Education Industry Reporter

Department of Education

Subscribe to Department of Education RSS Feed

Gainful Employment Notice Published

Posted in Department of Education, Gainful Employment, Higher Education News, Higher Education Policy

Dennis Cariello

As promised, here is the pre-publication version of the gainful employment rule, complete with Preamble (the informal text of the Rule was published earlier) as will be published int eh Federal Register tomorrow.  I suggest you pack a lunch if you are going to read it – the file comes in at 945 pages strong.  Of course, we will do the hard work so you don’t have to – stay tuned to the blog for further updates.

Department of Education Releases Gainful Employment Rule – Eliminates Proposed Programmatic Cohort Default Rate

Posted in Department of Education, Gainful Employment, Higher Education News, Higher Education Policy, Uncategorized

Dennis Cariello

As most readers of this blog probably know by now (around 8:00 am on the east coast), the Department of Education (“Department”) will publish the “gainful employment” rule (“GE Rule” or “Rule”) later this morning.  The informal text of the rule has been made available, although the full draft notice has not been published yet on the Department’s GE website.  In sum, the Rule seeks to impose a return on investment metric to higher education programs at proprietary colleges and on one-year programs at any school (regardless of tax status).  Early reports on the Rule (from Inside Higher Ed and the Chronicle of Higher Education) indicate at least one major variance with the draft rule published in March 2014 – the new programmatic cohort default rate has been eliminated.  The proposed debt-to-income metrics have not been changed.  As this fact sheet explains, the Department estimates approximately 1,400 programs – effecting 840,000 students will be effected.

We will discuss these issues more later this morning when we review the draft text.  In the meantime, here are a few interesting comments/whitepapers that came out of the notice and comment period on the rule:

  • APSCU presentation that reviews the rule and synthesizes the Charles River Report;
  • Mark Kanterowitz’s white paper on the GE Rule;
  • Chris Ross of the Parthanon Group did an analysis of the rule form a student characteristic perspective;
  • Mark Schneider’s report of the American Enterprise Institute on how public and private; and non-profit schools would perform under the GE Rule’s metrics.

New Incentive Compensation Decision

Posted in Department of Education, Higher Education News, Incenitve Compensation, Litigation News

Dennis Cariello

Yesterday, the DC District Court issued an opinion in the continuing saga of the U.S. Department of Education’s 2010 Program Integrity regulations.   The case rejected the Department’s rationale (we discussed this preamble previously) for banning graduation/retention rate bonuses and its explanation on the effect the ban on incentive compensation would have on diversity enrollment.   This Court remanded the issue back to the Department to better justify the reasons for the incentive compensation ban prohibiting these bonuses and to better explore the effect of the ban on minority enrollment.

Interestingly, the Court appeared to reject the Department’s view that everything is a proxy for enrollment when it relates to incentive compensation:

The “proxy” argument is advanced by the Department’s lawyers on summary judgment (in response to an invitation from the Circuit, but is not reflected in the Amended Preamble. Moreover, if graduation rates could be used as a proxy for recruitment numbers, graduation rates would need to serve as a nearly identical substitute for enrollment figures.  Nothing in the administrative record suggests the Department performed such an analysis, even after remand. What the Department stated in the Amended Preamble is the common-sense and irrefutable proposition that “compensation for securing program completion requires the student’s enrollment as a necessary preliminary step.” It cannot be gainsaid that enrolling in a postsecondary program—of any kind—precedes completion; in other words, one cannot end what one has not begun.

If accepted, this rationale would allow the Department to ban all incentive-based compensation in higher education, as enrollment is always a necessary predicate to any assessment of program success or student achievement. Congress specified that postsecondary institutions are prohibited from providing commissions, bonuses, or other incentive payments based “directly or indirectly on success in securing enrollments . . . .” 20 U.S.C. § 1094(a)(20) (emphasis added). Had Congress intended to proscribe all incentive-based compensation, it would have expressly done so by enacting a general ban on incentive payments, not limited to enrollments.  The fact that Congress chose to ban only enrollment-based incentives indicates that any regulatory prohibitions must be reasonably tied to enrollment, without permeating the entire postsecondary education process. (Citations omitted).

Also, it seems the Department will have a tough road in convincing that a graduation-based incentive is inconsistent with the Higher Education Act: Continue Reading

Department of Education Deputy Secretary James Shelton Reportedly Leaving at the End of the Year

Posted in Department of Education, Higher Education News, K-12 News

Dennis Cariello

As reported by EdWeek, U.S. Deputy Secretary of Education Jim Shelton is planning to resign at the end of this year.  “Before being promoted to deputy secretary, Shelton was the assistant secretary for innovation and improvement, where he managed a portfolio of high-profile competitive-grant programs targeted at improving teacher quality, public school choice, and education technology—including the nearly $1 billion Investing in Innovation contest.”  Dep. Sec. Shelton has been a real friend to innovation and technology and a frequent participant and presenter at the GSV Advisers EdInnovations conference.

Also, EdWeek reports that on Wednesday, September 24, Robert Gordon, who has been nominated to succeed Carmel Martin as assistant secretary for planning evaluation and policy, joined the Office of the Secretary as a consultant and senior advisor to Duncan. In this role, Gordon will advise Duncan on top administration priorities and initiatives while his nomination remains pending in the Senate.”

