Navigating the ED Program Integrity Rules: What Everyone Needs to Know (Even if You Really Don’t Want To) Presentation © Dow Lohnes pllc 2012

Michael B. Goldstein Practice Leader

The Tip of the Iceburg

October 29, 2010 Federal Register Pages thru (143 pages) What Hath ED Wrote?

Why Now?

Why Us? Obama Community Colleges

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For-Profit Schools

Key Issues State Authorization Definition of a “Credit Hour.” Prohibition against “Incentive Compensation.” Definition of “Misrepresentation.” Definition of “Last Day of Attendance” Definition of “Gainful Employment” and “Recognized Occupation.”

Hour” Credit Hour State Authorization

Return of the Dreaded SPRE “State Postsecondary Review Entity”

Return of the Dreaded SPRE Three key elements Defining an “acceptable” state authorization scheme for domestic institutions. Eliminating most “automatic” state authorization. Requiring institutions to demonstrate that they have all required state approvals wherever they enroll students.

Cross-Border Authorization Requiring institutions to demonstrate that they have all required authorizations… In every state where they enroll online (or correspondence) students. While regulation would not create any new state requirements… It would enable ED to enforce state rules.

Cross-Border Authorization 51 Agencies representing 43 States When I came to America to establish the U.S. version of the Open University I thought I was dealing with one country. Sir John Daniel Vice-Chancellor, British Open University Speaking at the 2003 Annual Meeting of the National Governors Association

51 Agencies representing 43 States When I came to America to establish the U.S. version of the Open University I thought I was dealing with one country. Sir John Daniel Vice-Chancellor, British Open University Speaking at the 2003 Annual Meeting of the National Governors Association I was mistaken... Cross-Border Authorization

51 Agencies representing 43 States Cross-Border Authorization

51 Agencies representing 43 States District of Columbia Cross-Border Authorization

Requiring institutions to demonstrate that they have all required authorizations In every state where they enroll online (or correspondence) students. Would not create any new state requirements. Would enable ED to in effect enforce state rules.

Cross-Border Authorization

Will the federal rule return?

Hour” Credit Hour The “New” Credit Hour

The New Credit Hour

The regulations describe a credit hour as: an amount of work represented in intended learning outcomes verified by quantifiable evidence of student achievement, as measured against the standard of the Carnegie Unit.

The “New” Credit Hour The “Carnegie Unit” a unit of faculty workload. One credit hour = one hour of classroom work + two hours of outside of class study for a minimum of 15 semester weeks or quarter weeks, or the equivalent amount of work over an equivalent amount of time.

The “New” Credit Hour The regulations “affirm” that Credit hour determination is an institutional responsibility, The definition is a minimum expectation, but Credit hour policies and procedures must be reviewed by an institution’s accreditor and found consistent with the regulatory standard.

The “New” Credit Hour As of last July 1, the front-line definition of a "credit hour," for federal purposes, is NO LONGER a time measure, it is instead the body of student work that represents the achievement of intended learning outcomes. There is still a reference back to the old standard, but the tables are turned in a way that is potentially transformative: traditional institutions will have to show accreditors what their academic expectations are rather than the hours a student is (sort-of) listening to a lecture. This gives innovators something other than seat time with which to calibrate their approaches. It will give us a way to assess new approaches and to counter claims about reduced quality.

Hour” Credit Hour Incentive Compensation

The institution will not provide any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid to any persons or entities engaged in any student recruiting or admission activities or in making decisions regarding the award of student financial assistance except that this paragraph shall not apply to the recruitment of foreign students residing in foreign countries who are not eligible to receive Federal student assistance.

Incentive Compensation Fixed compensation (salary or fixed wages) Programs not eligible for Title IV aid Arranging contracts between institution and employer, for employer’s employees Profit-sharing and bonus plans Completion of program or one academic year Clerical pre-enrollment activities Managerial and supervisory employees Token gifts to students and alumni Profit distributions based on ownership interests Internet-based recruitment activities Payments to third parties whose activities do not include recruitment or admissions Payment to third parties whose activities do include recruitment or admissions (revenue sharing) “Safe Harbors” in Effect July 2003-June 2011

Incentive Compensation Fixed compensation (salary or fixed wages) Programs not eligible for Title IV aid Arranging contracts between institution and employer, for employer’s employees Profit-sharing and bonus plans Completion of program or one academic year Clerical pre-enrollment activities Managerial and supervisory employees Token gifts to students and alumni Profit distributions based on ownership interests Internet-based recruitment activities Payments to third parties whose activities do not include recruitment or admissions Payment to third parties whose activities do include recruitment or admissions (revenue sharing) “Safe Harbors” in Effect July present

Incentive Compensation Fixed compensation (salary or fixed wages) Programs not eligible for Title IV aid Arranging contracts between institution and employer, for employer’s employees Profit-sharing and bonus plans Completion of program or one academic year Clerical pre-enrollment activities Managerial and supervisory employees Token gifts to students and alumni Profit distributions based on ownership interests Internet-based recruitment activities Payments to third parties whose activities do not include recruitment or admissions Payment to third parties whose activities do include recruitment or admissions (revenue sharing) “Safe Harbors” in Effect July present ?

Hour” Credit Hour Misrepresentation

“Misrepresentation” is: Any false, erroneous or misleading statement made to a student, prospective student or any member of the public, or to an accrediting agency, a State agency or ED by the institution, one of its representatives or persons with whom an institution has an agreement to provide educational programs or marketing, advertising, recruiting or admissions services.

Misrepresentation

Hour” Credit Hour Last Day of Attendance (LDA)

Last Day of Attendance (LDA) What is it? “LDA” is the date an institution is expected to use to calculate the amount of a Title IV refund when a student withdraws from a program. The later the LDA, the less the refund.

Last Day of Attendance (LDA) Evidence of attendance for on-the-ground programs: “physical presence in the classroom”

Last Day of Attendance (LDA) Evidence of attendance for online programs: “academic engagement” Instructor

Hour” Credit Hour Gainful Employment

The law: An eligible institution [is one that] offers a postsecondary education program that is: At least a one-academic-year training program that leads to a certificate, degree or other recognized educational credential, and Prepares students for gainful employment in a recognized occupation.

Gainful Employment Since 1965, a “recognized occupation” has been “An occupation that is— (1) Identified by a Standard Occupational Classification (SOC) code established by the Office of Management and Budget * * * ; or (2) [as] determined by the Secretary [of Education] in consultation with the Secretary of Labor to be a recognized occupation.”

Gainful Employment New Rules as of July 1, 2011 Virtually all educational programs offered by for- profit institutions are GE All educational programs that lead to a degree awarded by a public or private non-profit institution are not GE Programs. Virtually all non-degree educational programs (e.g. LPN) awarded by a public or private non-profit institution are GE Programs.

Gainful Employment June 13, 2011 Federal Register Pages thru (153 pages)

Gainful Employment The regulations at 34 CFR 668.6(b)(1)(iv) provide that institutions that prepare students for gainful employment in a recognized occupation must disclose the placement rate for students completing a GE Program, as determined under a methodology developed by the National Center for Education Statistics (NCES). In March, NCES convened a technical review panel (TRP). The TRP determined that at this time, a single job placement rate methodology could not be developed without further study because of limitations in data systems and other available data.

Michael B. Goldstein Practice Leader 1200 New Hampshire Ave NW Washington, DC Thank you!