From: Jessica Morales, Negotiator for Students or Borrowers [Primary]

Emmett Blaney, Negotiator for Students or Borrowers [Alternate]

Carolyn Fast, Negotiator for Civil Rights Organizations and Consumer Advocates [Primary]

Magin Misael Sanchez, Negotiator for Civil Rights Organizations and Consumer Advocates 

[Alternate] 

Barmak Nasirrian, Negotiator for Service Members, Veterans, or Groups Representing 

Them [Alternate]

Ashlynne Haycock-Lohmann, Negotiator for Service Members, Veterans, or Groups 

Representing Them [Alternate]

To: 2024 Negotiated Rulemaking 

Program Integrity and Institutional Quality Committee 

Date: January 10, 2024

Re: Automatic Textbook Billing

Books and supplies are a significant driver of college costs, averaging over $1,000 a year for students. One 

model pushed by textbook publishers, termed “inclusive access” automatic textbook billing, automatically 

opts students into digital course materials that get charged to their tuition and fees, forcing students to 

spend their limited federal aid dollars on materials that may not be as affordable as they are elsewhere. 

During yesterday’s negotiating session, the scope of the textbook industry’s investment in automatic 

billing became clear. Given that, we felt it might be helpful to negotiators to provide some additional 

information and resources on automatic billing practices.

Prior to the 2016 cash management regulations, colleges were not permitted to apply federal financial 

aid funds to charges for books and supplies without students first providing permission. Changes to those 

regulations, however, opened the door to automatic billing practices, in which institutions can include 

books and supplies in tuition and fee charges under some circumstances. 

While the intent of this provision was ostensibly to provide students with lower-cost options for textbooks 

(by requiring that such automatic billing could be used only when the books or supplies were provided at 

below competitive market rates), that has not always been the reality. Instead, students have been forced 

to pay high costs for textbooks and other supplies even when they could have found them cheaper 

elsewhere. 

To address these challenges, the Department proposed to eliminate the provision that allows institutions 

to include books and supplies as part of tuition and fees. This would effectively require these "inclusive 

access" programs to operate on an opt-in basis, where students choose to participate, rather than using 

their Title IV aid without consent. We strongly support this change, and believe that the resources 

included here provide further evidence of the need for this change. 
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Negative Impacts on Students

Unwanted charges. As these so-called “inclusive access” automatic billing programs have taken off, 

students have criticized the lack of transparency and unexpected charges. For instance, students at one 

four-year college reported being charged for textbooks that they weren’t even aware they were receiving 

and didn’t know how to access. In some cases, the textbooks weren’t even being regularly used in class. 

Similarly, a survey of more than 13,000 students in Florida’s public colleges, for instance, found that more 

than half of students who participated in such programs did not believe that the program had reduced 

their overall textbook costs. In some cases, these “savings” may only be relative to the sky-high sticker 

prices that publishers charge for printed textbooks, which few students ever buy. And though some 

industry representatives have claimed that automatic billing helps students use their financial aid to 

acquire books, this guarantee is set already by separate regulations (34 CFR 668.164(m)) that do not rely 

on forcing students to pay. Publishers often bill “inclusive access” programs as cost-saving for students, 

but the reality is not so clear.

Restricted access. Automatic billing programs also often provide access to the publisher’s electronic 

course materials for only a limited time period, meaning students lose access to the materials after the 

course is finished. That means as they progress into higher-level classes in the field, they don’t have access 

to foundational resources. These digital course materials also require students to cede significant amounts 

of data to the companies that produce these materials, including their locations, academic performance, 

and study habits.

Dubious marketing. “Inclusive access” proponents make claims of improved student outcomes, but these 

are often backed by narrow case studies rather than published research. A peer-reviewed study of a 

statewide automatic billing pilot found no statistically significant changes in student outcomes, whether 

for students overall or for those classified as non-White, Pell eligible, or adult learners over the age of 25. 

To the extent these programs are achieving positive outcomes in some places, there is no reason that 

cannot continue under an opt-in model consistent with the Department’s proposed change. A number of 

institutions, including the University of Central Florida, already do this.

U.S. PIRG Study Exposes Contracting Practices

A February 2020 report from U.S. PIRG explored dozens of contracts for “inclusive access” automatic 

textbook billing programs across 31 colleges that enroll more than 700,000 undergraduate students. The 

report identified common and deeply concerning problems across many of the contracts. Specifically, the 

report notes that:

● Almost half of automatic billing contracts failed to disclose their discount structure to students -- 

meaning that students couldn’t decipher how significant of a discount they were receiving 

through the program.
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● More than two in five (42 percent) contracts placed limitations on advertising these partnerships. 

Under these restrictions, publishers could influence how institutions present the discounts to 

students, or how students can opt out of the arrangement.

● One third of the contracts potentially allow for uncapped annual price increases. Twenty-one 

percent potentially allow for twice-annual increases. Just one of the institutions reviewed capped 

price increases.

Even with a federal requirement to allow students to opt-out, contractual terms with publishers may 

pressure institutions to restrict it. More than two-thirds of the contracts (68 percent) included a clause 

where the discount would be eliminated or reduced if the institution missed their quota for the number 

of students enrolled in the automatic billing program -- a quota that could be set as high as 90 percent of 

a course. 

In other words, textbook publishers have set egregiously restrictive terms for automatic billing contracts 

as a way to guarantee market share and prevent students from accessing the textbooks via more 

affordable sources. And institutions have played along, willingly handing over control to the textbook 

publishers, and effectively limiting transparency and choice for students while increasing their costs.

The full report is available here: https://publicinterestnetwork.org/wpcontent/uploads/2022/07/USPIRG_Textbook-Automatic-Billing_Feb2020_v3-2.pdf. 

A library of textbook billing contracts is also available here: https://sparcopen.org/ourwork/automatic-textbook-billing/contract-library/ 

Recommendations to the Department

As noted, we strongly support the Department’s efforts to revise this section of the federal rules to make 

them more student-friendly and ensure that students can get the full value of the aid they are entitled to. 

We urge the Department to move forward with eliminating §668.164(c)(2)(i) as proposed, and to go even 

further and eliminate §668.164(c)(2) in its entirety. While (i) eliminates the most significant concerns for 

students, the remaining two exceptions under (ii) and (iii) create unnecessary loopholes that the textbook 

industry could exploit. As came up in discussion during negotiations, there is ambiguity over what a 

compelling health or safety reason would be or how to determine whether materials are available 

elsewhere. Students should have the right to choose how their Title IV aid is used and where they will 

purchase their course materials, period.