NAICU Washington Update

Department Releases Guidance on State Authorization, Credit Hour, Other Areas

March 23, 2011

The Department of Education has released two "Dear Colleague" letters providing further guidance on regulations issued last October.  The first "Dear Colleague" letter was released on March 17, and deals with state authorization, incentive compensation, and misrepresentation.  The second letter, released March 18, addresses the federal definition of a credit hour and accreditation agency procedures for enforcing the definition. 

The state authorization portion of the March 17 letter includes 23 items in a question-and-answer format.  Some of the issues covered are authorization "by name," the scope of certain exemptions, the complaint resolution process, and distance education provisions.

The letter uses a similar Q&A format to address six items relating to incentive compensation, along with tables and examples to explain further the activities and payment methods subject to the new rules.  The descriptions of covered and exempt activities, clarifications, and examples of bundled activities that do and do not constitute incentive compensation will need to be read carefully, as the Department in several cases makes fine distinctions between what is considered incentive compensation and what isn't. 

The document does explain the conditions under which "tuition-sharing" may be acceptable, and also describes cases in which the actions of high-level managers dealing only with policy issues related to recruiting would not be considered as incentive compensation.

The section on misrepresentation restates that the regulations do not create a private right of action, and further describes the processes available to an institution to contest action initiated by the Department regarding alleged misrepresentation.  It states that the new regulations do not extend beyond substantial misrepresentation in three areas:  the nature of an eligible institution's educational programs, its financial charges, and the employability of its graduates.  

The March 18 letter on credit hour reaffirms the Department's view that a federal definition is needed, and that accreditation agency oversight of credit hour decisions must be strengthened to address "the potential for a small number of unscrupulous institutions to exploit this lack of minimum standards."

The guidance letter includes two enclosures:  (1) A Q&A document that addresses 11 issues related to the definition of a credit hour, the role of accrediting agencies, and the role of states; and (2) additional guidance to accreditors regarding their responsibilities - including the specific review elements and typical documentation the Department will expect accreditors to have.

For more information on state authorization or credit hour, contact Susan Hattan,

For more information on misrepresentation or incentive compensation, contact Maureen Budetti,

MORE News from NAICU