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112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    112-177

======================================================================



 
          PROTECTING ACADEMIC FREEDOM IN HIGHER EDUCATION ACT

                                _______
                                

 July 22, 2011.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

     Ms. Foxx, from the Committee on Education and the Workforce, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 2117]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Education and the Workforce, to whom was 
referred the bill (H.R. 2117) to prohibit the Department of 
Education from overreaching into academic affairs and program 
eligibility under title IV of the Higher Education Act of 1965, 
having considered the same, report favorably thereon with an 
amendment and recommend that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Protecting Academic Freedom in Higher 
Education Act''.

SEC. 2. REPEAL OF REGULATIONS RELATING TO STATE AUTHORIZATION AND 
                    DEFINING CREDIT HOUR.

  (a) Regulations Repealed.--
          (1) Repeal.--The following regulations (including any 
        supplement or revision to such regulations) are repealed and 
        shall have no legal effect:
                  (A) State authorization.--Sections 600.4(a)(3), 
                600.5(a)(4), 600.6(a)(3), 600.9, and 668.43(b) of title 
                34, Code of Federal Regulations (relating to State 
                authorization), as added or amended by the final 
                regulations published by the Department of Education in 
                the Federal Register on October 29, 2010 (75 Fed. Reg. 
                66832 et seq.).
                  (B) Definition of credit hour.--The definition of the 
                term ``credit hour'' in section 600.2 of title 34, Code 
                of Federal Regulations, as added by the final 
                regulations published by the Department of Education in 
                the Federal Register on October 29, 2010 (75 Fed. Reg. 
                66946), and subsection (k)(2)(ii) of section 668.8 of 
                such title, as amended by such final regulations (75 
                Fed. Reg. 66949 et seq.).
          (2) Effect of repeal.--To the extent that regulations 
        repealed by paragraph (1) amended regulations that were in 
        effect on June 30, 2011, the provisions of the regulations that 
        were in effect on June 30, 2011, and were so amended are 
        restored and revived as if the regulations repealed by 
        paragraph (1) had not taken effect.
  (b) Regulations Defining Credit Hour Prohibited.--The Secretary shall 
not promulgate or enforce any regulation or rule that defines the term 
``credit hour'' for any purpose under the Higher Education Act of 1965 
on or after the date of enactment of this section.

                                PURPOSE

    H.R. 2117, the Protecting Academic Freedom in Higher 
Education Act, reduces the federal government's overreach into 
postsecondary academic affairs and helps increase access to 
higher education for our nation's most disadvantaged students. 
It protects the academic autonomy of institutions of higher 
education and restores the authority of states and accrediting 
agencies over our nation's higher education system. The bill 
repeals the state authorization regulation, one piece of the 
credit hour regulation and prohibits the Secretary of Education 
from defining ``credit hour'' in the future.

                            COMMITTEE ACTION

    As the Committee on Education and the Workforce continues 
to evaluate the appropriate role of the federal government in 
education, we are committed to ensuring that students are 
afforded the freedom to choose institutions of higher education 
that best meet their unique needs, and colleges and 
universities are protected from unnecessary and burdensome 
federal regulatory schemes.

                             112TH CONGRESS

Hearings

    On Tuesday, March 1, 2011, the Committee on Education and 
the Workforce held a hearing in Washington, DC, on ``Education 
Regulations: Weighing the Burden on Schools and Students.'' The 
hearing was the first in a series examining the burden of 
federal, state, and local regulations on the nation's education 
system. The purpose of the hearing was to uncover the damaging 
effects of federal regulations that increasingly stifle growth 
and innovation, raise institutions' operating costs, and limit 
student access to affordable colleges and universities 
throughout the nation. Testifying before the Committee were: 
Mr. Gene Wilhoit, Executive Director, Council of Chief State 
School Officers, Washington, DC; Dr. Edgar Hatrick, 
Superintendent, Loudoun County Public Schools, Ashburn, 
Virginia; Mr. Christopher B. Nelson, President, St. John's 
College, Annapolis, Maryland; and Ms. Kati Haycock, President, 
The Education Trust, Washington, DC.
    On Friday, March 11, 2011, the Committee on Education and 
the Workforce Subcommittee on Higher Education and Workforce 
Training held a hearing in Washington, DC, on ``Education 
Regulations: Federal Overreach into Academic Affairs.'' The 
purpose of the hearing was to discuss the most egregious and 
intrusive pieces of the U.S. Department of Education's program 
integrity regulations--the state authorization regulation and 
the credit hour regulation--and uncover their unintended 
consequences on states and institutions of higher education. 
Testifying before the Subcommittee were: Mr. Ralph Wolff, 
President, Western Association of Schools and Colleges, 
Alameda, California; Mr. John Ebersole, President, Excelsior 
College, Albany, New York; Dr. G. Blair Dowden, President, 
Huntington University, Huntington, Indiana; and the Honorable 
Kathleen Tighe, Inspector General, U.S. Department of 
Education, Washington, DC.

