Why Is Education Department Afraid of Innovation in Higher Ed?

The Daily Signal

Adam Kissel

October 19, 2023

Online learning has revolutionized higher education, but a recent move by the federal Department of Education is threatening to tear down systems that are helping millions of students learn.

An extremely wide diversity of students choose to take online courses or to get entire online degrees. Colleges that offer them need to be nimble as the economy changes, yet traditional colleges are slow to change, and they often lack the expertise and funding to develop and manage online courses independently.

That’s a key reason online program management companies have sprung up to serve the need, working with colleges to help students.

Yet the Department of Education, apparently allergic to profit of any kind, earlier this year swept online program management companies and a vast array of other providers into its “third-party servicer” rule, promising a heavy-handed regulatory regime.

That move has injected deep uncertainty into the entire higher education sector, leading to diminished investment and layoffs in the online program management industry.

The problem is that Congress clearly described what a third-party servicer is, but the Department of Education does not like to stay within the law. The latter specifies that a third-party servicer only includes those that help with “student assistance programs”; that is, with managing students’ financial aid.

The department now argues that even providing a course counts, since a student might get financial aid to take the course. A recruiting service that also notes the existence of financial aid also would count.

All of that is an arbitrary modification of the law to attack online program management companies.

Even worse, the department announced this major change, sweeping a new set of companies into regulation, without actually regulating or negotiating. The department just issued a notice.

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