AMERICAN EDUCATIONAL RESEARCH ASSOCIATION, INC. et al v. PUBLIC.RESOURCE.ORG, INC.
Filing
70
LARGE ADDITIONAL ATTACHMENT(S) Index of Consolidated Exhibits In Support of Public.Resource.Org's Motion for Summary Judgment and Opposition to Plaintiffs' Motion for Summary Judgment and Permanent Injunction by PUBLIC.RESOURCE.ORG, INC. #69 MOTION for Summary Judgment and Opposition to Plaintiffs' Motion for Summary Judgment and Permanent Injunction filed by PUBLIC.RESOURCE.ORG, INC.. (Attachments: #1 Exhibit 1, #2 Exhibit 2 [Sealed], #3 Exhibit 3 [Sealed], #4 Exhibit 4 [Sealed], #5 Exhibit 5 [Sealed], #6 Exhibit 6 [Sealed], #7 Exhibit 7, #8 Exhibit 8 [Sealed], #9 Exhibit 9, #10 Exhibit 10, #11 Exhibit 11 [Sealed], #12 Exhibit 12 [Sealed], #13 Exhibit 13 [Sealed], #14 Exhibit 14 [Sealed], #15 Exhibit 15 [Sealed], #16 Exhibit 17 [Sealed], #17 Exhibit 18 [Sealed], #18 Exhibit 19 [Sealed], #19 Exhibit 20 [Sealed], #20 Exhibit 21 [Sealed], #21 Exhibit 22 [Sealed], #22 Exhibit 23 [Sealed], #23 Exhibit 24 [Sealed], #24 Exhibit 25 [Sealed], #25 Exhibit 26 [Sealed], #26 Exhibit 27 [Sealed], #27 Exhibit 28 [Sealed], #28 Exhibit 29 [Sealed], #29 Exhibit 30 [Sealed], #30 Exhibit 31, #31 Exhibit 32 [Sealed], #32 Exhibit 33 [Sealed], #33 Exhibit 34 [Sealed], #34 Exhibit 35, #35 Exhibit 36, #36 Exhibit 37, #37 Exhibit 38 [Sealed], #38 Exhibit 39, #39 Exhibit 40, #40 Exhibit 41 [Sealed], #41 Exhibit 42 [Sealed], #42 Exhibit 43 [Sealed], #43 Exhibit 44, #44 Exhibit 45, #45 Exhibit 46, #46 Exhibit 47, #47 Exhibit 48, #48 Exhibit 49, #49 Exhibit 50 [Sealed], #50 Exhibit 51, #51 Exhibit 52, #52 Exhibit 53, #53 Exhibit 54, #54 Exhibit 55, #55 Exhibit 56, #56 Exhibit 57, #57 Exhibit 58, #58 Exhibit 59, #59 Exhibit 60, #60 Exhibit 61, #61 Exhibit 62, #62 Exhibit 63, #63 Exhibit 64 [Sealed], #64 Exhibit 65, #65 Exhibit 66, #66 Exhibit 67, #67 Exhibit 68, #68 Exhibit 69, #69 Exhibit 70, #70 Exhibit 71, #71 Exhibit 72, #72 Exhibit 73, #73 Exhibit 74)(Bridges, Andrew)
EXHIBIT 72
Federal Register | Program Integrity Issues
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Rule
Program Integrity Issues
A Rule by the Education Department on 10/29/2010
ACTION
Final Regulations.
Previous Document
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LEGAL DISCLAIMER
SUMMARY
The Secretary is improving integrity in the programs
authorized under title IV of the Higher Education Act of 1965,
Font Controls
as amended (HEA), by amending the regulations for
Institutional Eligibility Under the HEA, the Secretary's
PDF
DEV
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Recognition of Accrediting Agencies, the Secretary's
Recognition Procedures for State Agencies, the Student
Assistance General Provisions, the Federal Family Education
Loan (FFEL) Program, the William D. Ford Federal Direct
Loan Program, the Teacher Education Assistance for College
and Higher Education (TEACH) Grant Program in part 686,
the Federal Pell Grant Program, and the Academic
Publication Date:
Friday, October 29, 2010
Agency:
Department of Education
Dates:
These regulations are effective
July 1, 2011 with the exception
Competitiveness Grant (AGC) and National Science and
of the revision of subpart E of
Mathematics Access to Retain Talent Grant (National Smart
part 668, Verification and
Grant) Programs.
Updating of Student Aid
Application Information.
Revised subpart E of part 668
UNIFIED AGENDA
is effective July 1, 2012. The
Program Integrity Issues
incorporation by reference of
certain publications listed in
4 actions from June 18th, 2010 to July 1st, 2011
the rule is approved by the
August 2nd,
2010
NPRM
Comment
Period End
October 29th,
2010
Final Action
75 FR 66832
July 1st, 2011
Final Action
Effective
Director of the Federal
Register as of July 1, 2011.
Effective Date:
07/01/2011
Entry Type:
Rule
Action:
Final regulations.
