Executive Summary

State Approving Agencies (SAAs) and the U.S. Department of Veterans Affairs (VA) are expected to work in tandem to approve, disapprove, and oversee the educational benefits provided under 38 United States Code (U.S.C.) and its implementing regulations. However, confusion and disagreement over their specific roles and responsibilities have existed since the 1950s. The 1952 report of the House Select Committee to Investigate Educational Training and Loan Guarantee Programs Under the GI Bill found that “The relationship and relative authority and responsibility of the Veterans’ Administration and State Approving Agencies is not clearly defined by the present law, resulting in contention and confusion between Veterans’ Administration and State Approving Agencies.”

Historically, both SAAs and VA have had approval and disapproval authorities. In 2011 and 2016, however, the statutory language describing those authorities was amended. The 2011 changes, made in the context of a significant restructuring of SAAs’ day-to-day responsibilities, undermined the primacy of SAAs’ approval and disapproval authority. The 2016 changes were intended to restore SAA’s approval authority primacy. Although the intent of the 2016 changes is clear, the changes were piecemeal rather than comprehensive. As a result, the changes created ambiguity and contributed to disagreements between VA and SAAs and between VA and the VA Office of Inspector General (OIG) about these authorities.

2011 and 2016 Statutory Changes

 In 2011, VA was given a greater role in the approval of accredited for-profit schools (§ 3675) and in disapprovals (§ 3679)—either the Secretary or SAAs could approve or disapprove programs. No changes were made in § 3672, which already gave both the Secretary and SAAs coequal approval authority over accredited public and nonprofit institutions, or in § 3676, which reserved for SAAs the approval authority for nonaccredited programs.

In 2016, some, but not all, of VA’s authority to approve programs was rolled back. “The Secretary” was replaced with “the Secretary acting in the role of a State approving agency” in subsections (b)(2)(A) and (b)(2)(C) of § 3672.  The primacy of the SAA role was emphasized by the phrasing of the revisions, which led off with the “SAA” followed by the reference to the “Secretary when acting in the role of an SAA.” In contrast, no changes were made in 2016 to disapproval authorities, which are assigned consistently to both VA and SAAs. We found only one reference to a disapproval authority that used the phrase “VA when acting in the role of an SAA,” a new provision that was added in 2018. We also identified several inconsistencies between statutory and regulatory references to approval and disapproval authorities.

Although the intent of the 2016 changes is clear, the changes were piecemeal rather than comprehensive, creating ambiguity and contributing to disagreements between VA and SAAs and between VA and the VA OIG about those authorities.

VA Has SAA Oversight Authority

Although the piecemeal changes to statutory approval and disapproval authorities have created ambiguity, VA’s authority to oversee SAAs is clear. Because SAAs operate under contract with VA, their actions are subject to the Department’s oversight. In exercising that oversight authority, VA has not hesitated to weigh in when it questioned the basis for an SAA approval or disapproval. Moreover, VA has exclusive authority over payments to schools serving beneficiaries. If VA disagrees with an SAA approval decision it can “not approve the enrollment of an eligible veteran,” which for all practical purposes is the equivalent of disapproving a program.

VA’s broad role in disapprovals is important because the Department can act quickly against all schools under common ownership if evidence emerges that new enrollment should be suspended; suspension can lead to disapproval. For example, VA could have used its disapproval authority to suspend new enrollment at Argosy University in February 2019 when the Department of Education terminated the school’s participation in Title IV for failure to disburse federal student aid. When there are flashing red lights about an imminent school closure, leadership by VA in suspending enrollments would be much more efficient than relying on multiple SAAs to suspend new enrollment, particularly when schools like Argosy operate across the country. Rather than exercising its authority, however, VA notified Argosy beneficiaries that the Education Department’s actions did not affect their use of benefits. GI Bill beneficiaries remained enrolled when Argosy closed a short time later.

  1. Approval and Disapproval Authorities Are Sources of Tension

 In a December 2018 report, the VA Office of Inspector General (OIG) criticized VA’s oversight of SAAs; SAAs are state-based organizations with which VA contracts to help ensure that schools eligible to enroll GI Bill beneficiaries meet statutory requirements both when approved and on a continuing basis. The OIG concluded that VA would make an estimated $2.3 billion in improper payments to schools over 5 years if it did not implement the report’s recommendations. The most common oversight weakness, involving 57 percent of the oversight errors, entailed SAAs’ failure to detect potentially deceptive advertising when approving or reviewing degree programs, including false claims about job placement rates, accreditation, and post-graduation earnings. Sec. 3696 of the statute governing the GI Bill requires “the Secretary” to not approve the enrollment of eligible beneficiaries in such institutions.

