NAICU Washington Update

NAICU Seeks Member Comment on Proposed Regulations

July 09, 2010

NAICU has sent an action alert to its membership outlining the key issues of interest to private, non-profit higher education in proposed regulations intended to stem concerns about growing federal student aid fraud and abuse.  Most concerns addressed in the proposed Department of Education regulations center on the for-profit sector of higher education, but the new rules would impact all of higher education.

The June 18 release of the proposed regulations represents an approximate mid-point in the regulatory process.  The public has until August 2 to comment on the proposals, and the Department has until November 1 to publish final regulations, if such regulations are to go into effect by July 1, 2011.  Public comments are taken seriously, and can have a great impact on the final process.

There is growing concern that fraud and abuse in the for-profit sector could be contributing to the spiraling cost of federal student aid.  However, neither party in Congress has been willing to apply fraud and abuse rules solely to the for-profit sector.  The for-profit sector has some rules that the non-profit and public sectors do not need to follow (most notably the 90/10 rule).  Still, the recent conversion of some non-profit colleges to for-profit entities has added resolve to policy makers view that no sector is immune from increased scrutiny.

Recent hearings in both the Senate and the House on fraud and abuse focused heavily on for-profit abuses, but included such universal concerns as the awarding of credit hours and the effectiveness of accreditation.

NAICU is encouraging each of its members to write in on the issues of greatest concern.  In particular, NAICU has cited as especially troublesome the proposal to impose a federal definition of credit hour and the requirements on state authorization.  Other areas NAICU advises members to review carefully include misrepresentation, incentive compensation, and gainful employment. 

On the matter of state authorization, NAICU is working closely with its network of independent college state executives, to help develop state and institutional specific responses to the proposals on state authorization.

For more information on the issues of state authorization or credit hour, contact Susan Hattan (  For all other proposed regulatory issues, contact Maureen Budetti, below.