New Federal Regulations, Part 2: Addressing Compliance with State Closure Laws and the Impact on Interstate Reciprocity Agreements

This is the second of our two-part blog post series on the recently released U.S. Department of Education regulations. The first covered new rules regarding programs leading to professional licensure. This one is about institutions complying with closure requirements in each state in which it serves students. We, especially, analyze the impact on the more than 2,000 institutions that serve students through the State Authorization Reciprocity Agreement (SARA).

The U.S. Department of Education (the Department) formally announced the new federal regulations that impact institutions serving students in programs leading to a license or certification and created new institutional closure requirements, which may have an impact on state authorization reciprocity. The Federal Register October 31, 2023 announcement of Financial Responsibility, Administrative Capability, Certification Procedures, Ability to Benefit (ATB) includes the release of the remaining four issues related to the Winter 2022 rulemaking, Institutional and Programmatic Eligibility Committee.

It is the Certification Procedures issue that we followed closely and reported on often during the three months of rulemaking committee meetings and summarized the outcome of the committee soon thereafter. Of utmost concern was that sub-issues of Professional Licensure and Closure/State Authorization that were not announced, but were inserted by negotiators within the Certification Procedures issue without the opportunity to nominate knowledgeable committee members to share invaluable and pertinent information for the committee’s discussions.

This entire package of regulations was released as final on October 31, as well as the Final Regulations for Financial Value Transparency & Gainful Employment released on October 10, 2023. These regulations become effective July 1, 2024.

Introduction

Note to the reader: This introduction is mostly repeated from the first post.

The Certification Procedures issue focuses on the agreement between postsecondary institutions and the Department that each institution certifies compliance with specific obligations in order to participate in Title IV HEA Programs. The agreement is called a Program Participation Agreement (PPA). The Department’s goal was to strengthen student protections within the PPA. The sub-issues for which we followed were among the new requirements being added to the PPA even though there are Federal regulations that direct institution requirements in these two areas.

You may recall that, when the proposed regulations were released in May 2023, we provided two separate WCET Frontiers posts to share our analysis. Our first post addressed the regulation subsection that appears to require that institutions comply with state consumer protection laws for closure, recruitment, and misrepresentation where the institution is located and where the student is located at time of initial enrollment. The second post addressed the institution’s responsibility to satisfy applicable educational prerequisites where the institution is located and where the student is located at the time of initial enrollment as well as an edit to the currently effective public notification requirements.

The final regulations released have been modified to some degree from the proposed regulations. We believe that the public comments that we all shared with the Department were heard and persuaded the Department to make some changes to the final language. However, we believe there appears to still be some misunderstanding by the Department about the variation of oversight for licensed professions by state and by the specific profession. Additionally, there are lingering questions about the applicability of state consumer protection laws upon institutions that participate in reciprocity.

Please consider sharing your questions with the Department on these areas, especially regarding the challenges of coordination of processes and information with state licensing boards. The Federal Register announcement includes the contact information for the Department staff member addressing this issue. For certification procedures: Vanessa Gomez. Telephone: (202) 987-0378. Email: Vanessa.Gomez@ed.gov.

This is the second of our two posts reviewing the new requirements around state closure laws and the impact and interstate reciprocity agreements, such as SARA. Look for our first post New Federal Regulations, Part 1: Addressing Programs Leading to a Licensure or Certification.

In both posts we will ask the following questions:

• What does the final regulation say?
• What questions and comments did WCET and SAN share with the Department during rulemaking, public comment period, and the Office of Management & Budget final review (EO 12866 Meeting)?
• How did the Department respond to WCET and SAN’s questions in the preamble of the final regulations?
• What are the implications to the institution for implementation of the regulations?

*Please note that page numbers in the analysis will refer to the unofficial version of the rules released on October 24 as that document is larger print and easier to direct you to the language of the preamble and regulations. [...}