Department of Education Issues New Guidance on Race and “Resource Comparability”

Posted in Civil Rights & the Constitution, Department of Education, K-12 News, Office for Civil Rights (OCR)

Dennis Cariello

Yesterday, the US Department of Education’s Office for Civil Rights (“OCR”) issued a 37-page guidance document on “Resource Comparability” and unequal distribution of education resources along racial or ethic lines in elementary and secondary education.  More specifically, OCR is focusing on racial disparities in access to “rigorous courses, academic programs, and extracurricular activities; stable workforces of effective teachers, leaders, and support staff; safe and appropriate school buildings and facilities; and modern technology and high-quality instructional materials.” The document  also tackles such “in the news” topics as racial disparities in selective public schools and AP classes, as well as funding disparities within and between school districts.

Senator Lamar Alexander (R-TN), the current Ranking member of the Senate Committee on Health Education Labor and Pensions – and the likely Charmian of that committee if Republicans take control of the Senate this November, called on the Obama Administration to rescind the guidance, citing the intrusion onto issues of local control called for in the guidance (“This administration’s National School Board has gone from telling states what academic standards they should set to, now, making decisions for our school districts about school wi-fi hotspots, air conditioning systems, performance art spaces or the quality of the carpeting in the hallways. “).

Department of Education Extends CDR Relief to Schools With Borrowers Facing “Split Servicing”

Posted in Cohort Default Rate, Department of Education, Education Data & Statistics, Higher Education News

Dennis Cariello

In advance of the release of the official FY2011 Cohort Default Rate (CDR) data, the U.S. Department of Education (Department) announced that the Department has “adjusted how it calculates CDRs for any institution that otherwise would have been subject to potential loss of eligibility with the release of the FY 2011 rates.”  The Department, in response to the increased “incidence of borrowers with loans held by multiple lenders and serviced by more than one servicer” (“Split Servicing”) attempted to remove any penalty to institutions occasioned by Split Servicing.  The Department explained:

The adjustment to the calculation excludes from the CDR numerator certain borrowers who defaulted on a loan but who had one or more other Direct or FFEL Program loans in a repayment, deferment, or forbearance status for at least 60 consecutive days and that did not default during the applicable CDR monitoring period. The 60 consecutive days must have been between the date the loan on which the borrower defaulted entered repayment and the date when the borrower defaulted on that loan.  A borrower was only excluded from a CDR numerator if there were one or more non-defaulted loans that met the above criteria for each of a borrower’s defaulted loans.

The Department has made these Split Servicing adjustments for all “three of the most recent official three-year official CDRs (FY 2009, FY2010, FY2011) for any institution that otherwise would have been subject to potential loss of eligibility with the release of the FY 2011 CDRs.”  While these adjustments apparently allowed institutions that would have lost Title IV eligibility due to high CDRs, it is not apparent just how many institutions were effected or what type of institutions most benefited.

This adjustment – which is seen as a boost for two-year colleges – will become less meaningful over time.  This is because the loans relevant to the CDR calculation are increasingly comprised of loans serviced by one Federal loan servicer.  Thus it is doubtful whether this adjustment will be provided in future years, or whether any such adjustment will have a positive effect for institutions.

Cohort Default Rates Decrease; Proprietary School Default Rates Decrease for Third Straight Year

Posted in Cohort Default Rate, Department of Education, Education Data & Statistics, Higher Education News

Dennis Cariello

Earlier today the U.S. Department of Education (Department) released the official three-year Cohort Default Rates (CDRs) for FY 2011.  For the uninitiated, this is a measure of the number of students entering repayment in FY 2011 (entering repayment between October 1, 2010 and September 30, 2011)  that defaulted on their loans (experienced 270 or more days of delinquency on their loan payments). Previously, the Department utilized a two-year CDR metric and merely published three-year CDRs for information purposes.  Of course, if an institution’s 3-year CDR exceed 30% for three consecutive years (or exceeds 40% in any one year), that institution is no longer eligible for Title IV.

As the chart below shows, the CDR has gone down from last year’s 14.7% mark to 13.7%.  Importantly, each school group – save for the 43 private non-profit 2-year colleges — have improved on the previous years’ CDR.   Also, proprietary schools have accomplished their third straight year of declining 3-year CDRs – and have seen CDRs fall from 22.7% in FY2009 to 19.1% in FY2011.

(Click to Enlarge)

It is also interesting that the highest default group remains the 2-year and 2-3 year colleges no matter the sector (public, private non-profit or proprietary).  I would be interested in hearing explanations for this discrepancy and, in particular, why 2-3 years schools have such high default rates.  Indeed, public 2-3 year schools actually have higher default rates than their proprietary peers.  What is it about those schools that make them so susceptible to higher default rates?

Of course, any schools suffering loss of Title IV due to high default rates (there were 21 schools subject to this sanction this year) may appeal for a host of reasons.  The deadlines for doing so are very short – and institutions must advise the Department of the intent to appeal within five business days after the official CDRs are released to the public.

