Subscribe
Share
Share
Embed
Host Jason Altmire sits down with Nicholas Kent, Senior Vice President of Policy and Regulatory Affairs for Career Education Colleges and Universities (CECU) to discuss the impact of negotiated rulemaking on the proprietary sector of higher education.
Career education is a vital pipeline to high demand jobs in the workforce. Students from all walks of life benefit from the opportunity to pursue their career education goals and find new employment opportunities. Join Dr. Jason Altmire, President and CEO of Career Education Colleges and Universities (CECU), as he discusses the issues and innovations affecting postsecondary career education. Twice monthly, he and his guests discuss politics, business, and current events impacting education and public policy.
Jason Altmire (00:04):
Hello and welcome back to another edition of Career Education Report, I am Jason Altmire. And we are joined today by Nicholas Kent, who is the senior vice president for Policy and Regulatory Affairs at Career Education Colleges and Universities, CECU. And as I think most listeners to this podcast know, CECU is the national association representing career schools in higher education, and generally, the proprietary sector of higher education. And Nicholas knows more about regulatory affairs and the negotiated rulemaking session than, I think, anybody. He's been involved in this for a number of years, he has a tremendous background in it, and is just immersed in what is happening with regard to negotiated rulemaking currently.
Jason Altmire (00:57):
And I thought, given the impact this is going to have on the proprietary sector of a higher education and the increased volume of conversation that is going on, regarding the rule making process and the regulation of for-profit schools in this country, I wanted to bring Nicholas on because I think folks are interested in why is this happening now, what is the history of negotiated rulemaking, why is the process structured the way that it is? And most importantly, what can we expect? We're in the middle of it now, it's going to have a huge impact on the sector. And wanted to bring Nicholas on, so Nicholas, thank you for being with us today.
Nicholas Kent (01:38):
Thanks for having me.
Jason Altmire (01:39):
So I wanted to just first talk about why this is unique, almost unique, to the Department of Education. The negotiated rulemaking session that's ongoing is required and it's different than most federal agencies. So what is the process that we're going through and why is it required for the department?
Nicholas Kent (02:01):
One of the questions I get asked by non higher education people is what is negotiated rulemaking, and the short answer to that is it's a unique regulations drafting process. But to really understand how it came to be today, we have to actually go back to the early 1980s. And in 1982, a little known federal agency, known as the Administrative Conference of the United States, which is really a federal entity responsible for improving federal processes, had sort of suggested that the federal regulators and the regulated community had a pretty adversarial relationship, that really most of the work that was being done at the time was just to position both parties for litigation and judicial review of regulations after the fact, after they were published and after they went into effect.
Nicholas Kent (02:51):
And so the Administrative Conference got together and said, "Listen, we recognize that a lot of the solutions that are happening in the litigation front are being done through negotiations, but they're being done sort of really late in the process. So if we can bring the regulators and the regulated together early on in the process, we might have a better outcome and it would certainly reduce the amount of litigation going on." And so the Administrative Conference set out some general standards about what negotiated rulemaking would look like, and Congress felt it was a really great idea in terms of really technical regulations. And so because the higher education programs are very technical in nature, Congress decided that under certain circumstances, the Department of Education would be responsible for bringing parties together to negotiate on issues before regulations actually went into effect. And therefore, when the department negotiates on certain topics like federal student loans, and Pell grants, and accreditation, they have to go through this negotiated rulemaking process.
Jason Altmire (03:55):
In the process, the department is required to bring together diverse points of view, at least on paper. And they're required to have around the negotiating table, folks who represent different segments of the issue that's being regulated. But what happens is, of course, the department gets to decide what the make up is of those seats, what the proportion is for the different voices that are being heard, and the specific people that are being appointed to that committee, knowing in advance, what the point of view of those folks is. So can you talk a little bit more about that, about the way that the department, on paper, is required to fill the seats, versus what actually happens in practice?
