On June 12, 2019, the U.S. Department of Education (the “Department”) issued a Notice of Proposed Rulemaking (the “Proposed Rule”) to revise its regulations governing the recognition of accrediting agencies for postsecondary education. The Proposed Rule was the first to be issued as a result of negotiated rulemaking sessions that took place between January and April 2019 to address various regulatory changes for postsecondary education, including changes regarding accreditation, credit and clock hours, the Robert C. Byrd Honors Scholarship, TEACH Grants, religious freedom, distance education programs, state authorization for distance education, and competency-based education. At a final meeting on April 3, 2019, the negotiated rulemaking committee reached consensus on the regulatory language for all of the topics that were discussed. The Department is expected to issue additional notices of proposed rulemaking in the future that will include proposed regulatory language for the topics that were covered in the negotiated rulemaking sessions but not included in this Proposed Rule.

Comments to the Proposed Rule must be submitted by July 12, 2019. For the revisions reflected by the Proposed Rule to take effect on July 1, 2020, a final rule must be published in the Federal Register by November 1, 2019.

This alert describes some key provisions of the Proposed Rule that pertain to accrediting agencies. The goal of the negotiated rulemaking was to “examine the Department’s accreditation regulations and processes to determine which are critical to assessing the quality of an institution and its programs and to protecting student and taxpayer investments.” Overall, the Proposed Rule seeks to provide accrediting agencies with greater flexibility to apply its standards, as well as making certain changes to the recognition process, in an effort to promote innovation and to honor the autonomy of accrediting agencies. While there has been some criticism that the proposed changes lessen the regulation of accrediting agencies, the rules do not fundamentally change the recognition process, nor do the rules change the types of standards that each accreditor is required to implement and apply. In fact, the negotiating committee refused to adopt one of the most controversial proposals that would have permitted nonaccredited educational providers to enter into agreements with accredited institutions to offer more than 50% of a Title IV–eligible program. Thus, the changes are more gradual and incremental than originally anticipated.

The Proposed Rule represents the first consensus reached at a negotiated rulemaking conducted by the Department in about five years. As a result of such consensus, the Department is obligated to publish the rule that was agreed to by the negotiators, which included the Department and representatives of accrediting agencies, institutions, student and consumer groups, and others.

Changes with Respect to Adverse Actions

• Timelines for institutions and programs to come into compliance: In one of the Proposed Rule’s most notable changes, the Department proposes to remove the specific (described by the Department as “overly prescriptive”) timelines by which an accrediting agency must take an adverse action against an institution or program that is not in compliance with its standards. Instead, it would require an agency to provide a written timeline for coming into compliance that is “reasonable,” based on the nature of the finding and the stated mission and educational objectives of the institution or program. The timeline may include intermediate compliance checkpoints but may not exceed the lesser of four years, 150% of the length of the program (for a programmatic accrediting agency), or 150% of the length of the longest program (for an institutional accrediting agency).

• Policy for agency to take immediate adverse action: Under the Proposed Rule, the Department would require an agency to have a policy for taking immediate adverse action and to take such action when the agency has determined that such action is warranted. The Proposed Rule also establishes that an institution may remain out of compliance with the agency’s standards for a period of up to three years and longer for good cause shown, where there are circumstances beyond the institution’s or program’s control, such as a natural disaster.

• Notification of accrediting decisions: The Department proposes to require an accrediting agency to provide written notice of a final decision of a probation or equivalent status or of an initiated adverse action (such as to initiate nonfinal actions denying, withdrawing, suspending, revoking or terminating the accreditation/preaccreditation of an institution or program) to the Secretary, to the appropriate State licensing or authorizing agency, and to the appropriate accrediting agencies at the same time that it notifies the institution or program of the decision. It would require an institution or program to disclose such action within seven business days of receipt to all current and prospective students.

• Appeals process: The Department proposes to remove reversal as an option available to an accrediting appeals panel. It would require that an appeals panel explain the basis for a decision to remand if it differs from the original decision-maker’s decision. The “reversal” requirement had resulted in significant confusion among accrediting agencies and had resulted in some appeals panels becoming the ultimate decision-making authority within the accrediting process. This change would alleviate that issue.

• Programmatic-level actions: The Department would give institutional accrediting agencies the ability to impose programmatic-level actions when an institution’s noncompliance with the agency’s standards is at the program-level. In proposing this change, the Department states that it wishes to alleviate the concern that “agencies may believe they are limited to a rather blunt institution-level instrument that may not effectively address the source of the noncompliance.”