Department of Education Releases Updated Gainful Employment Template

Posted in Department of Education, Gainful Employment

Dennis Cariello

While higher education waits for the final version of the gainful employment rule, the U.S. Department of Education recently released an updated template for disclosures required under the existing gainful employment rule.  Institutions must, no later than January 31, 2015, update the disclosures for each of their GE programs to reflect the 2013-2014 award year using the updated disclosure template.

The Department’s release explains that the updated GE Disclosure Template:

  • Provides the institution name on the output screens;
  • Includes an option for “graduate certificate” as a credential level;
  • Has improved printing capability;
  • Allows institutions with programs of different lengths, but the same CIP code and credential level, to use the bulk upload tool;
  • Contains an updated list of standard occupational classification (SOC) codes that institutions may identify as associated with the program;
  • Contains improved skip logic for programs with fewer than 10 program completers;
  • Ensures that the output document will be accessible to individuals with disabilities (i.e., compliant with section 508 of the Rehabilitation Act); and
  • Provides optional context boxes for the institution to provide additional explanations and clarifications.


Article on OCR’s Letter Regarding Rights of Disabled On Rights of Disabled Students to Participate in Extracurricular Activities

Posted in Athletics, Civil Rights & the Constitution, Department of Education, Higher Education News, Higher Education Policy

Dennis Cariello

A few months back, we discussed a dear colleague letter the Department of Education’s Office for Civil Rights published related to the rights of of disabled students to participate in extracurricular activities.  Subsequently, we had the opportunity to publish a longer article in Bloomberg/BNA Law Week.   As always, your comments are most welcome.

According to New NCES Study, Proprietary Higher Education Reduces Costs for Students by Over 10% Since 2007-08

Posted in Department of Education, Higher Education News, Uncategorized

Dennis Cariello

Yesterday, the National Center for Education Statistics released the 2011-2012 National Postsecondary Student Aid Study.  This report focuses on the average price of attendance paid by students to attend institutions of higher education (price of attendance includes tuition, fees, books and materials, housing, food, transportation, and personal expenses), and also specifies the “net price” (price of attendance, less grants) and the out-of pocket expenses (price of attendance, less grants and other aid, such as loans or work study).

There are a few findings of note, as we try to show below, which is derived from Tables 1-3 in the study:

2011-12 – Full Time Undergraduate Students

Institution Type

Public 2-year Public 4-year Private Nonprofit 4-year Private For-profit 2-year Private For-profit 4-year Private For-profit 2-year or more
Annual Price of Attendance $15,000 $23,200 $43,500 $29,700 $29,200 $29,200
Net Price $7,100 $14,300 $23,000 $18,600 $16,600 $17,100
Net “Out of Pocket” $6,000 $9,600 $15,000 $12,400 $9,000 $9,900

2007-08 – Full Time Undergraduate Students

Institution Type

Public 2-year Public 4-year Private Nonprofit 4-year Private For-profit 2-year or more
Annual Price of Attendance $13,600 $20,400 $38,800 $32,900
Net Price $6,400 $13,200 $22,300 $20,300
Net “Out of Pocket” $5,600 $8,800 $14,200 $11,500

From the chart below, what we see is that while higher education overall has increased the cost of attendance over the last four years, for-profit institutions have actually reduced the cost of attendance:

Institution Type

Public 2-year Public 4-year Private Nonprofit 4-year Private For-profit 2-year or more
2011-12 Annual Price of Attendance $  15,000.00 $  23,200.00  $  43,500.00  $  29,200.00
2007-08 Annual Price of Attendance $  13,600.00 $  20,400.00  $  38,800.00 $  32,900.00
Difference  $    1,400.00  $    2,800.00  $    4,700.00  $  (3,700.00)
Percentage Change





2011-12 Net Price of Attendance  $    7,100.00  $  14,300.00  $  23,000.00 $  17,100.00
2007-08 Net Price of Attendance  $    6,400.00  $  13,200.00  $  22,300.00  $  20,300.00
Difference  $        700.00  $    1,100.00  $        700.00  $  (3,200.00)
Percentage Change





Note, I have not considered students as a whole because part time students, which are disproportionally located at for-profit and 2-year public colleges, would have the effect of lowering the average and net price price.  So, by looking at full-time student, we get a fairly apples-to-apples comparison.


The reduction in cost of attendance at for-profit schools, relative to the industry, is fairly dramatic.  Looking at net price – which is fairer to private non-profits which commit substantial sums to institutional scholarship – we see a significant reduction in the cost gap between for-profit schools and public colleges.  In fact, on average, a four-year public college will only cost $2,300 less (net price) than one at a for-profit 4-year college.

There are, no doubt, reasons for all of this.  Declining state expenditures on higher education have forced public institutions to raise tuition.  On the other hand, proprietary schools, and to a lesser extent, private non-profit institutions, have had reasons to reduce price or commit to large institutional scholarships to attract students in the face of declining student demand.  It is, however, a positive story that proprietary institutions have responded to consumer demand and reduced price.  I do wonder how much further price would be lowered if the 90/10 rule were repealed.