Nicholas Kent (04:44):
The short answer is the department has a lot of latitude here. There is a statutory framework from which the department has to work in terms of comprising this committee of certain individuals and certain constituency groups. The Higher Education Act requires that the department involve those groups that have experience with regard to the federal student aid programs. And so in statute, the department is required to engage people like students and legal assistance organizations, higher education institutions, accreditors, and financial aid administrators, but the department can also add additional constituencies that they feel are significantly impacted by the regulations that are undergoing consideration. And so, as you mentioned, the department has great latitude in determining who gets put on the committee and what points of view they represent. And so with any administration, whether it's this administration or previous ones, the Department of Education really appoints most individuals who share their beliefs and thoughts about the policies under consideration.
Nicholas Kent (05:50):
When we look at the previous administration, they appointed individuals who shared their philosophy on higher education, and this administration is also doing the same. So we're getting consumer focused, accountability driven, consumer groups that are really focused on the things that are most important to them. And so one of the differences, for example, on the committees that we're seeing under this administration is there are less representatives around the table for for-profit colleges, whereas in the previous administration, because the regulations that were being negotiated significantly impacted them, they had two seats, whereas now, they only have one seat. And we know that President Biden and this administration are really focused on community colleges, for example. And so community colleges have their own seat at this table, aside from public four year institution. So it just shows you that the administration in power really gets to dictate who sits around the table and what philosophies that they represent.
Jason Altmire (06:47):
An alternative way that they could have done that, if they're going to give community colleges a two year public institution a seat at the table, they could also have had a two year or certificate seat for for-profit institutions, and then a four year for-profit institution, which would seem to have been an issue of equity, but that's not what they chose to do, they chose to give one seat. And this time around, with President Biden having campaigned on holding for-profit schools accountable, and of course, we can discuss what the definition of accountability is, but he has made very clear that that's a priority for him. The Department of Education is loaded up with people who have been critics of the for-profit sector over time, and that has filtered through to their commentary and the way that they've filled out those seats. So can you talk a little bit about what we're expecting now with what's ongoing and negotiated rulemaking, what the seats look like and what we can expect as far as timing of decisions being made?
Nicholas Kent (07:49):
To springboard off of what you said, this presidential administration is really focused on for-profit colleges and holding them accountable, but that's based off a false premise that there was an accountability for those institutions in the first place, which we know is not necessarily true. But this particular administration is really focused on a robust accountability in transparency framework, but not for all institutions, arguably just for private career schools. And so that's something that we're really paying attention to. And the negotiators who were appointed around the table have significant interest and research chops when it comes to for-profit colleges.
Nicholas Kent (08:31):
And so for example, this administration had appointed actually two former Obama administration officials that worked on some of these issue as part of the committee. As you would imagine, appointing individuals who have worked on these issues and previous administrations are very passionate about it, and they did not appreciate the previous administration undoing their work. And so they are back with a vengeance and for all intents and purposes, they are very interested in not only reestablishing some of the regulations that were rolled back under the previous administration, but strengthening them as well.
Jason Altmire (09:06):
And the way they filled out the seats, it's often that there's 13 seats, correct? And they added a 14th seat. So it's 13 folks with long histories of writings and commentary in a very well known position of being adverse to for-profit higher education, for the most part, and one seat representing the proprietary sector. And so what you see is you see a lot of votes that are occurring, where only the for-profit representative casts a vote. They do the thumbs up or thumbs down on Zoom, and they like to take pictures of it and tweet it out where, "Oh, here again, the for-profit sector, the only dissenting view."
Jason Altmire (09:51):
But the reason they're the only dissenting view is because the department clearly filled out these seats in a way that they knew what they were getting, so you know you're going to get that point of view. And I think what's frustrating to people who are interested in equity and people who are interested in the career education sector and proprietary schools being fairly represented and having a fair voice in the process is when the department filled out these seats, they did it in a way that seems to preordain the outcome. What do you have to say about that?