The OIG attributed the oversight weaknesses identified during the audit to VA’s position that it lacked approval and disapproval authority for GI Bill programs and was prohibited from supervising or controlling SAAs. For example, VA stated that:

“According to VA OGC [Office of General Counsel], SAAs have nearly exclusive authority to approve, suspend, or withdraw programs for the Post-9/11 G.I. Bill, not the VA, and this SAA authority is largely unchallengeable. VA holds certain approval authorities as well, but mostly in the context of when acting in the role of the SAA (i.e., in situations where the state has no SAA). Therefore, SAAs hold the authority and VA fully expects them to do the job according to the terms of the contract….”

The OIG disagreed with the statement that SAAs are primarily responsible for approvals and are given this authority nearly exclusively under the law:

“The provisions of 38 CFR § 21.4152, Control by agencies of the United States, prohibits VA from supervising or controlling the SAAs, but also specifically states that VA retains the right to determine whether the SAAs are complying with Title 38. Furthermore, 38 U.S.C. § 3679, Disapproval of courses, also allows VA to approve or disapprove schools, courses, or licensing or certification tests and does not include any limitations stating VA can only exercise this authority when acting in the role of an SAA. The OIG also noted that the statement about the nearly exclusive authority of the SAAs, except in cases where the state does not have an SAA, directly contradicts prior VBA [Veterans Benefits Administration] actions….”

The OIG also concluded that, under Office of Management and Budget guidance and the Financial Integrity Act, VA is “ultimately responsible” for safeguarding federal assets and preventing waste, fraud, and mismanagement.

  1. Statutory Changes to Approval and Disapproval Authorities in 2011 Were Spotty, and Not All Were Reversed in 2016

Prior to 2011, 38 U.S.C. assigned primacy in approval and disapproval of programs to SAAs. The Secretary’s approval and disapproval authorities were limited to specific types of programs, such as those offered by a federal agency, apprenticeships offered in more than one state, or when there was no SAA. Changes made in 2011 increased the Secretary’s authority in approvals and disapprovals. Some, but not all, of the statutory changes enacted in 2011 with respect to approval and disapproval authorities were reversed in 2016. An appendix to this report summarizes the references to approval and disapproval authorities in 38 U.S.C. and certain regulations that appear to be inconsistent with statute.

If the goal of these 2016 statutory changes was to limit the Secretary’s role in approving and disapproving degree programs, their failure to do so comprehensively throughout the statute allowed for the emergence of dueling narratives about roles and responsibilities. In fact, it is unclear how these modest statutory tweaks resolved the issue because, even prior to the 2016 changes, VA’s position was that it lacked approval and disapproval authority.

In response to a letter from eight U.S. Senators about questionable programs approved for the GI Bill, VA’s September 2015 reply stated: “The authority for the approval of educational programs is specifically granted to the State Approving Agencies (SAA) under Title 38 of the United States Code…. Any course approved for benefits that fails to meet any of the approval requirements should be immediately disapproved by the appropriate SAA. VA is prohibited, by law, from exercising any supervision or control over the activities of the SAA, except during the annual SAA performance evaluations.”

This statement of its authorities vis-à-vis those of SAAs was almost identical to VA’s response to the OIG more than 3 years later, that is, that SAAs have near exclusive authority to approve, suspend, or withdraw the approval of degree programs.

2011 Statutory Changes

In addition to changes in approval and disapproval authorities, P.L. 111-377, the Post-9/11 Veterans Educational Assistance Improvements Act of 2010, also made notable changes to this new benefit program that begun to enroll beneficiaries in August 2009. Key changes included reducing SAAs’ approval workload and providing VA the authority to better utilize the services of SAAs.

For example, P.L. 111-377 amended § 3672 to establish a “deemed approved” category of institutions with a more limited approval process because they already met one of the key GI Bill approval criteria—accreditation by an organization recognized by the U.S. Department of Education. No were changes made to the provision covering the approval of non-accredited courses in § 3676, which assigned approval authority to SAAs, but a technical change was made to § 3671 to acknowledge that the Secretary’s approval authority in § 3672 does not extend to § 3676. No changes were made to the approval authorities of § 3672(a) because it already recognized that either the SAA or the Secretary could approve courses. However,

  • 3675(a)(1) governing the approval of accredited courses was amended by replacing “A State Approving Agency may approve the courses offered by an educational institution” with “The Secretary or a State Approving Agency may approve accredited programs (including non-degree accredited programs) offered by proprietary for-profit educational institutions.” Finally, § 3679 (a), disapproval of courses, was amended by inserting ‘‘the Secretary or’’ after ‘‘disapproved by’’ in both places it appears, so that it now reads “…disapproved by the Secretary or the appropriate/applicable State approving agency.” Table 1 identifies the provisions of 38 U.S.C. that were amended in 2011 (see p. 8).