Document Citation:
75 FR 66831
Page:
66831 -66975 (145 pages)
TABLE OF
DATES:
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CFR:
Federal Register | Program Integrity Issues
CONTENTS
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FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
34 CFR 600
34 CFR 602
34 CFR 603
34 CFR 668
Implementation Date of These Regulations
Analysis of Comments and Changes
General Comments
34 CFR 682
34 CFR 685
34 CFR 686
34 CFR 690
34 CFR 691
Gainful Employment in a Recognized Occupation (§§ 600.2,
Agency/Docket Number:
600.4, 600.5, 600.0, 668.6, and 668.8) Gainful
Docket ID ED-2010-OPE-0004
Employment Reporting and Disclosure Requirements (§
668.6)
RIN:
General
1840-AD02
Document Number:
2010-26531
Placement Rates
On-Time Completion Rate
Shorter URL:
https://federalregister.gov/a/201026531
Median Loan Debt
Student Information Database
Links to O*Net
RELATED TOPICS
Disclosing Program Costs
Administrative practice and
procedure
One-Year Program
Aliens
Definition of a Credit Hour (§§ 600.2, 602.24, 603.24, and
668.8)
Colleges and universities
Consumer protection
Education
General
Education of disadvantaged
Institutional Determination and Flexibility
Elementary and secondary
education
Out-of-Class Student Work
Foreign relations
Authority and Need To Regulate
Grant programs-education
Loan programs-education
Administrative Burden
Accrediting Agency Procedures (§ 602.24(f))
Notification Requirements
State Agency Procedures (§ 603.24(c))
General
Program Eligibility: Clock-to-Credit-Hour Conversion (§
668.8)
State Authorization (§§ 600.4(a)(3), 600.5(a)(4), 600.6(a)
(3), 600.9, and 668.43(b))
General—No Mandate for a State Licensing Agency
Implementation
Examples
Exemptions: Accreditation and Years of Operation
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Reporting and recordkeeping
requirements
Selective Service System
Student aid
Vocational education
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Complaints
Reciprocity and Distance Education
State Institutions
Religious Institutions
Tribal Institutions
Part 668Student Assistance General Provisions Retaking
Coursework (§ 668.2)
Written Arrangements (§§ 668.5 and 668.43)
General
Written Arrangements Between Two or More Eligible
Institutions (§ 668.5(a))
Requirements for Arrangements Between Eligible
Institutions and Ineligible Institutions or Organizations
(§ 668.5(c))
Disclosures to Students (§§ 668.5(e) and 668.43(a)(12))
Incentive Compensation (§ 668.14(b))
General
Current Safe Harbors
Permissible Compensation Activities
Satisfactory Academic Progress (§§ 668.16(e), 668.32(f), and
668.34)
General
General
Delayed Implementation
Satisfactory Academic Progress (§ 668.34)
Consistency Among Categories of Students
Frequency of Evaluation
Minimum GPA
Pace
Transfer Credits
Financial Aid Probation and Financial Aid Warning
Statuses
Appeals
Maximum Timeframe
Notification
Evaluating the Validity of High School Diplomas (§
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668.16(p))
High School Diploma (§ 668.16(p))
Return of Title IV, HEA Program Funds (§§ 668.22(a),
668.22(b), 668.22(f), and 668.22(l))
Treatment of Title IV, HEA Program Funds When a
Student Withdraws From Term-Based Programs With
Modules or Compressed Courses (§§ 668.22(a), 668.22 (f)
and 668.22 (l))
Withdrawal Date for a Student Who Withdraws From an
Institution That Is Required To Take Attendance (§§
668.22(b) and 668.22(l))
Verification and Updating of Student Aid Application
Information (Subpart E of Part 668)
General (§ 668.51)
Definitions (§ 668.52)
Policies and Procedures—Professional Judgment (§
668.53(c))
Selection of FAFSA Information for Verification (§ 668.54)
Updating Information (§ 668.55)
Information To Be Verified (§ 668.56)
Acceptable Documentation (§ 668.57(a)(2), (a)(4)(ii)(A), (a)
(5), (a)(7), and (d))
Interim Disbursements (§ 668.58(a)(3))
Consequences of a Change in an Applicant's FAFSA
Information (§ 668.59)
Deadlines for Submitting Documentation and the
Consequences of Failing To Provide Documentation (§
668.60(c)(1))
Recovery of Funds (§ 668.61)
Misrepresentation (Subpart F—§§ 668.71 Through 668.75)
General
Scope and Special Definitions (§ 668.71)
Nature of Educational Program (§ 668.72)
Employability of Graduates (§ 668.74)
Ability To Benefit (§ 668.32(e) and Subpart J)
Student Eligibility—General (§ 668.32(e))
Subpart J—Approval of Independently Administered Tests;
Specification of Passing Score; Approval of State Process
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Special Definitions (§ 668.142)
Application for Test Approval (§ 668.144)
Test Approval Procedures (§ 668.145)
Criteria for Approving Tests (§ 668.146)
Additional Criteria for the Approval of Certain Tests (§
668.148)
Agreement Between the Secretary and a Test Publisher or a
State (§ 668.150)
Administration of Tests (§ 668.151)
Administration of Tests for Individuals Whose Native
Language Is Not English or for Individuals With Disabilities
(§ 668.153)
Disbursements (§§ 668.164(i), 685.102(b), 685.301(e),
686.2(b), and 686.37(b))
Provisions for Books and Supplies (§ 668.164(i))
Reporting Disbursements, Adjustments, and Cancellations
(§§ 685.102(b), 685.301(e), 686.2(b), and 686.37(b))
Executive Order 12866
Regulatory Impact Analysis
Paperwork Reduction Act of 1995
Section 668.6—Gainful Employment
Section 668.8—Eligible Program
Section 668.16—Standards of Administrative Capability
Section 668.22—Treatment of Title IV, HEA Program
Funds When a Student Withdraws
Section 668.34—Satisfactory Progress
Section 668.43—Institutional Information
Section 668.55—Updating Information
Section 668.56—Information To Be Verified
Section 668.57—Acceptable Documentation
Section 668.59—Consequences of a Change in FAFSA
Information
Section 668.144—Application for Test Approval
Section 668.150—Agreement Between the Secretary and a
Test-Publisher or a State
Section 668.151—Administration of Tests
Section 668.152—Administration of Tests by Assessment
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Centers
Section 668.164—Disbursing Funds
Intergovernmental Review
Assessment of Educational Impact
Electronic Access to This Document
List of Subjects
PART 600—INSTITUTIONAL ELIGIBILITY UNDER THE
HIGHER EDUCATION ACT OF 1965, AS AMENDED
PART 602—THE SECRETARY'S RECOGNITION OF
ACCREDITING AGENCIES
PART 603—SECRETARY'S RECOGNITION PROCEDURES
FOR STATE AGENCIES
PART 668—STUDENT ASSISTANCE GENERAL
PROVISIONS
Subpart E—Verification and Updating of Student Aid
Application Information
Subpart E—Verification and Updating of Student Aid
Application Information
Subpart F—Misrepresentation
Subpart F—Misrepresentation
Subpart J—Approval of Independently Administered Tests;
Specification of Passing Score; Approval of State Process
Subpart J—Approval of Independently Administered Tests;
Specification of Passing Score; Approval of State Process
PART 682—FEDERAL FAMILY EDUCATION LOAN (FFEL)
PROGRAM
PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN
PROGRAM
PART 686—TEACHER EDUCATION ASSISTANCE FOR
COLLEGE AND HIGHER EDUCATION (TEACH) GRANT
PROGRAM
PART 690—FEDERAL PELL GRANT PROGRAM
PART 691—ACADEMIC COMPETITIVENESS GRANT (ACG)
AND NATIONAL SCIENCE AND MATHEMATICS ACCESS
TO RETAIN TALENT GRANT (NATIONAL SMART GRANT)
PROGRAMS
Appendix A—Regulatory Impact Analysis
Executive Order 12866
Regulatory Impact Analysis
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Need for Federal Regulatory Action
Regulatory Alternatives Considered
Benefits
Costs
Net Budget Impacts
Assumptions, Limitations, and Data Sources
Accounting Statement
Regulatory Flexibility Act Certification
Footnotes
TABLES
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Meets State Authorization Requirements*
Collection of Information
Chart A—State Authorization Requirements
Table 2—Accounting Statement: Classification of
Estimated Expenditures
DATES:
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These regulations are effective July 1, 2011 with the exception
of the revision of subpart E of part 668, Verification and
Updating of Student Aid Application Information. Revised
subpart E of part 668 is effective July 1, 2012. The
incorporation by reference of certain publications listed in the
rule is approved by the Director of the Federal Register as of
July 1, 2011.