Nicholas Kent (10:25):
No, that's absolutely right. If you want to win the game at the end of the day, you want to stack the deck with those individuals who share your philosophy and your ideas and your thoughts about out where these policy should go. So I completely agree with you on that. Obviously, it is concerning. We are seeing, in the most recent rulemaking, for example, a lot of these sort of thumbs up, thumbs down consensus checks, right? Which are these temperature checks along the way to see whether or not the negotiators appreciate the departments proposals. And you're right, a lot of the time, it is the for-profit college rep who has his thumbs down. What is an interesting dynamic that I am seeing, which is different than in previous rulemakings, is especially during the first session... And for your listeners, there are three sessions that span one week over three months.
Nicholas Kent (11:16):
So one week in January, one week in February, one week in March. And during the first negotiated rulemaking session, typically, the negotiators are giving a lot of constructive feedback to the department on the changes they would like to see in subsequent sections. And so these temperature checks and the first session generally are, a lot of times, you're seeing a lot of thumbs down where you're saying, "Listen, you haven't quite hit the nail on the head yet, but you're getting there. And this is what we like, and this is what we don't like, but for now, we're going to vote it down." And what we saw during the first session was a lot of constructive feedback from the negotiators, the non-federal negotiators, and many negotiators who actually agreed with the for-profit rep on many issues, to our surprise.
Nicholas Kent (12:03):
But when it came time for the vote, the for-profit rep was the only one who voted it down. And I think that's because we are in this world of social media, and Twitter, and having your picture taken, and nobody wants to be seen as sort of voting down these proposals on camera because the headlines are, generally, the vote down represents a vote against accountability or a vote against transparency, right? Tweets are not nuanced enough to understand the issues. And so it's really unfortunate that the for-profit rep is the only one with his thumbs down, but if you go back and you really listen to the sessions, there was a lot of more agreement in the last session than the thumbs up, thumbs down would lead you to believe.
Jason Altmire (12:45):
And for listeners who may not be aware, the primary negotiator representing the for-profit sector is Bradley Adams, who is the chief operating officer at South College, and as the primary negotiator who has voting authority and is leading most of the discussion for the sector. Nicholas, let's transition into talking specifically about a couple of issues that are of great importance to the sector, maybe more than a couple. What would you say gainful employment, clearly, one of them, 90/10, one of them, some of these accountability measures that are being debated, what are the key issues where you would expect there would be a strong difference of opinion in the greatest impact on the proprietary sector?
Nicholas Kent (13:27):
So Rufus Miles, who was the chief of the labor and welfare branch of the Bureau of the Budget in the late 1940s had this great adage. He said, "Where you stand depends on where you sit." And I think all institutions of higher education will be impacted by the regulations under discussion. So whether you're a small, private, liberal arts college in the northeast, or you're a proprietary institution in the south, these regulations will likely impact you regardless. To the extent that they impact you will depend upon your type of institution, whether you're a for-profit institution, a public institution, a nonprofit institution, whether you're engaged in things like mergers and acquisitions. But certainly, I think it's indisputable that these regulations will have a disparate impact on proprietary institutions.
Nicholas Kent (14:19):
And so the things that we are really focusing in on, like you mentioned, is gainful employment, the reestablishment of the gainful employment regulations, 90/10, certainly that is a concern that many of our members are paying attention to. But there are also really important issues that find themselves in other issues that include financial responsibility, the standards of administrative capabilities, what regulations are there that assess whether or not an institution is even able to participate in the federal student aid programs. So there are a lot of wide ranging issues here that we're paying attention to. And pretty much all of the issues, like I had mentioned, are going to impact institutions across the board.
Jason Altmire (15:04):
And on an issue like gainful employment, there's been a lot of discussion about what happened last time and the accountability measures and formula that they used. And in 2014, those decisions were held up in court after a long and contentious legal fight. And some on the committee are using that as justification to continue using the same measures that they used, from just starting from where President Obama left off. What are your thoughts about where they're going to go on gainful employment and what are the specific issues that are being debated?
