NAICU Washington Update

Program Integrity Neg-reg Panel Addresses Thorny Issues

December 18, 2009

The Department of Education's negotiated rule-making committee on proposed changes to program integrity regulations spent most of December 7 to 11 in protracted sessions, wrestling with over a dozen separate issues.  

This second round of negotiations was marked with divergent points of view on a number of key issues, with the committee reaching "tentative agreement" on only one issue - a minor change related to "retaking course work."  The more contentious issues included:

Definition of a Credit Hour:  The department believes that it needs a consistent definition of a credit hour to insure equity among federal student aid recipients and to administer its programs appropriately.  Most of the non-federal negotiators (with perhaps the exception of the consumer protection representative) feel that the matter is better left to accreditors.

Most traditional institutions use the Carnegie system, with a credit is equal to an hour of class time and two hours of work outside class.  This would remain an acceptable definition under the department's proposal, but in lieu of the Carnegie system, institutions would be "responsible for establishing equivalencies in credit hours for the amount of academic work, as represented in intended learning outcomes and verified by evidence of their achievement . . . "

Under the proposed language, accrediting agencies would have to "evaluate and approve an institution's policies and procedures for determining credit hours awarded for courses and programs."  Although many at the table believe that the department should not define a credit, the accreditors present seem willing to work a deal.

According to the department, students in clock hour (seat time) programs that convert those hours to credits receive more aid for less time spent than do students receiving credit under the Carnegie system.  The department has also proposed to increase the number of hours of "instructional time" required in converting that time to credit hours.  This was most strenuously opposed by the cosmetology representatives.

Incentive Compensation:  The department has proposed eliminating from the regulations all the "safe harbors" related to incentive compensation (i.e., paying recruiters based on the number of students they enroll).  The department believes that the safe harbors provide too wide a berth for abuse by the for-profit sector. The safe harbors cover a number of practices, such as receiving multiple salary increases in a year.  Because the incentive regulations also cover nonprofit and public institutions, some negotiators from those sectors are concerned that the removal of the safe harbors might be as problematic for them as for the for-profit sector.

State Authorization as a Component of Institutional Eligibility:  The department has proposed a new regulatory section to define the meaning and extent of state authorization of colleges and certain non-degree programs. These institutions and programs must be authorized to operate in a state in order for their students to be eligible for federal student aid.  There have been several instances in which students have continued to receive federal aid at at colleges and in programs lacking state authorization.  This recently happened in California, when its for-profit authorizing agency went out of business, and also is a department concern in states allowing accreditation to substitution for state authorization.

The non-federal negotiators objected to a number of requirements in the proposed language, including requiring the state to monitor education programs to assure quality, capacity, financial viability, and compliance with state laws.  Besides their concern that the regulations go too far, negotiators noted that accreditors and the department already perform some of the proposed functions.  A particularly vexing proposal was that, in order for a college to offer distance education courses in other than its home state, both states will have to have an agreement.

Definition of a high school diploma:  To stem the growing problem of high school diploma mills and ineligible students receiving student aid, the department proposed language requiring colleges to develop and maintain lists of good, bad, and questionable high schools.  Colleges would use the lists in determining students' eligibility for student aid.  There is no comprehensive national list of recognized schools and, in fact, many states don't have such a list.

Nearly all negotiators objected to this proposed solution, suggesting that - for efficiency, consistency, and liability reasons - the department should provide such lists.  They also raised operational questions.  

The department seems to have no intention of maintaining the lists, nor did it offer any other solutions - though it suggested sources and methods colleges might use for the high school lists.  During the next session, in late January, negotiators will learn if the proposed language stands or will be modified according to negotiator recommendations.

Misrepresentation of Information to Students and Prospective Students:  The department is proposing new regulatory language expanding the types of information subject to misrepresentation rules.  The current rules apply to information colleges provide to students and the Secretary of Education.  The proposed language would include accreditors and state agencies, and would broaden the areas of information that would be covered.

The department's definition of misrepresentation - "false, erroneous or misleading statements" - would also apply to statements and advertising regarding an institution's accreditation; transfer of credit policy; completion of programs; grounds for terminating a student's enrollment; unsolicited recommendations, subject matter, state authorization for courses of study; and program cost.   In addition, the proposed change would apply the misrepresentation rule to those providing information that does "not accurately reflect the current conditions of employment opportunities in the industry or occupation for which students are being trained." 

Many of the non-federal negotiators raised concerns about the wording and extent of the proposal, arguing that the changes could infringe on academic freedom, and weren't compatible with the realities of college operations and teaching.

Gainful Employment in a Recognized Occupation:  To address the problem of students incurring high levels of debt for education programs with little benefit, the department has proposed two controversial options.  This is primarily a proprietary school issue, because "gainful employment" applies only to short-term programs.  Still, the options provoked comment from the representatives of the business officers (NACUBO), student aid administrators (NAFSAA), and the traditional college sectors in addition to the proprietary sector.  The proposals step into previously untouched areas in attempting to restrict eligibility for federal student aid by either "the value added by the program" or a debt-to-income ratio.

In the first case, the department would "consider the cost/earnings relationship to be reasonable if the cost of the program is less than 3 times . . . the value added" (i.e., the difference between wages of high school graduates and for those completing the vocational program).  The second option would evaluate "whether a student's starting annual income is adequate to repay the average debt service obligation for someone completing a specific program, while still having an adequate amount available to meet living expenses."  The department seems very intent in tightening up this area, and had Department of Labor and Bureau of Labor Statistics representatives address the negotiators.

Satisfactory Academic Progress (SAP):  The department has offered only preliminary draft language on its proposal to update the SAP regulations.  Currently students must have a grade point average of 2.0 to maintain federal aid eligibility. The new rules would require an institution to have a reasonable SAP policy, including a schedule of incremental progress, and to evaluate students' progress at the end of each payment period or the end of an academic year.

Negotiators pointed out that some of the prescribed timing might not be feasible, especially for short programs. The department is concerned that students are getting federal student aid despite not making academic progress, and even when they are on probation for several terms.

The negotiators are scheduled to return for a third session in late January.  Time constraints and the controversial nature of the issues could pose problems for completing the work over that session.  Consensus on the whole package could prove difficult because of negotiators' strong differences of option on many of these items.

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