“Outcomes Are Key:” Department of Education Continues Negotiated Rulemaking to Strengthen Student Protections

Last week, the U.S. Department of Education (ED) convened a group of higher education stakeholders for the second session of negotiated rulemaking (neg reg), a process ED uses to review, discuss, and hopefully reach consensus on proposed regulatory changes. See our summary of the first work period here.

During this work period, negotiators reviewed ED’s updated regulatory proposals covering program integrity and institutional quality issues, including cash management, state authorization, distance education, return of Title IV funds (R2T4), and accreditation. Negotiators also participated in nonbinding “temperature checks” to indicate how they would vote on ED’s proposals without modification, raised objections to any regulatory language that concerned them, and made suggestions for further refinements.

Cash Management

The most consequential proposals in this section would change when schools can automatically bill students for books and supplies, and restrict schools' ability to keep unused meal plan funds at the end of each semester. Negotiators representing institutions raised concerns that the meal plan changes would lead to colleges eliminating cash-value meal plan options. They also suggested that the proposed changes might harm programs that allow students to donate meal plan funds to students in need.

Negotiators representing students and consumer protection groups suggested that if colleges can afford to run donation programs, they should be able to provide the funds back to students and give them the choice of how they use their money. Several public commenters during the week highlighted this issue, noting that students should be able to use any leftover funds rather than have them kept by schools.

ED also presented a revised proposal that would require students to opt into having course materials included with tuition each semester. The proposals include an exception allowing schools to include supplies in tuition when there was a compelling health and safety reason – for example, requiring specific safety equipment for lab classes. Negotiators representing institutions raised concerns that changing to an opt-in model would reduce the savings they claim arise when a high percentage of students participate in automatic billing policies. ED and negotiators representing students, veterans, and consumer advocates made the case that students should be able to choose how they spend their money. ED’s negotiator made it clear that “we are talking about money that belongs to the students,” and giving students the ability to opt in, rather than forcing them to opt-out, was the best way to give them control over their own funds.

State Authorization

For the committee’s consideration of state authorization, ED presented a proposal that would allow states – even those participating in state authorization reciprocity agreements – to enforce their own education-specific laws. Negotiators representing students, consumer advocates and civil rights groups, veterans and military students, legal aid organizations, and state attorneys general all underscored the need to ensure online out-of-state students benefit from the same consumer protections as in-state students. They also emphasized the importance of allowing states to enforce their consumer protection laws related to higher education. In response, negotiators representing state officials argued that states voluntarily choose to enter reciprocity agreements and thus choose to adhere to the agreement’s terms, even if the agreement limits the actions they can take against out-of-state institutions.

The Department additionally proposed language that would require reciprocity agreements to provide state-led processes to modify the agreement’s policies, establish a process for students to report complaints, and allow states to investigate and respond to those complaints. Student and consumer-aligned negotiators supported these changes, but they recommended ED clarify that “state-led process” refers only to state regulators and agencies tasked with enforcement. Representatives of state officials and private nonprofit institutions expressed a concern that the new language would overstep states’ authority to participate in reciprocity agreements as they see fit.

Distance Education

ED made no changes to its initial proposal on distance education issues, which included the addition of a virtual location for institutions offering all courses and instruction via distance education. No negotiators opposed this change in the temperature check.

The Department also proposed removing language that would allow institutions to count asynchronous instruction toward total hours for clock hour programs. All five negotiators representing institutions and the representative of business officers expressed concerns with this language. Dissenting members requested ED provide additional information on the number and types of clock hour programs currently using asynchronous instruction.

Beyond ED’s proposed language, negotiators discussed a proposal from representatives of proprietary institutions and legal aid organizations that would require institutions to report whether students are enrolled exclusively online, exclusively in-person, or both online and in-person. ED expressed support for the improved data on distance education students that this requirement would provide. The Department will present proposed language to this effect during the March work period.

Return of Title IV Funds (R2T4)

The proposed changes to the R2T4 process remained relatively unchanged from the first session; all of the proposals from session one aimed to simplify the R2T4 process and make it more student-centered. The Department provided revisions to help simplify situations where R2T4s could lead to balances owed by incarcerated students studying in prison education programs. Department representatives said they had listened to feedback from schools with generous refund policies for students enrolled in prison education programs and did not want to undermine those policies. Negotiators generally supported ED’s R2T4 proposals.

The only R2T4 provision to face opposition was a change that would require distance education programs to take attendance (most traditional credit hour programs are not required to take attendance) as a way to make it easier to track when an online student stopped attending. Negotiators representing institutions said the current language would require institutions to take attendance for all classes – not just classes offered only through online learning. ED’s negotiator indicated the Department would review suggested changes that could alleviate this concern.

Accreditation

Negotiators had an especially vigorous debate over the Department’s proposed changes to accreditation regulations. The changes to the accreditation regulations are substantial, covering over sixty pages of regulatory text and taking a day and a half to cover. As such, we will focus on a few key issues raised at the table.

ED added language to the accreditation proposals requiring accrediting agencies to set minimum standards that colleges would need to meet to remain in compliance. Proposed changes also focused on ways to improve the data schools use to calculate graduation and retention rates during accreditation reviews to ensure the data used to measure student success is reliable. The Department kept changes from the first negotiation session that would limit who can serve as a public member of accrediting agency governing bodies. Public members are meant to provide an outside perspective to accreditors, and the regulatory revisions are meant to ensure public members do not have close links to colleges and universities to avoid any conflicts of interest.

Negotiators representing accreditors and institutions generally opposed proposed regulatory changes. In particular, negotiators representing institutions opposed the requirement that accreditors set minimum standards schools would need to meet. One negotiator pointed out that this position appeared at odds with a claim made earlier in the week by a negotiator representing accreditors that “outcomes are key.”

Negotiators for institutions also continued to question what problems ED seeks to solve by strengthening regulations throughout the accreditation issue paper. Negotiators representing students, veterans, and legal aid organizations brought up numerous examples of institutions that were fully accredited for years while they provided sub-standard educational programs and, in some cases, committed fraud at the expense of students and taxpayers.

TRIO Subcommittee

ED maintained its initial proposal to expand eligibility for some federal TRIO college preparation programs to undocumented students. After some discussion of the additional capacity and training TRIO practitioners will need to best serve this student population, all subcommittee members agreed to support ED’s proposal. Three members of the subcommittee will present their final recommendation to the full committee before its consensus vote during the March 2024 work session.

Public Comments

During this work period, the full committee heard directly from students, faculty, advocates, and other members of the public. Many students and institutional administrators weighed in on ED’s proposal to prohibit institutions from automatically billing students for textbooks and supplies; some argued that automatic billing unfairly limits student choice and raises costs, while other commenters emphasized the convenience of these “inclusive access” programs.

Several veterans urged ED to consider strengthening accreditation regulations to hold low-quality schools accountable for ensnaring veterans in programs that fail to deliver on their promises. Career education and technical program representatives encouraged ED to maintain the use of asynchronous instruction in clock hour programs, citing the additional flexibility this option provides both students and instructors.

The full committee will meet for its final work period March 4 - 7. During these sessions, negotiators will formally vote on ED’s proposals and make final recommendations. Later this year, ED should publish its notice of proposed rulemaking, which will include language on which negotiators reached consensus. To view all materials provided to the committee and the public, visit the Department of Education’s negotiated rulemaking website.