Neg Reg Subcommittee on Distance Education Debates State Authorization, Outsourcing

By Joelle Fredman, NASFAA Staff Reporter

The negotiated rulemaking, or “neg reg,” subcommittee tasked with discussing distance learning and educational innovation concluded its first two-day session Friday, debating a list of proposed definitions from the Department of Education (ED), such as those related to state authorization and outsourcing.    

ED convened the subcommittee after hearing from higher education stakeholders that its proposal to rewrite a host of regulations related to Title IV issues in one neg reg session was too ambitious. This subcommittee will present its findings to the larger committee—which spent the earlier part of the week debating accreditation issues—after either its second meeting February 12-13, or final meeting March 11-12. Two other subcommittees on the Teacher Education Assistance for College and Higher Education (TEACH) Grant program and faith-based entities occurred simultaneously.

The negotiators kicked off the day with a continuation of a debate from Thursday regarding state authorization. ED originally approached the subcommittee with a proposal to strike the definition for state authorization reciprocity agreement (SARA), which is an agreement among member states and districts to establish and adhere to comparable standards for distance education courses. ED published final rules related to state authorization of distance education in December 2016, which were set to go into effect July 1, 2018. The May announcement in which ED hinted that it would be rewriting this slew of higher education regulations, however, officially delayed the effective date for two years. However, ED said that after collecting feedback from the table yesterday, it was interested in hearing instead how this language can be changed or strengthened.

While negotiators overall supported the concept of reciprocity, some were concerned about conflicts between SARA requirements and state laws. The 2016 rules specifically say that an agreement does not satisfy the state authorization requirements if it prohibits “any state in the agreement from enforcing its own statutes and regulations, whether general or specifically directed at all or a subgroup of educational institutions.”

“The idea for reciprocity is that you all agreed to use the same standards,” said Russell Poulin of The WICHE Cooperative of Educational Technologies (WCET). “If you make it that states can make different rules on top of that, you’re back to where you were prior to that … you don’t really have reciprocity.”

At the same time, other negotiators were concerned about the amount of state policies that must be waived in order to join SARA, and the strict standards that SARA sets for states. For example, Jody Feder of the National Association of Independent Colleges and Universities (NAICU) argued that NAICU has been fighting for years against the level of financial responsibility an institution is required to maintain under SARA, which she said isn’t “properly calculated,” and has led to schools being kicked out of the agreement despite no risk of closure. A representative from ED responded that it has addressed some of these concerns in a new Notice of Proposed Rulemaking (NPRM) it is drafting for the borrower defense to repayment regulations, but did not provide specific details.

Negotiators also expressed concerns with ED’s proposal to define correspondence students. Institutions are not eligible for Title IV aid if more than 50 percent of their courses are correspondence courses, or their regular student enrollment is comprised of more than 50 percent correspondence students. ED proposed to define the latter as a student whose enrollment during the award year was solely in correspondence courses. Some negotiators warned that this might, for example, lead institutions to encourage students to take one-credit distance education courses in order that they become and remain eligible to accept federal aid.

ED also proposed a new definition for a “written arrangement” between institutions eligible for Title IV aid and entities that are not eligible for federal funding, which would allow an institution to outsource an unlimited portion of its educational program to such an entity. Under current rules, an eligible institution cannot enter into an arrangement with an ineligible organization to provide more than 49 percent of its educational program. ED said it proposed elimination of the 49 percent cap in order to allow students to quickly acquire the skills they need for the workforce when their own institutions cannot offer it to them, and that it was inspired by an experimental program ED is currently overseeing—through its Educational Quality through Innovation Partnerships (EQUIP) initiative—in which institutions are granted the flexibility to outsource more than 49 percent of their program material to non-eligible entities. Data on this experiment has not yet been collected.      

Jillian Klein from Strategic Education Inc., representing for-profit institutions, argued that this proposal “risks diluting what a definition of an institution of higher education is,” and that it may open a door to fraudulent practices to “put a shell around 100 percent of somebody else's program … that doesn't have experience in higher education.” Many other negotiators echoed those concerns.

“Why have all these Title IV requirements if we’re then going to have, potentially, 100 percent outsourcing?” Feder said. “That seems nonsensical to me.”

ED responded that it was open to the possibility of limiting this provision to cover only certain types of credentials, or changing the amount that an institution can outsource. Many negotiators, however, said they prefer ED rethink including this proposal at all.

“The unintended consequences are too high,” said student representative Amanda Martinez of American University. “The basis for this solution seems questionable. I highly suggest going back to drawing board and asking, ‘Who are you really serving?’”

ED said it expects negotiators to bring suggestions for new language to the next subcommittee meeting, which will take place one week prior to the larger committee session, which begins February 19. You can find coverage of the TEACH subcommittee meeting here.


Publication Date: 1/22/2019

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