Guidance Around Higher Ed Revenue Sharing May Be Safer Than Many Assume

Alarm bells are ringing in some quarters of higher education in the wake of President Trump’s victory—but not the ones you might expect.

Some believe that the outgoing leadership at the U.S. Department of Education will soon rewrite the 2011 Dear Colleague Letter to undercut how colleges enter into contracts with external providers that offer a bundle of services, as Phil Hill reported.

The concerns are significant enough that Congresswoman Virginia Foxx, chairwoman of the House Committee on Education and the Workforce, recently wrote the Department a letter warning them not to make any changes to the guidance and expressing “strong reservations about any last-ditch efforts by an outgoing administration that would disrupt current educational delivery.”

In a piece a few weeks ago, I had asked whether in a post-Chevron world, the Department of Education’s 2011 Dear Colleague letter that has allowed online program manager (OPM) companies to enter into revenue sharing agreements with universities might be impermissible in the first place.

Astute readers with legal backgrounds wrote me after my piece published and argued convincingly that my worries were misplaced—for two major reasons:

1)       Chevron deference applied only when an agency undertook a formal rulemaking process and issued an actual regulation;

2)       And, independent of Chevron, the interpretation permitting an exception to the incentive compensation ban for entities offering a bundle of services arguably dates back to the 1990s when the ban first appeared—and therefore rests on more durable ground than a Dear Colleague Letter alone would suggest.

Thus, if the Department of Education tried to revoke the 2011 Dear Colleague Letter, it would actually be highly problematic, even in a post-Chevron world. Which would mean that OPMs’ ability to continue to enter into revenue share agreements with universities should be safer than has been widely assumed.