FOR FURTHER
For information related to the provisions on high school
INFORMATION
diplomas and verification of information on the Free
CONTACT:
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Application for Federal Student Aid (FAFSA), Jacquelyn
Butler. Telephone: (202) 502-7890 or via the Internet at: Jacq
uelyn.Butler@ed.gov.
For information related to the return of title IV, HEA funds
calculation provisions for term-based modules or taking
attendance, Jessica Finkel or Wendy Macias. Telephone: (202)
502-7647 or via the Internet at: Jessica.Finkel@ed.gov.
Telephone: (202) 502-7526 or via the Internet at: Wendy.Maci
as@ed.gov.
For information related to the provisions on retaking
coursework, Vanessa Freeman. Telephone: (202) 502-7523 or
via the Internet at: Vanessa.Freeman@ed.gov.
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For information on the provisions related to incentive
compensation, Marty Guthrie. Telephone: (202) 219-7031 or
via the Internet at: Marty.Guthrie@ed.gov.
For information related to the provisions on satisfactory
academic progress, Marty Guthrie or Marianna Deeken.
Telephone: (202) 219-7031 or via the Internet at: Marty.Guthr
ie@ed.gov. Telephone: (206) 615-2583 or via the Internet at:
Marianna.Deeken@ed.gov.
For information related to the provisions on ability to benefit,
Dan Klock. Telephone: (202) 377-4026 or via the Internet at D
an.Klock@ed.gov.
For information related to gainful employment in a recognized
occupation, John Kolotos. Telephone: (202) 502-7762 or via
the Internet at: John.Kolotos@ed.gov.
For information related to the provisions for written
agreements between institutions, Carney McCullough.
Telephone: (202) 502-7639 or via the Internet at: Carney.McC
ullough@ed.gov.
For information related to the provisions on
misrepresentation, Carney McCullough or Vanessa Freeman.
Telephone: (202) 502-7639 or via the Internet at: Carney.McC
ullough@ed.gov. Telephone: (202) 502-7523 or via the
Internet at: Vanessa.Freeman@ed.gov.
For information related to the provisions on timeliness and
method of disbursement, Harold McCullough. Telephone:
(202) 377-4030 or via the Internet at: Harold.McCullough@e
d.gov.
For information related to the provisions related to the
definition of credit hour, Fred Sellers. Telephone: (202) 5027502 or via the Internet at: Fred.Sellers@ed.gov.
For information related to provisions on State authorization,
Fred Sellers. Telephone: (202) 502-7502 or via the Internet at:
Fred.Sellers@ed.gov.
If you use a telecommunications device for the deaf (TDD), call
the Federal Relay Service (FRS), toll free, at 1-800-877-8339.
Individuals with disabilities can obtain this document in an
accessible format (e.g., braille, large print, audiotape, or
computer diskette) on request to one of the contact persons
listed under FOR FURTHER INFORMATION CONTACT.
SUPPLEMENTARY
INFORMATION:
On June 18, 2010, the Secretary published a notice of proposed
rulemaking (NPRM) for program integrity issues in the
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Federal Register (75 FR 34806).
In the preamble to the NPRM, the Secretary discussed on pages
34808 through 34848 the major regulations proposed in that
document to strengthen and improve the administration of
programs authorized under the HEA. These proposed
regulations included the following:
Requiring institutions to develop and follow procedures
to evaluate the validity of a student's high school diploma
if the institution or the Secretary has reason to believe
that the diploma is not valid or was not obtained from an
entity that provides secondary school education;
Expanding eligibility for title IV, HEA program assistance
to students who demonstrate they have the ability to
benefit by satisfactorily completing six credits of college
work, or the equivalent amounts of coursework, that are
applicable toward a degree or certificate offered by an
institution;
Amending and adding definitions of terms related to
ability to benefit testing, including “assessment center,”
“independent test administrator,” “individual with a
disability,” “test,” “test administrator,” and “test
publisher”;
Consolidating into a single regulatory provision the
approval processes for ability to benefit tests developed
by test publishers and States;
Establishing requirements under which test publishers
and States must provide descriptions of processes for
identifying and handling test score abnormalities,
ensuring the integrity of the testing environment, and
certifying and decertifying test administrators;
Requiring test publishers and States to describe any
accommodations available for individuals with
disabilities, as well as the process a test administrator
would use to identify and report to the test publisher
instances in which these accommodations were used;
Revising the test approval procedures and criteria for
ability to benefit tests, including procedures related to the
approval of tests for speakers of foreign languages and
individuals with disabilities;
Revising the definitions and provisions that describe the
activities that constitute substantial misrepresentation by
an institution of the nature of its educational program, its
financial charges, or the employability of its graduates;
Removing the “safe harbor” provisions related to
incentive compensation for any person or entity engaged
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in any student recruitment or admission activity,
including making decisions regarding the award of title
IV, HEA program assistance;
Clarifying what is required for an institution of higher
education, a proprietary institution of higher education,
and a postsecondary vocational institution to be
considered legally authorized by the State;
Defining a credit hour and establishing procedures that
certain institutional accrediting agencies must have in
place to determine whether an institution's assignment of
a credit hour is acceptable;
Modifying provisions to clarify whether and when an
institution must award student financial assistance based
on clock or credit hours and the standards for credit-toclock-hour conversions;
Modifying the provisions related to written arrangements
between two or more eligible institutions that are owned
or controlled by the same person or entity so that the
percentage of the educational program that may be
provided by the institution that does not grant the degree
or certificate under the arrangement may not exceed 50
percent;
Prohibiting written arrangements between an eligible
institution and an ineligible institution that has had its
certification to participate in title IV, HEA programs
revoked or its application for recertification denied;
Expanding provisions related to the information that an
institution with a written arrangement must disclose to a
student enrolled in a program affected by the
arrangement, including, for example, the portion of the
educational program that the institution that grants the
degree or certificate is not providing;
Revising the definition of unsubsidized student financial
aid programs to include TEACH Grants, Federal PLUS
Loans, and Direct PLUS Loans;
Codifying current policy that an institution must
complete verification before the institution may exercise
its professional judgment authority;
Eliminating the 30 percent verification cap;
Retaining the ability of institutions to select additional
applicants for verification;
Replacing the five verification items for all selected
applicants with a targeted selection from items included
in an annual Federal Register notice published by the
Secretary;
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Allowing interim disbursements when changes to an
