Program Integrity Neg Reg Ends Without Consensus

By Brittany Hackett, Communications Staff, and Karen McCarthy, Policy and Federal Relations Staff 

Negotiators on Tuesday failed to reach tentative agreement on the remaining two issues of the Department of Education's (ED) 2013-14 Program Integrity and Improvement negotiated rulemaking, ending the final session without reaching consensus on the overall package of proposed regulations.

Over the last four months, the committee has reached tentative agreement on four of the six issues presented in the package, including regulations on:

  • Clock-to-credit hour conversion;
  • State authorization of foreign locations of domestic institutions;
  • Retaking coursework; and 
  • The definition of adverse credit under the PLUS Loan Program.

However, negotiators could not overcome concerns with proposed regulations on state authorization of distance education and cash management. 

Regarding state authorization of distance education, many negotiators said they were still concerned about a provision that states that an institution “is not considered to be legally authorized to offer postsecondary distance or correspondence education in a state for purposes of institutional eligibility for funding under the [Higher Education Act] if it is exempt from state approval or licensure requirements based on accreditation, years in operation, or other comparable exemption.” In the most recent proposal, ED included redrafted language requiring states to have an “active process that examines the institution and its programs.” 

Some negotiators said they were uncomfortable with the language, with some going as far as to say the inclusion of the provision would be a deal breaker for them. They argued that while institutions are willing to follow state requirements, they are unable to force the states to create an active process that would satisfy ED’s proposed regulations and allow the creation and expansion of distance education programs. Negotiators objected to ED’s perceived attempt to regulate states through its leverage over institutions and reiterated their call for ED to remove the provisions altogether. ED declined to remove the provision, claiming that it is a key component to their objective of strengthen states’ role in distance education oversight.

During negotiations ED agreed to apply a proposed provision concerning licensing and certification requirements to distance education only, rather than more broadly to all state authorization requirements, which was another sticking point for several non-federal negotiators. However, since the committee ultimately failed to reach consensus on the entire regulatory package, ED’s agreement is not binding.

The committee was able to make some progress on the cash management issue, agreeing to new language on when it is appropriate for an institution to include the cost of books and supplies as part of tuition and fees. The agreed upon language states, “A school may include as part of tuition and fees the costs of books and supplies only for pedagogical reasons and only if the inclusion is not adverse to the student’s financial interest and if the costs are disclosed.” 

However, the committee fell short of reaching tentative agreement on the entire issue after a subcommittee of negotiators failed to find common ground on the definition of a sponsored account, an issue on which the committee has been divided throughout the entire negotiated rulemaking process. The definition of a sponsored account is a pivotal issue, since only arrangements that are considered sponsored accounts under the regulatory definition would be subject to the proposed requlatory requirements.

Since the committee failed to reach consensus on the overall package, ED will move forward with its regulations for each of the six issues. Although ED is not bound to any of the tentative agreements reached during negotiations, ED officials said Tuesday that they would take into account many of the committee’s comments, suggestions, and proposed language as they work to publish Notices of Proposed Rulemaking (NPRMs). As always, the NPRMs will be open to public comment.

For more on this negotiated rulemaking, be sure to check out prior coverage.


Publication Date: 5/21/2014

Robert W | 5/26/2014 4:50:06 PM

Dear Karen,

Please explain how you define a " sponsored account ". Thanks in advance.

Bob W

Karen M | 5/23/2014 11:25:01 AM

Hi Peter. There are some details on tentative agreements in the daily Today's News coverage during negotiations, found here: We don't know if ED will honor the tentative agreements in the proposed rules, so at this point we will wait to see the proposed rules. When the NPRM is released, we will provide a detailed summary of the proposed rules. We'd welcome your feedback when the NPRM is posted.
Karen McCarthy, NASFAA

Peter G | 5/21/2014 6:10:57 PM

I saw several mentions that there was agreement reached on clock/credit conversions and a few other items. Should I presume the details of the areas that did see agreement will get explication in the next few days?

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