Department Ups the Ante; Who Will Fold?

This is a follow up to our February blog covering the U.S. Department of Education negotiated rulemaking process. 

The Department and negotiators just wrapped up the final week of discussions on Friday, March 18th. Because negotiators and the Department did not reach consensus on 5 of the 7 issues, the Department can now move forward with whatever language they choose. We have a pretty good indication of what their proposed regulations will look like, based on the discussions last week. Their proposals will raise the minimum actions required by institutions that offer licensure programs.  Based on the Department’s stated goals, new regulations would likely be effective July 1, 2023. With the major changes likely to be proposed, institutions need to start planning now for how to comply, unless they are prepared to fold all licensure programs.

Raising the Stakes - New PPA Certification Requirement 

The Program Participation Agreement (PPA) sets the terms and conditions for all institutions that participate in Title IV financial aid programs. Institutions must explicitly agree to do (and not do) certain things as part of the PPA. The Department is proposing adding a new section, (32), that relates to accreditation, licensure/certification and consumer protection. Each of these are important and impactful, but I’m focusing only on the licensure related requirements in this post. 

34 CFR 668.14 (b)(32) In each State in which the institution is located or in which students enrolled by the institution are located, as determined at the time of initial enrollment in accordance with the requirements in 34 CFR 600.9(c)(2), the institution must ensure that each program eligible for Title IV, HEA program funds—

(ii) Satisfies the applicable educational prerequisites for professional licensure or certification requirements in the State so that a student who completes the program and seeks employment in that State qualifies to take any licensure or certification exam that is needed for the student to practice or find employment in an occupation that the program prepares students to enter; 

At this point, the Department has not defined “ensure” or offered explanation as to what the expectations for institutions would be to qualify to certify the PPA. During discussions last week, the Department indicated they will include an implementation date for section (32)(ii) for students enrolling after that date, so that it won’t impact students currently enrolled in a licensure or certification program.

During discussions last week, the Department also indicated that it is not their intention to require institutions to update student location after time of enrollment. They added language (“as determined at the time of initial enrollment in accordance with the requirements in 34 CFR 600.9(c)(2)”) to their original proposal to clarify their intent. In other words, if a student starts a licensure program located in a state where the institution does satisfy educational requirements for licensure, the student could remain enrolled, and utilize Title IV funds, even if they relocate to a state where the institution does not meet requirements and as a result, could not offer the program under Title IV. 

The Department’s added language reinforces that location is set by each institution, per the institution’s own policy, as outlined in 34 CFR 600.9(c)(2). Negotiators commented that location should be where the student receives the education. The Department did not confirm this approach, but pointed back to 34 CFR 600.9(c)(2), which states: 

(i) For purposes of this section, an institution must make a determination, in accordance with the institution's policies or procedures, regarding the State in which a student is located, which must be applied consistently to all students.

(ii) The institution must, upon request, provide the Secretary with written documentation of its determination of a student's location, including the basis for such determination.

(iii) An institution must make a determination regarding the State in which a student is located at the time of the student's initial enrollment in an educational program and, if applicable, upon formal receipt of information from the student, in accordance with the institution's procedures, that the student's location has changed to another State.

While this approach to location is consistent with other Department requirements under the Title IV program, it will inevitably lead to a patchwork of location policies and uneven distribution of Title IV funds.

Interestingly, the Department has chosen to link the licensure requirement in (ii) to qualifying to take a licensure or certification exam. This does raise questions, as some license types allow anyone to take the licensing exam at any point in time, even prior to completing any courses/program. For example, many states allow for anyone to register for the P-12 educator license/certification exams. In other instances, such as Certified Public Accountant, many states allow applicants to sit for the exam prior to completing the full amount of credits and coursework required for certification or  licensure. There are also examples of some states that do not require an exam for certification or licensure. From discussion during the negotiated rulemaking sessions, it seems that the Department’s intent is really to require programs to satisfy educational requirements for licensure or certification. The commentary the Department provides in the preamble with the final regulations may shed more light on this. 

