About the Petulant Rulemaking

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I was wrong. In a post last week, I noted a mini-pattern from the US Department of Education (ED) where they actually listened to public comments about proposed policies and were persuaded to change course. This pattern is in direct contrast with the past four years’ rulemaking from ED, and it prompted me to speculate on whether ED insiders rethinking their we know best and any pushback is illegitimate approach that has plagued the higher education community.

I was right about the aberration, but I was too optimistic about ED staff when I said that they appear to be willing to ignore activist coalitions and instead listen to the community. It is clear that this hope was wrong and that ED is fully part of the coalition and not changing approach.

OPM Guidance

This week ED released new guidance through a Dear Colleague Letter (DCL) nominally clarifying behavior from Online Program Management companies (OPMs) that would likely be treated as misrepresentation, putting the partner university at risk of losing federal financial aid status. The key section of the DCL called out three cases of particular risk.

In Higher Ed Dive’s coverage, I described my criticism of the DCL.

No Process

The first part of my complaint is about the lack of process. ED’s core arguments in OPM regulatory actions has been based on tuition revenue-sharing business models and whether those should be considered in violation of the Incentive Compensation ban or not. That was the basis of the public comment period in Spring 2023, as described in the notice about the comment period.

Of the nine questions posed, only one was not specifically on the revenue share topic.

ED never took action in the ensuing two years on revenue sharing. None. And then in the last days of the administration, it throws out OPM guidance on a different topic, misrepresentation. There have been plenty of references to the problem of misrepresentation in coalition activities (open letters, lawsuits, media interviews, etc), but the process of determining policy, even without any end result, has been focused on revenue sharing. There has been nothing explicit about misrepresentation.

Therefore, there has been zero attempt for ED to lay out a proposed set of rules or guidance and get input from the community on appropriate actions. This is how the third-party servicer (TPS) guidance failed - ED and the coalition thought they knew better than others what was needed, they proposed a ridiculous DCL, and then had to rescind that guidance after massive pushback. The same thing but at a smaller scale is happening now.

A Treasure Trove

One of the coalition member’s addressed my complaint in Higher Ed Dive.

That phrase is telling. There was no process to craft guidance on the misrepresentation subject, and no proposed language before this week’s DCL. But Hall is right about the “treasure trove” of comments. The coalition used that Spring 2023 public comment period to lay out myriad complaints about OPMs that they consider misrepresentation. In fact, ED included a link to a public comment from an allied interest group. A modus operandi on display. ED asks for comments, coalition provides a treasure trove in comments, ED makes rule and references coalition letter as the basis for ED discovering the issue. Rinse and repeat with coalition lawsuits.

At the risk of repeating myself, there was no process to craft effective regulatory actions on OPMs on the misrepresentation subject. At best, just efforts to collect a treasure trove to be used later.

A Hot Mess

A further problem is that this DCL is just a hot mess. The reason I described it as nominally clarifying behavior from OPMs is that the DCL is both very specific and very vague. What is the scope of the DCL [emphasis added]?

Just like the TPS expansion DCL, this language is incredibly broad and invites all kinds of unintended consequences. Any third party engaged by the institution, not just OPMs.

The DCL then combines a remarkable specificity with equally remarkable vagueness. Specific words and email domains are listed as problematic, but every description is qualified by descriptions such as “under certain conditions" or “can be” or “not an exhaustive list.”

In an interesting twist, footnote 12 in this DCL actually reaffirms tuition revenue-sharing and the 2011 bundled services exception DCL, but in the same description it confuses matters [emphasis added].

What a missed opportunity. The first part of the footnote on the bundled services exception is clear and useful. But the second part about counselors is a massive stretch and vague. The description leading to this footnote at the federal level is based on anecdotes.

The DCL then references and claims alignment with New York and Massachusetts state laws that do explicitly call out prohibition on usage of the “counselor” word, but that is statutory in nature. The federal government to my knowledge has no such statutory language, and vaguely associating coalition interpretations, and guidance should interpret policy, not create it. Furthermore, what kind of counselors? The text references “academic counselors,” but the footnote references admission “counselors.” Vague, inconsistent, creating policy from guidance.

Unintended Consequences

This lack of clarity leads to some convoluted references in the DCL, where ED ends up acknowledging the confusion, as seen in the footnotes.

So any third-party entity, particularly involved in recruitment, better be careful to not use an institution’s email domain and to read a disclaimer of who they work for on each call? Consider the case of ReUp, a company that helps schools engage stopped out students and re-enroll them. They have a platform that identify students, contacts, them and even offers one-on-one coaching.

An November article also from Higher Ed Dive described a New Jersey initiative leveraging ReUp that has reenrolled 8,600 stopped out students and already led to 350 additional graduations. It also references Project Kitty Hawk’s usage of ReUp to reenroll 2,800 students for the UNC system.

Will this misrepresentation DCL directly harm these initiatives and prevent similar efforts to reach out to students in novel approaches? ED doesn’t know, because it didn’t ask or attempt to understand.

[Update: Update: ReUp does not currently use school email domains or identify themselves as part of the institution. My point is not that it is in violation of this DCL but was meant to highlight valuable initiatives done by third parties. I apologize for the confusion.]

The Real Driver

While this DCL nominally on OPM misrepresentation on one hand is out of left field, it is fairly clear why it was written.

The activist coalition is quite frustrated that ED before this week actually had no successful regulatory actions against OPMs, despite all the noise of the past three years. In my estimation, the letter from Arnold Ventures-funded coalition in November is the proximate cause of this week’s action.

That letter was signed by the same groups (exception AFL/CIO) that are all out in force this week defending and supporting the new misrepresentation DCL.

Revenue-sharing models underpinned by bundled services exception are still in place, but ED is taking a parting shot at OPMs this week and letting others clean up the mess, regardless of unintended consequences.

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