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As July 1 Approaches, House Bill to Block State Authorization, Credit Hour Definition Passes Committee

With the July 1 deadline for U.S. Department of Education (ED) implementation of new Higher Education Act Title IV (student financial assistance) regulations on program integrity looming, the American Council on Education reports that a bill to rescind new rules on a federal definition of the credit hour and state authorization of online/distance learning courses and programs has passed the U.S. House Education and the Workforce Committee. As ACE notes, the timeline for action on the bill by the full House is not yet known, and the prospects for action by the U.S. Senate on this or similar legislation are unclear at this time. However, many higher education organizations continue to express support for Congressional efforts to address serious concerns about the pending regulations, even given the ED "Dear Colleague" letter indicating that enforcement of the state authorization provisions would be stayed until July 1, 2014, pending good-faith efforts by institutions to pursue compliance with relevant state laws and regulations over that timeframe.

The ACE article notes the specific issues raised by many in the higher education community about the state authorization and federal credit hour definition regulations, emphasizing traditional higher education concerns about federal intrusion into academic decision-making (federal credit hour definition) and expansion of the institutional compliance burden for student access to federal financial aid for online/distance learning programs (state authorization). In relation to the state authorization provisions, ED has argued that Title IV has always required compliance with relevant state statutes by postsecondary education providers as a condition for Title IV eligibility, and the dialogue on the new program integrity regulations, especially the "gainful employment" requirements, indicates that for-profit proprietary/vocational education providers are largely the intended audience for increased scrutiny.

However, as ED noted in discussing the proposed rules initially released for comment on June 18, 2010, the department had historically viewed the HEA's state authorization requirements as "minimal," whereas its new rule-making in this area was intended to make the provision a "substantive requirement" to ensure effective state oversight of postsecondary education providers operating within a state's jurisdiction. Even then, the initially proposed rules stayed within what many in higher education would consider the traditional understanding of state authorization--having state approval to function as a postsecondary education provider within the state where the institution or provider is physically located--as a requirement of eligibility for Title IV student financial aid programs. While this interpretation of the requirement may not have fully squared with state laws and regulations on out-of-state providers that may have applied to institutions' online/distance learning programs without their understanding, it was the basis on which ED, the states, and institutions had been operating to this point, such that the proposed new state authorization regulations posed no real issues for non-profit colleges and universities in general. The later addition of a section in the revised October 2010 version of the rules specifically extending the state authorization requirement to distance learning significantly altered the basis on which most colleges and universities had pursued the development and delivery of online learning, dramatically increasing the potential complexity and expense of doing so both now and in the future if the rule were enacted as proposed.

Some have argued that the pending legislation to rescind the new rules would have little if any practical effect, since the underlying state obligations on distance learning providers of any type would remain. However, one may fairly argue that reasserting the status quo which existed prior to the issuing of the new regulations would remove the threat to the Title IV eligibility of the broad number of online programs offered by non-profit colleges and universities developed and delivered based on that context. This, in turn, would focus the dialogue between the higher education community and the states on collaborative efforts to update state postsecondary/distance learning authorization requirements and processes for the world of online learning in a manner and timeframe appropriate to those efforts, not as set by the U.S. Department of Education, no matter how generous the terms.