applicant's FAFSA information would not change the
amount that the student would receive under a title IV,
HEA program;
Codifying the Department's IRS Data Retrieval System
Process, which allows an applicant to import income and
other data from the IRS into an online FAFSA;
Requiring the processing of changes and corrections to an
applicant's FAFSA information;
Modifying the provisions related to institutional
satisfactory academic progress policies and the impact
these policies have on a student's eligibility for title IV,
HEA program assistance;
Expanding the definition of full-time student to allow, for
a term-based program, repeated coursework taken in the
program to count towards a full-time workload;
Clarifying when a student is considered to have
withdrawn from a payment period or period of
enrollment for the purpose of calculating a return of title
IV, HEA program funds;
Clarifying the circumstances under which an institution is
required to take attendance for the purpose of calculating
a return of title IV, HEA program funds;
Modifying the provisions for disbursing title IV, HEA
program funds to ensure that certain students can obtain
or purchase books and supplies by the seventh day of a
payment period;
Updating the definition of the term recognized
occupation to reflect current usage;
Establishing requirements for institutions to submit
information on students who attend or complete
programs that prepare students for gainful employment
in recognized occupations; and
Establishing requirements for institutions to disclose on
their Web site and in promotional materials to
prospective students, the on-time completion rate,
placement rate, median loan debt, program cost, and
other information for programs that prepare students for
gainful employment in recognized occupations.
Implementation
Date of These
Regulations
Section 482(c) of the HEA requires that regulations affecting
programs under title IV of the HEA be published in final form
by November 1 prior to the start of the award year (July 1) to
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which they apply. However, that section also permits the
Secretary to designate any regulation as one that an entity
subject to the regulation may choose to implement earlier and
to specify the conditions under which the entity may
implement the provisions early.
The Secretary has not designated any of the provisions in these
final regulations for early implementation. As indicated in the
DATES section, the regulations contained in subpart E of part
668, Verification and Updating of Student Aid Application
Information are effective July 1, 2012.
While the Secretary has designated amended § 600.9(a) and
(b) as being effective July 1, 2011, we recognize that a State
may be unable to provide appropriate State authorizations to
its institutions by that date. We are providing that the
institutions unable to obtain State authorization in that State
may request a one-year extension of the effective date of these
final regulations to July 1, 2012, and if necessary, an additional
one-year extension of the effective date to July 1, 2013. To
receive an extension of the effective date of amended §
600.9(a) and (b) for institutions in a State, an institution must
obtain from the State an explanation of how a one-year
extension will permit the State to modify its procedures to
comply with amended § 600.9.
Analysis of
Comments and
Changes
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The regulations in this document were developed through the
use of negotiated rulemaking. Section 492 of the HEA requires
that, before publishing any proposed regulations to implement
programs under title IV of the HEA, the Secretary must obtain
public involvement in the development of the proposed
regulations. After obtaining advice and recommendations, the
Secretary must conduct a negotiated rulemaking process to
develop the proposed regulations. The negotiated rulemaking
committee did not reach consensus on the proposed
regulations that were published on June 18, 2010. The
Secretary invited comments on the proposed regulations by
August 2, 2010. Approximately 1,180 parties submitted
comments, a number of which were substantially similar. An
analysis of the comments and of the changes in the regulations
since publication of the NPRM follows.
We group major issues according to subject, with appropriate
sections of the regulations referenced in parentheses. We
discuss other substantive issues under the sections of the
regulations to which they pertain. Generally, we do not
address minor, nonsubstantive changes, recommended
changes that the law does not authorize the Secretary to make,
or comments pertaining to operational processes. We also do
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not address comments pertaining to issues that were not
within the scope of the NPRM.
General Comments
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Comment: We received a significant number of comments that
expressed support for the Secretary's proposed regulations.
Many of the commenters noted that the proposed regulations
would protect taxpayer investments in
higher education by
helping to curtail fraud and abuse and would protect the
interests of a diverse population of students who are seeking
higher education for personal and professional growth. Some
of the commenters also stated that the Secretary's proposed
regulations would provide a level playing field that benefits the
majority of institutions of higher education that are committed
to sound academic and administrative practices.
Discussion: The Department appreciates the numerous
comments we received in support of the proposed regulations.
Changes: None.
Comment: Several commenters disagreed with the process by
which the Department developed the proposed regulations.
The commenters believe that the Department did not negotiate
in good faith and did not follow faithfully the Federal
negotiated rulemaking process. These commenters believed
that the Department excluded important members of the
proprietary school sector from the process and failed to
provide adequate time for review of and comment on the
proposed regulations. Because of the complexity of the
proposed regulations, these same commenters also requested
that the Department delay the effective date for
implementation of the final regulations. Several other
commenters believed that before negotiating proposed
regulations with such a broad scope, the Department should
have conducted studies to assess the impact the proposed
regulations would have on affected institutions. Lastly, one
commenter expressed the view that the Department began
negotiations without presenting examples of abuse or data that
supported additional regulation and that many of the
Department's concerns about program integrity could have
been better addressed by enforcing current regulations.
Discussion: We disagree with the commenters who said that
the Department did not act in good faith in negotiating the
proposed regulations or that we did not follow the negotiated
rulemaking process. In conducting the negotiated rulemaking
for these proposed regulations, the Department followed the
requirements in section 492 of the HEA, which govern the
negotiated rulemaking process and require the Department to
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choose non-Federal negotiators from the groups involved in
the student financial assistance programs authorized by title
IV of the HEA. As addressed earlier in this preamble, all of
these groups were represented during the negotiations.
