Half of all Michigan college students get at least part of their coursework online. But federal regulators are considering a policy that would block this innovation by going after the private-sector service providers who offer the programs public universities and non-profits use.

This draft resolution from the federal Department of Education seems to have come out of the blue. It was pushed by left-wing activists. (The Center for American Progress says this is needed because “oversite hasn’t kept pace.”) It would restrict “third-party servicers,” private-sector businesses such as education tech companies, foreign-owned vendors and even healthcare clinics that partner with traditional colleges and universities.

Hundreds of college administrators sent letters expressing their opposition to the new rules. Among the most prominent skeptics was the American Council on Education (“the major coordinating body for the nation’s colleges and universities”) whose president, a former Obama official, asked the Education Department to pump the breaks.

That pushback has stalled the regulations for now. But Biden-Harris bureaucrats recently announced their intention to resurface draft regulations before the end of the year.

The regulations target “online program managers” which help schools build, manage and market online classes. Most of Michigan’s major universities, including the University of Michigan and Michigan State University, use the private sector for some of these services.

Eastern Michigan University found a successful niche for one of its online programs. The School of Nursing gives an accelerated path for registered nurses to get a bachelor’s in nursing (BSN) degree. This program has quadrupled from 200 to 800 students in recent years. The “additional tuition revenue has strengthened EMU’s finances and enabled it to reinvest in staff, technology, and student services and bring on additional faculty,” the school notes.

The federal regulations may impact small colleges even more than the state’s public universities. Adrian College, with just 1,650 students, expanded its online offerings. Last winter college President Jeffrey Docking informed federal bureaucrats that “small private colleges in America are already facing a tremendous number of financial difficulties and need to ‘innovate or die.’ The guidance from the DOE will only worsen our budgetary situations and stifle the very innovation needed to provide students with better education opportunities at lower costs.”

Docking estimated that the regulation would cost his college “in the high tens, if not hundreds of thousands” and require “a year to comply with the DOE’s guidance.” It will “further stifle innovation via the number of potential partners who seek to help colleges build solution to the problems we face.”

The federal rules are intended to provide oversight to new programs that are coming online. But education officials and accreditors already have plenty of tools they can use to ensure that schools are spending public money wisely and that students are getting educated. This rule is pushing toward a policy that would prohibit public and private colleges from contracting with online education service providers. Smaller schools that can’t afford to navigate or deal with the severe regulations will ultimately have to drop programs students want.

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