NACIQI Recognition Changes

• Concepts of “substantial compliance” and “monitoring report”: With respect to the Department’s recognition process for accrediting agencies, the Proposed Rule proposes to add the concept of “substantial compliance.” Under current regulations, the Department will only recognize an accrediting agency when it has demonstrated full compliance with every recognition criterion. This has resulted in some agencies’ recognition being placed in jeopardy for failure to meet largely technical procedural requirements. Under the Proposed Rule, “substantial compliance” means, “the agency has demonstrated to the Department that it has the necessary policies, practices and standards in place and generally adheres with fidelity to those policies, practices, and standards; or the agency has policies, practices, and standards in place that need minor modifications to reflect its generally compliant practice.” The Proposed Rule would also introduce the use of a “monitoring report,” which would be required of accrediting agencies that are in “substantial compliance” with the Department’s recognition criteria. An agency could thus be recognized with findings of substantial compliance subject to a monitoring report requirement. These concepts would add an intermediate step between full compliance and a compliance report. The monitoring report would be reviewed by staff but not be considered by the National Advisory Committee on Institutional Quality and Integrity (“NACIQI”) unless the response does not satisfy the Department staff or raises other issues that the staff determines should be considered by NACIQI.

• Geographic area: The Department seeks to encourage accrediting agencies to conduct their activities in the geographic areas most appropriate for them. The Proposed Rule would allow regional agencies to accredit institutions outside their region, but would not require it. It also would remove the distinction between regional and national accrediting agencies. A stated objective of this change is “to increase students’ academic and career mobility, by making it easier for students to transfer credits to continue or attain an additional degree at a new institution, by eliminating artificial boundaries between institutions due in part to reliance on a reputation associated with certain types of accrediting agencies.” The Department proposes that an agency’s geographic area would include not only the states in which the main campuses of its accredited institutions are located, but also any state in which an accredited location or branch may be found. However, agencies would not be required to accept applications for accreditation from other institutions in states where it only accredits additional locations or branch campuses. In addition, the Department would not consider a change to an agency’s geographic area to be an expansion of the agency’s scope but would require the agency to notify the Department and disclose the change to the public on its Web site.

• “Two-year rule”: Under the Proposed Rule, the Department would not continue the requirement that an agency seeking initial recognition have conducted accrediting activities for two years if that agency was previously affiliated with or was a division of a recognized agency. This exception to the two-year rule is meant to address situations where an accrediting agency is “spinning-off” from a parent or other agency but is essentially the same accrediting agency accrediting the same institutions as prior to the spin-off or change in affiliated agency.

• Review of change in scope: The Department had adopted the practice of allowing accrediting agencies to change their scope to include distance education simply by notifying the Department. The Department proposes to include in the Proposed Rule the statutory requirement that NACIQI review any expansion in scope by an accrediting agency to include distance education, if any institution that the agency accredits and that offers distance education or correspondence courses increases its enrollment by 50 percent or more in any institutional fiscal year. The review by NACIQI would occur at the next meeting after which the 50% growth threshold is met.

Changes to Substantive Change Procedures

• What constitutes “substantive change”: The Department proposes to make minor changes to what constitutes a substantive change requiring an accrediting agency’s review. An agency’s definition of a “substantive change” would be required to cover “high-impact, high-risk changes,” including the following, among other factors: substantial changes to the mission of the institution; changes in legal status, form of control or ownership; addition of programs that represent a significant departure from existing offerings, educational programs or method of delivery; addition of graduate programs by institutions that previously only offered undergraduate programs or certificates; change in a way the institution measures student progress (i.e., clock or credit hours, or other time-based or non-time-based methods); the acquisition of another institution or any program or location of another institution; the addition of a permanent location at a site at which the institution has been conducting a teach-out for another institution that ceased operating; entering into written arrangements with an institution that is not certified to participate in the Title IV programs (in which that institution offers between 25% and 50% of a program); addition of direct-assessment programs; and addition of a new location or branch campus (subject to the following caveat). Notably, while the addition of a new location or a branch is treated as a substantive change requiring prior approval, the Department proposes, in certain cases, to require institutions to report new locations or branch campuses within 30 days rather than obtain prior approval. That is, an institution that has successfully completed at least one cycle of accreditation and received agency approval for the addition of at least two additional locations, that has not been placed on probation or equivalent status or been subject to a negative action by the agency over the prior three academic years, does not need to apply for approval of subsequent additions of locations.

• Senior staff review: In an effort to expedite reviews of substantive changes, the Department proposes to allow an agency to designate a senior agency staff member to approve or disapprove certain substantive change requests, including but not limited to those regarding written arrangements for non-Title IV–ineligible entities to offer between 25 and 50 percent of a program. The staff member must make a final decision within 90 days of receipt of a materially complete request unless circumstances require the agency’s decision-making body to review the request, which it must do within 180 days.

