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 Letters on State Authorization and Gainful Employment 


Dear Colleague:

On April 20, the Department of Education (ED) released two important “Dear Colleague” letters that I want to call to your attention. The letters specify ED’s implementation plans for new regulations on the state licensing of distance education programs and gainful employment program reporting requirements. Both letters refer to regulations that were published Oct. 29, 2010, and take effect July 1, 2011.

State Authorization
One letter outlines how colleges should approach securing needed state authorization in states outside the ones in which they are physically located and where they want those students to be eligible for federal student aid. I sent you a communication on this issue earlier this month.

ED’s letter provides significant accommodation to our many members who have voiced concerns about their ability to comply with the new state authorization requirement. The letter states that ED will not initiate any action to establish liabilities or limit student eligibility for distance education activities before July 1, 2014, so long as the institution is making good faith efforts to identify and obtain necessary state authorizations before that date. The letter provides examples of good faith efforts.

ED has also indicated that it is committed to developing a comprehensive directory of relevant state licensure requirements, which should facilitate implementation. Over the coming months, we hope that states will work to harmonize their policies concerning the regulation of distance education provided within their borders, and, with that, ease the costs and burden of institutional compliance.

AACC worked closely with ED officials to provide community colleges with some breathing room from this looming state authorization requirement. I am pleased to report that ED has largely responded to our concerns. In our opinion, this regulation is unnecessary to ensure that community colleges provide quality education, with integrity, outside their state borders. However, the breakneck growth of distance education, particularly by the for-profit industry, makes these new rules no surprise. AACC will continue to closely monitor future developments in this area and intervene where appropriate.

Gainful Employment
The letter on gainful employment applies only to the new reporting and disclosure requirements emanating from the first of two gainful employment regulations. Virtually all certificate programs at community colleges eligible for federal student aid are covered by the gainful employment regulations. Again, the meaningful reporting unit is the individual program and the students who enroll in each of those programs.
The regulation that the letter addresses does not concern programmatic eligibility, which was outlined in the second proposed rule that has not been finalized. That second regulation is being vehemently combated by the for-profit industry. However, this second proposed rule would, as best we can determine, have a very limited impact on community college student aid eligibility.
Since the proposed gainful employment rules were first proposed, AACC staff has focused on the potential impact of its reporting requirements. Unfortunately, the letter does not dramatically lighten the anticipated reporting burden. In addition, it leaves a number of questions unanswered, in part because ED has yet to settle on its final institutional reporting framework, despite the fact that the regulation takes effect July 1.

A few things to note about the gainful employment letter, which must be looked at in combination with the Oct. 29, 2010, final regulation:
• AACC succeeded in persuading ED to state that “awarding students one or more certificates as part of a degree program does not create GE programs based upon the awarding of the certificate(s).” This was a top priority, as it should limit the number of programs and students that will be affected by the rule.
• The regulation requires the disclosure of job placement rates for gainful employment programs, but unless institutions are currently required to report them for other purposes, the requirement will not take effect until ED has developed a new process for generating the rates. Mitigating the impact of the placement rate requirement was a top AACC priority, and we are working to ensure that it can be reasonably met.
• The above two achievements aside, the new rules involve a significant new regulatory burden, including the calculation of a new “on time” graduation rate for program completers.
• Lastly, while asking institutions to meet a very tight timeframe for compliance, to date ED has failed to give colleges all of the detailed information they will need to implement the rule.  Moreover, it is currently unprepared to fulfill all its own designated responsibilities as outlined in the letter. This seems heavy-handed.
The regulation also imposes new procedures that institutions must follow in order to make new gainful employment programs eligible for Title IV. We call your attention to the fact that institutions must notify ED by July 1, 2011, of any new program whose first day of class will be after July 1, 2011, but before Oct. 1, 2011. For programs beginning after Oct. 1, institutions must provide notification at least 90 days before the course is offered.

Lastly, let me note my regret that our member colleges are being subjected to regulations that are widely acknowledged to have been necessitated by the practices of the for-profit higher education industry. We do urge you to respond to our periodic alerts on pending regulatory activity, such as we provided on these rules.
For more information or to report any issues that your college may be facing relating to compliance, please contact Senior Vice President for Government Relations and Research David Baime by e-mail or phone (202-728-0200, ext. 224).

Thank you,
Walter G. Bumphus
President and CEO

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