Legislative Action

    On Friday, June 3, 2011, Rep. Virginia Foxx (R-NC) and Rep. 
John Kline (R-MN) introduced H.R. 2117, the Protecting Academic 
Freedom in Higher Education Act. The bill repeals the state 
authorization regulation, one piece of the credit hour 
regulation and prohibits the Secretary of Education from 
defining ``credit hour'' for any purpose under the Higher 
Education Act of 1965.
    The Committee on Education and the Workforce considered 
H.R. 2117 in legislative session on Wednesday, June 15, 2011, 
and reported it favorably, as amended, to the House of 
Representatives by a bipartisan vote of 27-11. The Committee 
considered and adopted the following amendment to H.R. 2117:
     Rep. Virginia Foxx (R-NC) offered an amendment in 
the nature of a substitute to add a short title to the 
legislation. The amendment was adopted by voice vote.
    The Committee further considered the following amendments 
to H.R. 2117, which were not adopted:
     Rep. Raul Grijalva (D-AZ) offered an amendment to 
maintain pieces of the state authorization regulation, 
including the complaint process, strike the repeal of the state 
authorization regulation, except for the portion to create a 
complaint process, and the requirement for authorization by 
name. The amendment failed by a vote of 17-22.
     Rep. George Miller (D-CA) offered an amendment to 
prohibit implementation of the Act until the U.S. Department of 
Education's Inspector General certifies there are equal or 
greater protections in place related to program integrity under 
Title IV of the Higher Education Act of 1965. The amendment 
failed by a vote of 17-22.
     Rep. Rush Holt (D-NJ) offered an amendment to 
stipulate that the Act will be effective only if the maximum 
Pell Grant award is at least $5,550 for the 2012-2013 school 
year. The amendment was ruled out of order.
     Rep. Tim Bishop (D-NY) offered an amendment to 
strike the repeal of the credit hour regulation that 
establishes a federal definition of a ``credit hour.'' The 
amendment failed by a vote of 11-27.
     Rep. Tim Bishop (D-NY) offered an amendment to 
strike the prohibition on the Secretary of Education from 
defining credit hour in the future. The amendment failed by a 
vote of 16-22.
    Below is a summary of H.R. 2117.

                                SUMMARY

Short title

    Section 1 establishes the short title of the bill as the 
Protecting Academic Freedom in Higher Education Act.

Regulations repeal

    Section 2 repeals the U.S. Department of Education's state 
authorization regulation and the regulation that creates a 
federal definition of ``credit hour.'' This section also 
includes a prohibition on the Secretary of Education from 
creating a federal definition of credit hour.

                       SUMMARY OF THE REGULATION

    State Authorization. Under the Higher Education Act of 
1965, an institution of higher education seeking to participate 
in federal student assistance programs must be authorized to 
provide a postsecondary educational program within a state. 
Historically, the U.S. Department of Education has allowed 
states to determine what requirements institutions of higher 
education must meet in order to carry out this requirement. The 
new federal regulation mandates the following:
     Established by Name. States must establish an 
institution of higher education by name. The institution that 
is established by name must comply with all applicable state 
approval or licensure requirements, unless exempted by the 
state based on its accreditation or that it has been in 
operation for at least 20 years.
     Exemption if Institution is Established as a 
Business or Charity. If a state establishes an institution of 
higher education as a business or charity (not established by 
name), the institution must be approved or licensed to offer 
postsecondary programs and may not be exempt from the approval 
process based on accreditation, years in operation, or other 
comparable exemption.
     Impact on Religious Institutions. States may 
exempt religious institutions from state authorization 
processes by nature of their religious affiliation. A 
``religious institution'' is narrowly defined as one that that 
is ``owned, controlled, operated, and maintained'' by a 
religious corporation and awards only religious degrees or 
certificates. The definition is extremely narrow.
     Complaint Process. States must have a process in 
place to review and act on complaints about the institution of 
higher education. Currently, all accrediting agencies must have 
a process to review and act on complaints and many states lack 
a system to address complaints from students.
     Distance Education. An institution of higher 
education offering distance education courses must be able to 
document that it is authorized by any state in which it would 
otherwise be subject to state jurisdiction. The U.S. Department 
of Education issued a Dear Colleague letter stating that it 
will not enforce this provision until July 1, 2014, for 
institutions making ``good faith efforts'' to comply with the 
regulation.
     Disclosure. An institution of higher education 
must disclose to students and prospective students information 
about filing complaints with an accrediting agency, a state 
approval or licensing agency, and any other appropriate state 
agency.
    Federal Credit Hour. Under Title IV of the Higher Education 
Act of 1965, federal student aid is awarded to students based 
on the number of academic credits in which they are enrolled 
each term. Historically, the U.S. Department of Education has 
relied on accrediting agencies to oversee how an institution of 
higher education defines a credit hour and assigns a specific 
number of credit hours to each course. The new federal 
regulation creates a federal definition of a credit hour, under 
which an institution of higher education has only two ways to 
ensure its students are enrolled in classes and earning the 
required credit hours. Under the first option, an institution 
must base its credit hour off of the ``Carnegie Unit,'' the 
traditionally accepted definition for one credit hour. Under 
this metric, one credit hour equals one hour of lecture and two 
hours of out-of-class work for approximately 15 weeks for one 
semester or trimester or 10 to 12 weeks for one quarter. Under 
the second option, an institution must demonstrate an 
equivalent amount of coursework as required by the first option 
for other academic activities, such as laboratory work, 
internships, and practice, as established by the institution.

                            COMMITTEE VIEWS

    In October 2010, the U.S. Department of Education released 
a package of regulations to purportedly improve the integrity 
of federal student financial assistance programs. Two of these 
so-called ``program integrity regulations''--the state 
authorization and credit hour regulations--inject the federal 
government into traditionally academic and state affairs. The 
burdens of these two regulations, as well as other statutory 
and regulatory requirements, tax the resources of colleges and 
universities, making it difficult for these entities to focus 
on their true mission of educating students.