Impacts for Institutions

Practically, this new section will limit an institution’s ability to enroll students using Title IV to only those states/territories where the institution knows that the program meets educational requirements for licensure or certification. This presents several challenges to institutions. 

First, licensure/certification requirements vary, sometimes widely, from state to state. Understanding each state’s requirements and aligning the institution’s curriculum with the educational requirements takes a significant amount of time and effort. Even after completing this work, the institution will have to determine if they want to invest the resources in developing new courses or otherwise customizing the curriculum to meet many different requirements. 

Second, many state licensing boards and agencies currently limit their guidance to institutions. Generally, each individual license applicant (program graduate) is assessed by the board at the time of license application. While individual graduate licensing outcomes are useful information, it likely is not sufficient to “ensure” that a program meets educational requirements. This is especially true when you factor in the length of time after graduating that it takes many professions to be licensed. State licensing boards and agencies do not typically have a process in place for evaluating and/or approving out-of-state programs. 

Online programs would certainly feel the greatest impact of this new section, as they are likely to have students in multiple locations, by limiting enrollments to only those states/territories that they can “ensure” licensure requirements are met. But this section technically applies to all types of institutions delivering education through all modalities. This means that public, private, and proprietary traditional campus-based programs will also need to “ensure” that their programs meet licensure requirements in all states/territories where students enrolled by the institution are located. Because students can be located in another state when they first consider and enroll in a traditional, campus-based program, this current proposal could have implications beyond online programs.

Bottom line, as drafted, this section will create new confusion and challenges for all institutions. It will most likely result in private nonprofit, public and proprietary colleges and universities limiting growth of online programs. It will also very likely result in the closure of some existing online programs.

New Exam Performance Measure

As if the new PPA requirements proposed in (32) aren’t enough, the Department’s proposal in session 3 includes another new section that applies to all programs that participate in Title IV. This section outlines the information that the Department can consider when issuing new PPAs or continuing existing PPAs.

34 CFR 668.13 Certification procedures. (e) Supplementary performance measures. The Secretary assesses and analyzes the following information, among other information, prior to issuing an institution a new Program Participation Agreement, and may consider the information in determining whether to certify, or condition the participation of, an institution under § 668.13 and 668.14–

(vi) Licensure pass rate. If a program is designed to meet educational requirements for a specific professional license or certification that is required for employment in an occupation, and the institution is required by an accrediting agency or State to report passage rates for the licensure exam for the program, such passage rates.

Proposed 668.13 (e)(vi) will not cover all licensure programs, as not all states or accreditors require reporting of exam passage rates. However, many do. The Department has not defined any thresholds for rates or otherwise indicated if/when a certain passage rate would create an issue for the institution’s eligibility. 

Doubling Down on Disclosures

Public Disclosures

After discussion at the second and third negotiating sessions, the Department has retained the public disclosure requirement for licensure, with a notable change. Institutions can no longer indicate “have not determined” in their public disclosure. As many institutions are currently relying on this option afforded to them by current federal regulation, this change could require significant investments in licensure research and curriculum comparisons.

34 CFR 668.43(a)(5)(v) If an educational program is designed to meet educational requirements for a specific professional license or certification that is required for employment in an occupation, or is advertised as meeting such requirements, a list of all States where the institution is aware that the program does and does not meet such requirements.

During discussion in session three, the Department commented that under (32), institutions will have to be aware of where the program meets and does not meet requirements, therefore the public disclosure should encompass all states/territories. Depending on the Department’s commentary in the preamble, “where the institution is aware” will be subject to different interpretations and result in inconsistent disclosures.

Individual Disclosures

The Department has not proposed any changes to the existing individual prospective student and student disclosures required under 34 CFR 668.43(c) . If the changes with public disclosures are adopted, as currently drafted, or if there are different changes made to the public disclosure requirement, there will be a mismatch and conflict between the public disclosure and individual disclosure requirements. 

