Faulty Logic

Updating my thinking about ED plans for 2024

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In late October, I projected that third-party servicer (TPS) expansion guidance was dead at least through 2024. The TPS guidance issued last February was aimed at reining in the Online Program Management (OPM) market but was broad enough to micromanage and impact all of EdTech and even prevent international companies from operation in the US. That guidance was pulled back in April. From October:

Let’s get to the point before the context and rationale. The US Department of Education (ED) will not release new third-party servicer (TPS) guidance this year, and I believe ED will not release it next year, either, due to the election. In short, TPS expansion at the federal level is no more.

This issue gets at the heart of one of the two biggest EdTech stories of the year. Namely, will ED and its Arnold Ventures-funded allies back off on its regulatory activism to focus on protecting wins, or will they double down.

Mea Culpa

While the expanded TPS guidance has not yet been released, I now believe the logic behind my projection needs to be updated. ED and its allies are clearly doubling down on regulatory activism in 2024.

Going back to the October post, this is the section where I misread the situation.

Moving the earliest possible release into 2025, along with a timeline of not making the new guidance effective for at least six months after issuance, means that any new TPS expansion guidance would hit in the middle of a hotly-contest national election. And TPS is very, very unpopular if you are not receiving Arnold Ventures funding. Importantly, TPS expansion guidance is more specifically unpopular with the higher education community - institutions and associations representing these institutions - that are key to Democrat prospects. [snip]

In other words, these changes in plan for TPS expansion are due either to a change of heart from ED leadership, or from the clock running out, or from both.

Updated View - NegReg

I’ll address in future posts the specifics of the continued regulatory activism and the likely impacts on EdTech and on higher education institutions in general, but there are two revelations that are key to understanding this year’s activity.

The first is the early January negotiated rulemaking session, best described ahead of time in this Inside Higher Ed article.

The Education Department wants greater oversight over colleges and universities and the entities that oversee them, and it’s eyeing a number of ways to make that happen.

With proposed changes to the rules for accreditation, distance education and some financial aid policies, the department is aiming to further reshape how the federal government holds colleges accountable and add additional consumer protections for students—building on the Biden administration’s efforts over the last three years.

“The department is inserting itself more deeply into higher education than it previously has been,” said Jan Friis, senior vice president for government affairs at the Council for Higher Education Accreditation.

After the January 8 - 11 sessions, WCET covered the impacts in its detailed post.

Here we go again! Significant changes to postsecondary distance education operations emerged from the U.S. Department of Education’s (Department) Winter 2024 negotiated rulemaking discussion. The proposed changes could be huge and we suggest you read or scroll through this post to see what might affect you and your students. For example, state authorization reciprocity could be greatly limited, distance education programs could be required to take attendance in every course, and all “inclusive access” programs from publishers could be eliminated.

I believe this analysis is accurate - the impacts could indeed be “huge” if ED’s incoming positions largely end up in revised regulations and guidance. But the intentions are clear.

There were, of course, signs in 2023 that this round of rulemaking could be significant. One is the choice of non-federal negotiators selected for the Program Integrity and Institutional Quality topics. 18 of the 27 (primary and alternate) negotiators were required to come from higher ed institutions, accreditors, and states. Of the remaining nine slots allocated to outside groups - four of them are from the Arnold Ventures-funded coalition. The Century Foundation, UnidosUS, National Consumer Law Center, and Veterans Education Success.

And with the topic of gutting Inclusive / Equitable Access, there is additional billionaire foundation-funded activist participation, as the Michelson 20MM Foundation is behind those revisions, with The Century Foundation and Young Invincibles as negotiators. The proposed language would gut many college and university attempts to fund sustainable OER initiatives.

Five out of nine outside groups for these sessions in total come from activist allies.

Updated View - Politics

The other revelation is from the one area where ED has separated from Arnold Ventures recommendations - student loan debt forgiveness. AV recommended that ED back off on those efforts and focus on solidifying wins. In fact, ED is being directed to accelerate loan forgiveness efforts, and President Biden is campaigning on the topic as described at Politico.

President Joe Biden pitched his record on student debt as a “promise kept” to Black voters in South Carolina over the weekend ahead of the state’s first sanctioned Democratic primary this week. [snip]

— Biden’s comments in South Carolina also reflect a concerted effort by the president’s reelection campaign to frame his work on student debt relief as a major accomplishment rather than a major disappointment to Democratic voters.

— “I promised to help ease accumulated student debt for millions of folks carrying during the crisis of the pandemic,” Biden said Saturday. “The Supreme Court blocked me, but it didn’t stop me.”

— Biden touted the more than $130 billion of student debt that his Education Department has approved for discharge for more than 3.7 million borrowers. He also underscored funding that his administration secured to help Historically Black Colleges and Universities.

Net Effect

Regardless of whether you agree with the approach or not, the message is clear. ED is doubling down on its regulatory activism, both in seeking ways to forgive student loans and in increasing federal oversight power and control over all of higher education.

It’s regrettable that regulatory activity is such a major story recently for higher education writ large and EdTech lately, but there you have it. Expect much more moving forward.

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