History of examining regulatory red tape

    The Committee has long championed bipartisan efforts to 
examine the regulatory burden imposed by the federal government 
on colleges and universities. In 2001, the Committee introduced 
a first-of-its-kind, web-based tool to enable higher education 
stakeholders across the nation to get involved in identifying 
ways to reduce red tape and bureaucracy for students, financial 
aid personnel, and colleges and universities. Known as the FED 
UP project, this bipartisan initiative, developed by Rep. 
Howard P. ``Buck'' McKeon (R-CA) and the late Rep. Patsy Mink 
(D-HI), was instrumental in fostering a more efficient and 
effective federal student aid system. The project solicited 
suggestions from the higher education community as to which 
provisions in the Higher Education Act, and corresponding 
regulations, should be changed or eliminated and why. More than 
3,000 responses were received from loan professionals, 
financial aid officers, students, higher education 
associations, and concerned citizens. Congress and the 
Department of Education used the suggestions from this project 
to streamline regulatory and reporting requirements in 2002.
    The 2008 reauthorization of the Higher Education Act, the 
Higher Education Opportunity Act (HEOA), also included efforts 
to examine the federal regulatory burden on institutions of 
higher education. The HEOA required the Advisory Committee on 
Student Financial Assistance to solicit comments from personnel 
working at colleges and universities about federal regulatory 
burdens and how to address them.\1\ The HEOA also required the 
National Research Council at the National Academy of Sciences 
to conduct a study to examine the regulatory burden on 
institutions of higher education.\2\ The Committee is currently 
awaiting the results of both efforts.
---------------------------------------------------------------------------
    \1\Higher Education Opportunity Act Sec. 492(a)(2)(F).
    \2\Higher Education Opportunity Act Sec. 1106.
---------------------------------------------------------------------------

Recent efforts to examine regulatory red tape

    In the 112th Congress, the Committee has continued its 
efforts to streamline the federal regulatory burdens imposed on 
states, institutions of higher education, school districts, 
schools, and other entities impacted by the programs under its 
jurisdiction. In furtherance of this goal, the Committee held a 
number of hearings that examined the regulatory burden imposed 
on schools, institutions, and students by the federal 
government. During these hearings, college presidents, 
accrediting agency heads, and students testified about the cost 
of complying with burdensome, overreaching federal laws and 
regulations. For example, the President of St. John's College, 
Christopher Nelson, testified about the harmful impact of 
excessive regulations on colleges and universities:

          The cost of compliance is large for institutions of 
        all sizes, but particularly so for a school of our size 
        that has no office of institutional research or staff 
        dedicated to support that function. This means that 
        literally dozens of people on our campus, myself 
        included, assume this burden as part of our daily 
        work.\3\
---------------------------------------------------------------------------
    \3\``Education Regulations: Weighing the Burden on Schools and 
Students,'' hearing before the House Committee on Education and the 
Workforce, 112th Congress, 1st Session (March 1, 2011) (oral testimony 
of Christopher Nelson).

    Mr. Nelson went on to discuss how the time spent by his 
faculty and other staff on reporting and compliance affects 
---------------------------------------------------------------------------
their ability to educate:

          When I step back from the mass of the more mundane 
        record-keeping, reporting, and compliance environment, 
        I try to see what the effect of all this is on our 
        principal task, fulfilling our educational mission for 
        the sake of our students. Every diversion or 
        distraction from these primary purposes weakens our 
        best attempts to achieve those ends.\4\
---------------------------------------------------------------------------
    \4\Ibid.

    Finally, he offered a worthwhile suggestion, ``As new 
requirements are created, get rid of some of the old at the 
same time. The concept would be something along the lines of a 
pay-go system for regulation that could be applied both to 
regulatory requirements and to data collection.'' The Committee 
believes this is a sensible suggestion that the U.S. Department 
of Education should consider as it enters into future 
negotiated rulemaking sessions to improve student aid programs. 
Our goal should be to reduce, not increase burdens.

The state authorization regulation will jeopardize college access and 
        completion

    The Committee believes the new state authorization 
regulation imposes a one-size-fits-all requirement that will 
harm students and public and private schools. In issuing the 
regulation, the federal government is overstepping its 
traditional role of utilizing the knowledge and expertise of 
states and accrediting agencies to measure and ensure 
institutional quality. The rule also infringes on the right of 
states to regulate their higher education systems and will 
likely require them to change how they currently authorize or 
license institutions of higher education to comply with the new 
requirements. Under the Higher Education Act, an institution of 
higher education participating in federal student aid programs 
must be authorized to provide a postsecondary educational 
program within a state.\5\ The state authorization regulation 
micromanages how states comply with this longstanding 
requirement.
---------------------------------------------------------------------------
    \5\Higher Education Act Sec. 101(a)(2).
---------------------------------------------------------------------------
    One of the most troubling aspects of the state 
authorization regulation is its impact on distance education 
programs. Under the rule, institutions of higher education that 
offer distance education programs may be forced to seek 
authorization in each state in which the students it services 
live, no matter how small its presence. These institutions may 
be forced to comply with authorization requirements in multiple 
states, including paying new fees, which will increase the cost 
of providing a high-quality postsecondary education. 
Ultimately, these innovative colleges and universities may 
decide to stop serving students in a particular state, thereby 
denying access to students. Rural states may be the most 
affected by this regulation and an institution's decision to 
forego authorization in states with limited populations.
    In addition, colleges and universities specializing in 
distance education will need to hire additional staff to 
monitor the varying state laws to ensure they are appropriately 
authorized in each state. The rapid expansion of distance 
education demonstrates that colleges and universities are 
utilizing new technology to provide cost-effective ways to 
deliver postsecondary education to students. The state 
authorization regulation would put this new, innovative tool in 
jeopardy, reducing options for students without the resources 
or time to attend a traditional college or university. Fewer 
students with access to postsecondary education mean fewer 
graduates entering the workforce with the skills necessary to 
meet local economic demands.
    During the March 11 hearing, the Subcommittee on Higher 
Education and Workforce Training heard from John Ebersole, 
President of Excelsior College, an online institution of higher 
education. Mr. Ebersole discussed the burden the state 
authorization regulation will impose on his institution:

