The Rollback

By Terry Hartle    //    Volume 27,  Number 1   //    January/February 2019

Once Congress passes legislation and the president signs it into law, federal agencies must write the regulations that turn legislative intent into operational reality. This means that government regulation is an essential, if rarely loved, feature of American democracy.

Even in the best of times, regulation can be intensely controversial. And it goes without saying that we are not living in the best of times. Conservatives argue that too much regulation undermines economic growth and stifles individual freedom, and they generally seek to limit it. Liberals argue that without strong and meaningful regulation, health and safety inevitably are compromised.

During Barack Obama’s presidency, the federal regulation of American society increased as Democrats sought to accomplish policy objectives that were consistently blocked by a Republican Congress. Not surprisingly, critics of the administration frequently and viciously criticized what they saw as executive overreach. During his 2016 presidential campaign, Donald Trump promised a widespread rollback of the Obama regulatory initiatives—especially by repealing the Affordable Care Act and loosening environmental regulations. Since being elected, his administration has moved aggressively to carry out these promises and has regularly proclaimed its successes.

Now, at the halfway point in the Trump administration’s first term, it’s worth taking stock of how federal regulation of colleges and universities has changed since the election and what changes might be in store in the near future. Such a review is especially timely as the administration is in the middle of two major regulatory initiatives, one focused on federal regulations and administrative procedures affecting accrediting agencies and another aimed at completely rewriting the Obama administration’s initiative to combat campus sexual assault. These two efforts, which will occur exclusively within the purview of the executive branch, are likely to be among the most visible and widely discussed higher education policy initiatives in 2019.

THE GROWTH OF FEDERAL REGULATION

Federal regulation of higher education has increased over time. To some extent, this is attributable to increased federal spending on student aid. As more federal dollars go to students and campuses, more regulation inexorably follows. Between 1990 and 2015, the total amount of federal student aid grants and loans increased from roughly $32 billion to $135 billion.

Federal regulation of higher education increased even more during the Obama presidency for multiple reasons. In part, this was because the 2008 Higher Education Amendments were enacted during the waning days of the Bush administration, but it fell to the Obama administration to develop the implementing regulations. The increase also reflected the administration’s desire to reduce abuses in federal student aid programs that it attributed to for-profit schools. Controversial federal regulations addressing the “Borrowers Defense Against Repayment” (an effort to define the circumstances under which federal student loan debts would be forgiven if an institution defrauded a borrower) and “Gainful Employment” (an attempt to link earnings with specific education and training programs at individual postsecondary institutions) were finalized in the closing days of the Obama administration after a long and tortuous process. Some proposed regulatory initiatives that would have gone further—such as a plan for the federal government to rate individual colleges and universities—never fully made it off the drawing board.

Still another factor increasing the number and reach of federal mandates during the Obama administration was the desire to accomplish broader social policy objectives, such as reducing sexual assaults. In this case, the administration did not bother with formal regulations, but simply imposed the legally binding steps, known as “guidance,” and then enforced those requirements as if they had been the result of a formal regulatory process.

Consistent with the Trump administration’s promise to reduce the federal government’s regulatory footprint, Secretary of Education Betsy DeVos did not implement either the Gainful Employment or the Borrowers Defense regulations. However, because the mandates were officially promulgated under a longstanding federal law called the Administrative Procedures Act (APA), the Trump administration could not simply kill them because under the law, no officially issued regulation can be withdrawn without going through a separate regulatory process. The administration has embarked on an effort to accomplish this. But the Department of Education is not enforcing these regulations, and there is little doubt that the Obama requirements will be sharply pared back when the federal regulations are finally released later this year.

The administration’s efforts to cut federal regulation of higher education are not restricted to these two attempts. Indeed, two additional projects that are currently underway will, in the end, have a larger impact on traditional colleges and universities than either repeal of or changes to Borrowers Defense or Gainful Employment regulations. First, the administration hopes to rewrite the federal regulations and administrative procedures governing its relationship with accrediting agencies under Title IV of the Higher Education Act, an effort that is just getting started. Second, and more controversially, the Trump team wants to rewrite the federal requirements that dictate how colleges and universities respond to allegations of student-on-student sexual misconduct under Title IX.

