Biden delays ban on US universities using foreign companies

After extensive complaints from sector groups, administration postpones but does not abandon prohibition against working with companies from abroad

March 1, 2023

The Biden administration has delayed but not abandoned a planned prohibition on universities using foreign-owned companies across the full range of their operations.

The administration issued the order two weeks ago, giving US colleges and universities until May to report their contracts with private companies that help them with educational or operational functions, and to end those ties if the companies have foreign owners.

After widespread complaints from university leaders, the administration has agreed to push the compliance date back to September. The Department of Education “will continue to work with colleges to ensure the requirements are clear and that they have ample time to meet reporting deadlines”, a departmental spokesperson said in announcing the four-month extension.

Education Department officials explained their action as part of a long-running effort dating back through previous administrations to confront abuses tied to for-profit partners incentivising the recruitment and enrolment of low-qualified students.

In its notice to institutions, the department expanded that concern to cover virtually the entire range of corporate partners – especially those running or assisting online teaching – after federal audits in the past year by the US Government Accountability Office faulted it for poor oversight of such operators.

The Education Department explained the outright ban on foreign-owned companies – which would appear to affect such prominent learning systems providers as Pearson, SAP and D2L – by generally calling it an effort “to protect the interests of institutions, taxpayers and students”.

Universities pushed back, with the American Council on Education leading a range of higher education associations in writing to the department to complain about the wide scope and surprising nature of the order.

“To meaningfully comment on the guidance and its implications, colleges and universities will need time to conduct an in-depth and individualised review of each and every contract or relationship with an outside entity – which, at some institutions, could number in the hundreds,” the associations said.

As for the ban on foreign companies, the higher education groups told the Education Department that it “would benefit from a deeper understanding of the potential that the guidance could trigger an unintended disruption of services to students currently provided by institutions through these entities”.

The Education Department’s announcement said that its legal authority to regulate student aid programmes gives it extensive rights to issue orders covering college and university operations in the US. Yet higher education leaders described uncertainty over both the true extent of the order’s intended reach and the administration’s ability to impose such changes without engaging in the months-long process of implementing a formal regulatory change.

The Biden administration also has encountered pushback from congressional Republicans and affected companies. The chair of the education committee in the US House of Representatives, Virginia Foxx, accused the department of a “reckless” move. “While I share the belief that we must ensure programmes provide value to students and taxpayers,” Ms Foxx said, “it’s never going to work for the department to push blanket compliance policies on to entities, especially those organisations that help students complete their education through effective retention strategies.”

And D2L, a Canada-based software company, said it does not believe that its services such as the course management platform Brightspace would ultimately be covered by the Biden order. “D2L expects further clarity from the department that will ensure relationships like ours with US institutions will not be negatively affected,” the company said in a statement.

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