Notes from the FSA Conference Day 1

Posted in Department of Education, Financial Aid (Loans & Grants), Higher Education News, Higher Education Policy

Patricia V. Edelson

As usual, the it is a well attended conference Federal Student Aid (FSA) Conference here in Las Vegas is well attended.  It is nice to catch up with so many friends from schools and the Department of Education.  It is also a great opportunity to here about the upcoming initiatives for FSA and what FSA thinks schools should be focusing on.

The first day of the conference opened with a General Session and welcome.  The presenters for this session were FSA COO Jim Runcie, Jeff Baker, and Lynn Mahaffie.   They provided various updates concerning Department of Education’s Title IV activities and initiatives.  They also mentioned that there will be an experimental site announcement in an upcoming federal register.  Also, FSA encouraged schools to adopt the Shopping Sheet that was introduced last year.  While it is still not a requirement except for military students, currently 19,000 schools have signed up to use it.

One hot topic was the impact of the unconstitutionality of the Defense of Marriage Act (DOMA) on student aid. As you may recall, last term, the Supreme Court overturned DOMA and, as a result, the federal government must recognize marriages between same sex couples for federal benefit purposes.  For aid purposes, this means that if a student (or parent of a dependent student) is legally married they would file the FASFA as married, regardless of gender. This is effective in the current year and appropriate language will be included in the 2014/2015 FAFSA. Students (or parents) who are in a same sex marriage, but who already filed their 2013/2014 FAFSA, but could have filed married at the time they filed, may now correct their ISIR and file married. They may correct marital status, but are not required to. New filers must file married and a DCL will be coming out early next week with guidance. “Legally married” applies regardless of State of current residence. Conversely, if parents aren’t married but living together they will be required to report both incomes.

New on the verification horizon, the Department has eliminated the verification group V2, which required verification of SNAP benefits and added a new Group V6 that will require verification of income in cases where income and household size are inconsistent.

The upcoming negotiated rulemaking sessions were also discussed, and special note was made of the upcoming sessions related to VAWA and the Clery Act regulations, as well as the use of third parties to disburse Title IV aid.


Primer on Negotiated Rulemaking

Posted in Department of Education

Dennis Cariello

Given all the current and future negotiated rulemaking sessions fro the U.S. Department of Education (Department), it might be helpful to take a look at the Department’s FAQs on the Negotiated Rulemaking Process.  Also, here is the relevant statute concerning negotiated rulemaking.

Department of Education Announces Negotiators for Rulemaking Concerning the Violence Against Women Reauthorization Act of 2013

Posted in Clery Act, Department of Education, Higher Education News, Higher Education Policy

Dennis Cariello

Following up on our prior coverage of this rulemaking session, late last week, the U.S. Department of Education (Department) announced the negotiators for the rulemaking session seeking to “prepare proposed regulations to address the changes to the campus safety and security reporting requirements in the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act, made by the Violence Against Women Reauthorization Act of 2013 (VAWA).”  The negotiations sessions, which start on January 13-14, 2014 (and continue on February 24-25, and then end on March 31-April 1), run from 9:00 a.m. to 5:00 p.m. and will be held at the Department’s office at 1990 K Street, N.W., Eighth Floor Conference Center, Washington, DC 20006.  Gail McLarnon was named the Department’s negotiator.

Additional information, including the original Federal Register Notice, can be found on the Department’s VAWA Negotiated Rulemaking web site.  This will be an interesting session and will attempt top answer a number of difficult questions.  My presentation on the changes required by VAWA tries to highlight a few of the more thorny topics.


Final Gainful Employment Rulemaking Session Scheduled for Friday, December 13

Posted in Department of Education, Education Data & Statistics, Gainful Employment, Higher Education News, Higher Education Policy

Dennis Cariello

Politico’s Libby Nelson, in today’s “Morning Education” email (and in a tweet on Black Friday) reports that the U.S. Department of Education “has scheduled its third session of negotiated rule-making on the ‘gainful employment’ rule for Dec. 13 from 9 a.m. to 5 p.m. at the Education Department’s 1990 K St. offices, according to an email sent to negotiators Friday.”  This is also the last day of the next NACIQI meeting (the Department’s advisory committee on accreditation).  In case you are curious, 1990 K Street is no where near 415 New Jersey Ave. NW. (where the NACIQI sessions will be held).

As you may recall from our past reporting, one of the purposes of this session is to review data on the anticipated effect of the proposed rules.  It will be interesting to see how these various rules shake out and if there are a number of programs that would pass the debt metrics proposed in September, but would fail the new measures proposed by the Department before the last session.

UPDATE (8:23 PM): The Federal Register has the pre-publication notice for the new session.  Nothing else of note in the notice.

