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Breaking News: Negotiated Rulemaking Sessions on Program Integrity and Institutional Quality Concluded

Breaking News: Negotiated Rulemaking Sessions on Program Integrity and Institutional Quality Concluded

NEGOTIATED RULEMAKING SESSIONS ON PROGRAM INTEGRITY AND INSTITUTIONAL QUALITY CONCLUDED

Highlights:

  • Department proposes regulations to prohibit schools from compelling students to pay for books and kits with Title IV funds;
  • Department would disallow asynchronous distance learning in clock hour programs, essentially compelling in person instruction for all clock hours; and
  • Department would tighten recognition criterial for all institutional and programmatic accreditors.

This week, the Department of Education conducted its second Negotiated Rulemaking session on Program Integrity and Institutional Quality. The following topics were the focus of the session: cash management, state authorization, distance education, return to Title IV and accreditation proposals. Of particular note, the topics discussed by the Rulemaking Committee included the Department’s proposed language to end the ability of institutions to compel students to pay for book and kit fees with Title IV funds and remove asynchronous coursework from the definition of clock-hour programs. Further analysis on these issues are provided below.

We remind membership that the final Negotiated Rulemaking session on March 4 – 6, 2024 will include a public comment period starting at 3:30 PM, with each commenter having three minutes for public comment. Additional information on the Negotiated Rulemaking Committee can be found on the Department’s website.

First Session – Cash Management

The session on cash management focused on the definition of “tuition, fees and institutionally provided food and housing,” as it appears in § 668.164(c)(1)(i)(A).The proposed language excludes books and supplies from this definition, unless there is a compelling health or safety reason. The Department deleted its previous provision that included books and supplies within the definition, if the “institution documents on a current basis that the books or supplies, including digital or electronic materials, are not available elsewhere or accessible by students enrolled in that program from sources other than those provided by the institution.” AACS members should monitor this provision, as it would force institutions to provide students with an option to purchase its kits (and/or other supplies) from a third-party instead requiring that it be purchased directly from the institution. The Department remained focus on ensuring that students have the choice of where to purchase books and supplies, without being forced to purchase the items from the institution. An early temperature check indicated that negotiators were divided on this issue.

Additionally, the Committee focused on proposed changes to § 668.167, concerning the return of funds and overpayments. The proposed language provides that an institution must promptly send written notices to students requesting repayment of the balance, and that the institutions have thirty (30) days to then either (a) recover the overpayment in full; or (b) enter into a repayment arrangement with the student. The proposed changes are potentially beneficial to AACS members, as it would provide a timeline and pathway to recover overpayments of funds not tied to nonattendance or return of title IV, HEA funds.

Second Session – State Authorization and Distance Education

The Rulemaking Committee discussed the Department’s proposed language to remove asynchronous coursework from the definition of clock-hour programs, as the term appears in § 600.2. The Department noted that this change will impact cosmetology programs, as some of institutions providing these programs have adapted new educational delivery models. It does not appear likely that the negotiators will reach consensus on this proposed change, as an initial “temperature check” revealed that several of the negotiators did not approve of this language.

Additionally, a main topic of discussion centered around exemptions for state authorization under § 600.9(a)(3), and provides three exemptions for when an institution is not authorized to comply with state authorization and licensing requirements. The proposed exemptions are as follows:

  1. The institution is providing distance education in a state through participation in a state authorization reciprocity agreement, but does not have a physical presence in the state;
  2. The institution is listed by name in a state action by the appropriate state agency or entity to provide postsecondary education including programs that lead to a degree or certificate before July 1, 2030; or
  3. The institution is exempted by a state action based on the institution’s accreditation with one or more accreditors recognized by the Department or based on the institution being in operation for 20 years before July 1, 2030.

The proposed language will sunset all of the exemptions on July 1, 2030, except for the exemption relating to participation in a state authorizing reciprocity agreement.

Third Session – Return of Title IV and Accreditation 

Overall, the Department is proposing regulations that will tighten recognition criteria for accreditors of all types. Two relevant topics raised during this session of the Rulemaking Committee were (1) the requirement for accreditation agencies to include public representatives in their voting memberships, and (2) defining when a student has withdrawn from an institution in assessing return of Title IV funds. The Department’s proposed language on voting memberships for accrediting agencies was met with skepticism, as the requirement seems to exceed reasonable bounds to ensure that the agencies are representatives of the public. As to the issue of withdrawal of students, negotiators remained divided on whether institutions are reasonable in determining the date of withdrawal for students, and whether additional Departmental involvement is necessary.

Fourth Session – Accreditation 

The Department’s proposed language amends the timeline for institutions that have violated agency standards for student achievement, to return to compliance. Under the new language, the timeline may include intermediate checkpoints on the way to full compliance and must not exceed the lesser of four years or 150 percent of the —

  1. Length of the program in the case of a programmatic accrediting agency; or
  2. Length of the longest program at the institution in the case of an institutional accrediting agency.

Additionally, the Department provided proposals to require all pre-accredited institutions and institutions seeking renewal of accreditation to submit a teach-out plan to the accreditor. All institutions and all accreditors will be subject to this provision. Several negotiators objected that the proposed language does not provide enough time for institutional improvement, while others objected that the language allows for too much time.

While it has little chance of becoming law, AACS will monitor this legislation and work to ensure that our friends and allies in Congress understand the valuable role that our institutions serve. Please email info@beautyschools.org with any questions or comments.

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