Observations on Hill Day

Earlier this week, I attended CCA’s annual Hill Day and Policy Forum in Washington, DC. It was a great event, with over three times the number of attendees of previous years. This turnout wasn’t entirely surprising, considering the legislative issues unfolding in Congress and the Department of Education right now. Regardless, it was great to see the career college community come together and show such a strong, unified front. It was also great to have a chance to meet up in person with peers and friends from across the country.

When I returned from the event, a colleague asked me to explain the issues and concerns around the Department of Education’s rulemaking on Federal financial aid programs. I thought I’d just send her a link, but I couldn’t find a site that pulled the relevant details together in one place. So, for anyone who is trying to understand these issues, I thought I’d share the summary I pulled together.

A Primer on the Department of Education’s Negotiated Rulemaking for Title IV Programs

1. What is negotiated rulemaking?
   When a government agency (ie. The Department of Education) proposes a change to a regulation, it is usually develops the proposed changes without public input and then publishes them in the Federal Register for comment by the public. In some cases, an agency is required to use a process called “negotiated rulemaking” which allows those parties that will be most affected by the regulation/rule change to participate in the development of the proposed rules before they are published in the Federal Register. The Department of Education is specifically required by law to use negotiated rulemaking for Title IV, Higher Education Act (HEA) programs.

   A complete FAQ on the negotiated rulemaking process is available here: http://www2.ed.gov/policy/highered/reg/hearulemaking/hea08/neg-reg-faq.html

2. Why did the Department of Education establish a negotiated rulemaking committee?
   The Department of Education established two negotiated rulemaking committees for 2009-2010 – one to develop proposed regulations governing foreign schools, and the other (which is the one we are concerned with) was established to develop proposed regulations to maintain or improve “Program Integrity” in the Title IV, HEA programs (Student Assistance programs). The goal of this committee is basically to prevent abuse of the federal financial aid programs. A more complete explanation by Robert Shireman, the Deputy Undersecretary of Education, can be found in the transcript of a call with Career College representatives held on May 29, 2009 ( http://www2.ed.gov/policy/highered/reg/hearulemaking/2009/call-career-colleges.pdf )
   
3. What issues are the “Program Integrity” negotiated rulemaking committee addressing?
   The committee is negotiating on 14 rules/rule changes in the following areas:
   Definition of High School Diploma; Ability to Benefit; Misrepresentation of Information to Students; Incentive Compensation; State Authorization as a Component of Institutional Eligibility; Gainful Employment in a Recognized Occupation; Definition of a Credit Hour; Agreements Between Institutions of Higher Education; Verification of Information Included on Student Aid Applications; Satisfactory Academic Progress; Retaking Coursework; Return of Title IV Funds: Term-based Programs with Modules or Compressed Courses; Return of Title IV Funds: Taking Attendance; Disbursements of Title IV Funds

   A full explanation of each of these issues can be found here: http://www2.ed.gov/policy/highered/reg/hearulemaking/2009/integrity-session3-issues.pdf .

4. What issues are the most contentious and why?
   The two issues causing the most concern for career and community colleges are around the definition of “gainful employment” and the issue of “incentive compensation”. An explanation of each follows.

   Gainful Employment: Most for-profit, career and community colleges & universities are eligible for federal aid based on their ability to “prepare students for gainful employment in a recognized occupation.” The proposed goal of the negotiated rulemaking was to define/create a standard for what is considered “gainful employment”. The final proposal for defining gainful employment involves capping annual debt repayments at no more than 8 percent of a program graduate’s expected salary over 10 years.

   Serious concerns were raised with this approach. First, it singles out students attending proprietary career, technical, and vocational colleges. Many of these programs serve predominantly adult learners, single parents, and low-income students who need the flexibility that for-profit career colleges can provide. These students are also the most in need of Title IV funding. If the real concern is with the high debt burden incurred by some students, any proposed changes should affect students attending non-profit and public institutions as well. Other concerns raised during the negotiations include a potentially “slippery slope” of price controls for all higher education institutions; the significant work/time required to implement this on a program-by-program basis; and concerns with whether the DoE has the necessary authority to regulate on this issue. More details on this issue can be found here in an article in Inside Higher Ed.
   
   Incentive Compensation: In order to receive Title IV funding, institutions are prohibited from providing staff with any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid. There are 12 “safe harbors” or types of payment and compensation plans that do not violate this statutory prohibition. The proposed rule changes would eliminate those safe harbors. Although the two sides were much closer at the end of negotiations, according to Inside Higher Ed, issues around language remained.

5. Where do things stand now?
   Following months of negotiations between the DoE and the panel of negotiators (representing two- and four-year nonprofit institutions, for-profit colleges, students, consumer advocates and campus administrators), a consensus was reached on nine of the 14 issues being proposed. On the remaining five issues (including, most notably, the definition of gainful employment and incentive compensation), no consensus could be reached. According to Inside Higher Ed, “Without overall consensus, the department is free to revise all 14 rules as it sees fit before releasing them for a final round of public comment.” The lobbying continues and we’ll wait to see how it all works out.