With the perceived loosening of regulatory controls at the federal level, many states are stepping in with aggressive legislative and regulatory action. Leading the charge is California, where a legislative package of seven new bills has been introduced. We are doing a series of blog posts on these bills, as they may be indicative of a trend that we will see in other states and bear close watching.

Also in the mix is a proposed regulatory change currently open for comment that would impact institutions approved by the California State Approving Agency for Veterans Education (CSAAVE). We start with this proposal because it is only open for comment until March 9.

CSAAVE

The California agency responsible for approving institutions to provide VA funds to students, CSAAVE, has issued a notice of proposed rulemaking that is in the final week of public comment.

This proposed rule updates the definitions relating to, among other things, degree types, accreditation, student outcomes and student aid programs. The proposed rule also creates new conditions for CSAAVE approval, including the submission of student outcomes information, licensing rates, cohort default rates and the state of an institution’s participation in the Title IV federal student financial aid programs.

The headliner for some institutions is new language that would bar them from participation in the state-administered VA programs if they have a failing “composite score” under the U.S. Department of Education financial formula, despite the option to post a letter of credit and to satisfy one of the department’s alternative financial tests. Many institutions that are able to continue to participate in the Title IV federal aid programs by satisfying the department via other pathways, would find that they are excluded from the VA programs. This could result in a loss of program access for veteran students, as well as seriously damaging an institution’s financial situation.

The proposed rule does not suggest any alternatives or any timeline to phase in this new requirement.

We encourage institutions currently approved by CSAAVE to carefully review the proposed rule and submit comments as directed by 5:00 PM PST on March 9. This is a proposal where informed public comment could really make a difference. Please feel free to contact any of us to discuss the particulars.

California Legislature

On February 22, the California Assembly introduced seven new bills (AB1340 through 1346) that would substantially impact institutions operating in California under the approval of or through registration with the Bureau for Private Postsecondary Education (BPPE).

These bills, all authored by the same group of six Democrats, are organized as a package targeting the proprietary sector. These bills have not yet been assigned to committee, but we expect the majority of the bills will start in the Assembly Higher Education Committee, where they will come under debate and likely major revision. At the moment, there are no comparable bills on the California Senate side.

Note the potentially broad impact of any bill that governs institutions that have either BPPE authorization or registration. The reference to registration captures many out-of-state institutions that enroll California residents in their online programs. The bill impacting the registration process for out-of-state schools (AB1344) will be discussed in a future blog post, but the preview is that it would require registered institutions to… (continue reading)