Additional Clarity into Regulatory Activism in Education

We all knew that the US Department of Education (ED) would change its regulatory approach with the new administration, and it has been virtually axiomatic that they would directly target the for-profit sector. But recently it is becoming more clear the approach and scope of the ED regulations, and it can best be described as regulatory activism, by which I mean using the regulatory processes to achieve pre-defined end goals. And those goals seem to have a common “protect students from the bad actors” theme, usually based on the involvement of for-profit companies – and not just in the for-profit sector. Some people applaud the changes as overdue corrections to the system, and others decry the changes as overly broad and likely to have unintended consequences, but either way, I think those involved in online education and alternative models should take notice and avoid assuming that only the for-profit sector will face aggressive regulations.

* Use regulatory processes not just as safeguards but also to enable predefined end goals, usually around ‘reining in for-profit’ entities;

* Minimize the amount of time allowed for public comment and debate;

* Informally work through multiple agencies, both federal and state, to set new rules; and

* Worry about the unintended consequences later.

Back in July I wrote a mini-rant Twitter thread 1 triggered by tens of thousands of California residents losing access to federal financial aid for their online education studies at out-of-state schools. My basic argument was that we were witnessing the consequences of a dance of elephants – triggered by activists who were targeting for-profit institutions, nonprofit conversion institutions, and Online Program Management (OPM) companies – with students caught in the middle.

Sometime in the coming weeks, there will be a policy change announced by the U.S. Department of Education that some of your for-profit contractors will tell you is going to wreak havoc on your budget. Don’t believe them.

The policy change will impact the arrangements you have made to enroll students in your online-only college programs. Companies that provide platforms for colleges’ online courses—known as online program managers (OPMs)—may be taking 50 percent or more of your college’s tuition revenue for these courses through long-term contracts. As it turns out, since most of those contracts involve the companies recruiting students in addition to running the online platform, the tuition-sharing component of these contracts may implicate a federal law that prohibits commission-paid sales in colleges that receive federal aid.

Despite this ban, the Department of Education has let the practice continue since 2011. I am writing to let you know that the practice is under increased scrutiny, and the days for this policy exception are probably numbered. Whether due to the anticipated report from the Government Accountability Office or the next scandal like this one, the department probably soon will need to revise its policy exception and enforce the law as written by Congress.1

The reversal of the policy exception will not be sudden, though, because the U.S. Supreme Court, in a case decided against the Trump administration in 2020, made it clear that policy changes must—even when they involve enforcing an existing law—be carried out in a way that is orderly and fair, not suddenly pulling the rug out from current practices based on policy guidance.

Multiple news outlets are reporting that the Biden administration will announce a fifth extension of the federal student loan repayment pause that began in March 2020 shortly, with this extension going through the end of August 2022. This news doesn’t seem to make anyone truly happy, with borrower advocates and many progressives advocating for an extension through the end of 2022 and/or outright student debt forgiveness. On the right, conservatives are unhappy with continuing to kick the repayment can down the road when the economy is strong and a sizable share of borrowers could resume repayment (with or without income-driven repayment).

At this point, it seems more likely than not to me that the Biden administration will not resume student loan repayment during its time in office. There is almost no chance that the administration will restart payments in August as Democrats face a challenging midterm election and need every vote that they can get from their base and younger voters. Then 2023 starts the next presidential election cycle. If Biden and/or Harris want to run for office, resuming payments is a terrible way to position themselves in a Democratic primary.

The University of Arizona Global Campus told students Friday it has temporarily lost access to education benefits covered by the GI Bill, which could spell enrollment troubles if it doesn’t soon regain approval.

The loss of military education benefits could deal a bruising blow to the online college, where nearly 10% of the institution’s roughly 28,000 students receive financial aid from Veterans Affairs, according to a snapshot of the university’s student demographics shared in February. The university draws a sizable share of its revenue from VA benefits, with 3,422 of the university’s students receiving a total of $16.5 million from the GI Bill in fiscal 2020. [snip]

UAGC said it received a notice from a California state agency last week that its programs were no longer approved for VA benefits because its headquarters had moved to Arizona. UAGC submitted an application for VA approval in September with the Arizona State Approving Agency, but that agency said it lacked jurisdiction over the institution because it had a California license, according to a university statement.

The university then worked with a California state agency to close UAGC’s California location to move forward with the Arizona approval.

On March 30, the California State Approving Agency for Veterans Education officially withdrew GI Bill approval for all coursework offered by the University of Arizona Global Campus, formerly known as Ashford University.

The move followed a decision by the California Bureau for Private Postsecondary Education revoking the school’s license to operate in the state. Without that approval, students are unable to use GI Bill benefits to pay for any of the for-profit school’s 90 education programs.

Still, it’s possible that most students have already had their housing allowances dispersed this month, giving them a buffer, said William Hubbard, vice president for veterans and military policy at Veterans Education Success, an advocacy organization.

“But if the school continues to remain ineligible for VA benefits and the next month rolls around, I mean, there’s no rent,” he said. “That’s really the worst-case scenario in the immediate term.”

The loss of that housing allowance will likely leave student veterans concerned about how those costs will be covered, said Vanessa Sansone, a higher education professor at the University of Texas at San Antonio.

And it could be difficult to help students who need to finish their education elsewhere to transfer to different institutions.