According to the Senate Report on P.L. 111-377, these changes were derived from a VA draft  bill that gave VA new authorities to better utilize the services of SAAs. The Committee Report concurred with VA’s belief that “these amendments will contribute to streamlining the administration of educational assistance…” and allow SAAs to help “…identify issues and problems that may arise regarding…instances of fraud, misrepresentation, and abuse” related to implementation of the new Post-9/11 GI Bill. The Senate report cited the findings of a March 2007 GAO report, which had identified an overlap between functions performed by SAAs and the Departments of Labor and Education; creation of the “deemed approved” category of schools was intended to address this perceived duplication. In reducing SAAs’ approval workload, Congress also authorized VA to use SAAs for compliance surveys—audits of payments to schools.

The Senate Report did not specifically address the rationale for giving VA approval authority over accredited courses at for-profit schools. One hypothesis is that it better aligned § 3675 authorities with those in § 3672, which already recognized that both VA and SAA had approval authority for accredited and certain other programs. Nor did the Senate Report address why SAAs retained exclusive approval authority over nonaccredited programs (§ 3676). Not only did these changes further cloud the issue of approval authority, but they also resulted in the unforeseen restriction of SAA approval activities when VA immediately assigned over 50 percent of compliance surveys conducted nationwide to the SAAs.

2016 Statutory Changes Were Made Selectively, Not Comprehensively

 In 2016, the statute was amended again, reversing some, but not all of the changes made in 2011 (see table 1).

Section 408 of P.L. 114-315 replaced “the Secretary and the State approving agency” with “the State approving agency and the Secretary when acting in the role of a State approving agency” in § 3672(b)(2)(A); and in § 3675(a)(1), (b), and (b)(1). However, language indicating that the Secretary shared these authorities with SAAs was retained in other provisions, including “approval of courses,” § 3672(a), which states that courses must be approved by “the State approving agency for the State where the educational institution is located, or by the Secretary.” In addition, § 3672(b), which reserves approval authority over programs offered by other federal agencies to the Secretary also states: “The Secretary may approve any course in any other educational institution in accordance with the provisions of this chapter and chapters 34 and 35 of this title.”

The Legislative Director of the National Association of State Approving Agencies supported the 2016 wording changes during April 2016 testimony: “This change clarifies and codifies that State approving agencies have the primary statutory authority to protect our Veterans and their families from those who would engage in unscrupulous conduct.”

No changes were made in § 3679, disapproval authorities, which retained 2011 language giving both the Secretary and SAA disapproval authority. Nor were any changes made in

  • 3671(b)2), which states that references to an SAA shall be deemed to refer to the Secretary. In addition, § 3676, approval of an unaccredited course, reserves that authority to SAAs and was not changed in either 2011 or 2016.

Authority to Not Approve Enrollment Rests with VA

Two additional statutory provisions use the phrase “shall not approve the enrollment of an eligible veteran.” The authority to not approve enrollment is assigned to the Secretary in both

  • 3680A and § 3696. For example, § 3680A directs the Secretary to not approve enrollment in certain programs, including avocational or recreational courses; flight training at an Institution of Higher Learning that does not award credit toward a standard college degree; or courses where beneficiaries constitute more than 85 percent of the enrolled students. In a similar vein, § 3696 directs the Secretary to not approve enrollment in courses that are offered by institutions engaged in misleading advertising or that pay commissions for securing enrollments.

The authority to not approve enrollment is a reflection of VA’s exclusive authority over payments to institutions and beneficiaries. If an SAA erred in approving a program that was precluded from enrolling beneficiaries under § 3680A or § 3696, VA could disapprove enrollment by refusing to initiate payments for tuition or other benefits. Such an action would have the same impact as disapproving an institution.

Exceptions to Control and Supervision of SAAs

VA’s contention that SAAs have nearly exclusive and largely unchallengeable approval and disapproval authority and that the Department is prohibited from supervising SAAs is misleading. SAAs operate under contract with VA, and as a result, SAA actions are subject to the Department’s oversight. Although § 3682 prohibits supervision and control of SAAs by VA, it recognizes that there are exceptions to this prohibition: “Nothing in this section shall be deemed to prevent any department, agency, or officer of the United States from exercising any supervision or control which such department, agency, or officer is authorized by              law to exercise….”

Moreover, § 21.4152, the implementing regulation outlines the “authorities retained by VA” despite the prohibition. For example, the prohibition does not restrict the authority conferred on VA: (1) “To determine whether the SAAs under the terms of the reimbursement agreements are complying with the standards and provisions of the law….” or (2) “To disapprove schools, courses, or licensing and certification tests for reasons stated in the law and to approve schools, courses, or licensing or certification tests notwithstanding lack of State approval.”

As the VA IG noted, VA has not hesitated in the past to weigh in when it questioned the basis for an SAA’s approval or disapproval. Our analysis of tensions between VA and SAAs over specific approvals and disapprovals are described in greater detail in this forthcoming VES report.

