Policy

ED Approves California Federal Financial Aid Fix

The U.S. Department of Education is allowing California's new process for students receiving federal aid despite a change in ED regulations that would have impacted 80,000 online students.

• By Sara Friedman
• 08/07/19

The U.S. Department of Education has approved a new process developed by the California Department of Consumer Affairs to help online students continue to receive federal financial aid.

Earlier this year, a federal judge ruled that ED must follow through on a 2016 regulation requiring distance education providers to be authorized by each state in which the institution enrolls students. As a result, online students attending schools that failed to meet the authorization requirements could lose their eligibility for federal student aid.

The 2016 Obama-era regulation required states to have a process for online students to make complaints to a state agency about their institutions. This process is necessary for students in each state to qualify for financial aid. Through the California Bureau for Private and Secondary Education, the state did not have a complaint process for nonprofit colleges.

California's fix announced last week will allow students to submit complaints about out-of-state universities directly to the Department of Consumer Affairs — helping provide the accountability that the 2016 regulation was meant to create. This approval of this change will return financial aid eligibility to 80,000 California residents who lost their financial aid due to the federal court ruling.

Diane Auer Jones, principal deputy under secretary at the Education Department, told the Department of Consumer Affairs in an Aug. 2 letter obtained by Inside Higher Ed that ED will accept the fix despite concerns that "certain aspects of the plan do not comply with 2016 regulations." The implementation of the 2016 rules was delayed on May 26, 2019 as a result of court challenges. This reverses a notice issued by ED on July 22 that would have cut off financial aid for California students.

Through ED's 2019 negotiated rulemaking process, the federal agency is planning to change federal laws to provide institutions with greater flexibility to rely on the complaint process developed by each state where the institutions are located. However, the new process has not been implemented yet by ED.

In order "to avoid the disruption in educational programs for California students" and to "provide a bridge for institutions serving the students to the new 2019 regulations," Jones wrote in her letter that "the Department will consider California to have had an acceptable plan in place in place dating back to May 26, 2019."

More information about the California Department of Consumer Affairs fix for students can be found here.