Everything You Never Wanted to Know About the Education Department’s 2019 Higher Ed Rulemaking

If you didn’t spend the first four months of 2019 in windowless conference rooms watching a Department of Education negotiated rulemaking systematically dismantle what few protections exist for college students, trying to understand what was agreed upon can be like trying to read Greek. But this post will hopefully help to interpret what happened, and what it will mean for more than 20 million college students across the country.

What is negotiated rulemaking?

Negotiated rulemaking (AKA neg-reg or reg-neg, depending whom you ask) was added to the Higher Education Act in 1992 as a required process for writing any regulations related to Title IV student financial aid (like Pell Grants and loans). At the time, lawmakers expressed concern that colleges and lenders didn’t have enough say in how regulations were written -- and laid out a process for negotiations that may have overcompensated for the perceived problem.

In short, the Department lays out a list of constituencies to seek representation on a rulemaking committee; potential negotiators submit names; and the Department constructs a rulemaking committee out of those names. The group gathers for multiple sessions of negotiations, and attempts to reach agreement, line by line through the text of a regulation. If there is unanimous agreement--”consensus”--the Department publishes that language for public comment, and then responds to comments and publishes a final rule. Even a single ‘no’ vote--from the Department or from any of the negotiators--kicks the rule back to the Education Department, which can then proceed to write the proposed rule however it wants.

What was different about this rulemaking?

The 2019 rulemaking took even more liberties with an already-complex process. There were hundreds of pages of regulations being debated, covering well over a dozen separate issues that required diverse expertise. Commenters noted in droves before the neg-reg that there were too many issues on the table -- but rather than break the negotiations into multiple, separate committees, the Department left a single negotiating committee ill-equipped to address all of the issues and created three, separate, non-voting subcommittees. Subcommittee members made ‘recommendations’ to the full committee, which debated very few of the issues in full. And rather than hold a single consensus vote, as is typically the case, the Department broke the issues into three, sometimes-arbitrary “buckets” of votes. The Education Department also provided almost no data to support its proposals, leading many negotiators to ask repeatedly during the first week, “What problem are you trying to solve?”

While the committees are usually stacked in favor of industry, rather than consumer, student, or taxpayer interests, this committee took industry capture to new levels. Historically, alternates for each member of the committee have been able to weigh in and share their thoughts and expertise with the group, but in a break from a long-standing precedent, the Department largely prevented alternates from joining the negotiating table to add their two cents. Whereas recent rulemakings have had attorneys general (AG) and consumer protection advocates represented, the Department didn’t include either this time -- and fought tooth-and-nail to prevent an AG from being added, even as an alternate to another state representative added during the first week. It was clear that the Department did not want to have experts who could speak to student and consumer interests. Of the 17 members of the full, voting committee, 13 were industry or Education Department representatives, just three were volunteers who represented interested communities (students, veterans, employers) but who don’t spend their days steeped in the regulations, and only one was a representative from a consumer law group.

So what happened?

A week at a time for months on end, negotiators convened to read the Department’s proposed regulatory language and debate the issues. In some cases, the Department seemed to have pitched ideas to the negotiating committee--like allowing colleges to outsource up to 100 percent of their programs to unaccredited and unaccountable providers--solely as a distraction, ultimately caving almost entirely near the end of the negotiations. In others, the Department threatened that if negotiators didn’t reach consensus, the White House would certainly make the final regulations even worse than what the Department was proposing -- a warning that the regional accreditor and other industry negotiators appeared to take especially seriously in light of a White House proposal released only weeks before that included eliminating regional accreditors entirely.

In short, lobbyists for the higher education industry and accrediting agency heads joined forces to fight only one or two of the proposals, leaving students to fend for themselves on the others. In the final minutes of negotiations, the legal aid representative--by far the loudest voice for students at the table and the only likely no-vote--stated, choked up, that she would agree to vote for the final language, clearly feeling the pressure of the others around the table.

And so consensus was reached. Betsy DeVos dropped by to thank negotiators for their yea-votes on two of the three buckets of votes. Diane Auer Jones, the acting Under Secretary at the Department, popped champagne seconds after consensus was reached, celebrating the industry-friendly regulations. Ivanka Trump Tweeted her congratulations to the Education Secretary. Few wrote about how the changes would have huge implications for students and taxpayers if finalized.

What will these regulations mean for accreditors?

