C-RAC Letter to ED on NPRM, Closed School Discharge
August 12, 2022
Mr. Jean-Didier Gaina
U.S. Department of Education
400 Maryland Ave. SW,
Washington, D.C. 20202
Re: Docket ID number ED-2021-OPE-0077, Student Assistance General Provisions, Federal Perkins Loan Program, Federal Family Education Loan Program, and William D. Ford Federal Direct Loan Program.
On behalf of the Council of Regional Accrediting Commissions (C-RAC), a collective of organizations responsible for the accreditation of roughly 3,000 of the nation’s colleges and universities, I am writing in response to the notice of proposed rulemaking (NPRM), which covers student loans and affordability issues, published in the Federal Register by the U.S. Department of Education (the Department) on July 13, 2022.
C-RAC is generally supportive of the Department’s efforts to update and expand protections for student borrowers through this NPRM. However, we urge the Department to consider modifications to the current language with respect to the proposed streamlining of student eligibility requirements for closed school discharges related to what the Department would consider a “closed school” and when it would consider an institution “closed”. Heather Perfetti, President of Middle States Commission on Higher Education (MSCHE) and Vice-Chair of C-RAC, represented accreditors during the negotiated rulemaking process and raised these issues on several occasions. Specifically, she noted instances where an institution has planned a responsible merger resulting in a stronger institution in order to ensure quality in a changing educational environment. C-RAC does not believe that in such cases - and where there is preservation of mission, programs, faculty, and services - that an institution should automatically face the same consequences. This is in stark contrast to when an institution unexpectedly or irresponsibly closes its doors without protecting student expectations.
This line of reasoning was reflected in the NPRM as follows: "…, one of the non-Federal negotiators made the point that each school closure is unique, and that while there are many examples of schools that have not handled closure well, some schools do effectuate an orderly, planned closure. This negotiator stated that school closure is not necessarily a sign that the quality of instruction at the school has deteriorated and that there can be unique transactions such as mergers, consolidations, or acquisitions that end with an institution officially closing, but prior to the closure the school was still in good standing. According to the negotiator, the transaction that resulted in the school closure may have been intended to result in a stronger institution, and schools that close under these circumstances are likely to have established effective teach-out programs or to have ensured that their credits are transferable to another institution.”
To address these situations, C-RAC urges the Department to consider adding flexibility for determining what would constitute “closure” for purposes of loan discharges. Under such process, the Secretary, in consultation with accreditors and the State in which such institution is located, would make a case-by-case determination in identifying a true “closure” vs. another situation such as an approved merger or acquisition where a discharge may not always be warranted. In making such determination, the Secretary would consider factors such as the extent to which students attending the institution are able to continue in their academic program through an accreditor-approved teach-out agreement and have access to the same faculty, classrooms, facilities, and academic resources.
In addition to clarifying the definition of closed school, equally important is the determination by the Department of the specific date in which an institution is considered closed, as this has significant ramifications as well. Proposed §§ 674.33(g)(1)(ii)(A), 682.402(d)(1)(ii)(A), and 685.214(a)(2)(i) would specify that, “for purposes of a closed school discharge, a school’s closure date is the earlier of the date that the school ceases to provide educational instruction in most programs, as determined by the Secretary, or a date chosen by the Secretary that reflects when the school had ceased to provide educational instruction for most of its students.” (Under current regulations, an institution is considered closed on the “date that the school ceases to provide educational instruction in all programs, as determined by the Secretary.”)
Although the proposed regulations maintain the ability of the Secretary to make the determination of the date of closure, C-RAC believes having the point of closure tied to an undefined concept of when most programs cease conflicts with current accreditation and state practices and, specifically, with the date when accreditation is likely to end for an institution. If interpretations and publications of closure dates differ among the regulatory triad, and are used for different purposes, C-RAC believes this will only serve to create confusion for students and the public.
C-RAC reiterates here the request put forth during negotiated rulemaking as it pertains to information sharing with accreditors, in particular relating to closed schools. If the date of closure will be tied to when most programs are no longer offered by the institution, or a date determined by the Secretary, communication protocols will need to be strengthened to make this date clear to the other members of the regulatory triad.
C-RAC appreciates the opportunity to respond to this NPRM and asks the Department to consider these views in developing final regulations.
Jamienne S. Studley
Jamienne S. Studley Chair, Council of Regional Accrediting Commissions President, WSCUC