Limiting the Take - Capping Title IV for GE Programs

Gainful Employment is back! I want to call out one section specific to licensure programs that could have an enormous impact. If you aren’t familiar with Gainful Employment, there is a lengthy history of negotiated rulemaking and court cases, with much information from proponents and opponents available to read. In a nutshell, certificate programs at private, nonprofit and public institutions, and nearly all for-profit degree and certificate programs must prepare students for “gainful employment in a recognized occupation” in order for those students to be eligible for federal student aid. Any institution with a gainful employment program must provide specific information about its students to the Department and make disclosures about the success of its programs to the public.

34 CFR 668.14 (b)(26) For an educational program offered by the institution that is required to prepare a student for gainful employment in a recognized occupation 

(i) Effective [one year from the effective date of these regulations], the Secretary limits title IV, HEA eligibility for the program to the lesser of - 

(A) The minimum number of hours required for training in the recognized occupation for which the program prepares the student, as established by the State in which the institution is located, if the State has established such a requirement, or as established by any Federal agency; or 

(B) If at least half of States license the recognized occupation for which the program prepares students, the national median of the minimum number of clock hours required for training as established in those States, as determined by the Secretary for the year of the effective date of these regulations and published in a notice in the Federal Register; and

(ii) The institution must establish the need for the training for the student to obtain employment in the recognized occupation for which the program prepares the student;

Under this proposed section, students enrolled in GE programs would have their Title IV capped to the lesser of the minimum number of hours required in the state where the institution is located or the national median.

Here is an example of how this proposed section would be applied.

An addictions graduate certificate program offered through distance education or on-campus by a private non-profit institution requires 25 semester credits or roughly 375 hours (using 15 clock hours per 1 semester credit). The state where the institution is located requires 360 hours for licensure in the field. More than half of the states license addictions professionals, many under the title of Alcohol and Drug Counselors. The national median for the minimum number of hours of training/education for Licensed Alcohol and Drug Counselor is 270 hours. Under proposed § 668.14(26) that institution would be limited to the lesser - the median (270 hours or 18 semester credits) - for Title IV eligibility for the program, which would not meet the home state license requirements. Students in that institution’s home state would have Title IV capped at 18 semester credits, requiring that they secure private loans or other funding to finish the program, meet licensure requirements and work in the field.

What’s Next?

Because the negotiators did not reach consensus with these sections, the Department will be able to move forward with their proposed language. There will be a 30 day public comment period once the Department releases their proposed regulations, likely this summer. The Department must review and respond to public comments as part of the rulemaking process. The Department was clear last week that their goal is to release final regulations prior to November 1, 2022, which would mean an effective date of July 1, 2023.

The Federal Negotiated Rulemaking webpage contains information on the negotiators, the documents they considered, and recordings of meetings. Licensure is one of many important issues that the Department and negotiators considered. Having reached consensus on 2 of the 7 issue areas, the Department has significant opportunity to shape the final regulations. Their decisions over the next several months could result in major changes to the availability of online licensure programs and create a new level of protection for students using Title IV HEA financial aid.

HELP will continue to monitor and share information about this, as we know it universally impacts everyone at the (poker) table; private nonprofit, proprietary and public colleges and universities. Everyone can’t win every hand, but all players should have a chance to play without folding. We encourage you to follow this issue and provide written comments to the Department once the proposed regulations are published, likely this summer. And start planning now for how your institution is going to determine if all of your licensure related programs meet educational requirements for licensure in every U.S. state and territory.

Remember, we are here to help! We work with institutions to create a compliance plan, conduct research, compare curriculum, develop disclosures, and more.

Further reading:
Our friends at WCET Frontiers highlight these and other proposed changes impacting distance education. Also check out their informative two part series posted after session 1 of negotiated rulemaking.