NAICU Washington Update

Consensus Reached in Department of Education Negotiated Rulemaking

April 10, 2019

In a surprise development, the negotiated rulemaking committee established by the Department of Education reached consensus on revisions to numerous regulations governing the Title IV student financial aid programs. After four months of deliberations, negotiators agreed on a broad array of regulatory changes to accreditation, distance learning, TEACH grants, Title IV eligibility of faith-based institutions, and more.  (See below for the red-lined regulations that reflect the consensus vote and will be the basis of the proposed rule.) 

Because the negotiated rulemaking committee reached consensus, the Department is now bound to publish proposed rules that are based on the agreed-upon regulatory language. Absent such consensus, the Department would have been free to publish regulations reflecting its own priorities. This prospect appeared to motivate many of the negotiators to agree to regulatory language they otherwise may have been reluctant to accept. The Department’s willingness to compromise was also a key factor in achieving consensus. In particular, the Department abandoned many of its most controversial proposals when pressured by negotiators concerned about the potential for fraud and abuse.

For example, in the accreditation context, the Department originally proposed regulatory language that would undermine the current system of regional accreditation. When faced with heavy criticism, the Department eventually backed away from these proposals and ultimately agreed with accreditation representatives on compromise language. Similarly, the Department proposed to eliminate a requirement that accreditors have two years of accreditation experience prior to seeking federal recognition, but later agreed to retain this provision. Negotiators, however, did agree to several provisions that would grant more flexibility to accreditors and streamline the recognition process.

Another key compromise involved a controversial proposal regarding written arrangements. Originally, the Department had proposed to allow Title IV-eligible institutions to outsource up to 100% of their programs to non-Title IV-eligible providers via such contractual agreements. Ultimately, the Department agreed to retain current limits on the percentage of such programs that may be subject to written arrangements. In exchange, negotiators agreed to regulatory changes that will allow accreditors to speed up the review and approval of these arrangements. Several other substantive changes will also be subject to this streamlined process.

Other proposed changes before the negotiated rulemaking committee appeared to be aimed at reducing regulatory burden. For example, the Department proposed to delete the federal definition of credit hour and the regulations governing state authorization for distance education. Although NAICU has supported the elimination of these provisions, many negotiators argued that retaining these requirements was important for protecting consumers, and both of these provisions were preserved in modified form. In addition, negotiators successfully argued against the inclusion of several proposals that could have undermined institutional prerogatives with respect to determining what credits it will accept from transfer students.

Despite the rejection of many of the regulatory changes initially proposed by the Department, negotiators reached consensus on new rules in several significant areas. First, in response to the Department’s plea to allow more innovation, the negotiated rulemaking committee agreed to multiple modifications to regulations governing online and competency-based programs. The committee also agreed to a regulatory fix for current and future TEACH grant recipients who have experienced inadvertent grant-to-loan conversions. Finally, the committee agreed to several changes designed to improve faith-based institutions’ access to the Title IV programs and to define religious mission.

Consensus Documents

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