The proposed rule will likely have a profound impact on a large portion of the higher education industry, with a particular emphasis on institutions that have incorporated fully distance education programs into their curriculum.

On July 17, 2024, Under Secretary of Education James Kvaal published a blog post―“Update on Department of Education’s Postsecondary Education Regulatory Work”―that served as a triumphal “status update” of sorts on the Department’s numerous consumer-focused postsecondary regulatory initiatives to date and its plans for further regulatory action through the end of 2024. That blog entry previewed the contents of the July 24, 2024, notice of proposed rulemaking on program integrity and institutional accountability, making clear that this most recent package of regulatory proposals is a key part of the Department’s student protection goals, this time directed at the rapid growth of online education. In our assessment, the distance education regulatory proposals put forward in the proposed rule discussed below will likely impact a large portion of the higher education community now engaged in offering one or more fully online educational programs. For that reason, institutions should consider filing public comments addressing legal and policy deficiencies in the proposal, including describing unintended consequences or onerous operational impacts. The close of the comment period is August 23, 2024. According to the Department’s master rulemaking calendar, if a final rule is published in the Federal Register by November 1, 2024, it would be effective no sooner than July 1, 2025.

Proposed Rule on Program Integrity and Institutional Accountability

In the last election, President Joe Biden ran on a higher education platform centered on making higher education more affordable and more accountable to students, families and taxpayers. As one part of this effort in office, the Department published final rules on financial value transparency and gainful employment (88 Fed. Reg. 70004) and, additionally, financial responsibility, administrative capability, certification procedures and ability-to-benefit programs (88 Fed. Reg. 74568) to strengthen consumer protections for student borrowers. Following the publication of these final rules, the Department initiated a negotiated rulemaking process to consider proposals on the additional topics of state authorization and accreditation, distance education, return of Title IV funds (R2T4) and eligibility for federal TRIO programs.

On July 24, 2024, the Department published its proposed rule addressing distance education, R2T4 and federal TRIO programs (with the regulations on state authorization and accreditation to be “published by next year” according to the aforementioned blog post).

The proposed rule would, according to the Department, make changes to:

• Help the Department better measure and account for student outcomes, improve oversight over distance education and ensure students are receiving effective education by expanding the definition of an “additional location” for Title IV purposes to include virtual locations for programs offered entirely online or through correspondence, adding a definition of “distance education course,” requiring institutions to report their students’ distance education status, and disallowing asynchronous distance education in clock-hour programs for Title IV purposes.
• Help withdrawn students repay outstanding Direct Loan credit balances, increase the accuracy and simplicity of performing R2T4 calculations, address unique circumstances for what constitutes a withdrawal, clarify that distance education programs are attendance taking and codify “longstanding” policies into regulation.
• Expand eligibility for TRIO programs to include students without immigration status who seek to enroll in high school in the United States and its territories. This expansion would apply to several programs that support students in both elementary and high school.

The proposed rule will likely have a profound impact on a large portion of the higher education industry, with a particular emphasis on institutions that have incorporated fully distance education programs into their curriculum. These regulatory changes will have operational impacts for many online courses. In a recent article published on the University Business website, Duane Morris partners Kristina Gill and Edward Cramp state:

[T]he Department is on course to roll back online learning opportunities, launching efforts to curtail the growth of distance education and reduce the current availability of these offerings. While these initial efforts may seem limited, they foreshadow a broader attack on online learning—one that will likely follow a familiar DOE strategy.

All institutions of higher education offering distance education programs should be on alert, as the Department’s platform of “quality oversight” has now set its sight on the distance education sector.

Conclusion

The Department continues to take unprecedented efforts to use the regulatory process to move forward its higher education platform in the waning pre-presidential election days. As a result, the higher education industry is entering a period of uncertainty regarding the regulatory landscape, but the Department has not, and likely will not, change course on finalizing its ambitious regulatory agenda. With its most recent sights on distance education, impacted institutions should consider submitting comments by August 23, 2024, to inform the Department about unintended consequences of the proposed rule and to help shape any final rule.

For More Information

If you have any questions about this Alert, please contact any of the attorneys in our Higher Education Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.