Nicholas Kent (15:37):
So I think that if you're a higher education policy wonk, I think many of us were really disappointed in the Biden administration's first working paper on gainful employment. They published seven issue papers that dealt with all of these issue, all of the papers, except for gainful employment, included red lines, essentially draft regulatory language that the negotiating committee could see, that they could touch, that they could comment on. Well, they didn't come with that to the first session with regard to gainful employment. This is actually a regulation that has been, as you had mentioned, discussed for over a decade now. There have been various iterations of gainful employment, some which have not survived legal scrutiny, and some that have survived legal scrutiny.
Nicholas Kent (16:23):
And so it was really disappointing since President Biden ran on the promise to bring back gainful employment, that we didn't actually see red line text with the regard to a gainful employment rule, just sort of some leading questions for the committee to consider. So as you had mentioned, the negotiators, I think, had conceptually said to themselves, the 2014 iteration of the gainful employment regulations, the ones that have survived legal scrutiny that were previously ruled back under Secretary DeVos, is the right baseline to think about as we think about a future gainful employment regulation. And I think that that's actually very smart from a strategic standpoint, right? You have regulations that have survived judicial review, they were supported by the research at the time.
Nicholas Kent (17:10):
And it would be sort of full hearty for this administration to develop a new regulation out of whole cloth, and that have to go through, possibly, the litigation and the judicial review for an entirely new rule. So actually starting with the 2014 regulations is a pretty smart consideration for this negotiated rule committee. So what we can expect to see in February is draft language that uses the 2014 regulations as the baseline. Now, I think we all expect that this administration will want to put their touch on the gainful employment role, so we may see additional metrics and additional measures that hold schools accountable, but I think a lot of what we see in February is going to be based on the 2014 regulations.
Jason Altmire (17:56):
Many schools and thought leaders within the proprietary sector are concerned that the gainful employment regulations only applied to proprietary schools and certificate programs across higher education and left about 75% of other schools in higher ed outside of the scope of that regulation, so they're not to be held accountable. They don't have the same accountability measures and their students don't enjoy the same protections as those who are covered under gainful employment. And that's a big issue of contention for the sector.
Jason Altmire (18:32):
We believe that the sector should be held to the same accountability standards as all schools. And we're able to compare data in a way that we weren't eight or 10 years ago. And you can very easily find the high and low performers across sector, and those that are not performing well should be held accountable, and students at those schools should be protected, but the same rules should apply to everybody. Can you explain why the GE, gainful employment, measures are used, why they only apply, from the purposes of the statute, to those schools and how we could, within the scope of the higher education and the authority of the department, expand those in a way that would include all schools?
Nicholas Kent (19:18):
Yeah, it's a great question and it constantly comes up in higher education. So again, going back and looking at the history of gainful employment, we have to go back over a decade. Then, President Obama, was very supportive of holding for-profit colleges accountable for the outcomes of their students. And so policy makers at the time within the Department of Education were looking for statutory authority in order to hold for-profit colleges accountable. And the best that they could come up with was this provision in the Higher Education Act known as gainful employment. The definition of gainful employment is any program at a for-profit college and any non-degree program at public and non-profit institutions as well. And so the statutory authority is very narrowed when it comes to gainful employment programs. And those two words, gainful employment, the Obama administration created hundreds of pages of regulations that really defined what that meant.
Nicholas Kent (20:22):
What did it mean to employ a graduate, gainfully, in a recognized occupation? And so that sometimes is what you will hear policy experts hang their hats on, that we would port accountability for all students at all institutions, but for the statutory authority that is very narrow. And that's a really terrible argument, to be honest with you, right? The Obama administration went out and they looked for statutory authority to be able to do this. And so what is really interesting is that about two years ago, a student advocacy group known as Student Defense, certainly no fan of for-profit colleges, created a issue paper that really talked about how any administration could hold all programs, at all levels, at all institutions accountable using a different type of statutory authority. That statutory authority is in section 454 of the Higher Education Act, and what it does is it is under the direct loan agreement.
