain postsecondary programs led to gainful employment in a recognized occupation and Title IV eligibility conditions for those programs. Since that committee did not reach consensus, the Department created rules with income to debt ratios for determining gainful employment and debt repayment metrics. The resulting rules issued in 2010 and 2011 were largely struck down in a federal court challenge. The Department then reissued the rules in 2014 and included a similar debt to earnings ratio. In 2019, the Trump Department of Education rescinded the 2014 rule.

President Biden’s commitment to consumer protection for students brings us to the present round of negotiated rulemaking. Unlike other areas of proposed regulations, the Department has not provided negotiators with proposed regulatory language. This means negotiators will have to draft regulations from scratch, making it much less likely they will be able to reach consensus on such a complicated and contentious regulation. The Department has, however, provided negotiators with a list of discussion questions to consider that includes:

  • metrics for determining gainful employment, including the use of repayment rates and debt-to-earnings ratios,
  • the benefits of using multiple metrics versus a single metric, and
  • recommendations for how the Department should balance the burden of institutional reporting requirements with collecting the necessary data for the regulations.

For more information on the history of gainful employment regulations and the current negotiated rulemaking, you can review the great analysis by NASFAA (the National Association of Student Financial Aid Administrators) as well as Inside Higher Education’s recent reporting on gainful employment.

The 90/10 Rule (for Capping For-profit Institution Aid Eligibility)

Federal Law, through the American Rescue Plan Act of 2021, was enacted on March 2021.  Section 2013 expands the types of Federal aid in addition to Title IV aid that is to be included in the total revenue that for-profit institutions must include in the revenue calculation for federal student-aid program eligibility. The Federal aid is to be no more than 90% of the institution’s revenue.

Many object to certain types of aid provided by federal agencies (e.g,. Tuition Assistance for active-duty military, GI Bill education benefits, and other Federal aid to military-affiliated students) not being counted in that calculation. A proposed change to regulations would address implementation of the Federal law to determine a listing of Federal agencies that provide educational assistance as well as address the type of non-federal revenue that can be claimed within the 10% of revenue.

Changes in ownership and For-Profit Institution Conversions

In the wake of an increase in changes in ownership and conversion from for-profit to nonprofit or public status, some are concerned that these  changes create an added risk to students in that they will not receive the educational experience for which they were engaged. The committee will reevaluate policy and procedures to possibly develop a clearer and more streamlined process for purposes of changes of ownership and other arrangements. 

Negotiated Rulemaking Next Steps

Note that the complete regulatory process ending in an effective regulation must follow a designated timeline. The earliest date that the regulations from this Committee may become effective is July 1, 2023. During the final days of the Committee meetings this March, there will be a vote by the committee members on the regulatory language that was developed. If the Committee reaches complete agreement on the regulatory package (called consensus), the regulations may move forward to be released by the Department as proposed regulations subject to a period of public comment.

After the Department reviews the public comments, final regulations may be released. If the final regulations are released by November 1, 2022, the regulations will become effective July 1, 2023. If the final regulations are released after November 1, 2022, the regulations will not become effective until July 1, 2024. 

If the Committee does not reach consensus on the regulatory package, the Department may choose to write the rules. The work of the Committee may be used by the Department to write the regulations and will follow the same timeline outlined above.

Public Commenting

The rulemaking committee agenda includes a public comment period from approximately 4:00 p.m. to 4:30 p.m. (Eastern Time) each day.  You must register to synchronously stream the proceedings. You may wish to bookmark Federal Negotiated Rulemaking Webpage for all notices, recordings, initial proposal language, and transcripts. To request time to comment, please send the name of the speaker, as well as the name of the organization, if applicable, to no later than 12:00 p.m. Eastern time on the day of the meeting. There may also be opportunities for you to write comments to the Committee, and we will inform you about how you can participate.

In Conclusion…

We hope that you enjoyed those “coming attractions,” and that the blog entices you to be prepared to watch the story play out. There are many rules in play and much more work to be done in the coming months.

 We’ll keep WCET and WCET/SAN members informed as this story plays out, especially for the professional licensure and gainful employment rules. At times, we may also be suggesting that you provide your own comments.

Watch for our next post on other state and federal rules that will be in play for digital, distance, and online learning in 2022.

Cheryl Dowd

Senior Director, State Authorization Network & WCET Policy Innovations

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Van Davis

Chief Strategy Officer, WCET

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