WASHINGTON – One of the most complex sets of regulations ever to be promulgated by the U.S. Department of Education is today being released in its final -- though partial -- form, with the agency’s strongest acknowledgment yet that the rules intended to guard against waste and abuse in the federal financial aid program are by and large aimed at for-profit colleges.
While the department is still weighing regulatory language finalizing its proposed metrics to determine whether most for-profit college offerings and long certificate programs at nonprofit institutions prepare students for “gainful employment,” today’s release shows the department pushing ahead to tighten rules governing the Title IV federal aid program.
More than ever before, the department emphasized in a statement released to reporters late Wednesday that for-profit higher education was its target. “These new rules will help ensure that students are getting from schools what they pay for: solid preparation for a good job,” said Education Secretary Arne Duncan. While the department has in the past framed the rules as designed to protect the integrity of the Title IV program, the statement cites the for-profit sector’s “rapid growth of enrollment, debt load, and default rates” as having “prompted” the public hearings in the summer of 2009, the negotiated rule making sessions that spanned from November to January, and the months of revisions that produced the final regulations. Most of the regulations released today take effect on July 1, 2011.
AND: The Education Department's list of 82 changes from NPRM to final rules.
Ahead of the posting of the regulations on a federal website today and their official publication in the Federal Register on Friday, the Education Department gave reporters a list of 82 “thoughtful revisions” to the notice of proposed rule making that the agency published in June, as well as a new description of how the department will approve new programs that qualify for the federal aid program because they prepare students for gainful employment. The department did not, however, give reporters the full text of the regulations.
Also released late Wednesday was a list of 40 groups and institutions that had met with department officials or would meet with them in the coming weeks to discuss their written comments on the gainful employment metrics. Most of the publicly traded for-profit colleges are on the list, as are several community colleges, the Association of Private Sector Colleges and Universities, Georgetown University’s Center on Education and the Workforce, and the Institute for College Access and Success.
The department’s July notice of proposed rule-making on gainful employment, which consisted primarily of metrics on repayment rates and debt-to-income ratios, also laid out a "program approval" process that would have required an institution seeking to create new programs to submit an application with projected student enrollments, independent employer affirmations of existing demand for people in the field for which the program would prepare students, and other information. Facing criticism -- from the for-profit sector and from some groups representing nonprofit higher education -- that institutions, accreditors and states already take those and other factors into consideration, the department backed down from the proposal.
Instead, department officials said, the final rules will require institutions to give the department 90 days' notice before introducing a new program. If officials have concerns about the institution or program, the institution “will be asked to formally apply for new program approval based on several factors including whether the number of additional educational programs being added is inconsistent with the institution’s historic program offerings, growth and operations,” the department said in its statement.
Though this shift could be seen as the department yielding to pressure, a department official said this change -- and others -- reflected the fact that the department was “open to considering [public] comments” and did so “carefully.” While some of the changes between the notice of proposed rule-making and the final rules to be released today may be heralded as the department softening its approach or bowing to pressure from various stakeholder groups (and not just the for-profit sector), the official said the revisions had not “compromised any of the core principles of the proposals.”
Without the full language of the rules, said Terry W. Hartle, senior vice president of government and public affairs at the American Council on Education, “we don’t really know whether all the concerns have been addressed -- the devil’s in the details in regulatory policy, and they haven’t provided that yet.”
Nonetheless, without doing an in-depth read-through, there are some clear indications of the department’s direction with the regulations.
The final rules keep intact the department’s proposal to eliminate the 12 “safe harbors” that some critics have seen as a way to circumvent the Congressional ban on incentive compensation for recruiters and financial aid officers. In the final regulations, the department makes clear that any person or group that makes admissions or aid decisions, as well as any higher-level official responsible for recruitment or admission, cannot be paid “in any part, directly or indirectly, upon success in securing enrollments or the award of financial aid.”
David Hawkins, director of public policy and research at the National Association for College Admission Counseling, praised the department for keeping the safe harbors out of the final rules and “drawing a pretty wide circle around the group of people they’re intending to regulate,” which would likely include deans of admission and vice presidents of enrollment management, not just rank-and-file recruiters.
Senator Tom Harkin (D-Iowa), chairman of the Health, Education, Labor and Pensions Committee, who has in a series of hearings examined what he sees as for-profit colleges’ aggressive recruiting tactics, also voiced support for the department’s approach.
“Over the last decade many for-profit colleges have used taxpayer subsidies to grow enormous profits with little regard for the interests of their students,” he said. “This first package of regulations from the Department of Education closes the Bush-era loopholes that allowed this industry to expand predatory recruiting practices that mislead students, and is an important first step toward protecting the billions of taxpayer dollars invested in for-profit colleges.”
The rules also maintain the department’s general stance on state authorization of institutions. As in the proposed rules, the final regulations require states to specifically authorize institutions to offer postsecondary education, to have a process whereby an institution can be subject to adverse action by the state, and to have a process to review and act on complaints.
But the final rules include several revisions from the NPRM -- most having to do with precisely which institutions fall under the requirement for state authorization. The department has also clarified that “if an institution is offering postsecondary education through distance or correspondence education to students in a state in which it is not physically located, the institution must meet any state requirements for it to be legally offering postsecondary distance or correspondence education in that state,” it said in its list of revisions.
In public comments, institutions and accreditors voiced concerns that the department’s move to define credit hours overstepped its bounds and moved department regulations too deeply into the learning process. Others argued that the department's approach would lock in the credit hour as the primary or even sole way of assessing students' academic progress, at a time when more and more institutions are contemplating new, more flexible ways of making that determination.
But, in light of high-profile incidents in which institutions were found to have overawarded credit, the department did not back down from promulgating a definition that can be used to disburse federal aid. The final regulations, the department said, include a revised definition of the credit hour “to delineate further that it is an institution’s responsibility to determine the appropriate credit hours or equivalencies."
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