  • VA objected to the Arizona SAA’s approval of Ashford because Ashford’s main campus was located in California, not Arizona. In 2017, VA threatened to cancel the Arizona SAA’s contract for failure to follow statutory requirements and gave Ashford 60 days to apply for approval in California or risk losing its ability to enroll veterans. When the California SAA notified Ashford of its “intent not to act” because of the pending California Attorney General’s lawsuit over the school’s misleading advertising and recruiting practices, VA threatened to cancel California’s contract. Section § 21.4250(b)(3), states that a school may request VA’s approval if an SAA notifies the institution that it does not intend to act on its application. Notwithstanding this regulatory language, VA asserted that, under the terms of the contract, the California SAA’s only options were to approve or disapprove a school’s application.
  • In August 2018, VA informed the California SAA that it was at risk of losing its contract for failure to approve an application by the University of Maryland University College and for its disapproval of a law school experiencing serious financial issues that was at risk of losing its accreditation because of low-bar passage rates. The California SAA subsequently reversed its decisions on these two schools.
  • Citing these and other example, VA informed the California SAA on September 6, 2019, that its contract would not be renewed for fiscal year 2020. 
  1. Some Implementing Regulations Are Inconsistent with Statute

In addition to inconsistencies between the assignment of authorities in statute, we also found discrepancies between their assignment in statute and regulation. For example:

  • Designation (§ 3671 and § 21.4150). Section 3671 of 38 U.S.C. addresses the designation of an SAA by the governor of each state. When a state fails to designate an SAA, § 3671 authorizes all references to an SAA to be deemed to refer to the Secretary because the Secretary would be acting as the SAA. However, subsection (b)(2) also states that “Except as otherwise provided in this chapter, in the case of courses subject to approval by the Secretary under section 3672 of this title, the provisions of this chapter which refer to the State approving agency shall be deemed to refer to the Secretary.” This exception language was added by P.L. 111-377 in 2011. The “except” clause reflects the fact that § 3676 reserves to SAAs the authority to approve nonaccredited programs. The implementing regulation, 38 C.F.R. § 4150, was not changed in 2011 and it limits VA approval, disapproval, or suspension authority to just a few enumerated program types—apprenticeship programs, courses offered by another federal agency, etc. These limited authorities are inconsistent with the Secretary’s broader authorities referenced in § 3671.
  • Disapproval of enrollment in certain courses (§ 3680A and § 21.4252). Section 3680A gives the Secretary the authority to not approve avocational and recreational courses, but
  • 21.4252 leaves the authority unassigned.
  • Licensure and Certification Tests (§ 3672 and § 3689 and § 21.4259). Section 3672 gives VA approval authority over programs at public and nonprofit institutions of higher learning and over licensure and certification tests. Section 3689 authorizes the Secretary to delegate licensure and certification test approval to SAAs. However, subsection (c) of
  • 21.4259 [suspension or disapproval] states that “The Department of Veterans Affairs will suspend approval for or disapproval of courses or licensing or certification tests under conditions specified in paragraph (a) of this section where it functions for the State approving agency.” The language in the implementing regulation reflects the 2016 changes but is in conflict with § 3672 (a) and (b)(1), which give the Secretary approval authority. Section 21.4259 appears to have been last updated in 2007.
  1. Conclusions and Recommendations

References to VA and SAA approval and disapproval authorities are found in numerous statutory provisions but inconsistencies in the assignment of those authorities has created ambiguity and led to tensions between VA and SAAs and between VA and the OIG.

Congress should clarify the approval and disapproval authorities in statute. Congress should clearly and explicitly recognize circumstances in which VA has an appropriate role in both approvals and disapprovals, even if that role is secondary to that of SAAs. In addition, VA should correct regulations that are in conflict with the statutes that they are intended to implement.

Such clarifications, however, will not address additional sources of tension between VA and SAAs: (1) the high priority VA places on compliance surveys (financial audits), which leaves SAAs little time and resources for approvals and other routine oversight that helps ensure adherence to statutory requirements, and (2) VA’s use of its contract oversight authority to dictate policy that contradicts the statute governing the GI Bill. These issues are addressed in a companion reportOveremphasis on Payment Accuracy Impedes More Effective Oversight of Schools Participating in the GI Bill.

5. Appendix: References to VA and SAA Approval and Disapproval Authorities in Statute and Certain Implementing Regulations

VES reviewed the approval and disapproval authorities in both statute and regulation, 38 U.S.C. and 38 C.F.R., respectively. Table 2 summarizes the references to VA and SAAs in the key statutory approval and disapproval authorities in effect as of August 2019. The table also includes language from several implementing regulations that appear to be inconsistent with statute.

Note: Figures and tables can be found in the PDF of this report.