Nicholas Kent (21:21):
So any institution that participates in the Direct Loan Program, which are most institutions of higher education that participate in federal student aid programs, could be held accountable for this quality assurance program. And Student Defense argues that under that particular authority, the Secretary of Education would be able to create debt to earnings metrics, and graduation metrics, repayment rate metrics, and et cetera, that would hold all institutions accountable. So essentially, you could pick up the gainful employment measures and metrics, and move them over under this new statutory authority, and hold all institutions accountable. But as you know, Jason, the department sort of refused to entertain this statutory authority.
Nicholas Kent (22:05):
And quite honest with you, they didn't give a great reason as to why. Some conjecture in the higher education community that for-profit colleges are low hanging fruit and that the administration might not have the political will to go up against large institutions like Harvard, and Stanford, and UCLA, where if they were held accountable for the value that they produce for their graduates, that then you're going to have politicians getting involved and members of Congress, and it's going to create a lot of debate in the higher education community about what value really is today for higher education institutions.
Jason Altmire (22:41):
And I think the key issue is there's been enough research, and The Wall Street Journal, first among those who have evaluated this issue with a long series of reports and investigations last year, that demonstrate that the private, nonprofit, and the public institutions, if you look at them and hold them to the same standards of accountability as under gainful employment would likely fail. They would have huge challenges all across the board, hundreds of schools, perhaps thousands, across the country in other sectors. So I think that that is what is most frustrating to folks in the for-profit sector, that if you only apply the rules to one sector, of course, you're going to get a certain outcome, but if you make those same rules apply to everybody, the advocates for those other types of schools might be very surprised at the result. I wanted to, as we move towards closing, just ask the last question about what do you expect the timing of when the final rules will be proposed and then when they would take effect?
Nicholas Kent (23:44):
The Department of Education under this administration is involved, currently, in two rulemaking processes relative to Title IV. One of those just wrapped up last year, where one negotiating committee finished their work in the late fall, early winter, and there's a new negotiated rulemaking committee, the one we're talking about today, primarily, that just finished their first session. So these rules will be sort of trickling out over the next year in the form of proposed rules, so this is what they call a notice of proposed rulemaking. And we expect that the regulations that were negotiated on last year, we're expecting to see those packages sometime in the late spring, so sometime in April or May. And so what the department will do is they will publish a notice of proposed rulemaking. They typically give the public 30, 60 days to comment on those.
Nicholas Kent (24:37):
They take those comments back, respond to them in the form of a proposed rule, and then publish or promulgate final regulations. So we believe that we are likely to see a lot of these regulations that were discussed last year and that are being discussed this year, promulgated on or before November 1 of 2022. And what that means, and it's really important, is that these regulations can take effect as soon as July 1 of 2023. And that may seem like a long time away, but as I had mentioned, a lot of these regulations are really going to be impactful to institutions across this country, and so it's extremely important people are paying attention right now to what's going on with regard to these negotiations and these proposed rules, and not wait until next year when they go into effect.
Jason Altmire (25:25):
That is Nicholas Kent, the senior vice president for Policy and Regulatory Affairs at Career Education Colleges and Universities. And this is the first in a series of podcasts we're going to dedicate to this negotiated rulemaking session. Nicholas is going to join us to host one of those sessions coming up, and we're going to dig a lot deeper into some of these issues. So I wanted to have Nicholas on today to kind of set the table for the next few episodes we're going to have, which is going to look a lot more deeply into several of these issues that we've discussed today. So Nicholas, thank you for being with us today.
Nicholas Kent (25:59):
Thanks for having me.
Jason Altmire (26:01):
Thanks for joining me for this episode of the Career Education Report. Subscribe and rate us on Apple Podcast, Google Play, Spotify, or wherever you listen to podcasts. For more information, visit our website at career.org and follow us on Twitter @CECUed, that's @C-E-C-U-E-D. Thank you for listening.