By Hugh T. Ferguson, NASFAA Senior Staff Reporter

By Owen Daugherty and Hugh T. Ferguson, NASFAA Staff Reporters

Negotiators wrapped up work on all seven issue papers to cap a packed week of discussions for the final session of the Institutional and Programmatic Eligibility negotiated rulemaking committee, with little agreement on the issue papers at hand, and spent the bulk of Friday afternoon in breakout caucus sessions.

In all, the committee reached consensus on two out of the seven issue papers: the 90/10 rule, along with the ability to benefit regulatory language, only reaching consensus at the tail end of Friday’s session.

On Friday, the committee took consensus votes on the last two of the seven issue papers they were tasked with reviewing, and re-voted on an earlier issue paper from the week.

The day began with negotiators finishing discussion on the certification procedures issue paper before moving onto the final topic, dissecting the 90/10 issue paper.

Federal negotiator Greg Martin, representing the Department of Education (ED), outlined updated language in the certification procedure issue paper that ED made overnight following concerns raised by negotiators on Thursday.

Specifically, ED made changes to language in the section on student disclosures related to whether a program meets the educational requirements for licensure or certification in a state. The language was changed to be consistent with language in another section of the same issue paper related to program eligibility for Title IV funds that would be contingent upon the program’s meeting state licensure requirements. 

Emmanuel Guillory, a negotiator on behalf of nonprofit institutions, thanked ED for some thoughtful revisions, but also asked for a transition period to be added when institutions make disclosures about licensing requirements to currently enrolled students.

Martin said the department is open to including a transition period and asked for suggested language to be submitted. 

Negotiators also requested that ED be clear in the language requiring programs to meet state licensure requirements in order to qualify for Title IV aid that institutions would only be responsible for making that determination at the time the student enrolled in the program and not in the event that the student changed locations after enrollment. ED agreed and made changes to the language to reflect the intent.

A few breaks were taken during the morning session so the department could update language as needed before a consensus vote was taken on the issue paper. However, when it came time for a vote, multiple negotiators issued “no” votes, meaning a consensus was not reached.

Ernest Ezeugo, a negotiator on behalf of students and student loan borrowers, who voted “no” on the issue paper, said he appreciated the consumer protection fixes that the department made to the language, but could not vote in support, as he had lingering issues with the language around transcript withholding.

Anne Kress, a negotiator on behalf of two-year public institutions, said her no vote was due to issues over the licensure program length, where ED is seeking to address concerns about some states setting an unusually high number of training hours required for licensure, leading to longer program lengths and potentially higher borrowing by students. While she agreed that there is a problem, she disagreed with ED’s solution.

The committee moved on to discuss the 90/10 issue paper, reviewing the department’s proposed language on the topic.

Adam Welle, a negotiator on behalf of state attorneys general, urged ED to consider including income-share agreements (ISAs) in the revenue generated from institutional aid section of the 90/10 rule, noting that the Consumer Financial Protection Bureau (CFPB) has taken the position that ISAs are a type of loan.

Brad Adams, a negotiator on behalf of for-profit institutions, noted that when Congress changed the language in the statue for 90/10 to have all federal funds count in the 90% ledger rather than just Title IV funds, he did not take it to mean the intent was to change the 10% side of the equation.

Martin underscored the desire behind the 90/10 rule is to ensure an institution’s programs are of sufficient quality that students are willing to pay some of their own money to enroll, and that this was ED’s intent in drafting the language that addresses the 10% side of the calculation. Adams called for a caucus with negotiators representing servicemembers and veterans, as well as with ED officials, to craft some revised language, which was presented after the lunch break.

ED convened a pair of caucus meetings — the first between the department’s counsel and negotiators representing state attorneys general, and a second between ED counsel, proprietary institution negotiators, and negotiators representing service members, veterans, or groups representing them.

The committee then resumed, with ED detailing newly added language to address how income-share agreements (ISAs) would be treated under revenue generated from institutional aid in the 90/10 rule, which would be essentially the same treatment given to institutional loans.

There was then some discussion about the extent to which an ISA is a loan, with some committee members urging ED to make clear what ED’s position is on ISAs being loans.

ED said that within a preamble of the notice of proposed rulemaking (NPRM), they will make a clear position statement about ISAs being considered institutional loans, underscoring that the position they represent there will be consistent with CFPB's guidance at that time.

Adams then called another caucus with ED representatives and his alternate, Mike Lanouette, though this time before convening, Emmanual Guillory, a negotiator for private nonprofit institutions, urged caucus members to provide the public with more information concerning the talks that are not made available to the general public. He also asked if negotiators and ED could be more forthcoming with what issues were discussed when the live feed resumes.

Facilitators reminded the committee that the caucus procedure was a part of the agreed upon protocol and that those discussions were allowed to take place in private, as well as be confidential.

Once the group reconvened, ED led negotiators through new language agreed to in the caucus that addressed revenues generated from programs and activities, where ED agreed to add back two provisions from the current regulations that they had initially proposed to eliminate related to revenue generated from training provided by the institution for students or practitioners to maintain or meet licensing requirements.

Martin noted that the language revisions made during the caucuses represented a compromise position by all parties, and that reaching consensus would send a powerful message that the community is behind this rule. The committee then voted for consensus on the 90/10 rule.

The committee concluded negotiations for the day by taking a quick break for ED to revisit the ability to benefit issue paper in an effort to find consensus.

ED sought to address a single sticking point concerning a requirement for the state process alternative that students admitted under that process have a success rate within 95% of the success rate of students with high school diplomas. Earlier in the week William Durden, representing two-year public institutions, requested that ED drop the 95% down to 85%, which ED declined to do. Today, ED offered to go to 85% to get to consensus, which the committee then voted in favor of, bringing the consensus count to two of the seven issue papers in this rulemaking package.

Jill Desjean, NASFAA’s senior policy analyst, commended the committee’s work in its final session on Institutional and Programmatic Eligibility.

“While most of the issue papers did not reach consensus it was heartening to see the Department and negotiators show a commitment to compromise in many parts of the process, especially on the 90/10 rule considering the significant differences among negotiators coming into discussions on this topic,” said Desjean. “Today’s conclusion of negotiations is one more step toward a final rule. We look forward to engaging with the Department in the next steps, especially on gainful employment, where there is still much work to be done."

Publication Date: 3/21/2022

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