          We do know we have put money in our budget for 
        compliance and we estimate that at our institution by 
        the time we hire the additional staff that will be 
        necessary to coordinate this and we pay the fees which 
        each of these states requires we are going to have an 
        annual recurring cost of somewhere between $150,000 and 
        $200,000 which when multiplied by the number of 
        institutions that offer online programs today, we are 
        talking about an additional cost which will eventually 
        be passed to students of $500 million.\6\

    \6\``Education Regulations: Federal Overreach into Academic 
Affairs,'' hearing before the House Subcommittee on Higher Education 
and Workforce Training, 112th Congress, 1st Session (March 11, 2011) 
(oral testimony of John Ebersole).
---------------------------------------------------------------------------
    The overriding consequence of the new regulation will be to 
put postsecondary education out of reach for students, many of 
whom are disadvantaged or low-income. In this tough economic 
climate, the federal government needs to put forward policies 
that improve college access and completion, thereby helping to 
put more skilled individuals into the workforce. Instead, it is 
pushing policies that will deny students the ability to gain 
the skills necessary to succeed in the global economy.
    The Subcommittee also heard during the March 11 hearing 
about the negative consequences this regulation could have on 
private or religious colleges. The new federal requirements 
could force states to exercise unprecedented authority over 
private colleges and universities, going far beyond granting 
the authority to operate as postsecondary institutions. Dr. G. 
Blair Dowden, President of Huntington University, highlighted 
his concerns with the new state authorization requirement, 
stating, ``My concern is that there appears to be no limits to 
what factors a state can consider when granting or withholding 
authorization and no mechanisms for appeal or due process.''\7\
---------------------------------------------------------------------------
    \7\``Education Regulations: Federal Overreach into Academic 
Affairs,'' hearing before the House Subcommittee on Higher Education 
and Workforce Training, 112th Congress, 1st Session (March 11, 2011) 
(oral testimony of G. Blair Dowden).
---------------------------------------------------------------------------
    He went on to discuss the extremely narrow definition of 
``religious institution'' included in the regulation and 
pointed out that most religiously affiliated institutions would 
not qualify for the exemption, thereby opening the institution 
up to unwarranted state interference:

          In addition, the possibility exists that certain 
        states may use this new state authorization requirement 
        as leverage to achieve their own higher education 
        policy agenda at the expense of institutional missions. 
        For instance, a state could require a certain 
        curriculum or text books in order to gain authorization 
        potentially violating both the academic prerogatives 
        and religious convictions of the institutions.\8\
---------------------------------------------------------------------------
    \8\Ibid.

    These consequences clearly go beyond the existing federal 
requirement that states grant authority to operate as a 
postsecondary institution within the state--threatening the 
academic freedom and mission of private colleges and 
universities.

The credit hour regulation will shut down innovative programs for 
        students