We believe that the 45-day public comment period was an
adequate period of time for interested parties to submit
comments, especially in light of the fact that prior to issuing
the proposed regulations, the Department conducted public
hearings and three negotiated rulemaking sessions, where
stakeholders and members of the public had an opportunity to
weigh in on the development of much of the language reflected
in the proposed regulations. In addition, we believe that the
45-day public comment period is necessary in light of the
HEA's master calendar requirements. Under those
requirements, the Department must publish final regulations
by November 1, 2010, in order for them to be effective on July
1, 2011. The Department must adhere to the master calendar
set forth by Congress and does not have the statutory authority
to amend it.
We also do not agree that, except for certain provisions of the
regulations such as those that may involve systems changes
that require adequate lead time to make, implementation of
the final regulations should be delayed. For example, the
proposed regulations on FAFSA verification cannot be
implemented by the July 1, 2011 effective date because the
changes would require system updates that will not be in place
by that date. We discuss the implementation delay of
regulations that involve these system changes elsewhere in this
preamble. Absent these system-related or similar issues,
however, we believe a delay in implementing the final
regulations will undermine the Department's goal of
protecting taxpayers and students by ensuring the integrity of
the title IV, HEA programs.
Lastly, we disagree with the commenters who stated that the
Department should have conducted a study to assess the
impact of the proposed regulations on institutions of higher
education before negotiating the proposed changes and those
commenters who stated that the Department did not present
examples of abuse or data to support the proposed regulations.
The Department's decision to improve program integrity by
strengthening the regulations was based on many factors,
including feedback we received from the public. Specifically,
the Department developed a list of proposed regulatory
provisions based on advice and recommendations submitted
by individuals and organizations as testimony in a series of
three public hearings in June of 2009, as well as written
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comments submitted directly to the Department. Department
staff also identified issues for discussion and negotiation. The
proposed regulations that were negotiated during negotiated
rulemaking and included in the proposed regulations were
developed for one or more of the following reasons:
To implement provisions of the HEA, as amended by the
Higher Education Opportunity Act of 2008 (HEOA).
To update current regulations that had not been updated
in some time so that they more accurately reflect the state
of the law as well as the Department's current practices
and policies (e.g., aligning the regulations with the
Department's FAFSA simplification initiative).
To respond to problems identified by students and
financial aid advisors about the aggressive sales tactics
used by some institutions.
To respond to a report from the United States
Government Accountability Office published in August of
2009 that raised concerns about proprietary institutions
and recommended stronger Department oversight to
ensure that only eligible students receive Federal student
aid.
We believe that all of these factors provided ample support for
the Department to immediately propose stronger regulations
to protect students and prevent fraud and abuse in the title IV,
HEA programs.
Changes: None.
Comment: Many commenters expressed concern about what
they argued would be a negative impact of the proposed
regulations on institutions of higher education, particularly
proprietary institutions. These commenters stated that the
proposed regulations are too complex and too broad in scope
and that, as a result, they would disproportionately impose
burdens on the institutions that serve many of the students
who need the most financial assistance. Other commenters
stated that, in these trying economic times, institutions simply
do not have the resources to administer the disclosure,
reporting, and implementation requirements included in the
proposed regulations. Some of these commenters stated that
they feared that the cost of compliance with these regulations,
which many argued were ambiguous or inconsistent, would
drive their small proprietary institutions out of business.
Several commenters stated that the proposed regulations target
the entire proprietary school sector of higher education, while
the actions of only a few proprietary institutions are cause for
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concern. These commenters decried the Department's “onesize-fits-all” approach to ensuring program integrity.
Lastly,
one commenter requested that the Department indicate in
each section of the final regulations the types of institutions to
which that specific section applies.
Discussion: The Department is aware that some institutions
may have limited resources to implement some provisions of
the final regulations and is committed to assisting these
institutions in every way possible to ensure that all institutions
can comply with program requirements. Several of the changes
are to discrete areas of existing regulations rather than wholly
new requirements. As such, institutions wishing to continue to
participate in the title IV, HEA programs have already
absorbed many of the administrative costs related to
implementing these final regulations. Any additional costs are
primarily due to new procedures that, while possibly
significant in some cases, are a cost of continued program
participation.
The Department believes that the benefits of these regulations
for students, consumers, and taxpayers justify the burdens of
institutional compliance, as discussed, in the Regulatory
Impact Analysis in Appendix A. These regulations strengthen
the Federal student aid programs by protecting students from
aggressive or misleading recruiting practices and clarifying
State oversight responsibilities, providing consumers with
better information about the effectiveness of career colleges
and training programs, and ensuring that only eligible
students or programs receive aid.
We do not believe it is necessary to specifically indicate in each
section which institutions are covered by a particular
regulation because all provisions of these regulations apply to
all postsecondary institutions, unless otherwise specified.
Changes: None.
Comment: A number of commenters stated that the proposed
regulations would harm students who are already
disadvantaged, underserved, and not adequately represented
in postsecondary institutions because they would limit their
choice of educational programs and their chances of getting a
quality education. Other commenters noted that the proposed
regulations could become a barrier to access for needy
students, as well as adult students who work full-time, because
aid may be discontinued for programs that do not meet new
regulatory requirements. Finally, one commenter urged the
Department to ensure that the final regulations further the
objectives of student access and success, and promote quality
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educational programs.
Discussion: We are confident that the regulations
strengthening program integrity are in the best interest of
students, consumers, and taxpayers, and will improve the
quality of the programs offered at institutions by ensuring that
all programs meet a threshold of quality. We believe that
students, particularly disadvantaged, high-need students who
are the most vulnerable, are not well served by enrollment in
programs that leave them with limited or low-paying job
prospects and with crushing debt that they are unable to
repay. Students who complete their educational programs
should not expect results that leave them in a worse situation
than when they began their educational programs. We believe
the regulations will hold institutions accountable and ensure
that students can have confidence in the quality of the
educational programs in which they invest their time, energy,
and money. The Department has a fiscal responsibility to
American taxpayers to ensure the value of education provided
by all institutions and programs that are eligible for Federal
student aid, regardless of whether they are public, private
nonprofit, or proprietary institutions, and these regulations
will aid the Department in achieving the best possible return
on taxpayers' investment.
Changes: None.