Some Thoughts on the Latest Round of Gainful Employment Negotiated Rulemaking Part 2

Posted in Department of Education, Gainful Employment, Higher Education News, Higher Education Policy

Dennis Cariello

Something that seems clear after two rounds of negotiated rulemaking is the lack of trust those aligned with consumer advocates have for proprietary schools.  As I recall, one negotiator suggested they needed to think “deviously” when considering how a proprietary school would game the rules.  I understand these folks hear some very sad and angering stories from students that have been legitimately harmed – and we need to protect those students that are treated unfairly at any institution.  But, as one negotiator said, “the plural of anecdote is not data.”  The vast majority of schools are attempting, in good faith, to help their students improve their lives through education and, in fact, are doing a pretty good job providing students with the skills and education sought.  Even the NY Federal Reserve – in a report I will discuss in another post – noted that proprietary schools offering two-year degrees and certificates have completion rates that are “reasonably good” (57% graduate in 150% of normal time for two-year degrees, 66% graduate in 150% of normal time for degrees under two years).  Indeed, the proprietary school negotiators selected by the Department are sterling examples of my point.

The issue came to a head, I think, as related to Marc Jerome’s proposal to, in essence, be able to supplant student borrowing with institutional aid if that program has failed for one year to meet the debt-to-income or debt-to-discretionary income test.  As I see it, this is a very pro student proposal; in essence, he wants the ability to give away money to students to keep them from borrowing.  It would be done with the knowing consent of the students (they’d have to sign a document, presumably showing how much they could have borrowed and that they are not going to take out a loan for that amount and will instead get funds from the school).  The questioning however, was as intense as it’s been about anything else.  Concerns were expressed about letting a failing program have a “second bite at the apple,” and how schools would use this to game the rules – including finding ways to raise tuition and use this to reset the bar at the upper limit of the metric set by the Department.  It seemed, amidst these attempts to figure out how some school could leverage this proposal to “game” the rule, that the proposal at issue was one in which an institution could request the ability to provide free money to students to lower student debt.  To the Department’s credit, it embraced this idea (John Kolotos called it the “most proactive” idea negotiators put forth related to student debt). It seems, however, everyone should rally around such a pro-student measure, notwithstanding their opposition to each other on other issues.

Some Thoughts on the Latest Round of Gainful Employment Negotiated Rulemaking Part 1

Posted in Department of Education, Gainful Employment, Higher Education News, Higher Education Policy

Dennis Cariello

I will apologize upfront for the length of this post.  Or that there will be multiple posts on this.  There’s just a lot to say after this latest session of gainful employment negotiated rulemaking.

For those of you that have missed the news, the Department of Education requested, and the negotiation committee agreed, to hold one more round of negotiations.  The sessions will last one or two days and happen somewhere between December 9-20.  If the goal is to achieve consensus around the proposal – or at least reach some agreement on some ideas – this is a good move.  I thought the Department made a mistake in not planning on holding three sessions in the first place.  While I understood the rationale – the Department has, after all, already held three sessions on this rule in the past, so everyone knows the issues – I thought not holding the last session failed to respect the normal process: the first session negotiators meet each other and talk philosophy; the second session they discuss actual proposals and coalesce; and the third session they negotiate over actual language.  Although many negotiators had a fairly solid grounding in the issues this time around, the process still remained the same, and wasn’t appreciably advanced by the Department’s release of proposed rule language prior to the first session.  I would, however, be remiss in not acknowledging that the Department’s dramatic revision to that first proposal prior to the second session also likely played a role in the failure to complete in two sessions.  By adding two new metrics, making schools comply with three of four of the proposed metrics, and not having data regarding how the two metrics would affect school programs, it may have been too much to expect negotiators to be in a position to vote on consensus this round.  Nonetheless, the Department deserves kudos for recognizing all of this and proposing to hold another session.

That said, I am curious how this final session will go.  Ostensibly, the purpose was to provide data to the negotiators on the effect of the new metrics.  What is unclear to me is whether the data will make any difference to the Department.  Indeed, the Department seemed to suggest that the main policy proposal (the four metrics) wasn’t going to change.  While we don’t have a transcript of the proceedings (the committee voted not to transcribe the proceedings on the first day of the first session), Ben Miller of the New America Foundation has done a live blogging of the sessions that squares with my recollection of the discussion:

Jones from Strayer says he appreciates the attempt to get data. He asks about the process going forward. He notes that some of the ideas the Department has put forward lies in the impact of the data. He asks if the terms of the rule appear to be set, what is the point of the data if there isn’t openness to using that data to find some critical underlying points. He says if the Department is going to have the data would it be used to revisit core components of the rule. Kolotos says it will give the data and we can discuss the metrics, but it must be done in one day and not have session after session. Jones says he in particular is concerned about the impact of complying with one of three metrics versus having to comply with all three metrics.

. . . .

Kolotos responds to Jones. He says he believes the Department put forward the right policy. The data should inform the policy, but it should not drive it. That seems to suggest that the policy should not be driven by the outcomes estimates but by what makes sense from a policy standpoint. (Italics in original).

I see this as an overreaction – perhaps an understandable one – to the court’s decision dealing with the last gainful employment rule.  As you may recall, the court in that case upheld the debt-to-income measures as the product of reasoned rulemaking but struck down the loan repayment metric.  While the court found that the Department based the debt metrics on “expert studies and industry practice,” which resulted in a “rational connection to the facts found tand the choice made,” the loan repayment metric was said to be based on an outcomes driven analysis:

The debt repayment standard, by contrast, was not based upon any facts at all. No expert study or industry standard suggested that the rate selected by the Department would appropriately measure whether a particular program adequately prepared its students. Instead, the Department simply explained that the chosen rate would identify the worst-performing quarter of programs. Why the bottom quarter? Because failing fewer programs would suggest that the test was not “meaningful” while failing more would make for too large a “subset of programs that could potentially lose eligibility.”  That this explanation could be used to justify any rate at all demonstrates its arbitrariness. If the Department had chosen to disqualify the bottom ten percent of programs, or the bottom half, it would have offered the same rationale: the rate chosen disqualified the percentage of programs that it was intended to disqualify, and to have disqualified fewer would have made the test too lenient while disqualifying more would have made the requirement too stringent. This is not reasoned decisionmaking. “As an expert agency, [the Department’s] job is to make rational and informed decisions on the record before it in order to achieve the principles set by Congress. Merely . . . picking a compromise figure is not rational decisionmaking.” In setting the debt repayment rate, the Department picked a palatable figure. Because the Department has not provided a reasonable explanation of that figure, the court must conclude that it was chosen arbitrarily.  (Decision, at page 31 (citations omitted).

As I read this case, the Department need not ignore what the data shows in coming up with the rule – the court only held that the data can’t be the sole basis for a rule.  Indeed, if a given rule would eliminate all or substantially all of a certain type of program, that should be a good reason to go back to the drawing board.  Now, I may be reading the Department incorrectly here; the folks I know at the Department are reasonable and would want that data so they could see the effect of the rule before they publish the rule.  I just hope the court’s decision hasn’t gotten the Department thinking otherwise.

The Department of Education Announces More Negotiated Rulemaking

Posted in Credit Hour, Department of Education, Financial Aid (Loans & Grants), Higher Education News, Higher Education Policy, State Authorization

Dennis Cariello

It will be a very busy year for the U.S. Department of Education (Department).  Already engaged in a controversial negotiated rulemaking on “gainful employment,” and having announced a rulemaking on the implementation of the Violence Against Women Reauthorization Act of 2013, the Department published a notice in the Federal Register of its Intention To Establish a negotiated rulemaking committee to discuss topics for “Program Integrity and Improvement.”  The committee meetings will be held at the Department’s offices at 1990 K Street NW., Eighth Floor Conference Center, Washington, DC 20006.  The committee will meet from 9am -5 pm on the following days:

  • Session 1: February 19-21, 2014
  • Session 2: March 26-28, 2014
  • Session 3: April 23-25, 2014

The “Program Integrity and Improvement” rulemaking will likely focus on six topics:

  • Cash management of funds provided under the title IV Federal Student Aid programs, including the use of debit cards and the handling of title IV credit balances.
  • State authorization for programs offered through distance education or correspondence education.
  • State authorization for foreign locations of institutions located in a State.
  • Clock to credit hour conversion.
  • The definition of “adverse credit” for borrowers in the Federal Direct PLUS Loan Program.
  • The application of the repeat coursework provisions to graduate and undergraduate programs.

The Department is seeking nominations for this committee.  All nominations should be received by December 20, 2013.  The nominees  should fill one of the following constituencies that “are significantly affected by the topics proposed for negotiations”:

  • Students.
  • Legal assistance organizations that represent students.
  • Consumer advocacy organizations.
  • State higher education executive officers.
  • State attorneys general and other appropriate State officials.
  • Business and industry.
  • Institutions of higher education eligible to receive Federal assistance under title III, Parts A, B, and F, and title V of the HEA, which include Historically Black Colleges and Universities, Hispanic-Serving Institutions, American Indian Tribally Controlled Colleges and Universities, Alaska Native and Native Hawaiian-Serving Institutions, Predominantly Black Institutions, and other institutions with a substantial enrollment of needy students as defined in title III of the HEA.
  • Two-year public institutions of higher education.
  • Four-year public institutions of higher education.
  • Private, non-profit institutions of higher education.
  • Private, for-profit institutions of higher education.
  • Regional accrediting agencies.
  • National accrediting agencies.
  • Specialized accrediting agencies.
  • Financial aid administrators at postsecondary institutions.
  • Business officers and bursars at postsecondary institutions.
  • Admissions officers at postsecondary institutions.
  • Institutional third-party servicers who perform functions related to the title IV Federal Student Aid programs (including collection agencies).
  • State approval agencies.
  • Lenders, community banks, and credit unions.


Department of Education Publishes Change to NACIQI Schedule

Posted in Accreditor News, Department of Education, Higher Education News, Higher Education Policy

Dennis Cariello

Earlier today, the Department of Education published a notice in the Federal Register (78 FR 68832) announcing revisions to the agenda for the December 12-13, 2013 meeting of the National Advisory Committee on Institutional Quality and Integrity (NACIQI).  This is a follow up to meeting notices published on August 19, 2013 (78 FR 50401), and October 30, 2013 (78 FR 64929).

This notice removes the petition for initial recognition submitted by the Association of Institutions for Jewish Studies (AIJS) from the agenda.  In addition, the election of a NACIQI Chairperson and a Vice Chairperson will precede the Committee’s review of agencies scheduled for review.