    The Committee believes the new credit hour regulation, 
which creates a federal definition of credit hour for the first 
time, undermines the traditional role of institutions of higher 
education and may be harmful to students and their colleges and 
universities. By imposing a restrictive set of new requirements 
when measuring coursework, the regulation will stifle 
innovative teaching practices being developed by colleges and 
universities around the country, including accelerated learning 
programs. This will shut down the programs unemployed or 
underemployed workers rely on to gain the skills necessary to 
get back to work, thereby jeopardizing the nation's fragile 
economic recovery.
    While H.R. 2117, the Protecting Academic Freedom in Higher 
Education Act, repeals the federal definition of ``credit 
hour,'' it leaves in place two other components of the credit 
hour regulation. First, it retains the requirements for 
accrediting agencies to review institutional policies on credit 
hour. Second, it leaves in place requirements for states to 
examine institutional policies on credit hour as the state 
decides whether to grant authorization to institutions of 
higher education to operate in their state. These two 
requirements were tentatively agreed to during the U.S. 
Department of Education's negotiated rulemaking session. While 
these remaining items still have their challenges, the affected 
parties agreed to them, and the Act does not change those 
regulations.
    Unfortunately, the federal definition of ``credit hour'' is 
the one issue on which the Department of Education did not 
abide by the tentative agreement reached by the negotiated 
rulemaking panel. In defense of this provision, the Department 
relies on an Inspector General report of the Higher Learning 
Commission (HLC) and its review of American InterContinental 
University,\9\ which was an isolated incident that does not 
represent a systemic problem in accreditation.
---------------------------------------------------------------------------
    \9\``Management Information Report--Review of The Higher Learning 
Commission of the North Central Association of Colleges and Schools' 
Standards for Program Length,'' Office of the Inspector General, U.S. 
Dep't of Education, May 24, 2010.
---------------------------------------------------------------------------
    During the March 11 Subcommittee on Higher Education and 
Workforce Training hearing, Rep. Rob Andrews (D-NJ) asked 
Kathleen Tighe, the Department's Inspector General, whether the 
issues she found in reviewing HLC represented one limited 
incident or a systematic problem and questioned whether the 
federal definition is a solution in search of a problem.\10\ 
The Inspector General pointed out that she had concerns with 
HLC's practices, but that other accrediting agencies her office 
reviewed did not have similar problems. In his testimony before 
the Subcommittee, Ralph Wolff, President of the Western 
Association of Schools and Colleges (WASC) and one of the 
participants in the negotiated rulemaking session, pointed out 
that participants continually asked the Department about the 
problems it was trying to solve. He noted the Department kept 
relying on the isolated incident with HLC without citing any 
other examples, ``We asked repeatedly at the negotiated 
rulemaking, what is the scope of this problem so that we could 
help define a resolution. And we were never told what the scope 
was, beyond this one incident.''\11\
---------------------------------------------------------------------------
    \10\``Education Regulations: Federal Overreach into Academic 
Affairs,'' hearing before the House Subcommittee on Higher Education 
and Workforce Training, 112th Congress, 1st Session (March 11, 2011), 
p. 67.
    \11\Ibid. (oral testimony of Ralph Wolff).
---------------------------------------------------------------------------
    The credit hour is at the heart of an academic decision. 
Institutions develop their credit hour policies and work with 
faculty to determine how many hours should be assigned to each 
course. Accrediting agencies then review each institution's 
policy and assignment of credit hours for the programs. Many of 
these agencies avoid strict standards to maximize flexibility 
in accounting for differing institutional policies and 
developing innovative ways to deliver educational content. 
During the hearing on March 11, the Subcommittee heard from 
numerous presidents of institutions of higher education and 
accrediting agencies who will be forced to comply with the new 
federal credit hour regulations when they go into effect this 
year. Dr. Dowden, President of Huntington University, stated:

          For the credit hour, I think the definition is . . . 
        confusing and how it relates to a variety of 
        educational experiences that we offer at the 
        institution including practicums and student teaching 
        experiences and many other experiences that don't 
        include the formula of seat time and that might be 
        difficult to find out an equivalency as proposed in the 
        regulations.\12\

    \12\``Education Regulations: Federal Overreach into Academic 
Affairs,'' hearing before the House Subcommittee on Higher Education 
and Workforce Training, 112th Congress, 1st Session (March 11, 2011) 
(oral testimony of G. Blair Dowden).
---------------------------------------------------------------------------
    Across the country, institutions like Huntington University 
and Western Governors University (WGU), which uses a 
competency-based model to award credit, are undertaking 
innovative and creative approaches to student learning. The 
Committee believes that the federal government should encourage 
more universities to adopt these models that are improving the 
higher education landscape. Under the federal credit hour 
regulation, WGU's credit hour definitions are relegated to 
exceptions, which could lead to accrediting bodies further 
questioning what they are doing and how they are doing it.

Conclusion

    Instead of protecting students from fraud and abuse, both 
the state authorization and credit hour regulations are clear 
examples of federal overreach into the academic affairs of 
states and public and private institutions of higher education. 
These unnecessary regulations will impose additional regulatory 
burdens on colleges and universities, which could lead to 
higher costs being passed down to low-income and disadvantaged 
students. More importantly, students who are looking to gain 
the skills necessary to succeed in the workforce will be denied 
access to innovative instructional programs that will keep us 
competitive in the global economy.
    H.R. 2117, the Protecting Academic Freedom in Higher 
Education Act, ensures that colleges and universities are able 
to focus their energy and resources on educating students. 
Congress and the Administration should focus on increasing 
educational opportunities for students and streamlining federal 
regulations that inhibit innovation in higher education.

                      SECTION-BY-SECTION ANALYSIS

Section 1. Short title

    States the short title as the ``Protecting Academic Freedom 
in Higher Education Act.''

Section 2. Repeal of regulations relating to state authorization and 
        defining credit hour

    Repeals the state authorization regulation.
    Repeals the definition of the term ``credit hour.''
    Prohibits the Secretary of Education from defining the term 
``credit hour'' for the purposes of carrying out the Higher 
Education Act of 1965.

                       EXPLANATION OF AMENDMENTS

    The amendments, including the amendment in the nature of a 
substitute, are explained in the body of this report.

              APPLICATION OF LAW TO THE LEGISLATIVE BRANCH

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch. H.R. 2117 repeals regulations relating to state 
authorization and defining credit hour under the Higher 
Education Act. H.R. 2117 would have no direct impact on the 
Legislative Branch.

                       UNFUNDED MANDATE STATEMENT

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandates Reform Act, P.L. 104--4) requires a statement of 
whether the provisions of the reported bill include unfunded 
mandates. This issue is addressed in the CBO letter.

                           EARMARK STATEMENT

    H.R. 2117 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of House Rule XXI.

                             ROLLCALL VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee Report to include for 
each record vote on a motion to report the measure or matter 
and on any amendments offered to the measure or matter the 
total number of votes for and against and the names of the 
Members voting for and against.


         STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

    In accordance with clause (3)(c) of House Rule XIII, the 
goal of H.R. 2117 is to repeal regulations relating to state 
authorization and defining credit hour under the Higher 
Education Act. The Committee expects the Department of 
Education to comply with these provisions and implement the 
changes to the regulations in accordance with these stated 
goals.

