‘State Authorization’ Struck Down

Higher education hates the U.S. Education Department’s recently enacted regulation requiring institutions to seek and gain approval from any state in which they operate, and has fought it on multiple fronts. Late Tuesday colleges and universities got at least a temporary reprieve from the part of the rule to which they most object — its application to online programs in which even one student from a state enrolls. A federal judge voided that part of the regulation in a ruling that otherwise upheld rules the department crafted over the past 18 months to try to protect the integrity of federal financial aid programs.

Tuesday’s ruling by the U.S. District Court for the District of Columbia came in a lawsuit that the Association of Private Sector Colleges and Universities filed in January on behalf of the for-profit colleges it represents. The career college group had challenged the state authorization regulation and two of the other "program integrity" rules — those that effectively bar incentive compensation for recruiters, and that hold colleges accountable if they misrepresent their programs and results.

While many traditional nonprofit colleges strongly opposed the state authorization regulation, they opted not to join the career college group’s lawsuit, hoping instead that Congress would step in to block enforcement of that rule and another creating a federal definition of a "credit hour." The House has done so, but Senate action to follow suit appears unlikely.

But for now, at least, the part of the state approval rule that has drawn the most concern has been voided by the federal court, which upheld the other parts of the department’s regulatory package.

Judge Rosemary M. Collyer disregarded the private-sector-college group’s arguments that the Education Department had exceeded its authority in enacting the incentive compensation and misrepresentation regulations and that the rules are "arbitrary and capricious."

"While APSCU is understandably frustrated at its inability to provide merit-based pay increases to recruiters based on the easiest to measure and, arguably, most logical merit metric — numbers recruited — that does not mean the regulations are themselves impermissible interpretations of the [Higher Education Act] or otherwise unreasonable, especially in light of congressional concerns with recruitment practices," the judge wrote regarding the incentive compensation rule.

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