Gainful Employment
in a Recognized
Occupation (§§
600.2, 600.4, 600.5,
600.0, 668.6, and
668.8) Gainful
Employment
Reporting and
Disclosure
Requirements (§
668.6)
Back to Top
General
Comment: Many commenters believed that the proposed
reporting and disclosure requirements should apply to all
programs, regardless of the type of institution or credential
awarded, or whether the programs are otherwise subject to the
gainful employment provisions. Alternatively, other
commenters maintained that since these requirements were
targeted to prevent known abuses in the for-profit sector, they
should apply only to those institutions.
A number of commenters supported the proposed
requirements and Web-based disclosure approach. Some of
the commenters urged the Department to require institutions
to provide the information under § 668.6(b) in a clear,
prominent, user-friendly, and easily understood manner. The
commenters also recommended that this information be given
directly to prospective students prior to enrolling or making a
verbal or written commitment to enroll. Other commenters
made similar suggestions including making the information
available in a prominent, clear, and conspicuous location in
the first promotional materials conveyed to prospective
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students. Another commenter believed that disclosures could
be helpful if they are offered early in the process and are clear
and conspicuous. However, the commenter opined that there
is virtually no evidence that disclosures impact consumer
decision making in a meaningful way. The commenter further
stated that the fiction that disclosures are sufficient to regulate
markets is especially apparent for low-literate consumers,
citing an example where a client was pressured to enroll in a
medical assisting program at a for-profit institution even
though she dropped out of school in the 9th grade and had a
6th grade reading level. The student did not complete the
program, never found work, and defaulted on her loans. The
commenter concluded that disclosures are not an adequate
counterweight to school overreaching and are useful only in
conjunction with substantive standards.
Discussion: As we noted in the NPRM for these regulations (75
FR 34808-34809), the reporting and disclosure requirements
in § 668.6 apply only to programs that prepare students for
gainful employment, as provided under sections 102(b) and (c)
and 101(b)(1) of the HEA.
With regard to the comments on how an institution should
disclose on its Web site the information required in § 668.6(b),
and when it would be most beneficial to students to receive
this information, we expect institutions to abide by the intent
of the provisions—to enable students to make an informed
choice about a program—by making the disclosures in a clear,
timely, and meaningful manner. To this end, and to help
ensure that the disclosures are easily accessible, an institution
must prominently provide the required information on the
home page of its program Web site and provide a prominent
and direct link to this page on any other Web page about a
program. The information displayed must be in an open
format that can be retrieved, downloaded, indexed, and
searched by commonly used Web search applications. An open
format is one that is platform-independent, is machinereadable, and is made available to the public without
restrictions that would impede the reuse of that information.
In addition, we agree with the suggestion that an institution
should be required to make this information available in the
promotional materials
conveyed to prospective students. To
promote the goal of facilitating informed choice, the disclosure
must be simple and meaningful.
The Department intends to develop in the future a disclosure
form and will be seeking public comment about the design of
the form through the information collection process under the
Paperwork Reduction Act of 1995 (PRA). While the form will
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be developed through that process, the regulations require
institutions to provide clear and prominent notice, delivered to
students at appropriate times and in promotional materials
prior to enrollment. Until a form is developed and approved
under the PRA process, institutions must comply with these
disclosure requirements independently. In addition, we agree
with the comments that disclosures alone are likely to be
inadequate and have proposed to establish program
performance standards in our NPRM on Program Integrity—
Gainful Employment that was published in the Federal
Register on July 26, 2010 (75 FR 43616).
Changes: Section 668.6(b) has been revised to provide that an
institution must prominently provide the information it is
required to disclose about a program in a simple and
meaningful manner on the home page of its program Web site,
and provide prominent and direct links to this page on any
other Web page containing general, academic, or admissions
information about the program. The revised provision also
states that an institution must use the disclosure form
developed by the Secretary when it becomes available and the
disclosure information must be displayed on the institution's
Web site in an open format that can be retrieved, downloaded,
indexed, and searched by commonly use Web search
applications. An open format is one that is platformindependent, is machine-readable, and is made available to the
public without restrictions that would impede the reuse of that
information.
Finally, § 668.6(b) has been revised to provide that an
institution must make the information available in the
promotional materials conveyed to prospective students.
Placement Rates
Comment: Many commenters objected to using the placement
rate calculation in § 668.8(g) arguing that it is overly
burdensome and administratively complex. The commenters
opined that tracking a student for 180 days after graduation
for a period of 13 weeks was too long and believed that it
would be virtually impossible for the Department or any other
auditor to affirm the accuracy of the placement data because
the tracking period represents nothing more than a snap-shot
of how many students were employed for 13 weeks at the time
the data was collected. The commenters asserted that if the
Department requires placement information to be disclosed to
students, the information that an institution currently
provides to its accrediting agency, which routinely assesses
that information, would be more accurate. In addition, the
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commenters were concerned about potential conflicts with the
misrepresentation provisions in subpart F of part 668 on the
grounds that any placement rate disclosed to students would
be obsolete as soon as it was posted to an institution's Web
site. Some of the same commenters objected to the proposed
alternative of relying on State-sponsored workforce data
systems arguing that there is no consistency between the
States that maintain employment outcome data, and that in
many cases the data collected fails to provide a full and
accurate depiction of the demand, growth, and earnings of key
occupations.
A number of commenters opposed using the placement rate
calculation in § 668.8(g) arguing that it is a highly restrictive
measure developed solely for extremely short programs
offered by a few institutions. The commenters noted that an
institution is already required under § 668.41(d)(5) to disclose
any placement rates it calculates and that it would be
confusing to students to disclose any additional rates beyond
those that it is required to calculate under accrediting agency
or State requirements. Some of these commenters suggested
that in cases where an institution is not required by its
accrediting agency to calculate placement rates, the institution
should calculate the rates using a methodology from a national
accrediting agency or the State in which the institution is
authorized to operate. Under either the agency or State
methodology, the commenters requested flexibility in
determining the rates for degree programs because
employment opportunities for graduates of degree programs
are much more diverse than for graduates of occupationally
specific training programs.
One commenter stated that its institution's mission of
educating working adults is at odds with the concept of
placement rates—many of the institution's students are
already employed and enroll to enhance their careers through
further education. In addition, the commenter stated that it
would be impractical to administer a job placement regime for
students taking online programs who reside throughout the
world. The commenter recommended that placement rates be
calculated in accordance with an institution's accrediting
agency or State requirements, but that the proposed
disclosures should not apply where there are no agency or
State requirements. As an alternative, the commenter
suggested that regionally accredited institutions, which are not
required to track employment outcomes, conduct post
graduation surveys asking program graduates if they are
working in their field. An affirmative response would count as
a “placement” even if the graduate maintained the same
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employment he or she had while attending the institution.
