APSCU Files Suit Against U.S. Dept. of Education to Stop Unlawful Regulations

The Association of Private Sector Colleges and Universities (APSCU), on behalf of its more than 1,500 member institutions, today filed a lawsuit in the federal District Court in Washington, DC seeking to block portions of the Department of Education’s October 29, 2010 final regulations, 75 Fed. Reg. 66,832, which impose unlawful and unfair limitations on access to higher education.

"APSCU members believe in fair regulatory oversight to protect students, institutions and taxpayers," said Harris Miller, president and CEO of APSCU. "But these regulations as written are not fair, lawful or workable. We’ve filed this lawsuit to halt the implementation of three specific regulations only after careful consideration and only after our good faith efforts to work with the Department of Education to craft clear, workable rules through the negotiated rulemaking process and the public comment period failed."

"President Obama signed an executive order this week seeking greater stakeholder input and placing heightened reliance on consumer disclosures over government controls. In this case, we have a set of regulations that constitute a classic case of bureaucratic overreach. The President expressed concern about rules that have gotten out of balance, place unreasonable burdens on organizations and could have a chilling effect. If these vague and poorly written regulations are implemented,” Miller said, “they will have a chilling effect on job creation and innovation, forcing our schools to waste resources defending themselves against frivolous lawsuits at the expense of investment in students, faculty, facilities and technology.”

APSCU has filed this suit to protect the more than three million students across America currently investing in their futures by enrolling in private sector colleges and universities. These are typically “nontraditional” students – whether they are working adults, single parents, returning veterans, low-income, minority, first-generation college attendees or other underserved student populations – who are unable to spend several years at a traditional college.

As explained below, the new Department of Education regulations challenged in APSCU’s lawsuit go far beyond lawful regulatory efforts in three areas within the Title IV federal student aid program—state authorization to conduct educational activities within state borders (34 C.F.R. §§ 600.4(a)(3), 600.5(a)(4), 600.6(a)(3), 600.9, and 668.43(b)), employee compensation (34 C.F.R. § 668.14(b)), and misrepresentations to the public (34 C.F.R. §§ 668.71-668.75):

· The State Authorization regulations force states to adopt particular regulatory regimes rather than adopt their own oversight structures. Notably, these regulations impede innovation and make it significantly more difficult for schools to provide students with online and other distance education programs since they require the authorization of every state where any student may be located, rather than relying on the review of the state in which the school is actually located.

· The Compensation regulations contradict the will of Congress, which in 1992 did not prohibit the payment of merit-based salaries. The new regulations eliminate almost 20 years of interpretive guidance on this issue, captured in 12 clarifying regulations in place since 2002. Completely eliminating those regulations introduces substantial confusion and forecloses practices that clearly benefit students, such as tying employee compensation to student graduation rates. This blanket prohibition will lead to a loss of quality employees and curtailed outreach, diminishing the ability of schools to attract those students most likely to succeed.

· APSCU agrees that statements made to intentionally mislead students are unacceptable. The new Misrepresentation regulations permit the Department to impose severe penalties on schools for inadvertent, insignificant, or innocent statements—including such statements made by third party advertising and marketing partners. Such statements need not be material or cause actual damage. Moreover, penalties can be imposed without due process. As a result of these regulations, schools will be forced to provide less information to prospective students out of fear of being held liable for any mistakes that are made.

APSCU believes that in adopting these regulations, the Department has violated the Constitution, the Higher Education Act, and the Administrative Procedure Act. Miller said that if left in place, these regulations will do irreparable harm to students and schools.


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