  STATEMENT OF OVERSIGHT FINDINGS AND RECOMMENDATIONS OF THE COMMITTEE

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the body of this report.

               NEW BUDGET AUTHORITY AND CBO COST ESTIMATE

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause 3(c)(3) of rule XIII of the Rules of 
the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following estimate for H.R. 2117 from the Director of the 
Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 21, 2011.
Hon. John Kline,
Chairman, Committee on Education and the Workforce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2117, the 
Protecting Academic Freedom in Higher Education Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Justin 
Humphrey.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                          Director.
    Enclosure.

H.R. 2117--Protecting Academic Freedom in Higher Education Act

    H.R. 2117 would repeal two regulations published by the 
Department of Education. The first requires institutions of 
higher education to be authorized by the state or states in 
which they offer a curriculum, and the second defines the term 
``credit hour.'' In addition, the bill would prohibit the 
department from defining the term ``credit hour'' after the 
date of enactment.
    CBO estimates that implementing H.R. 2117 would have an 
insignificant effect on discretionary spending. Additionally, 
CBO projects that enacting the bill could affect direct 
spending by increasing eligibility for federal student aid, 
such as student loans and Pell grants; therefore, pay-as-you-go 
procedures apply. However, because only a small number of 
students would be eligible for additional student aid, CBO 
estimates that the direct spending effects would be 
insignificant for each year and over the 2011-2021 period. 
Enacting the bill would have no impact on revenues.
    H.R. 2117 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    The CBO staff contact for this estimate is Justin Humphrey. 
This estimate was approved by Peter H. Fontaine, Assistant 
Director for Budget Analysis.

                        COMMITTEE COST ESTIMATE

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison of the 
costs that would be incurred in carrying out H.R. 2117. 
However, clause 3(d)(2)(B) of that rule provides that this 
requirement does not apply when the Committee has included in 
its report a timely submitted cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 402 of the Congressional Budget Act.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    No changes are made to existing law.

                             MINORITY VIEWS

                              INTRODUCTION

    H.R. 2117 repeals two regulations that are intended to 
better ensure that students and taxpayers receive a quality 
education for their investment, and it fails to offer 
constructive solutions or alternatives to these measures. 
Particularly in a tough budget environment such as the current 
one, laws and regulations to ensure the effective and efficient 
use of taxpayer dollars should be strengthened, not weakened or 
repealed.
    Now more than ever the federal government has an obligation 
to students and taxpayers to ensure that there is a minimum 
standard of institutional eligibility for federal student aid. 
The cost of college continues to skyrocket; on average, in-
state tuition and fees at a 4-year college increased by almost 
8 percent between 2009 and 2010.\1\ Additionally, more students 
are attending college and using federal student aid. In 2011, 
the Department of Education will provide over $170 billion in 
grants, loans, and work-study assistance to students at 
institutions of higher education.\2\ It is imperative that 
federal laws and regulations ensure adequate accountability at 
our institutions of higher education.
---------------------------------------------------------------------------
    \1\Trends in College Pricing 2010, The College Board.
    \2\Department of Education Fiscal Year 2012 Justifications of 
Appropriation Estimates to the Congress.
---------------------------------------------------------------------------

THE ``TRIAD'' REGULATORY STRUCTURE IN HIGHER EDUCATION AND THE FEDERAL 
                                  ROLE

    Title IV of the Higher Education Act (HEA) authorizes the 
federal student aid programs and establishes a regulatory 
structure that includes three actors--the federal government, 
states, and accrediting agencies--known as the ``triad.'' 
Because of concern about federal interference in school 
operations, curriculum, and instruction, the Department of 
Education (the Department) has relied on accrediting agencies 
and States to determine and enforce standards of program 
quality. The HEA recognizes the roles of the federal 
government, states, and accrediting agencies as providing a 
framework for a shared responsibility for ensuring that the 
``gate'' to student financial aid programs opens only to those 
institutions that provide students with quality education or 
training worth the time, energy, and money they invest.
    Although the Department relies on accrediting agencies to 
assess and certify program quality at institutions, the 
Department does perform an important oversight role. In 
particular, the federal government has a direct role in 
ensuring that the student aid programs are properly used by 
institutions and students. As the funder and operator of more 
than $170 billion in student aid,\3\ the federal government has 
a responsibility to ensure that institutions have policies and 
procedures that protect federal dollars, and are acting in the 
best interests of students and the taxpayers.
---------------------------------------------------------------------------
    \3\Ibid.
---------------------------------------------------------------------------
    The two rules repealed by H.R. 2117, the federal definition 
of a credit hour and state authorization, continue to respect 
the triad structure, providing for greater accountability 
through consistent definitions while relying on institutions, 
accreditors, and states as strong partners in ensuring such 
accountability for federal dollars.

