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What Young People Need to Know About Negotiated Rulemaking

Ernest Ezeugo is the Higher Education and Workforce Policy and Advocacy Director at YI. This week, Ernest is serving on a negotiated rulemaking committee with the Department of Education. Here, Ernest answers some questions and what this means and why it matters.

Negotiated rulemaking. I’ve never heard of this before. Can you tell me what it is?

To understand what negotiated rulemaking is, it’s worth zooming out briefly and recalling the functions of the legislative and executive branches of government. The legislative branch–Congress–makes the law. It’s up to the executive branch–in this case, the U.S. Department of Education–to carry out the law. And to carry out the law, it must be interpreted. 

Easy enough, right? Except sometimes the law is written in ways that can be unclear or ambiguous. This is traditionally cleared up in the regulatory process, where federal agencies create rules by which they will implement policies established by Congress. This is where negotiated rulemaking comes in.

Negotiated rulemaking is a process where a federal agency creates a proposed rule based on the input of a committee composed of the stakeholders said proposed rule would affect. The agency itself participates as a member of the committee along with other representatives (known as negotiators), and the committee itself is managed by a neutral facilitator. 

While other agencies have an option in using negotiated rulemaking to develop new rules, the Department of Education is unique in that the Higher Education Act requires it to use negotiated rulemaking in developing rules related to “student financial assistance programs” (work-study, grant programs like Pell, and federal student loans to name a few). 

The purpose of negotiated rulemaking is to give all parties affected by a proposed rule the chance to share concerns, offer ideas, and reach agreement on how a rule might look before it enters the traditional regulatory process. As such, negotiated rulemaking committees vote on proposed regulatory language (rule text) with the goal of reaching general agreement, or consensus. If even one negotiator votes ‘no’ on a rule, the rule doesn’t reach consensus.

If a negotiated rulemaking committee reaches consensus on a proposed rule, the federal agency is required to use the rule’s agreed-upon language when developing its regulation. For proposed rules that don’t meet consensus, the federal agency can use areas where negotiators agree and any information learned during the negotiation process to draft a new rule, but is not required to use either.

Wow. So how does this process impact my life as a college student and a student loan borrower?

Great question! In the traditional regulatory process, a federal agency is only required to publish a proposed rule and give the public the opportunity to comment on it. There is little to no public involvement in the drafting process on the front end, and by the time a proposed rule enters the public comment stage, the proposing agency usually already knows what it wants to do with it. 

By requiring the input of people affected by proposed rules as part of the drafting process, negotiated rulemaking is one of the few processes where the public can have direct say and impact on what a rule looks like from the beginning. In the case of federal student aid programs, this means that it’s one of the few official ways that students and loan borrowers can have a say in how regulations related to student loans and other college affordability programs are designed.

How did you become a lead negotiator? How many others are there and who do they represent?

Negotiators have to be nominated to negotiated rulemaking committees by organizations that fit the criteria of the stakeholder groups that an agency is looking for. I was nominated by Young Invincibles, and my nomination was supported by several of our partner organizations. The Department of Education confirmed my participation, and that’s how I was chosen. 

There are 26 other non-federal negotiators on the Institutional and Programmatic Eligibility committee for this negotiated rulemaking, representing 14 “seats,” or stakeholder groups. Save for the Civil Rights Organizations seat, which was added to the committee in the first week of negotiations, each seat has a primary and an alternate negotiator. I am the primary negotiator for Students and Student Loan Borrowers. The other seats represent the following constituencies:

  • Accrediting Agencies
  • Consumer Advocacy Organizations
  • Civil Rights Organizations
  • Financial Aid Administrators at Postsecondary Institutions
  • Four-Year Public Institutions of Higher Education
  • Legal Assistance Organizations that Represent Students and/or Borrowers
  • Minority-Serving Institutions
  • Private, Nonprofit Institutions of Higher Education
  • Proprietary Institutions of Higher Education
  • State Attorneys General
  • State Higher Education Executive Officers, State Authorizing Agencies, and/or State Regulators of Institutions of Higher Education and/or Loan Servicers
  • Students and Student Loan Borrowers
  • Two-Year Public Institutions of Higher Education
  • U.S. Military Service Members, Veterans, or Groups Representing Them

So what will be the big topics this week? Can you explain them to me?

The current negotiated rulemaking centers issues of accountability for institutions and programs that receive money from federal student aid programs. Notably, the topics of this negotiated rulemaking focus largely (but not only) on Gainful Employment programs (“generally all programs at for-profit institutions and any non-degree programs at public or private nonprofit institutions”). The committee will vote on the following topics: 

  • Ability to Benefit, a program that allows students who don’t have a high school diploma to use federal financial aid to pursue a higher education;
  • Administrative Capability, a set of standards that determine whether institutions have the resources necessary to meet requirements that allow them to receive federal financial aid;
  • Gainful Employment, a set of metrics that help ensure that career programs receiving federal financial aid dollars are equipping students to be employed in quality jobs that pay enough for them to appropriately repay any debts they incurred;
  • Financial Responsibility, a set of metrics that ensure that institutions of higher education have the financial means to remain in operation;
  • Change of Ownership/Control, a set of standards that help clarify what happens when institutions change ownership or change to different tax-designations (such as from for-profit to non-profit). 
  • Certification Procedures, detailing the specific agreements institutions have to enter with the Department of Education to become eligible for receiving federal financial aid dollars;
  • And 90/10, a rule that prohibits for-profit institutions from receiving more than 90% of their revenue from federal financial aid programs by requiring that they have to receive at least 10% of their revenue from private funding. 

For a deeper dive on these topics and what’s at stake, see this helpful summary by New America. 

What happens next after the meetings are concluded? 

After negotiated rulemaking ends this week, the Department of Education will receive a report summarizing the discussion on each of the issues, including whether or not a particular issue reached consensus. The Department will then use what it learned from the committee’s discussion to write the rules that will then follow the traditional regulatory process. 

In a few months, the rules will go through a process called Notice of Proposed Rulemaking (NPRM) where they will be posted publicly to the Federal Register and then opened up to a period where the general public can comment on them. Historically, the public comment period for issues and topics presented during negotiated rulemaking has been the best opportunity for students to engage directly with the rulemaking process. Young Invincibles will be organizing efforts that give students guidance on how to provide public comment, so stay tuned.