July brought us the next chapter chronicling the U.S. Department of Education rulemaking process. WCET and the State Authorization Network (SAN) have been following the rulemaking process, which began with the preview of the second Biden administration negotiated rulemaking committee, the Institutional Programmatic Eligibility Committee, in January 2022. Since then, we have shared news and analysis primarily as the rulemaking addressed digital learning. In late June, we shared an update  regarding the rulemaking as it addressed issues of licensed professions and reciprocity.

Today, we will highlight the most recent news: the release of the Notice of Proposed Rulemaking (NPRM) for two sets of proposed regulations subject to public comment. We will address some specific issues found in the most recent NPRM and share how and where you may provide public comments pertaining to the proposed regulations.

Status Update

There have been several releases of proposed regulations for public comment in recent weeks including:

  • From the Fall 2020 Affordability and Student Loan Committee, Borrower Defense related proposed regulations were released on July 13, 2022 with a comment period through August 12, 2022.
  • Regulations for Pell Grants for incarcerated students addressed during the Fall 2020 rulemaking were released July 28, 2022, along with 90/10 Rule and Changes in (Institution) Ownership regulations with a comment period through August 26, 2022.
  • Although the Department submitted proposed regulations regarding Income Driven Repayment (IDR) to the Office of Management and Budget (OMB) for review in April 2022, the Department has delayed the release of the proposal of these regulations for later this summer.
  • As we reported in June, the OMB website posted updates of the expected release timeframe of April 2023 for proposed regulations for the remaining issues that were raised in the Winter 2022 rulemaking meetings. These issues include Gainful Employment and Certification Procedures. As you may recall, the Certification Procedure issue included proposed increased requirements for programs leading to a professional license or certification and as well as agreements for state authorization reciprocity. So, we likely will not hear more about them until next year.

Changes in Ownership – Modification of Definitions found in 34 CFR 600.2

For many economic and regulatory reasons, there has been a recent increase in changes of ownership or control of institutions. Of particular interest to the Department is the uptick in forprofit institutions seeking to change their status to that of nonprofit institutions. The Department clarified its expectations and processes on these transactions.

Included in their actions are changes to several definitions. While these changes were proposed with the “changes in ownership” issue in mind, the definitions are universal and could have far-ranging impact.

The proposed changes include:

a computer keyboard
Photo by Marta Branco from Pexels
  • Main Campus – Oddly, there was no official definition of “main campus” until now. Among other factors, it is the “the primary physical location where the institution offers programs.”
  • Branch Campus – The Department continued the  requirement that a branch campus be a separate location and that it has certain operations that are independent from the main campus. Newly added requirements are that the branch campus be part of the same ownership structure and be approved as a branch campus by the Department.
  • Additional Location – The Department continued the requirement that the location be separated geographically and that it offers at least 50% of a program. Newly added requirements include that they be part of the same ownership structure and participate in Title IV disbursement through the main campus.
  • Distance Education – The provisions that went into effect just last year remain unchanged. The Department proposes adding:
    • For institutions offering both on-campus and distance programs, the distance programs are “associated with” the main campus.
    • For institutions offering only distance programs, the institution is located where its administrative offices are located and approved by its accrediting agency.
    • *Note these additions will not impact locations at a correctional institution.
  • Non-profit Institution – Additional provisions regarding who and how a former owner may profit and the setting of a “fair market” value.

Current versions of these regulations can be found in 600.2.

Potential Impacts Outside of “change of ownership”

Look for more analysis from us on these definitions as we have some worries that these rules may have unintended impact outside of the “change of ownership” framework. For example, the “associated with” concept for distance education was introduced with the following reasoning: “This addition clarifies how an institution’s programs offered through distance education or correspondence courses should be considered in the context of reporting students’ locations…” We worry it will have the opposite result without careful and comprehensive guidance.

The big concern is that the definition of distance education additional language, by supposedly clarifying reporting of students’ locations, addresses location differently than what is required for purposes of state authorization required by 34 CFR 600.9(c).

photo of college campus
Photo by Casey Olsen on Unsplash

As we know, the institution is required by 600.9(c) to meet state requirements for it to be legally offering postsecondary distance education or correspondence courses in that State where the student is located or to participate in a reciprocity agreement. The institution is responsible for the determination of student location and to share the process of determination with the Secretary upon request. The purpose of these requirmentsis to ensure student consumer protection where the student is physically located. This language about determining location is repeated in the context of professional licensure notifications in 34 CFR 668.43(c)(3)(ii). This is troubling and confusing with potential conflicts with state oversight! Again, watch for more analysis from us.