Along the same lines, another commenter suggested that the
Department allow an institution that is not required by an
outside agency to calculate placement rates, to develop and
implement a method that best reflects the make-up of its
student body, including surveys, collecting employer
documentation, or other methods.
One commenter objected to using the placement rate
calculation intended for short-term programs in § 668.8(g)
because all of its programs were at or above the baccalaureate
level. While the commenter stated that requiring public
disclosure of relevant outcomes puts pressure on an institution
to ensure that it is providing a good education to its students,
the commenter suggested that unless an institution's
accrediting agency or State requires it to disclose placement
rates, the institution should only disclose rates that it
calculates on an annual basis for internal purposes or any
employment or placement information it receives from
surveying its students. Another commenter made the same
suggestions and asked the Department to clarify that
placement rates would only need to be updated annually.
Another commenter argued that the placement rate
methodology in § 668.8(g) was never intended for gainful
employment purposes and made several recommendations
including:
(1) Excluding from the total number of students who completed
a program during an award year, the students who are unable
to seek employment due to a medical condition, active military
duty, international status, continuing education, incarceration,
or death. In addition, an institution could exclude those
graduates who certify they are not seeking employment or
those that it is unable to locate. The commenter specified the
documentation an
institution would have to obtain for each
of these exclusions.
(2) Removing the requirement in § 668.8(g)(1)(iii) that a
student must be employed, or have been employed, for 13
weeks and allowing students to find employment within 6
months from the last graduation date in the award year.
(3) Replacing the employer certification, income tax form, and
Social Security provisions in § 668.8(g)(3) with other ways
that an institution would verify that a student obtained gainful
employment.
Several commenters suggested using the methodology
developed by a national accrediting agency because the
proposed method in § 668.8(g) does not take into
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consideration circumstances that would prevent graduates
from seeking employment, such as health issues, military
deployment or continuing education, or practical issues
related to the employment of international or foreign students.
Several commenters stated it would be difficult, if not
impossible, for these institutions to obtain the data needed to
calculate placement rates. Some of these commenters
supported the use of State-sponsored workforce data systems,
but cautioned that many community colleges would not be
able to obtain sufficiently detailed placement information
through data matches with these systems to satisfy the
proposed requirements. Other commenters noted that some
States do not have workforce data systems, so institutions in
those States would have to use the non preferred placement
rate methodology under § 668.8(g). Many of the commenters
believed the requirement to document employment on a caseby-case basis under § 668.8(g)(2) would be overly burdensome
and labor intensive. Others opined that the placement
provisions are counterproductive, claiming that a substantial
number of community colleges eschewed participating in
programs under the Workforce Investment Act because of
placement rate requirements. On the other hand, another
commenter supported the placement rate provisions and
recommended that all institutions in a State participate in a
workforce data system, if the State has one. The commenter
asked the Department to clarify how the data obtained from a
workforce data system would be used to meet the placement
rate requirements and the timeline for reporting those rates.
In addition, the commenter suggested revising the placement
rate provisions in § 668.8(g) to more closely align those
provisions with practices used by State data systems.
One commenter stated that in order to receive Federal funding
under the Carl D. Perkins Career and Technical Education Act,
a program must receive State approval that entails a review of
documentation requiring that the program be high demand,
high wage or in an emerging field. As part of the State review,
the institution provides documentation of potential placement.
The commenter recommended that the Department waive the
gainful employment provisions for all certificate programs
approved by the State under this review process.
A commenter supported disclosing placement rate data, but
noted that the institution would only be able to report on
graduates who are employed in the State or continued their
education. The institution would not be able to provide
occupationally specific placement data, or data about
graduates who find employment outside the State, because the
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State's labor data base only tracks (1) the type of business a
graduate is employed by, not the occupation of the graduate,
and (2) graduates who are employed in the State.
Several other commenters supported the proposed placement
rate disclosures, but believed that the provisions in § 668.8(g)
were inadequate. The commenters made several suggestions,
including:
(1) Expanding the category of students who complete a
program (currently in § 668.8(g)(1)(i)) to include students
who are eligible for a degree or certificate. The commenters
stated they are aware of institutions that delay providing the
degree or certificate to students, which omits these students
from the placement rate calculation.
(2) Specifying that the time standards in § 668.8(g)
(employment within 180 days of completing a program and
employment for 13 weeks) also apply to rates calculated from
State workforce data systems.
(3) Specifying that employment must be paid. The commenters
stated they are aware of institutions that have counted
students in unpaid internships as being employed.
(4) To be counted in the placement rate, providing that a
student must find employment in one of the SOC codes
identified for the program unless the student finds a job that
pays more than any of the identified SOC codes. The
commenters believed that some institutions stretch the
concept of a “related” comparable job as currently provided in
§ 668.8(g)(1)(ii). For example, an institution might include
any job at a hospital, including the lowest paying jobs, when
the student was trained for a skilled job such as an x-ray
technician. The higher earnings recommendation would
condition a successful placement but allow an institution to
count a student employed in an unrelated SOC.
(5) To address the situation where a student cannot qualify for
employment until he or she passes a licensing or certification
examination, providing that the 180-day period during which
the student would otherwise have to find employment should
start after the results of the examination are available.
(6) To be counted in the placement rate, specifying that a
student must work for at least 32 hours per week. The
commenters stated that they are aware of institutions that
include as successful placements any student that works at any
time during a week, even if it is only for a few hours per week.
(7) Specifying that institutions must use a State data system if
it is available to ensure accurate reporting.
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(8) If the institution chooses to demonstrate placement rates
by salary, providing that documentation must include signed
copies of tax returns, W-4s or paystubs to document earnings.
(9) To more thoroughly substantiate placement rates, requiring
the auditor who performs the institution's compliance audit
under § 668.23 to directly contact former students and
employers whose statements were obtained by the institution.