The efforts are completely separate because the responsibility for Title IX is vested in the Department of Education’s Office for Civil Rights (OCR) while accreditation and student aid are handled by the Office of Federal Student Aid (FSA). These large offices report to different political appointees. And, as noted below, even the processes being used to revise the regulations are quite different. But both efforts have the potential to create significant changes in the relationship between the federal government and colleges and universities. Both are worth a closer look.

‘NEGOTIATED RULEMAKING’

Federal law requires that an agency issue a notice of proposed rulemaking (NPRM) and allow public comment before it imposes regulations. Agencies are required to review the public comments and to address the issues that are raised. Agencies do not have to accept all the suggestions, of course, but they must give them full consideration and explain their reasoning when issuing the final regulation.

Some federal student aid regulations, however, have more elaborate requirements. Before issuing new regulations affecting Title IV of the Higher Education Act, for example, the Department of Education must engage in “negotiated rulemaking.” Under “neg reg,” as it is commonly known, a panel of stakeholders is convened to help guide regulatory development. The department outlines its goals and objectives and puts forward draft regulations to accomplish them. The negotiators suggest revisions to the department’s plans. The underlying thinking is that the best regulations are likely to emerge from a process that allows all affected parties a voice at the table as the requirements are drafted.

The goal is consensus. If the participants unanimously agree on a set of regulations, the rest of the regulatory process—the NPRM and the publication of final rules—is pro forma. But if unanimity is not achieved, the department must proceed with the complete regulatory process as outlined in the APA.

ACCREDITATION

The Department of Education must use the neg reg process to modify federal regulations as they affect accrediting agencies. Under the Higher Education Act, schools must be accredited by an agency “recognized” by the secretary of education in order to be eligible to participate in the federal student aid pro-gram. If a school lacks accreditation from a “recognized” accreditor, its students cannot get federal student aid. Currently, 51 agencies, including all seven regional agencies, have been approved by the department to establish institutional eligibility for federal student aid.

The focus of this regulatory effort will be the relationship between accrediting organizations and the federal government. Over time, accreditors have been assigned more and more federal responsibilities. Many, such as the requirement to ensure compliance with local fire codes, are totally unrelated to the mission of accrediting agencies and far beyond their expertise. The department has indicated that it wants to strip away some of these requirements.

Simultaneously, federal officials want accreditors, who usually are operationally conservative, to greenlight more innovative and outside-the-box education initiatives, especially those from nontraditional providers. Giving these programs access to federal student aid certainly will generate new and innovative programs. At the same time, history suggests that such a step is also likely to encourage unscrupulous providers to create programs in hopes of attracting students who will use federal student aid to pay for their education. When this happens, students and taxpayers can all too easily find themselves financially responsible if the education or training proves worthless.

The Department of Education also wants to generate more competition among accreditors, perhaps by altering the very nature of regional accredit-ing agencies. Its initial proposal, for example, would confine regional accreditors (the type of accreditors that approve traditional colleges and universities) to no more than 10 states. Such a step would require two agencies—the Higher Learning Commission and the Southern Association of Colleges and Schools Commission on Colleges—to abandon some states entirely. The five other regional accreditors are in fewer than 10 states, but because of a proposed requirement that the states be “contiguous,” these agencies most likely would have to jettison some academic programs. For example, a number of schools in California (such as Pepperdine University, the University of California, and Stanford University) have fully functioning programs in Washington, DC. Under the current system, the Western Association of Colleges and Schools approves these programs when it accredits the home campus. Under the Education Department’s plan, these locations probably would need to find a different accreditor.

The department believes such steps would lead to the emergence of new and innovative agencies. Perhaps they would, but it’s a high-risk gamble. If the new agencies don’t materialize, some schools could lose their accreditor and will find their students ineligible for federal aid.

More far-reaching regulatory initiatives also are on the table. For example, what steps might the Education Department take to encourage traditional, regionally accredited colleges to accept academic credits from students who are at for-profit schools? Another thorny issue is how the federal government can ensure that accreditors do not impinge on the religious freedom of institutions with-out creating a regulatory loophole that lets some shady educational providers claim—perhaps tenuously—a religious affiliation.

Accreditation is a lynchpin of federal higher education policy because this is where the federal government’s need for accountability and oversight meet institutional needs for independence and academic autonomy—critical responsibilities that fall within the purview of governing boards. Too heavy a federal hand will turn accreditors into little more than enforcement arms of the Department of Education and distract them from their core mission of furthering educational quality and innovation. But too little attention to the work of accreditors threatens serious harm to students and taxpayers. The regulatory issues surrounding accreditation are often easy to describe, but finding a middle ground that will work effectively as a policy solution is usually a huge challenge.

