State Authorization Negotiated Rulemaking: What Happened? What’s Next?

The U.S Department of Education’s Negotiated Rulemaking process is designed to advise the Department on regulations that they are seeking to implement or change. Negotiators are chosen to represent the different constituencies that have an interest in the outcome.

Thanks to support from many of you, I was selected to be the negotiator representing the distance education community on the latest “NegReg” (as it is affectionately called) committee. One of the six issues under consideration was the return of the federal state authorization for distance education regulation that had originally been issued in 2010, but had been set aside by the courts on procedural grounds.

On Tuesday May 20, the Committee we had our final vote on the proposed language. I voted “no.” I was joined in withholding consent by all the representatives of every higher education sector. Nine out of sixteen negotiators voting “no” is a high ratio.

Although we made much progress, there were some items that I could not support. In this blog post I will outline my views on what happened. These are purely my observations and opinions.

Picture of Russ Poulin at Nationals (baseball) Park in Washington DC.

Celebrating the end of Negotiated Rulemaking. One reg was harder to stomach than a hot dog at Nationals Park…but that’s another story.

My Position on Authorization

So that you know where I’m coming from, unlike many in the distance education community, I believe that the states still are responsible for consumer protection and that institutions should follow state laws. I don’t agree with all their laws and regulations and processes and whatnot, but I’d rather work to fix them or create alternatives, like reciprocity.

I also believe the Department should be able to use a college’s authorization status in a state as a determining factor for eligibility for federal financial aid. I do not believe that the Department should impose its will as to what the states should use as authorization criteria.

We Made Progress!

The original regulation (§600.9(c)) issued in 2010 was only two sentences long. The last proposed draft covered 8 pages, 15 sections, and spilled over into another regulation. This wordiness was sometimes due to a propensity to use ten words where one would suffice, but I will not dwell on that fact…even though it bothers me. On the positive side, there were clarifications that arose from questions uncovered by the original language.

Items that I liked:

  • The concept of an interstate reciprocity agreement was recognized as one of two methods for achieving authorization. The second is directly being authorized by a state.
  • An institution authorized in its home state is considered authorized for the purposes of providing federal financial aid to students in a foreign country. This had been an open question.
  • Under certain conditions, members of the armed forces, their spouses, or their children would continue to be authorized for the purposes of federal financial aid if they move to another state. This conflicts with state laws, but would hope that we could work with states figure this out. Additionally, I’ve since had a great conversation with the Veterans Administration and I think we need to consider some form of exemption for students interning at VA Hospitals. As you may have heard, they already have enough other problems.

The Line in the Sand: Disallowing Exemptions

The main point of contention was around paragraph (8)(i), which (in the last official draft) read:

An institution is not considered to be authorized to offer postsecondary distance or correspondence education in a State for purposes of institutional eligibility for funding under the HEA if it is exempt from State approval or licensure requirements based solely on accreditation. years in operation, or other comparable exemption.

In an earlier section, states were also asked to identify institutions authorized in their state “by name.”

The Department’s Position on Exemptions

The Department asserts that the accountability “Triad” is based upon action by three partners:

  • Accrediting agencies review institutions and grant accreditation based on quality considerations.
  • States review institutions and authorize them to operate in their state based upon consumer protection considerations.
  • The U.S. Department of Education uses the actions of the accreditors and the states as the base (but not only) criteria for allowing an institution to offer federal financial aid.

The Department reasons that if the state is using only accreditation for its review, then there really is no longer a Triad. Accreditation criteria are the only considerations that have been reviewed. The Department included other perfunctory criteria (such as years in operation or physical presence in a state) as similar examples of review criteria that they deem inadequate for purposes of effective state oversight.

Other negotiators supported this position by saying that if there is no review in a state, then the “bad actor” institutions will be free to harm students in those states. I believe that there are students who are being harmed. I have talked to enough students to cringe at the actions of selected colleges from all higher education sectors.

My Objections

This is all good in theory, but it is not defensible in reality.

Students will be hurt in the short time for dubious long-term gain. While states would endeavor to implement this new rule, institutions that are currently operating legally in dozens of states will have their status called into question. What will be the new authorization criteria for a state? What will they charge an institution to be reviewed? Will my institution decide to remain serving students in that state?

