United States: U.S. Department Of Education And State Of California Attempt To Reach Accord To Restore Title IV Eligibility To California Residents Enrolled In Distance Education Courses Offered By Out-Of-State Public And Nonprofit Institutions

Last Updated: August 8 2019
Article by Greg Ferenbach and Michelle Tellock

As widely reported in the news and as discussed in our recent webinar, on July 22, 2019, the U.S. Department of Education (ED) notified institutions that, as a result of the U.S. District Court ruling in NEA v. DeVos, ED's 2016 regulations concerning state authorization and other related matters (2016 Final Regulations) took effect on May 26, 2019.

ED's announcement concerning California's noncompliance

Under the 2016 Final Regulations, Title IV-eligible institutions are not authorized to disburse federal student aid to students enrolled in distance education courses who are residents of states that do not have a state process to review and take appropriate action on complaints from those students (or, in the alternative, do not participate in a state authorization reciprocity agreement that addresses the issue). In the July 22 Electronic Announcement, ED singled out the state of California, which had failed to establish a process to manage complaints concerning out-of-state public and nonprofit institutions offering distance education courses to California residents. (California has a complaint process for out-of-state for-profit institutions that are registered with the state's Bureau for Private Postsecondary Education, which are not impacted by ED's action). California has not joined the State Authorization Reciprocity Agreement (SARA).

Specifically, ED stated in its official guidance: "[S]tudents residing in California receiving distance education or correspondence courses from out-of-state public or nonprofit institutions are ineligible for Title IV programs until such time as the State of California provides those institutions with an appropriate complaint process or enters into a reciprocity agreement."

ED's guidance has created a serious issue for many public and nonprofit institutions offering programs in California, resulting in the disruption of Title IV aid to approximately 80,000 students enrolled in distance education courses.

California's proposed solution

On Friday, July 26, the state of California responded by establishing a new complaint process allowing students enrolled in out-of-state public and nonprofit institutions to file complaints through the state's Department of Consumer Affairs. While the Department of Consumer Affairs said that it "expects that the ED will find the proposed process satisfactory," ED so far has not indicated whether it believes California's process satisfies the requirements of the 2016 Final Regulations. ED officials have said they "appreciate California's effort" and "will continue to work with them in order to protect students."

Other options for resolution

If ED and California are unable to reach an agreement regarding the student complaint requirement, there are several other ways forward:

  • ED has already proposed new rules that would eliminate this specific issue, because those proposed rules would not require institutions to document state-level complaint processes for distance education programs as the 2016 Final Regulations do. The proposed rules are currently expected to come into effect in July 2020, but ED potentially could accelerate the implementation of these new rules and allow institutions the discretion to adopt them early, as ED recently did with the gainful employment regulations.
  • The courts could resolve the matter if, for example, they permit the district court's decision to be stayed, and for the 2016 Final Rules not to take effect, pending resolution of ED's appeal to the Court of Appeals for the Ninth Circuit.
  • California could join SARA, as every other state has done, thereby eliminating the problem by allowing institutions to rely on the SARA complaint process.
  • Congress could intervene.

What to do in the meantime to comply with the 2016 Final Regulations

Unfortunately, any of these other solutions may take some time. So, if ED and California do not announce a solution soon, what should institutions do?

  • First, try not to panic. ED has not indicated that institutions have to return Title IV aid already disbursed for the period of time from when the 2016 Final Rules became effective until the date of ED's announcement (i.e., May 26, 2019-July 22, 2019), nor has ED issued guidance about whether it has concerns about states other than California. Institutions should continue to monitor related developments, including watching for further guidance from ED, as this is a rapidly evolving situation.
  • Second, make an operational plan, starting with evaluating how many students are affected at your institution (i.e., How many California residents are enrolled in distance education courses? How many of those are otherwise eligible for Title IV aid?) – including both current students and prospective students in the recruitment and application pipeline.
  • Third, until the situation has been resolved, out-of-state public and nonprofit institutions should not disburse any further Title IV aid to California residents implicated by ED's guidance. Institutions should also communicate clearly with current and prospective students to alert them that the institution currently cannot process Title IV aid. While it is still permissible to enroll affected students and, if your institution decides to do so, to allow them to carry a balance on their account in anticipation of restoration of Title IV eligibility at some point during the academic term, institutions must determine the best way to communicate with students about the risks involved in proceeding with their enrollment when the availability of Title IV aid is uncertain. Moreover, institutions should consider what will happen if Title IV eligibility is not restored by the end of the term (e.g., Will a balance on the student's account be converted to an institutional loan or institutional grant?). Institutions might also work with students to identify temporary or alternate sources of funding, such as private education loans or income share agreements, if available.
  • Finally, be aware that the 2016 Final Rules now in effect and the proposed 2019 rules likely to take effect in 2020 (if not before) are complex and require new consumer disclosures, particularly regarding programs leading to professional licensure. Institutions need to comply with the disclosure requirements under the 2016 Final Rules now and also be prepared to comply with a different set of rules once the proposed 2019 rules are finalized.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions