The Department of Education (ED) last week issued proposed regulations on administrative capability and certification procedures.
ED negotiated this section of the regulations in a rulemaking session held in early 2022, where it also discussed institutional and programmatic eligibility topics including the 90/10 rule, ability to benefit, financial responsibility, and gainful employment. This is the fourth article in series delving deeper into specific provisions of the proposed rules. See previous coverage on the 90/10 rule, released as a final rule on Oct. 28, 2022, and on the proposed gainful employment, ability to benefit, and financial responsibility rules also released on Friday.
Negotiators failed to reach consensus on both issues leaving ED free to craft its own language for public comment. The proposal largely matches ED’s proposals from last year and reflects feedback the department considered during negotiations.
Adding to the existing administrative capability requirement for institutions to provide adequate financial aid counseling to aid recipients, ED would now require institutions’ aid offers to include:
Individual components of the cost of attendance separated by whether the aid must be earned or repaid
A distinction of which costs are paid directly to the institution
The student’s net price
The method by which aid is determined and disbursed
Deadlines for accepting, declining, or adjusting award amounts
The student’s rights and responsibilities with respect to enrolling and receiving financial aid, including the institution’s refund policy, return of Title IV funds (R2T4) policies, and satisfactory academic progress (SAP) standards
Schools would also be required to advise students to accept the most beneficial types of financial aid first
Several new administrative capability requirements are also added in the proposal. Under the proposed rule, institutions would now be required to provide adequate career services, which ED would consider adequate based on an evaluation of the number of students enrolled in gainful employment (GE) programs, number and distribution of career services staff, the career services promised to students, and the presence of partnerships between the institution and recruiters and employers who regularly hire the institution’s graduates.
Institutions would also now be required to provide students enrolled in programs leading to licensure or certification with geographically accessible clinical or externship opportunities within 45 days of the student’s completion of required coursework.
Also new is a provision that institutions would not be considered administratively capable if they engaged in misrepresentation or aggressive and deceptive recruitment practices. Aggressive and deceptive recruitment was defined separately as part of borrower defense to repayment negotiations, for which regulations become effective July 1, 2023.
Several new administrative capability requirements align with changes made to other sections of the regulations negotiated during the same rulemaking session. Those include that an institution would not be considered administratively capable if it experienced a financial responsibility triggering event such as having lost eligibility to participate in another federal educational assistance program; if they had been subject to a significant negative action by a state or federal agency, a court, or an accreditor; or if they derive at least half of their total Title IV revenue from failing gainful employment programs or enroll more than half of their Title IV student aid recipients in failing GE programs.
Further, institutions would have to demonstrate they had disbursed Title IV student aid funds in a timely manner consistent with students’ needs to be considered administratively capable. This issue was addressed in discussions about the 90/10 rule as well, arising from ED concerns that institutions could game the 90/10 rule by delaying disbursements until after the 90/10 ratio was calculated. ED would make a determination of whether disbursements were timely based on verified student complaints about the timing of disbursements, high withdrawal rates due to disbursement delays, whether the institution has delayed disbursements until after the student withdraws, or if the institution delays disbursements to pass the 90/10 ratio.
Institutions would be required to certify on their program participation agreement (PPA) that no principal or affiliate of the institution has been convicted of or pled guilty or no contest to a crime related to the acquisition, use, or expenditure of government funds. Principals or affiliates could also not be a current or former principal or affiliate of another institution that incurred liabilities in excess of 5% of the institution’s Title IV volume due to misconduct or closure.
ED proposes to strengthen its requirement for schools to have adequate procedures to evaluate the validity of a student’s high school diploma if it has reason to believe the diploma is not valid or was not obtained from an entity that provides secondary education. ED adds new language specifying postsecondary institutions’ requirements for validating high school completion, which must include:
Collecting at least one of the following from the high school: transcripts, written descriptions of course requirements, or written statements from high school officials attesting to the rigor and quality of coursework.
If the high school is regulated by a state or tribal authority, confirming the high school is recognized by the appropriate agency (ED clarifies not being regulated is not reason to determine invalid)
If ED has a list of high schools that issue invalid diplomas (also known as diploma mills), verifying the high school is not on that list
ED further explains it does not consider a high school diploma valid if it:
Does not meet requirements established by the appropriate state or tribal authority
Has been determined invalid by ED, a state agency, or a court
Was obtained from entity that requires little or no secondary school instruction or coursework
Was obtained from an unaccredited entity that maintains a business relationship or affiliation with the postsecondary institution
ED also amends several provisions of the certification procedures regulations. It removes language that automatically approves an institution’s certification renewal application if ED has not made a determination within 12 months of submission. ED provided the justification that the reason an application could linger for more than 12 months could be due to the need for further investigation, and providing automatic approval could have negative consequences for stakeholders, including students, because ED would not have had adequate time to ensure the institution is in full compliance with federal regulations.
ED makes significant changes to existing regulations related to the program length of GE programs, limiting the amount of time students can receive Title IV student aid to the greater of the required minimum credit or clock hours required by the state the institution is located; or another state’s required minimum credit or clock hours if a majority of students resided in that other state, were employed in that state during the most recently completed award year, or stated in writing they intended to work in that other state.
This provision is significantly altered from ED’s proposal during negotiations, where ED sought to limit student eligibility for Title IV aid to the lesser of the required credit or clock hours required by the institution’s state or the national median of required credit or clock hours, which would have cut off students’ eligibility for federal student aid in programs in half of the states before they completed their education.
Also new to the certification procedures regulations are a prohibition on withholding students’ transcripts for students who owe a balance to the institution in cases where the balance is the result of the institution’s error in administering the Title IV student aid programs, including R2T4; or due to institutional fraud or misconduct. Institutions would also now be banned from incentivizing students to limit their federal student aid with the exception that institutions could do so if they provided a scholarship for at least the amount of loan funds the student agrees not to borrow.
Also proposed are new supplementary performance measures ED could consider in granting certification or provisional certification. They include the school’s withdrawal rate; debt-to-earnings ratio and earnings premium measure from the new gainful employment regulations; amounts spent on instruction, academic support, support services, recruiting activities, advertising, and other pre-enrollment activities; and licensure pass rates for programs preparing students in fields requiring licensure.
A new requirement would specify who must sign an institution’s program participation agreement (PPA), which would now have to be an authorized representative of the institution, or, for proprietary or private nonprofit institutions, an authorized representative of an entity with direct or indirect ownership of the institution.
Also new to the certification procedures regulations is a provision that institutions required to post financial protection as a result of triggering one of the financial responsibility events from the new financial responsibility rules negotiated in this same rulemaking session would be subject to provisional certification.
The proposal is open for public comment until June 20, 2023. If ED publishes a final rule by Nov. 1, 2023, the rule would become effective July 1, 2024. Read Today’s News for updates on final rules as they are released.
Publication Date: 5/26/2023