I applaud the Department personnel for proposing a three-year timeline with the possibility for extension to help ease the burden of implementation. I’m unconvinced that the promised added protections will outweigh the added costs to students and the confusion that will accompany the new limbo status in each state of nearly all institutions teaching students at a distance.

“Active review” is not very active…and does not add to consumer protection. The Department sought an “active review” of colleges offering distance education from states. As defined, it required a state to review only a few more items to make the review active. Examples cited of what activities comprised an “active review” involved choosing from a list that included: the institution’s fiscal viability, student refund policy, the institution’s history in providing distance education, and others. My guess is that most states would tend to perform the minimum required. This has been confirmed in conversations with a few state regulators. If that’s the case, then this proposal does not provide the additional consumer protection that some cited as being the reason for this requirement. What’s the point of all this disruption for no benefit?

“Active review” would be tough to implement.     Reviewing a few more documents sounds simple enough, but state regulators must have laws and regulations that guide their actions. Implementation would require each state:

  • Changing legislation and/or regulations.
  • Developing implementation processes, including funding mechanisms. Students will ultimately bear the additional cost.
  • Staffing the review process. Most states are not interested in adding more staff.
  • Conducting the review process on all the institutions already legally operating in that state.
  • If it does not already exist, creating a public list of authorized institutions.

Multiply that times most every state (we think about 45 states would need to take these actions) and this is not easy. It will be tough to get legislative attention to pass a law that will help institutions from other states, even though those institutions are serving people residing in their state. In fact some legislators might see it as an opportunity to keep institutions out of their state through inaction.

If we are doing the right thing for students, then being “tough to implement” would not be a reasonable objection. Since there is no real benefit to students, then it would be more prudent to focus each state’s limited compliance resources where they will benefit students.

Leave the determination with the state. Unfortunately, state regulators were not represented among the negotiators. At a recent meeting of state regulators, a representative of the Department presented the recommendations. There was a very high level of concern about the proposed language. One regulator told me privately that he was not aware of any uptick in complaints that he could attribute to the growth in distance education. The regulators are closest to what needs to be done. If they think additional regulation or oversight is needed, then they propose it. If some states are neglecting their duties, then let’s develop a process to engage the regulatory community in defining best practices and implementing processes that definitely will help students. This back door process of expecting colleges from other states to pressure states to better regulate them does not strike me as a recipe for successfully meeting student needs.

The words "state authorization surrounded by all the state names.Three Controversial Items: Minimums, the Death Penalty, and Licensure Notifications

De Minimis is More Confusing than Helpful

The Department added two minimum thresholds under which an institution would not need to seek authorization (for purposes of federal financial aid) in a state. A college would not need to seek authorization if it:

  1. Offers less than 50 percent or more of a postsecondary program through distance or correspondence education in that state; and
  2. Does not exceed an unduplicated headcount of 30 students a year in that state.

The idea was to relieve colleges from having to go through authorization for only a few students in a state. A great idea!

HOWEVER, a later section says that the institution must meet “the additional requirements for legal authorization in that State as the State may establish.” What does that mean? If a state requires that you obtain authorization for serving only one student at a distance, then the state’s stricter standard is now the Department’s standard in that state. I’m still hard-pressed to think of a single situation where these provisions will help. They were kind-hearted (and the first one matches other federal requirements), but in the end have no effect but to cause confusion.

If You Lose Authorization, the Financial Aid Death Penalty is Immediate

If your institutions loses authorization in a state, then you must immediately notify your students and immediately stop disbursing federal financial aid. I call it the death penalty because, as written, the language is a guillotine hanging above the heads of institution.

We agree with the Department that if the removal of authorization is “for cause” (the institution is found negligent in treating students) then that college should no longer receive aid. Hand me the draw string for that sharp blade hanging over that college’s head.

But, what if the reason were a clerical oversight, such as “oops, our check for fees was lost in the mail” or “we missed a deadline by a few days”? I also cited two examples of outrageous actions by states. California once defunded its oversight office leaving colleges in the lurch. A few years ago, Maryland gave institutions two months to comply with a complex set of new regulations and (at the same time) they had tremendous staff turnover. Both situations left institutions officially unauthorized in those states through actions outside of their control.

The Department was uncomfortable with including language to allow for a redress period or flexibility for the Department to review extraordinary cases. Who will get punished? Students.

