- Diane Auer Jones, principal deputy under secretary at the U.S. Department of Education, outlined how forthcoming regulations on accreditation would address college closings during an event Tuesday hosted by the Bipartisan Policy Center in Washington, D.C.
- New regulations will include "financial triggers" that require colleges to file a teach-out plan with an accreditor, even if it doesn't intend to close, Jones said. Teach-out plans will also require more detail, including a list of institutions that could potentially take students.
- The proposals will provide an "off-ramp" for some colleges, Jones said. If a college's academic quality is up to par but it loses accreditation because of other issues, it will be able to retain access to Title IV funds for an additional 120 days. "These provisions will allow everybody to be a little more aggressive and to shoot off the signal a little bit earlier," she added.
A trio of high-profile for-profit college system closures in recent months has drawn attention to how thousands of students can be left in the lurch when an institution closes without notice.
Yet few colleges collapse without warning signs, raising questions about why accreditors and the Ed Department haven't taken action sooner against several spiraling systems.
Jones said the Ed Department has learned several lessons from the recent spate of closures, including that it needs to work more closely with accreditors and state regulators. "There had been movement in the direction of finger-pointing," she added. "The department drove some of that."
Earlier this year, the Ed Department convened a committee to determine what the new rules should be, including accreditors' role in closings. In early April, negotiators came to a consensus on the text of those regulations, which would require colleges to alert students to possible closures and to establish teach-out plans sooner, Jones said.
Those rules could be even more critical in the coming years, as closures across for-profit and nonprofit higher ed are expected to become more frequent.
Jones said the department hopes to issue the final rules before Nov. 1, but she noted meeting that deadline depends on the level of interest the public comment period generates. If the department meets the deadline, the rules could go into effect as early as July 2020, but missing it would delay their implementation until 2021.
The agency has missed such a deadline for final rules before, when attempting to rewrite gainful employment and borrower defense criteria. The agency is still working on issuing a final rule on the latter, Jones noted, adding that it will likely be significantly different from the department's first proposal.
For instance, under the initial borrower defense proposal, the department included controversial language that would have made students ineligible for a loan discharge if their closing colleges provided a teach-out plan.
"While the intent was to try to force orderly teach-outs, we heard from the public that eliminates students' choice," Jones said. "And frankly, we heard from the accreditors that they were nervous about approving teach-outs that lock students in."
During the event, Jones shed light on some of the department's other priorities, including potential new experimental sites initiatives.
Those could include lifting the cap on Federal Work-Study (FWS) grants, allowing colleges to use some of the funding to pay students' wages for apprenticeships. Jones said such a program would incentivize companies to partner with colleges and eliminate students' risk of losing Pell Grant eligibility during an apprenticeship, as FWS grants don't count against a student's calculation of need.
The department may also explore how it can play a role in income share agreements (ISAs). ISAs allow colleges to share risk with students over tuition costs, with the student paying back the award as a percentage of their earnings over time. Although the agency has not settled on what that could look like, Jones floated the idea of bundling federal loans and ISAs into a single payment.