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President to President
Molly Corbett Broad's weekly email newsletter to higher education leaders.

President to President, July 13, 2011

Vol. 12, No. 27

 

​SPECIAL EDITION: Court Strikes Down Part of State Authorization Rule

 

The U.S. District Court for the District of Columbia yesterday struck down the portion of the Education Department's state authorization rule which requires distance education programs to get authorization in every state where they have students.

In striking the regulation, Judge Rosemary M. Collyer held that the department failed to comply with the Administrative Procedures Act (APA), noting that colleges and universities were not given adequate notice or opportunity to comment on the distance education regulation before it was finalized. (The APA governs the way in which federal agencies propose and establish regulations.)

The Association of Private Sector Colleges and Universities (APSCU) filed suit against the department in January, challenging regulations on three topics from the department's Oct. 29, 2010, program integrity rule: (1) state authorization, (2) misrepresentation and (3) incentive compensation. While the court struck down the distance education portion of the state authorization regulation, it dismissed APSCU's challenges to these other regulations.

In her opinion, Judge Collyer noted the online aspect of the state authorization regulation was introduced after the department published the final rule, thereby denying institutions and other affected parties the opportunity to raise objections to this part of the rule before its adoption.

At this point, the department appears to have three options: 1) accept the ruling; 2) appeal the ruling; or 3) call another negotiated rulemaking session in an effort to develop a regulation that can survive a court challenge. The department has said that it is currently reviewing the ruling to determine any additional steps it may take. It remains to be seen if APSCU will appeal the court's decision to allow the other challenged regulations to stand.

As most of you know, ACE and many others in the higher education community are strongly opposed to the state authorization regulation, which went into effect on July 1 as part of the department's package of new program integrity regulations. We have asked Congress to repeal it along with the rule establishing a federal definition of a credit hour. Bills are currently pending in both the House and Senate to rescind both regulations.

APSCU, formerly known as the Career College Association, has also been very vocal in its opposition to the so-called gainful employment rule, which is intended to ensure students who enroll in some higher education programs—especially those at for-profit schools—earn enough money to repay their student loans. No lawsuit has been filed on gainful employment yet, but it may be soon.

We are working on a more thorough analysis of the ruling and will have a full report for you in Friday's President to President.

Molly Corbett Broad
President of ACE