NAICU Washington Update

Education Department Approves Plan to Reinstate Financial Aid Eligibility for California Students

August 04, 2019

The Department of Education has granted conditional approval to a state plan that will allow thousands of students who live in California and attend online nonprofit colleges and universities to regain eligibility for federal aid.

Although the Department has raised concerns about whether the required complaint process established by California complies with current regulations, it noted that the process does comply with new distance education rules that were developed via a recent negotiated rulemaking and that are expected to go into effect by July 1, 2020.

As a result, the Department determined that, in order to avoid disruption for California students, the agency will assume that California will modify its complaint process to comply with the current rules until such time as the new regulations go into effect. Based on this assumption, the Department stated that it will consider California to be in compliance for the entire period in which eligibility for federal student aid was in question, meaning that students will not experience any interruption in their financial aid.

The problem for online students in California began last month when, in response to litigation, the Department of Education unexpectedly implemented Obama-era regulations governing state authorization for distance education. Because California lacked the federally required process for handling student complaints against out-of-state institutions, approximately 80,000 students were suddenly at risk of losing federal financial assistance. In response, California moved quickly to establish a new process for addressing such complaints.

Notably, the new regulations developed in negotiated rulemaking will eliminate the requirement for documenting a student complaint process. The Department has indicated that it intends to expedite publication of those regulations and allow for early implementation. Meanwhile, the Department has appealed the ruling that prompted the agency to issue the Obama-era regulations and has indicated that it will pursue other legal avenues for relief.

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