                  FEDERAL DEFINITION OF A CREDIT HOUR

    H.R. 2117 repeals the regulatory definition of a credit 
hour and prohibits the Secretary of Education from promulgating 
any future rules that define a credit hour.
    The HEA defines an academic year for an undergraduate 
program as requiring a minimum of 24 semester or trimester 
credit hours or 36 quarter credit hours in a course of 
study.\4\ The amount of student financial assistance that can 
be awarded is based on the number of credit hours earned, but 
the term ``credit hour'' is not defined in the HEA. Therefore, 
the credit hour is not only the basic unit of an academic 
program at an institution of higher education; it is also the 
basic unit underlying the distribution of federal student aid. 
Yet, prior to the October 2010 regulation, this term had never 
been defined for federal aid purposes.
---------------------------------------------------------------------------
    \4\Section 481(a)(2)(A) of the Higher Education Act of 1965, as 
amended.
---------------------------------------------------------------------------
    In recognition of the importance of the ``credit hour'' 
unit as an accounting measure for student financial assistance, 
and in response to Department of Education Office of Inspector 
General (OIG) reports finding that accrediting agencies--which 
are required by the HEA to assess an institution's measure of 
program length--did not have sufficient policies to ensure 
proper assignment of credit hours to educational programs or to 
justify the length of such programs, the Department of 
Education defined a ``credit hour'' in final regulations issued 
October 29, 2010.

       INSPECTOR GENERAL REPORT ON THE HIGHER LEARNING COMMISSION

    On May 24, 2010, the OIG issued a management information 
report of the Higher Learning Commission of the North Central 
Association of Colleges and Schools. The Higher Learning 
Commission (HLC) accredits 1,022 institutions in Arizona, 
Arkansas, Colorado, Iowa, Illinois, Indiana, Kansas, Michigan, 
Minnesota, Missouri, North Dakota, Nebraska, Ohio, Oklahoma, 
New Mexico, South Dakota, Wisconsin, West Virginia, and 
Wyoming. In 2008, institutions accredited by HLC received $27.5 
billion in Title IV funding.
    During the course of its review, the OIG issued a 
preliminary report--or Alert Memorandum--on December 17, 2009 
based on what the OIG believed was a serious issue regarding 
HLC's decision to accredit a particular institution. In 
particular, HLC performed a comprehensive review to evaluate 
American Intercontinental University (AIU) for initial 
accreditation and found issues related to AIU's assignment of 
credit hours to certain undergraduate and graduate programs. 
Peer reviewers found that some courses were being awarded at 
approximately double the amount of credit they were worth. A 
student seeking a Bachelor's of Business Administration at AIU, 
who was enrolled in a 9-credit course that is inflated at twice 
its value, is overpaying by $1,600 ($355 per credit). Despite 
its findings, HLC approved AIU for accreditation on May 14, 
2009. In its Alert Memo, the OIG concluded that HLC's 
accreditation of AIU called into question whether it is a 
reliable authority regarding the quality of education or 
training provided by the institution. The OIG recommended that 
the Department of Education determine whether HLC is in 
compliance with the Department's regulations and, if not, take 
appropriate action to limit, suspend, or terminate HLC's 
recognition by the Secretary.
    The OIG's findings show the ability of an institution to 
use the definition of a credit hour not as an academic measure, 
but as part of a business plan. In this case, AIU was 
overcharging students for their academic preparation and making 
excess profit from the increased student fees, paid in large 
part through federal student aid. Without a safeguard of a 
federal definition of a credit hour, the government can not 
adequately protect students and taxpayers from such abuses.
    The Inspector General testified in front of the Committee 
on two occasions, on June 17, 2010 and March 11, 2011, to 
discuss her findings in this matter. In both instances, she 
expressed the need for a federal definition of a credit hour in 
order to ensure that federal student aid dollars were protected 
from potential waste, fraud, and abuse.

                       THE CREDIT HOUR REGULATION

    The federal definition of a credit hour is necessary to 
ensure that student and taxpayer funds are protected from 
potential waste, fraud, and abuse. The Department of Education 
awards student aid funds based on how many credit hours a 
student is taking in a given semester; therefore the credit 
hour unit is fundamental to the awarding of federal student 
aid. Without a federal definition, there was little 
transparency to ensure that students and taxpayers were 
receiving consistent amounts of federal aid for comparable 
amounts of work at programs within and across institutions.
    The definition in the October 2010 regulation is not a 
departure from the norm. It is based on the commonly accepted 
practice by most institutions of higher education, the Carnegie 
unit, and allows for flexibility at the institutional level. 
While the Carnegie unit is based on classroom and homework 
time, the federal definition includes the ability for an 
institution to define an equivalent alternative measure, 
specifically allowing for innovative and alternative means of 
instruction. Because of this allowance, the regulation will not 
prohibit institutions from offering course credit for 
internships, study abroad, self-study, and other alternative 
means of instruction.
    The flexibility in the federal definition, along with its 
basis in widely accepted practice, will result in minimal or no 
adjustments for most institutions participating in Title IV 
programs, and will still allow institutions the freedom to set 
credit hours for courses using institution-based judgment and 
criteria. The definition recognizes the role of institutions as 
well as that of the accreditors, by ensuring that accreditors--
not the Department--assess the implementation of the federal 
definition.
    Also, it is important to note that the federal definition 
is a minimum standard; institutions may require additional work 
per credit hour than the definition requires, and use separate 
measures of credit hours for their own academic purposes as 
long as they also use a credit hour measure for federal student 
aid programs that meets this regulatory standard.
    By repealing this moderate and flexible definition, H.R. 
2117 significantly undermines accountability, transparency and 
consistency in the awarding of federal student aid at a time 
when more students are attending postsecondary education, using 
more federal student aid, and institutions of higher education 
are growing and adapting to meet student demands.

            PROHIBITING THE SECRETARY FROM FUTURE RULEMAKING

    H.R. 2117 takes a step beyond repealing the particulars of 
federal definition set in the October regulation. The bill 
would prohibit the Secretary of Education from ever providing a 
federal definition of a credit hour. This prohibition would 
hinder the Secretary from addressing current or future issues 
of waste, fraud, and abuse without an act of Congress. Such a 
restriction wouldgreatly limit the Secretary's authority and 
ability to adequately and responsibly operate the federal student aid 
programs in the best interests of students and the taxpayers.

