NAICU Washington Update

NPRM Released by the Department on a Range of Issues

July 29, 2022

The Department of Education has released the second in a series of Notice of Proposed Rulemakings (NPRM) resulting from the convenings of the two sessions that took place from October 2021 to March 2022.

This NPRM covers several issues, including change in ownership and change in control, prison education programs, and the 90/10 rule, which only impacts for-profit institutions. NAICU created a summary to highlight the current proposals from the Department. 

With Emmanual A. Guillory, director of student and institutional aid policy, serving as a negotiator during the most recent negotiated rulemaking session, NAICU led the effort of advocating for the private, nonprofit sector. 

One issue that was of particular concern was a new definition of a private, nonprofit institution that the Department proposed during the last meeting of the most recent negotiated rulemaking committee. The proposed change would have left all private, nonprofits open to defending their nonprofit status with the Department and could have had a negative impact on any revenue sharing agreements at non-profit institutions. Luckily, the Department did not move forward with the proposed language and modified it to only focus on institutions that have converted from for-profit to nonprofit status. 

However, concerns remain with the exact meaning of language that says a private, nonprofit institution cannot have any part of their net earnings benefiting any private entity or natural person.  It is unclear what the Department means by “private entity” as it pertains to nonprofits and how this would affect various contractual agreements between colleges and outside entities.  While the Department indicates that it is not their intent to impact these sorts of contractual agreements, further clarification in the regulations would best ensure that institutions can be compliant. 

Both prison education programs and the 90/10 rule reached consensus (meaning every negotiator agreed to the language) in the negotiated rulemaking committee. When consensus is reached, the Department is bound to the language when issuing proposed regulations, except for an allowance for technical and conforming changes. 

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