• Differing levels of review for higher-risk institutions: Under the Proposed Rule, certain enumerated changes would only need to be reported to an accrediting agency. However, if an institution is on probation or equivalent status with the agency, on provisional certification with the Department or subject to negative agency action over the prior three academic years, it must receive prior approval for those changes.

• Retroactive approvals permitted: The Department would codify, as an acceptable practice, granting retroactive approval of a substantive change.

Religious Mission

• Definition of religious mission: The Department proposes to define “religious mission” as follows: “A published institutional mission that is approved by the governing body of an institution of postsecondary education and that includes, refers to, or is predicated upon religious tenets, beliefs, or teachings.” In setting forth this definition, the Department seeks to distinguish institutions that have explicit faith-based principles included in their missions from those with simply a “historical connection to a religious order that is no longer relevant to the institution’s mission.” 

• Direction regarding religious mission: The Department proposes to provide greater clarity regarding the requirement that an accrediting agency not interfere with the religions mission of an institution. The Department notes in the preamble that a religious institution should have “wide latitude in carrying out its religious mission across all aspects of its academic and non-academic programs, functions and responsibilities.” The Department proposes that agencies may not use as a negative factor an institution’s religious-based policies, decisions or practices if the institution’s or program’s curricula include all core components required by the agency. If an institution believes its mission has been used by an agency as a negative factor, it may submit a complaint to the Department.

Teach-Out Plans

• When teach-out plans are required: Under the Proposed Rule, the circumstances under which an accrediting agency would be required to request a teach-out plan would be expanded to include the following circumstances: when the Department notifies the agency of a determination that an institution’s independent auditor has expressed doubt about the institution’s ability to operate as a going concern or has provided an adverse opinion or material weakness finding regarding financial stability; and when an institution is placed on preaccreditation probation or show cause or is required to submit a teach-out plan as a condition of provisional certification. In addition, the Department proposes to require both a teach-out plan and, if practicable, a teach-out agreement when the institution is placed on reimbursement or heightened cash monitoring, or if the Department has taken emergency action or an action to limit, suspend or terminate participation, or the agency acts to withdraw, terminate, or suspend accreditation or preaccreditation, or the institution notifies the agency that it will cease operations (either entirely or to close a location providing 100% of a program), or if the institution’s license or legal authorization to provide an educational program has been or will be revoked.

• New elements required: The Department is proposing to require that teach-out plans requested by accrediting agencies include additional elements, including a list of current students, academic programs offered, and names of potential teach-out partner institutions. A teach-out agreement would be required to include a complete list of current students and the program requirements that each has completed, a plan for giving all potentially eligible students closed school discharges and state refund information, a record retention plan that would be provided to all students, the number and types of credits the teach-out institution will accept before the student enrolls, and a clear statement of tuition and fees.

• Accuracy of teach-out communications: The Department would require accrediting agencies to obtain from closing institutions all notifications from the institution about the closure or teach-out options and to ensure the communications are accurate.

Additional Changes

Additional elements of the Proposed Rule include but are not limited to the following:

• Direct assessment: The Department proposes to add direct assessment to the types of education that an agency’s standards must effectively address if the agency accredits such programs.

• Qualifications and composition of accrediting agencies: The Department proposes to require an agency to have individuals qualified by “education or experience” rather than “education and experience.” It also includes the option to include students as possible public representatives on agency decision-making bodies.

• Record-keeping clarifications: Under the Proposed Rule, the Department would clarify that agencies must retain decision letters regarding an institution’s or a program’s accreditation or preaccreditation and its substantive changes; however, they do not need to retain every record of conversations or interim decisions when superseded by a final decision or determination.

• Preaccreditation: The Department proposes to require agencies to have policies to offer preaccreditation only to institutions likely to succeed in obtaining accreditation and to clarify that a student who completes a preaccredited program would have the same benefits as a student who completes an accredited program. In addition, an agency would be mandated to require preaccredited institutions to have a teach-out plan that ensures that students completing the teach-out would meet curricular requirements for professional licensure or certification, if any.

• “Federal link” changes: The Department proposes to consider as satisfying the “federal link” requirement situations where an accrediting agency accredits one or more institutions that could designate the agency as its link to the Title IV programs, even if those institutions have not identified that agency as their link to Title IV programs.

• Non-Title IV schools: The Department would clarify that it does not require agencies to apply accrediting standards required by the Higher Education Act of 1965 to institutions that do not participate in Title IV programs.