Notifying Students about Licensure Programs

The most calls that I have received from students has been in regards to the failure of institutions to notify students whether its programs in licensed professions (such as Nursing, teacher ed, psychology) meet important criteria in the student’s state. A regulation compelling notification to students of an institution’s ability to meet licensure requirements in a state is needed.

The last proposal would not allow an institution to enroll a student in a licensure program if it did not meet the academic criteria for that student to receive certification or sit for licensure exams in the student’s state. An exception would be allowed if the student signs a waiver demonstrating the student’s understanding of this shortfall.

One kicker on this issue, the Department wishes to issue this rule for ALL institutions, not just those teaching students in other states via distance education. In that case, the college would need to meet the regulations of the state in which it is located, not the student’s home state…as I understand it.

Proposed Timeline for Enforcement

Although it is not explicit in the text, upon direct questioning the Department personnel said that they were recommending that institutions be given until July 1, 2018 to be in full compliance in all states in which they serve students at a distance.

Next steps

You are thinking: “So….Russ, if this language got thrown out, why did you spend sooooo much blog space telling us about it?”

Since we did not reach consensus, the Department is free to issue its own language for public comment. July would seem like a reasonable timeframe for them to do so. Based on the feedback they receive, the Department will respond and issue a final regulation by the end of October of this year.My guess is that the current language will be the basis for what they propose.

BUT, we should try to influence the process both before and during the comment period. There are conversations happening among distance education leaders, higher education leaders, state regulators, and others.

It would be good to develop as consistent a message as possible. I have seen letters for others that essentially object to the whole notion of state authorization, but provide no vision for moving forward. In my opinion, we have a duty to help provide that vision.

We will be coming back to you for help in getting this message out. Be prepared. Thank you for persisting.Photo of Russ Poulin with baseball bat

Russ

Russell Poulin
Interim Co-Executive Director
WCET – WICHE Cooperative for Educational Technologies
rpoulin@wiche.edu

If you like our work, join WCET!

2 Comments

  1. Posted May 29, 2014 at 1:18 pm | Permalink | Reply

    Reblogged this on Sloan-C eLearning Landscape.

  2. Posted May 29, 2014 at 10:02 am | Permalink | Reply

    Russ, thank you for this clear and cogent overview of the endless pleasure of federal rulemaking. As we prepare to comment on the feds’ final proposed rule this summer, one useful precept to keep in mind is this. How does the proposal affect students, and do our comments support the needs of students?

    With that in mind, I am concerned about the proper approach to the “no exemptions” issue. There are many scenarios in which a student living in State A does not have meaningful access to consumer protection services in State B, where the college is located. Examples of this include limitations on the use of state resources for nonresidents. In that situation, a complete exemption for distance education is clearly not a student-oriented solution.

    The question is therefore how should State A structure its oversight of incoming distance-ed courses to ensure that when something goes wrong, students resident in State A have access to standard problem-solving services with a sufficient regulatory base. We all know that relying on an AG or filing a suit is not sufficient. There needs to be an educationally appropriate method of redress available.

    I think the Department of Education recognizes this, which is good, but has fumbled the response owing to a lack of familiarity with how states really operate (I agree completely with your comment about the lack of state regulators). Our dislike of the response should not cloud our commitment to student protection in this situation.

    The SARA approach fixes this problem for member states by requiring states to handle problems and complaints from anywhere their colleges offer courses in another member state. That works. But not all states are SARA members yet, and a few may decide not to join. How should comparable protections be provided to those students?

3 Trackbacks

  1. […] As part of DOE’s negotiated rulemaking process over the past half year representatives from schools (Columbia University, Youngstown State University, Benedict College, Santa Barbara City College, Clemson University, MIT, Capella University) to higher ed associations (WCET) were unanimous in their rejection of the proposed State Authorization rules. As Russ Poulin wrote for WCET: […]

  2. […] Negotiated Rulemaking: What Happened? What’s Next? Published by WCET’s Russell Poulin. http://wcetblog.wordpress.com/2014/05/29/state-auth-negreg-what-happened/ A very good update on what has happened and going on with State […]

  3. […] Negotiated Rulemaking: What Happened? What’s Next? Published by WCET’s Russell Poulin. http://wcetblog.wordpress.com/2014/05/29/state-auth-negreg-what-happened/ A very good update on what has happened and going on with State […]

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