90/10 Rule

For years, forprofit institutions have been responsible (by law) for obtaining at least 10% of their revenue from sources other than Title IV Federal Financial Aid. However, the fact that other forms of federal student aid counted in the 10% was seen as a loophole that made for-profit institutions excessively dependent on aid that is financed by taxpayers.

The proposed 90/10 regulations amend 34 CFR 668.28, Non-title IV revenue (90/10), in order to implement recently enacted Federal law through the American Rescue Plan Act of 2021. The newly enacted Federal law expands the sources of revenue to include more than just Title IV aid. The new regulations are developed as proposed to implement the new Federal law by identifying other sources that cannot be included in the 10% including veterans and service member tuition benefits.

The regulations, as proposed, reached consensus by the negotiators in the rulemaking committee in March 2022. Therefore, the language as voted upon was released as the proposed regulations. The intention of the regulations is to change how for-profit institutions calculate and report the percentage of the revenue that comes from other sources. New sources are to include all federal education assistance including grants for tuition and fees including GI Bill aid as well as other Federal military benefits. The Department will communicate the list of programs required for inclusion in the Federal Register and update that list as needed.

Pell Grants for Incarcerated Individuals

Congress established eligibility for Pell Grants for incarcerated individuals enrolled in qualifying programs through the Consolidated Appropriations Act, 2021. The language for the regulations negotiated in Fall 2021 came to consensus by the negotiators and thus are moving forward as proposed regulations to implement Federal law.

Specific to issues we have recently discussed affecting programs leading to a license or certification (such as in the delayed Certification Procedures regulations), we think the Department is expressing their view of the importance of regulatory direction addressing programs leading to a license or certification. We note that the proposed language also includes adding “make available” notifications, that we commonly describe as public notifications, to current regulations for Institutional Information, 34 CFR 668.43, regarding whether there are state prohibitions to licensure or certifications for formerly incarcerated individuals.

Proposed regulation 34 CFR 668.236 Eligible prison education program indicates that:

 An eligible prison education program means an education or training program that –

(g) Satisfies any applicable education requirements for professional licensure or certification….. in the State in which the correctional facility is located or, in the case of a Federal correctional facility, in the State in which most of the individuals confined or incarcerated in such facility will reside upon release as determined by the institution not less than annually based on information provided by the oversight entity.

Proposed regulation 34 CFR 668.43 (a)(5)(vi) Institutional Information

(vi) If a prison education program, as defined in 34 CFR 668.236, is designed to meet educational requirements for a specific professional license or certification that is required for employment in an occupation (as described in § 668.236(g) and (h)), information regarding whether that occupation typically involves State or Federal prohibitions on the licensure or employment of formerly incarcerated individuals in any other State for which the institution has made a determination about State prohibitions on the licensure or certification of formerly incarcerated individuals;

Public Comment on Proposed Regulations

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Who should comment?

Your voice matters!

Institutional personnel, program personnel, or individuals may comment. For an institutional or programmatic comment, you need to navigate the proper government relations channels at your institution. Issues that receive a greater volume of content tend to receive more attention.

How do I comment?

Each NPRM announcement provides directions on how to comment in the “Summary” section of each notice. You are directed to submit comments via that Federal eRulemaking Portal at regulations.gov. At regulations.gov under “FAQ,” you will find the instructions for finding a rule on the site and submitting comments.

Please note that the Department will not accept comments submitted by fax or by email or submitted after the comment period deadline. You are advised to include the Docket ID at the top of the comments and submit your comments or attachments in Microsoft Word format.

What should I say?

Here is your opportunity to ask clarifying questions, show support for the language, express challenges that could have unintentional consequences on students, or raise other concerns. We suggest comments that are positive and provide helpful suggestions.

Next Steps

As previously shared, the comment periods will end on August 12 and August 26 depending on the regulations that you plan to address. The Department must review and respond to the submitted comments. The announcement of the final regulations will include the Department’s responses to the comments in the preamble of the Federal Register announcement. Final regulations that are released by November 1, 2022, will be effective July 1, 2023.

You can follow the progress of the rulemaking here:

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

Cheryl Dowd

Senior Director, State Authorization Network & WCET Policy Innovations


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Russ Poulin

Executive Director, WCET & Vice President for Technology-Enhanced Education, WICHE



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