Author: Kristina Gill

On April 1, the U.S. Department of Education (“USDE”) published a long-awaited Notice of Proposed Rulemaking (NPRM) for Distance Education and Innovation in the Federal Register. The proposed regulations are the final part of the consensus negotiated rulemaking that occurred in 2019. This regulation comes at an important time as institutions across the country are transitioning to varying forms of distance education due to COVID-19, albeit temporary or longer term. The NPRM represents the next step in the Department’s agenda to modernize its distance education regulations to promote innovation and reflect technological advancements, while protecting program quality. One key component of the NPRM is the new proposed definition of “regular” and “substantive” interaction between instructors and students for Title IV eligibility purposes. In the past, Title IV institutions have been assessed multi-million dollar fines for violating substantive and regular interaction requirements that were not well-defined in regulation. The NPRM also proposes revised credit and clock hour definitions directly addressing distance education and makes changes to recognize subscription based delivery of online education.

If your institution offers distance education and/or direct assessment programs, you should strongly consider analyzing and commenting on the proposed regulations. The Department has indicated that the Final Rule will be published by November 1, 2020, to allow an effective date of July 1, 2021. Comments are due by May 4, 2020 and must be submitted through the Federal eRulemaking Portal or via postal mail, commercial delivery, or hand delivery. The Department will not accept comments submitted by fax or by email or those submitted after the comment period.

Summary of the Major Provisions

As provided in the NPRM, the proposed regulations would:

• Clarify that when calculating the number of correspondence students, a student is considered ‘‘enrolled in a correspondence course’’ if correspondence courses constitute 50 percent or more of the courses in which the student enrolled during an award year;
• Limit the requirement for the Secretary’s approval to an institution’s first direct assessment program at each credential level;
• Require institutions to report to the Secretary when they add a second or subsequent direct assessment program or establish a written arrangement for an ineligible institution or organization to provide more than 25 percent, but no more than 50 percent, of a program;
• Require prompt action by the Department on any applications submitted by an institution to the Secretary seeking a determination that it qualifies as an eligible institution and any reapplications for a determination that the institution continues to meet the requirements to be an eligible institution for HEA programs;
• Allow students enrolled in eligible foreign institutions to complete up to 25 percent of an eligible program at an eligible institution in the United States; and clarify that, notwithstanding this provision, an eligible foreign institution may permit a Direct Loan borrower to perform research in the United States for not more than one academic year if the research is conducted during the dissertation phase of a doctoral program;
• Clarify the conditions under which a participating foreign institution may enter into a written arrangement with an ineligible entity;
• Provide flexibility to institutions to modify their curriculum at the recommendations of industry advisory boards and without relying on a traditional faculty-led decision-making process;
• Provide flexibility to institutions when conducting clock-to-credit hour conversions to eliminate confusion about the inclusion of homework time in the clock-hour determination;
• Clarify the eligibility requirements for a direct assessment program;
• Clarify, in consideration of the challenges to institutions posed by minimum program length standards associated with occupational licensing requirements, which vary from State to State, that an institution may demonstrate a reasonable relationship between the length of a program, as defined in 20 U.S.C. 1001(b)(1), and the entry-level requirements of the occupation for which that program prepares students;
• Clarify that a student is not considered to have withdrawn for purposes of determining the amount of title IV grant or loan assistance that the student earned if the student completes all the requirements for graduation for a non-term program or a subscription based program, if the student completes one or more modules that comprise 50 percent or more of the number of days in the payment period, or if the institution obtains written confirmation that the student will resume attendance in a subscription-based or non-term program;
• Clarify satisfactory academic progress requirements for non-term credit or clock programs, term-based programs that are not a subscription based program, and subscription-based programs;
• Remove provisions pertaining to the use and calculation of the Net Present Value of institutional loans for the calculation of the 90/10 ratio for for-profit IHEs, because the provisions are no longer applicable;
• Clarify that the Secretary will rely on the requirements established by an institution’s accrediting agency or State authorizing agency to evaluate an institution’s appeal of a final audit or program review determination that includes a finding about the institution’s classification of a course or program as distance education, or the institution’s assignment of credit hours;
• Clarify that the Secretary may deny an institution’s application for certification or recertification to participate in the title IV, HEA programs if an institution is not financially responsible or does not submit its audits in a timely manner; and
• Clarify that an institution is not financially responsible if a person who exercises substantial ownership or control over an institution also exercised substantial ownership or control over another institution that closed without executing a viable teach-out plan or agreement.