                          STATE AUTHORIZATION

    In order for students at an institution of higher education 
to be eligible for Title IV funds, an institution must be 
legally authorized by a State to provide a program of 
postsecondary education.\5\ This requirement has always been a 
part of the HEA, though there have been few specifics in 
regulations. In its issuance of regulations on October 29, 
2010, the Department specified how it will determine whether an 
institution is authorized by the State.
---------------------------------------------------------------------------
    \5\Sections 101(a)(2), 102(b)(1)(A)(ii)(II)(B), and 103(c)(1)(B) of 
the Higher Education Act of 1965, as amended.
---------------------------------------------------------------------------

                   THE STATE AUTHORIZATION REGULATION

    State laws and regulations are what govern the specific 
requirements for the authorization of institutions of higher 
education in a respective state. The October 2010 federal 
regulation acknowledges states' authority in this area and 
provides that for the purposes of federal student aid, 
institutions must simply be in compliance with what States 
require. Therefore, this regulation provides no new authority 
to states; rather, it makes clear that institutions must abide 
by state standards when operating in a given state.
    As the landscape of higher education is growing and 
changing, it is important that states play a role in ensuring 
that institutions are, at a minimum, operating as an institute 
of higher education, and federal policies should support state 
efforts to protect students and taxpayers from institutions 
that are not operating in their best interests.
    H.R. 2117 repeals the state authorization rule issued in 
October 2010. This repeal would completely eliminate the 
definition of state authorization, including consumer 
protection provisions stipulating that institutions are only 
considered to be authorized by a state if such state has a 
process to review complaints against the institution.
    By repealing this regulation, H.R. 2117 sets an alarming 
precedent and sends a message to institutions and states that 
the federal government believes it is acceptable to provide 
billions of dollars in federal student aid to institutions of 
higher education that are not in compliance with state laws. 
Further, as the regulation provides that state authorization 
policies must be transparent to students and families, 
repealing the regulation could result in less information to 
consumers, making it more difficult to choose an institution of 
higher education that best fits the student's needs.

                          CONSUMER PROTECTION

    The federal state authorization regulation also requires 
that states have a process to resolve complaints about 
institutions of higher education from students, families, and 
employees. Currently, the complaint process is varied across 
the states,\6\ and some states do not have a process at all or 
the only process available is the same process available for 
any consumer complaint, and not unique to higher education. 
Therefore, in many places, students are left without any 
recourse at the state level when an institution does not act in 
their interest.
---------------------------------------------------------------------------
    \6\http://www.sheeo.org/stateauth/
Links%20to%20Complaint%20Process.pdf.
---------------------------------------------------------------------------
    In 2010, the Congress passed, and the President signed, 
legislation that protected consumers from bad practices at 
credit card companies and banks. We applaud the Department for 
ensuring that the nation's students are afforded similar 
protections at the state level.

                           DEPARTMENT ACTIONS

    Understanding that many institutions had concerns with 
their ability to be in full compliance with the regulations by 
July 1, 2011, the Department is working extensively with states 
and institutions to address implementation concerns. 
Specifically:
     On March 17, 2011, the Department issued a Dear 
Colleague Letter clarifying that, although the regulation 
became effective July 1, 2011, institutions providing distance 
education will not be considered to be out of compliance on 
that date as long as they have applied for state approval in 
the States in which such approval is needed.
     The Department is also supporting efforts by the 
higher education community to develop a comprehensive directory 
of state requirements so states can clearly identify their 
specific requirements and institutions have the ability to 
easily understand the processes required by each state. Once 
developed, the directory will be publicly available on the 
Department's website.
     Additionally, the Department is actively engaging 
States and schools, including the distance education community, 
to support their work in moving towards common applications and 
State reciprocity agreements.
    The Department is taking appropriate action to ensure that 
the regulation will be implemented as intended; and will ensure 
accountability for students, taxpayers, and the federal 
government without disrupting education at institutions of 
higher education.

                               CONCLUSION

    The Department has established rules defining a credit hour 
and providing other protections for students, including 
ensuring students have access to a complaint process through 
state authorization. The Department's regulation sets a minimum 
standard for credit hours for purposes of awarding federal 
student aid, and ensures that institutions are following state 
authorization laws. These do not interfere with academic 
freedom; rather, they ensure integrity for taxpayer dollars. 
These rules have closed loopholes in the accountability system 
protecting students and taxpayers in the student aid programs. 
We support these common sense measures to improve 
accountability.
    H.R. 2117 would repeal those efforts and open the loopholes 
again. It would put taxpayer dollars at greater risk of fraud, 
waste, and abuse at a time when the higher education market is 
in so much flux, and the demand for student financial aid is 
growing. H.R. 2117 fails to protect the nation's students, 
moves backwards in accountability measures, and lacks any 
alternative approaches.

                                   George Miller.
                                   Raul M. Grijalva.
                                   Timothy H. Bishop.
                                   Lynn C. Woolsey.
                                   Donald M. Payne.
                                   Dennis J. Kucinich.
                                   Robert C. Scott.
                                   Susan A. Davis.
                                   Dale E. Kildee.
                                   Ruben Hinojosa.
                                   John F. Tierney.
                                   Mazie K. Hirono.