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FAME Regulatory Bulletin

The Latest on 2016 State Authorization Regs

The U.S. Department of Education (ED) sent a letter to California officials on Friday, August 2, 2019, to address the 2016 State Authorization regulations issue. In short, ED states that it will “consider California to have had an acceptable plan in place dating back to May 26, 2019. Thus, no student will experience an interruption in his or her education or federal student aid.”

State Authorization Plan in California Considered Acceptable (with assumptions)

As reported in news articles Monday morning, August 5, 2019, in both Inside Higher Ed[1] and the National Association of Student Financial Aid Administrators’ (NASFAA) Today’s News,[2] ED has made the considered decision that California’s State Authorization plan for California’s distance education students who may reside in other states is an “acceptable plan.”

However, the statement made that it is an acceptable plan is based upon the premise that California will make further modifications to its student complaint process. Specifically, California may not relegate its responsibility for investigating and resolving student complaints to the state in which the student resides or to the institution’s accrediting agency. That is, a California agency must oversee the investigation of a student complaint, and the resolution of such complaints. The California plan must allow for any complaints that may date back to at least the effective date of the State Authorization regulations, May 26, 2019.

An additional positive note in the letter states that, with the presumption that California does modify its plan as ED stipulates, students are held harmless for otherwise eligible Title IV aid payments made. This would include even those who were paid prior to the date of ED’s letter. And, it is understood that no repayment or recouping of Title IV aid disbursed since the effective date of the 2016 State Authorization regulations, but prior to the date of ED’s letter, is necessary for matters related to complying to this provision of the State Authorization regulations. This provision is contingent upon the “commitment” of the aid was made prior to May 26, 2019. For more specific clarification of Title IV eligibility of students who may be impacted by the effective date of the 2016 State Authorization regulations see the Question and Answer (Q&A) attachment to ED’s Electronic Announcement dated July 22, 2019, which was updated as of August 5, 2019.[3]

A copy of ED’s letter (as provided in the news articles mentioned above) is available in the links to the articles in the end notes at the end of this Regulatory Bulletin. ED also included a copy of the letter to California as an attachment to the August 5, 2019, update to the Electronic Announcement dated July 22, 2019.

State Authorization Clarification from ED for Other States

To further aid institutions’ understanding of the requirements of an institution’s eligibility for ongoing participation in the Title IV aid programs, ED updated its Q&A attachment to the updated Electronic Announcement dated July 22, 2019. This amended attachment provides new questions and answers (T4-Q3/A3 and T4-Q4/A4). These specific Q&As address institutions who are in other States than California who are, or are not, members of the National Council for State Authorization Reciprocity (NC-SARA). Those institutions in a State that is not a member of NC-SARA, or if the institution is not a member of NC-SARA, should carefully consider the answers to these questions and review the related regulatory requirements.

Current State Authorization Reminders

Beyond the California story that has garnered attention the last few weeks, there are still other points that institutions with distance education programs should keep in mind. First, the Institutional Eligibility regulations [see 34 CFR 600.9(c)] require institutions to be able to:

  • document they have State approval to offer distance education in that State in which it is not physically located
  • or, document that it is covered by an applicable approved State reciprocity agreement.

Additionally, such institutions offering distance education are reminded that the 2016 State Authorization regulations, which are now currently in effect, require institutions to provide certain public disclosures and individualized disclosures related to the institution’s authorization to provide such programs. Some of these disclosures mirror the requirements for institutional eligibility, but further expand upon those items, for example by including the requirement to disclose the complaint process for distance education programs in the States in which enrolled students reside, etc. Some of these disclosures require that the institution:

  • inform students whether it is authorized to enroll students in distance education in the State in which the student resides. [See 34 CFR 668.50(b)(1).]
  • disclose any potential consequences for students who change their State of residence to where the institution may not meet the State’s requirements in which the student is located.
  • disclose the complaint process for the State in which the main campus of the institution is located, and the process applicable to the reciprocity agreement to which it is a party, if applicable. [See 34 CFR 668.50(b)(2).]
  • provide a description of the complaint process for the State in which the enrolled student resides.

Institutions should review the disclosure requirements detailed in 34 CFR 668.50(b) and (c) taking note of the distinction between those that are general public disclosures (e.g., via a website) and those that are to be individualized disclosures, (i.e., via mail, e-mail or direct distribution such as handouts, etc.).

Should you have any questions regarding the information in this edition of our Regulatory Bulletin, please feel free to contact FAME Customer Service through the Client Solution Center.

State Authorization Regs Ahead

ED does give indication that it anticipates the new 2019 State Authorization regulations will be published “as soon as possible.” Further, it is stated that the new 2019 regulations, which were written based upon the consensus obtained in the negotiated rule making process, will be published with the opportunity for early implementation. Most institutions who have distance education programs that enroll students from across the country will likely find this advantageous.

Publication Date: August 7, 2019

[1] “U.S. Says California Is in Compliance With State Authorization Rules;” Inside Higher Ed, August 5, 2019.
[2] “California Distance Education Students Now Eligible for Title IV Aid, May Keep Disbursements Already Made;” NASFAA’s Today’s News, August 5, 2019.
[3] Electronic Announcement, U.S. Department of Education, July 22, 2019, with State Authorization Q&A attachment, updated as of August 5, 2019.
This material is presented for informational and educational purposes only and should not be considered to be giving legal advice.

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