The most troubling changes are to the accreditation system. It can hardly be ignored that the current accreditation system is already very weak--not to mention the inadequate oversight the Department exercises over accreditors. But the new regulations would further weaken both. (Check out this report from Antoinette Flores at the Center for American Progress for a deeper dive on accreditation changes in the new rules.)

For starters, the Department has made it easier for new accreditors to gain access to financial aid “gatekeeper” status through federal recognition. Rather than requiring accreditors to demonstrate two years’ worth of experience assessing colleges to measure their quality, the consensus language creates a gaping loophole for new accreditors that lack experience to become recognized by virtue of an affiliation with an existing agency. And rather than requiring an existing college to cite the new accreditor as its gatekeeper in order for the accreditor to gain federal recognition, the new accreditor can instead simply approve a college already approved for access to federal aid by another accreditor. Both policies make it faster and easier for inexperienced accreditors to earn that gatekeeper badge.

At the same time, the new regulations make it significantly harder for the Education Department to kick out an underperforming accreditor. While that’s a rare step for the Department anyway, you don’t have to look far in the past to find a prominent example: In 2016, then-Secretary John King withdrew recognition of an agency after determining that ACICS (notorious accreditor of failed colleges like Corinthian Colleges and ITT Tech) had failed to effectively enforce its standards and wouldn’t be able to improve sufficiently within a year. Luckily for ACICS, it didn’t end up needing to; the Trump Administration came into power and reversed the decision in November 2018.

Many of the 2019 regulatory changes seem specifically targeted at the concerns raised in ACICS’ case (like requiring that agencies applying for recognition demonstrate acceptance by the field -- something the Department got caught fibbing about for ACICS, when it claimed nine other accreditors had endorsed ACICS that hadn’t). In another section, the Department changed the requirement that accreditors be in compliance with all federal requirements or that they come into compliance, so that accreditors need only be in substantial compliance with the requirements and allows non-compliant agencies to submit monitoring reports only to Department regulators instead of also requiring that NACIQI, an independent advisory body, review the agency and make a recommendation.

What will the regulations mean for colleges?

The proposed changes to the regulations also make it far less likely accreditors will be able to hold failing colleges accountable, even when they want to. A drawn-out timeframe for accreditor actions against colleges means schools could have years before losing accreditation. Accreditors can now allow colleges to be out of compliance for up to three years in certain circumstances (like during an economic recession); and they can wait up to four years to actually pull accreditation from a college that it’s found to be out of compliance. That means hundreds--even thousands--of students could be subjected to a poor-quality education while the college and its accreditor run out the clock.

Colleges can also change and grow without as much oversight from their accreditors as is currently required. “Innovative” programs can abide by a dual set of standards the accreditor creates, instead of having to meet the bar set for other programs -- a giant loophole that will allow poor-quality programs to thrive. Colleges can change their program offerings, increase the credential levels they offer, and open new campuses without as much oversight. For some types of these so-called “substantive changes,” accreditation staff can sign off on the changes without running it past the agency’s commissioners that are accountable for decisions.

And under the new regulations, even failing colleges stand to benefit. Colleges that are closing can receive up to four additional months of taxpayer dollars to teach out their current students, as long as state and federal regulators and the accreditor rubber-stamps the arrangement. Owners of failing colleges would also find it easier to sell off their campuses, because the proposed regulations would limit the federal liability the buyer assumes to only the current and past award year. That could ease the sale of colleges that have failed so drastically they are effectively toxic assets -- and might be better off shut down completely.

What will the rules mean for states?

In one of the more dramatic moments of the last week of negotiations, the negotiators reached agreement to maintain (almost word-for-word) a regulation published in 2016 that restored states’ authority to oversee online colleges that enroll their residents but are officially headquartered across state borders. Despite having delayed the 2016 rule before it took effect because “the clarifications requested [by higher education stakeholders] are so substantive that they would require further rulemaking,” the Department agreed to stick with the old language. (The new language would, however, eliminate a series of disclosures institutions would be required to provide to students -- like notification when the state or accreditor took an adverse action against the school.) It remains to be seen whether the Department will follow through on that commitment in the final rule.

What happens next?

The Department is preparing to release a proposed rule that will match the language agreed to during the rulemaking. After that, it will launch a public comment period, during which interested parties can submit written comments. Its aim is to finalize the proposed regulations by November 1, which would ensure the new regulations take effect July 1, 2020; any later, and the rules won’t be effective until 2021. So stay tuned for more in the coming months -- and start drafting any comments you plan to submit!

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