Higher Learning Commission

On June 16, 2022, the U.S. Department of Education published a Dear Colleague Letter with the subject Written Arrangements Between Title IV-Eligible Institutions and Ineligible Third-Party Entities Providing a Portion of an Academic Program. The Letter should be reviewed in its entirety by all HLC member institutions.

Contractual Arrangement Scenarios That Violate Title IV, Higher Education Act (HEA) Regulations

In the same correspondence, the U.S. Department of Education identified several examples of scenarios in which institutions that were eligible for funds under Title IV of the Higher Education Act of 1965 (as amended) failed to meet federal regulations governing access to those funds in their written arrangements with ineligible entities (that is to say, contractual arrangements) to provide an educational program. These scenarios include:

• Mischaracterizing a written arrangement as offered by the eligible institution;
• Miscalculating the ineligible third party’s portion of a program;
• Classifying third-party instructors as “adjunct faculty” when some portion of their compensation is provided either directly or indirectly by the ineligible entity;
• Assigning so-called “instructors of record” from the eligible institution when instruction is provided by the ineligible entity;
• Serving as an “institution of record” by transcribing hours for an ineligible entity’s program;
• Surrendering academic control over curriculum purchased from an ineligible entity; and
• Partnering with ineligible entities to provide Title IV, HEA funds access for an experience prior to matriculation of a student into conventional studies with the eligible institution (for example, Gap Year programs).

Contractual Arrangements and Distance Education

The U.S. Department of Education reminds institutions that any educational program offered even in part through distance-education coursework is not Title-IV eligible if the institution’s offering of distance education has not first been evaluated and approved by its accrediting agency.

The agency is also required to perform a substantive-change evaluation when an institution offers at least 50% of a program through distance education, enrolls at least 50% of its students through distance education, or offers 50% of its courses through distance education. Coursework offered through distance education by an ineligible entity can trigger any of the aforementioned requirements.

The U.S. Department of Education admonishes institutions that when they offer programs that will use distance education for the first time through a contractual arrangement, they should ensure that the coursework provided using distance education is not provided by an unaccredited ineligible entity.

Disclosure Requirements for All Third-Party Arrangements

(Both Contractual and Consortial Agreements)

The Dear Colleague Letter reiterates disclosure requirements related to all third-party arrangements. These disclosures, which are to be part of the educational program description, are essential if institutions are to maintain Title IV eligibility for the affected educational programs. These disclosures include:

1. The portion of the educational program that the institution that grants the degree or certificate is not providing;
2. The name and location of the other institutions or organizations that are providing the portion of the educational program that the institution that grants the degree or certificate is not providing;
3. The method of delivery of the portion of the educational program that the institution that grants the degree or certificate is not providing; and
4. Estimated additional costs students may incur as the result of enrolling in an educational program that is provided, in part, under the written arrangement.

(For more information, institutions should review 34 CFR 668.43(a)(12).)

What Institutions Should Do Now

Institutions are strongly encouraged to:

1. Regularly audit their third-party arrangements.
2. Ensure they have correctly accounted for any ineligible entity’s role in the educational program(s) in their contractual arrangements.
3. Confirm they have properly notified HLC or sought HLC approval as needed for contractual arrangements.
4. Validate that none of the impermissible practices cited by the U.S. Department of Education letter are included in their contractual arrangements for any educational program.
5. Determine that all their disclosures related to third-party arrangements (whether contractual or consortial) are complete, up-to-date and otherwise meet federal requirements.

Next Steps for HLC

HLC will examine its review processes for opportunities to further support these considerations and will keep the membership apprised of further developments.

Questions? Contact your HLC staff liaison.