As a reminder, the NACIQI meeting will be held on December 12-13, 2013, from 8 a.m. to 5:30 p.m. at the Liaison Capitol Hill Hotel, 415 New Jersey Ave. NW., Washington, DC 20001.  NACIQI will be considering the following actions:

Petitions for Continued Recognition Accrediting Agencies
1. Council on Accreditation of Nurse Anesthesia Educational Programs (COANAEP)
2. Council on Education for Public Health (CEPH)
3. Northwest Commission on Colleges and Universities (NWCCU) (regional accreditor – covers Alaska,
Idaho, Montana, Nevada, Oregon, Utah, and Washington)
4. Western Association of Schools and Colleges, Accrediting Commission for Community and Junior Colleges (WASC–ACCJC) (regional accredior – covers  associate degree-granting at schools in California,
Hawaii, the United States territories of Guam and American Samoa, the Republic of Palau, the Federated States of Micronesia, the Commonwealth of the Northern Mariana Islands, and the Republic of the Marshall Islands)

State Approval Agency for Nurse Education
1. North Dakota Board of Nursing (NDBN)

Petitions for Recognition Based on a Compliance Report
1. American Podiatric Medical Association (APMA)
2. Association for Clinical Pastoral Education, Inc. (ACPEI)
3. Commission on English Language Program Accreditation (CEA)
4. Council on Chiropractic Education (CCE)
5. Joint Review Committee on Education in Radiologic Technology (JRCERT)
6. Montessori Accreditation Council for Teacher Education (MACTE)

State Approval Agency for Nurse Education
1. New York State Board of Regents, State Education Department, Office of the Professions (Nursing Education) (NYBRN)

State Approval Agencies for Vocational Education
1. New York State Board of Regents, State Education Department, Office of the Professions (Public Postsecondary Vocational Education, Practical Nursing)
2. Oklahoma Board of Career and Technology Education (OBCTE)
3. Pennsylvania State Board of Vocational Education, Bureau of Career and Technical Education (PSVBE/BCTE)

President Obama Announces Intent to Nominate New Assistant Secretary for Postsecodnary Education

Posted in Department of Education, Higher Education News, Uncategorized

Dennis Cariello

As reported by the Chronicle of Higher Education, President Obama plans to nominate Ericka M. Miller as the U.S. Department of Education’s assistant secretary for postsecondary education.  As reported by the Chronicle, “Ms. Miller is now a vice president with the Education Trust. She has previously served as vice president and director of the search firm Isaacson, Miller, and as president and chief operating officer of the McKenzie Group, an education consultancy.”



Additional Information on the Government Shut Down from Federal Student Aid

Posted in Department of Education, Higher Education News, News from the Hill

Dennis Cariello

In our report on the budget showdown, I neglected to link to the letter from James Runcie, the COO of the Department of Education’s Office of Federal Student Aid (FSA) about the budget shutdown.  In short, much as we reported yesterday, FSA’s operations will largely continue for student and schools.  As there will be few administrative staff in DC or the regional offices, FSA officials won’t be holding an webinars or attending speaking engagements during the shut down.  Happily, as an attachment to the letter shows, most of FSA’s customer service contact centers will remain open.  The new Reach FSA voice-activated phone number (1-855-FSA-4-FAA or 1-855-372-4322) will also remain operational.

What the Budget Showdown Means for Higher Education

Posted in Department of Education, Financial Aid (Loans & Grants), Higher Education News, Higher Education Policy, News from the Hill

Dennis Cariello

Well, it’s September 30th and that means is the end of the Federal Government’s fiscal year.  Before anyone bites into the cake, however, Congress still needs to pass a new budget (or continuing resolution.  Otherwise, the government will shut down.  Happily, the Department of Education (Department) updated the playbook for when the government shuts down.

As an aside, as we are also heading to a standoff over raising the debt ceiling, I humbly suggest the Department (assuming it has staff to do) offer information on what would happen if Congress does not raise the debt ceiling (in case you are interested, the Congressional Research Service put out a number of helpful reports we highlighted earlier this year).  The lack of information when this happened two years ago caused confusion and worry among students, parents and schools over what would happen to loans and grants, among other things.

As for the shut down, the Department’s memo explains there will not be very many folks working at the Department during a shutdown:

the Department would furlough over 90 percent of its total staff level [the Department has 4,225 full and part-time employees] for the first week of such a lapse.  During this first week, we would maintain only those excepted functions related to the discharge of the duties of Presidentially-appointed, Senate-confirmed individuals; those employees charged with the protection of life and property; and, as appropriate,  the obligation, payment, and support of student financial aid as well as other authorized payments and obligations.

For a longer shutdown, “at most, a total of not more than 6 percent of the total staff would be called back” to perform “excepted activities to prevent significant damage to the underlying activity.”  In short, 212 employees will be working during the first week and, if the lapse lasts more than 1 week, 242 employees will work at some point during the shutdown [approximately 3,983 employees would be furloughed].

In higher education, loans and Pell grants will continue as normal.   Further, staff and contractors associated with these programs will continue to work, although “only skeletal program operations would continue under the ‘significant damage’ standard.”  While it’s not clear what level of loan servicing is provided for with skeletal program operations, the memo notes “student financial aid services should continue  in order to avoid the potential loss of federal assets and to maintain the delivery of student aid.”