TITLE IX AND SEXUAL ASSAULT

As reported in the November/December 2018 issue of Trusteeship, the Trump administration has proposed massive changes to the federal rules governing how colleges and universities handle allegations of sexual harassment, including sexual assault, that are filed under Title IX of the Higher Education Act.

In both process and substance, the Trump administration is proceeding differently than it is with accreditation. On the process front, there is no “neg reg”; the administration detailed its ideas in a formal NPRM, issued in October 2018. Interested parties were given until Jan. 30 to submit comments. (Neg reg was not required because Title IX is not part of Title IV of the Higher Education Act.) The Department of Education must review the comments it has received and presumably will make some changes to the draft package before publishing a final set of regulations later this year. Those regulations will take effect at some undefined point in the future.

The effort is predicated on two assumptions. First, the Trump administration believes the Obama administration over-reached in its handling of sexual harassment. In 2011, for example, the Education Department issued “guidance” to help schools anticipate how the agency would address complaints about institutional Title IX efforts. “Guidance” is usually issued to provide information about highly technical issues, but the Obama Title IX guidance imposed legally binding regulatory requirements while avoiding the mandatory “notice and comment” requirements of the APA.

In addition to overreach, the second assumption was that the Obama “guidance” led schools to favor the survivors of sexual assault over those who stood accused. To address this, the Trump draft regulations proposed an intricate series of protections for the accused. For example, in resolving sexual assault cases, the proposed regulation mandates a “live hearing” that permits “direct cross examination” by both parties. In addition, both the survivor and the accused are entitled to an advisor the party chooses and, if one side lacks an advisor, the institution must provide one whose views are “aligned.”

To higher education groups, including AGB, these provisions were alarming for two reasons. First, “direct cross examination,” especially if done by an experienced trial lawyer, could create additional trauma for the survivor, the prospect of which might be enough to discourage an individual from reporting a sexual assault in the first place. Second, the entire process as defined in the draft regulation would be a highly legalistic undertaking that runs the risk of turning campus disciplinary hearings into judicial-like proceedings—something beyond the financial resources, expertise, and authority of colleges.

The effort to write rules governing the handling of sexual assault cases, like the accreditation effort, has generated intense controversy. Indeed, as of this writing, the Education Department has received more than 100,000 comments on its proposed Title IX regulations—roughly 20 times the number it usually gets. College and university officials and education organizations, including AGB and the American Council on Education (ACE), submitted letters acknowledging that a number of the provisions in the draft regulations would help them combat the scourge of sexual assault. But both groups underscored that some of the other provisions are a step in the wrong direction that would add complexity, confusion, and cost to campus efforts to deal with this serious challenge and ultimately would do more harm than good.

LOOKING AHEAD

The federal government rarely stands still. Indeed, in an era of political turmoil when control of the legislative and executive branch agencies is split between the parties, power flows to federal agencies. If Congress and the president cannot agree, the executive branch can, and does, act alone. This was clearly the case during the Obama years; it may be less visible in the Trump administration because the over-all impression of political chaos distracts attention, but the underlying dynamic remains the same.

It is impossible to predict with any certainty how President Trump’s regulatory initiatives on accreditation and Title IX will evolve in the months ahead and what the final results will mean for colleges and universities. To the lay observer, these processes—while public to some extent—are inherently less visible than the legislative process on Capitol Hill. But regulatory actions are now at least as important as the legislative process.

It is difficult, if not impossible, for trustees to follow the nuances of federal higher education policy. Nor should they try. The issues are too technical and often (as with accreditation) are largely invisible to most higher education board members. Moreover, the process is complex and often maddeningly opaque. But constant changes in federal policy as they affect colleges and universities are an inexorable rule of higher education life in 21st-century America.

Government regulations have a huge and increasingly outsized impact on what colleges do, how they do it, what it costs them, and the legal liabilities that they may face. Trustees should not follow these issues themselves, but must ensure that their cam-pus is fully aware of the stakes, participates in the public policy process to make certain that its interests are represented, and takes appropriate action to address changes when they occur. Whether we like it or not, it’s impossible to imagine the modern American college or university without federal support and, therefore, federal regulation.

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