Negotiators Clash Over Proposed Program Integrity Rules

A rulemaking committee tasked with developing new regulations addressing program integrity and improvement issues for federal student aid programs reconvened this week, reported The Chronicle of Higher Education. Panelists will resume negotiations on a wide range of topics including state authorization, cash management on debit cards, PLUS loans, and clock-to-credit hour conversions, among other things.

Prior to meeting, the U.S. Education Department released new draft regulations that would reinstate a requirement – which a federal judge struck down in 2012 for procedural reasons – that colleges seek approval to operate in every state where they enroll students online.

Under the rule, institutions would have to provide proof of authorization to award federal aid to online students in other states. Colleges could demonstrate compliance through participation in a state reciprocity agreement, but they could not claim approval on the basis of a state exemption.

The draft state authorization regulation differs from earlier version of the rule, which would have allowed states to exclude online-only programs from their purview, as up to three-quarters now do. The new version would effectively compel states to have a process for recognizing online programs and handling student complaints.

At the rulemaking session on Wednesday, panelists representing a range of higher education institutions pushed back against the department's effort to expand state oversight of online education, calling the proposed rule a "bureaucratic nightmare." Campus officials argued that the draft regulation would place an undue burden on both the colleges and the states, the Chronicle reported.

Consumer advocates applauded the proposal, saying it would strengthen protections for online students. The advocates argued that too many states have been lax in their oversight of distance education, leaving their residents vulnerable to shoddy programs.

Last week, the Education Department also unveiled proposed new rules for cash management that attempt to boost transparency in the use of debit cards for federal financial aid refunds, reported Inside Higher Ed. The proposal would prohibit certain fees, restrict marketing activities, and require colleges to disclose their relationships with card providers.

Additionally, the agency proposed a change to rules governing clock-to-credit hour conversions that would ensure students taking a course measured in logged hours or the credit hour receive similar amounts of aid for similar levels of academic coursework.

This week, the Education Department released several sets of data to inform the panel's work, the Chronicle reported. According to that data, nearly 70 percent of all PLUS loan applications initially rejected in the past two years were denied on the grounds that the borrower had other debts in collection or had settled a debt for less than the full amount. As result, rates of denial increased from the 2011-12 academic year by 13 to 15 percentage points in the following two years, depending on students' sectors.

For example, in 2011-12, before the stiffer credit checks went into effect, the department denied 29 percent of PLUS loan applications at public colleges, 23 percent at private colleges, and 35 percent at for-profit colleges. The next year, the denial rates for those sectors were 44 percent, 36 percent, and 49 percent, respectively. Some of the rejected loans were later approved through appeals.


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The Chronicle of Higher Education

Inside Higher Ed

The Chronicle of Higher Education