Campus-Based aid programs, however, will not be so lucky.  Indeed, “FSA employees working in areas not directly related to Pell Grants or Direct Student Loans, such as the Campus-Based Programs of College Work-Study and Supplemental Educational Opportunity Grants, customer service activities, administrative functions not related to providing student aid to schools and students, and development of new programs or activities, would not be excepted.”  Thus, if you are awaiting funds from the government out of these programs, you will be out of luck.

In addition, as a general matter, grants awarded by the Department previously (not student aid) should continue as normal for the first week.  “For a lapse of more than a week, Department staff would be needed as excepted employees to monitor the contractors and resolve any issues.”  In addition, grants awarded by the National Institutes of Health and the National Science Foundation will also be affected.  Under contingency plans authored by the Department of Health and Human Services and the National Science Foundation, grantees working on existing grants could continue their work to the extent funds are available and grantees do not require assistance from agency staff.  Neither agency will take any actions on new grant applications or awards.

Department of Education’s OCR Releases New Guidance on Fisher v University of Texas at Austin

Posted in Civil Rights & the Constitution, Department of Education, Office for Civil Rights (OCR), Uncategorized

Dennis Cariello

On September 27, 2013, the Department of Education’s Office for Civil Rights (OCR) released new guidance – in the form of a letter and Q&A – on the Supreme Court’s decision in Fisher v. University of Texas at Austin. Last week we posted a link to the report from the Congressional Research Service on Schuette v. Coalition to Defend Affirmative Action, which the Supreme Court will hear on October 15, and also deals with racial preferences in higher education.

The guidance offered is fairly limited.  In addition to the seven Q&As, the Department readopts (and defends the continued validity of) the Department’s 2011 guidance: “Guidance on the Voluntary Use of Race to Achieve Diversity in Postsecondary Education” and the related “Guidance on the Voluntary Use of Race to Achieve Diversity and Avoid Racial Isolation in Elementary and Secondary Schools.”

The guidance promotes a view that Fisher did little to the landscape concerning the use of race-conscious admissions programs.  While I can’t quibble with the individual answers to the questions posed – it is true that the Court did not validate the plan involved in Fisher, or that the Court continued to apply the “strict scrutiny” test to race-conscious admissions programs – it feels like there is something missing from the analysis.  For example, OCR only once notes that the Court will not defer to the deliberations of institutions over choosing an admissions plan:

The Court reiterated that, among other things, prior to taking into account an individual student’s race in the admissions process, colleges and universities must determine that available, race-neutral alternatives do not suffice to achieve the benefits of diversity. And, a court reviewing an admissions program under legal challenge must – without deference to the college or university – be satisfied that the means chosen by the college or university are narrowly tailored to meet its diversity goal. (Answer to Question 3)

In minimizing one of the big takeaways from the case (this is the only time the point about deference is mentioned), OCR leaves institutions with the idea that the case was a non-event.  To the contrary, trying to justify the use of race-conscious admissions criteria as narrowly-tailored to meet its end is a big issue.  More guidance on this point would have been very helpful.  Should institutions look at/commission studies for this purpose to examine the impact of the plans?  Should institutions look to the experience of other schools?  Should institutions test out the other plans to have the benefit of that experience? Is this nothing more than a check the box documentation requirement?  What does it mean for the Court to take account of the University’s experience and expertise in making its decision?

What concerns me is that institutions will get the idea that documenting the consideration of other, race-neutral admissions plans, will be sufficient to meet strict scrutiny.  While documenting consideration of such plans is important — and we advice institutions to document the deliberations related to such plans if an institution wants to utilize a race-conscious plan – I think the Court is looking for more to pass the bar of narrow tailoring.

Compliance Focus: New FSA Handbook Prohibits Discounts to Students Who Pay in Cash or Who Pay Before the Start of Class

Posted in Department of Education, Financial Aid (Loans & Grants), Higher Education News, Higher Education Policy

Dennis Cariello

As many of you know, the new Federal Student Aid Handbook were released this summer.  There are a number of new items in the handbook and I encourage you all to review it.  We will be discussing these new items in future posts (so make sure you do the reading, or else you won’t be able to participate!)

One new note that comes a bit out of the blue this year relates to tuition discounts: many of them are prohibited:

Charging variable tuition
Schools may not charge students who receive federal student aid a different tuition from those who don’t receive federal student aid for the same program. Moreover, giving a discount to students who pay in cash or who pay their tuition in full before the start of class is not allowed. This, of course, does not prevent schools from having different costs for other categories of students, such as having a different tuition for in-state and out-of-state students.

Volume Three of the Handbook, at 3-36.  Now, this comes from section 472(1) of the Higher Education Act which talks about “tuition and fees normally assessed a student carrying the same academic workload…”  Internally, the Department of Education has interpreted this to mean that all students–aided as well as unaided student–in the same program are charged the same tuition.  This is to prohibit schools from charging different tuition based on whether a student receives Title IV funding (and presumably charge those students more).  However, given the explicit language, schools should strongly consider ending discount programs covered by this note even if all students are eligible for the discount. Continue Reading