Substantive Change: Contractual Arrangements
Prior HLC approval or notification may be required for the initiation, modification or renewal of contractual arrangements, in which an institution partners with certain types of third-party entities to provide some portion of an educational program.
What Is a Contractual Arrangement?
A contractual arrangement is an arrangement in which the institution outsources some portion of an educational program (a degree or certificate program) to any of the following:
- An unaccredited institution.
- An institution that is not accredited by an accreditor recognized by the U.S. Department of Education.
- A corporation or other entity.
The services provided by the contractual party related to the program may include, but are not limited to:
- Establishing admissions requirements and recruiting students
- Establishing program requirements
- Curriculum development
- Providing instructors for the program and determining the qualifications for such instructors.
- Determining who provides instruction: Review Dear Colleague Letter GEN-22-07 from the U.S. Department of Education Federal Student Aid for guidance on how to determine whether instruction is provided by the institution or by another entity as part of a contractual arrangement.
- Assessment of student learning and program evaluation
- Student supports services, such as tutoring and advising
- Other services related to the design, administration or instruction of the program
HLC Expectations
When reviewing a contractual arrangement between an institution and a third-party entity, HLC’s priority is to ensure that the institution retains its capacity to ensure and maintain educational quality for the educational program.
HLC expectations as expressed in the Assumed Practices, the Guiding Values, and the Criteria for Accreditation are aligned with HLC’s evaluation of contractual arrangements where they touch upon teaching and learning. Contractual arrangements are subject to HLC review during comprehensive evaluations, or at other times if they become a matter of concern, as part of HLC’s efforts to ensure the institution’s ongoing compliance with HLC requirements.
Implications for Title IV Funding
The U.S. Department of Education’s expectations of institutions with regard to contractual arrangements can include significant implications for Title IV funding. Per federal regulations, educational programs will not be eligible for Title IV, even if approved by the accreditor, if they are provided through contractual arrangements wherein 50% or more of the educational program is being provided by the contractual partner.
Arrangements That Do Not Require HLC Approval or Notification
- Contractual arrangements in which any of the following conditions apply:
- The contract is solely for goods and services, such as food services and parking lot management, that are unrelated to the provision of academic programs.
- The institution offers the goods or services to another party. (Note that if the other party is an accredited or candidate for accreditation with HLC, that party may need to seek approval for the arrangement.)
- The contractual partner provides an internship that does not include a formal instructional component.
- The contractual partner provides only books or supplies supporting the academic program or only equipment or a platform for internet-based instruction.
- The contract between the contractual partner and the institution provides only for the articulation or transfer of courses that are transcribed as transfer credit on the students’ transcripts and not the outsourcing of aspects of courses offered for academic credit from the institution.
- Consortial Arrangement: An arrangement in which all of the contractual partners providing goods or services related to academic programs are institutions accredited by agencies recognized by the U.S. Department of Education. As of February 2020, institutions are no longer required to notify HLC of or request prior approval for consortial arrangements.
- Credit Transfer: Based on its transfer policy, an institution independently determines whether credits already earned by a student from another institution are acceptable in transfer. These determinations may be based on credit, course and curriculum equivalencies, often without reference to partial fulfillment of a specific credential. Each institution teaches its own curriculum and courses; there is no outsourcing involved.
An institution may decide whether to accept credits from other institutions regardless of their accredited status. HLC requires member institutions to clearly communicate their transfer policies to the public. - Articulation Agreement: An arrangement between institutions that agree in advance, via a Memorandum of Understanding or other contractual agreement, to accept each other’s credits in transfer, often in partial fulfillment of one or more specific credentials. In these cases, students may be simultaneously enrolled in multiple institutions. Each institution teaches its own curriculum and courses; there is no outsourcing involved.
Institutions may decide whether to enter into articulation arrangements with other institutions regardless of the other institution’s accredited status. However, HLC member institutions should make the public aware of all such arrangements (e.g. by listing such arrangements on the website, providing more details in program catalogs and ensuring clarity in the transcript produced as a result of such arrangements).
Screening Form for Contractual Arrangements
Institutions engaging in any contractual arrangement that meets the definition above should complete HLC’s screening form for contractual arrangements.
Types of Requests
Related Resources