Discussion: We are persuaded by the comments that using the
methodology in § 668.8(g) may not be the most appropriate
method for determining the placement rate for the majority of
the programs that are subject to the gainful employment
provisions. Moreover, in view of the varied suggestions for
how the rate should be calculated, documented, and verified,
in early 2011 we will begin the process for developing the
method to calculate placement rates for institutions through
the National Center for Education Statistics (NCES). These
final regulations establish some reporting requirements using
existing placement data as explained below, with a transition
in a later period for institutions to disclose placement rates
obtained from the NCES methodology. NCES will develop a
placement rate methodology and the processes necessary for
determining and documenting student employment and
reporting placement data to the Department using the
Integrated Postsecondary Education Data System (IPEDS).
NCES employs a collaborative process that affords the public
significant opportunities to participate in making, and
commenting on, potential changes to IPEDS. Potential
changes are
examined by the IPEDS Technical Review Panel
(TRP), which is a peer review panel that includes individuals
representing institutions, education associations, data users,
State governments, the Federal government, and other groups.
The TRP meets to discuss and review IPEDS-related plans and
looks at the feasibility and timing of the collection of proposed
new items, added institutional burden, and possible
implementation strategies. After each meeting, a meeting
report and suggestions summary is posted to the IPEDS Web
site. The postsecondary education community then has 30
days to submit comments on the meeting report and summary.
After those comments are considered, the Department
requests the Office of Management and Budget (OMB) to
include the changes in the next IPEDS data collection. This
request for forms clearance is required by the Paperwork
Reduction Act of 1995, as amended. A description of the
changes and the associated institutional reporting burden is
included in the request which is then published by OMB as a
notice in the Federal Register, initiating a 60-day public
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comment period. After that, a second notice is published in the
Federal Register, initiating a 30-day public comment
period. Issues raised by commenters are resolved, and then
OMB determines whether to grant forms clearance. Only OMB
cleared items are added to the IPEDS data collection.
Although we agree with the commenters that the data
maintained or processes used by workforce data systems may
vary State by State, and that the data systems are not available
to all institutions or in all States, we continue to believe that
these data systems afford participating institutions an efficient
and accurate way of obtaining employment outcome
information. However, because of State-to-State variances and
in response to comments about how employment outcome
data translate to a placement rate, NCES will develop the
methods needed to use State employment data to calculate
placement rates under its deliberative process for IPEDS.
Until the IPEDS-developed placement rate methodology is
implemented, an institution that is required by its accrediting
agency or State to calculate a placement rate, or that otherwise
calculates a placement rate, must disclose that rate under the
current provisions in § 668.41(d)(5). However, under new §
668.6(b), the institution must disclose on its Web site and
promotional materials the placement rate for each program
that is subject to the gainful employment provisions if that
information is available or can be determined from
institutional placement rate calculations. Consequently, to
satisfy the new disclosure requirements, an institution that
calculates a placement rate for one or more programs would
disclose that rate under § 668.6(b) by identifying the
accrediting agency or State agency under whose requirements
the rate was calculated. Otherwise, if an accrediting agency or
State requires an institution to calculate a placement rate only
at the institutional level, the institution must use the agency or
State methodology to calculate the placement rate for each of
its programs from information it already collects and must
disclose the program-specific placement rates in accordance
with § 668.6(b).
Changes: Section 668.6(b) has been revised to specify that an
institution must disclose for each program the placement rate
calculated under a methodology developed by its accrediting
agency, State, or the National Center for Education Statistics
(NCES). The institution must disclose the accrediting agency
or State-required placement rate beginning on July 1, 2011 and
must identify the accrediting agency or State agency under
whose requirements the rate was calculated. The NCESdeveloped placement rate would have to be disclosed when the
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rates become available.
On-Time Completion Rate
Comment: Many commenters asked the Department to clarify
the meaning of “on-time” completion rate. Other commenters
assumed that “on-time” completion referred to the graduation
rate currently calculated under the Student Right to Know
requirements in § 668.45, or encouraged the Department to
either (1) adopt the current requirements in § 668.45 for
gainful employment purposes, or (2) use a completion rate
methodology from an accrediting agency or State, to minimize
confusion among students and burden on institutions. One of
the commenters suggested that if the Department intended
“on-time” to mean 100 percent of normal time for completion,
then the proposed rate should be calculated in the same
manner as the completion rate in § 668.45 for normal time
and incorporate the exclusions for students transferring out of
programs and other exceptions identified in § 668.45(c) and
(d). Another commenter opined that absent significant
enforcement to ensure that all institutions consistently use the
same definition of “on-time” completion rate, students will be
unfairly led to believe that institutions who report
conservatively have less favorable outcomes than institutions
who report aggressively. One commenter cautioned that it may
be misleading to focus heavily on graduation and placement
rates, particularly for institutions whose students are
employed while seeking a degree.
A number of commenters supported the “on-time” completion
requirement, and in general all of the proposed disclosures,
stating that providing outcome data would allow prospective
students to make more informed decisions. The commenters
believed that better outcome data will help to ensure that the
taxpayer investment is well spent, and that students are
protected from programs that overcharge and under-deliver.
A commenter stated that under State licensing requirements
for cosmetology schools a student must be present, typically
for 1,500 hours, to qualify for graduation and to complete the
program. Taking attendance and ensuring that a student is
present for these hours is typically required. The commenter
reasoned that for a student to complete the program “on-time”
the student could not miss a single day or even be late for
classes as opposed to a credit hour program where a student
does not have to attend classes 100 percent of the time but will
still be considered to satisfy the on-time requirement. To
mitigate the difference between clock and credit hour
programs and account for legitimate circumstances where a
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student would miss classes, the commenter suggested that the
standard for “on-time” incorporate the concept of a maximum
timeframe under the satisfactory academic progress provisions
that allow a student to complete a program at a specified rate.
Discussion: In proposing the on-time completion rate
requirement, the Department intended to include all students
who started a program to determine the portion of those
students who completed the program no later than its
published length. This approach differed significantly in two
ways from the completion rate under the Student Right to
Know (SRK) provisions in § 668.45. First, in calculating the
completion rate the SRK methodology includes in the cohort
only full-time, first-time undergraduate students, not all
students. Second, the SRK rate is based on 150 percent of
normal time, not the actual length of the program. However, in
view of the comments suggesting that we use the SRK
methodology, or a modified version, we examined whether the
cohort of students under SRK could be expanded to include all
students and from that,
whether a completion rate could be
calculated based on normal time, as defined in § 668.41(a). We
concluded that doing this would be difficult and too complex
for institutions and the Department.
We believe prospective students should know the extent to
which former students completed a program on time, not only
to ground their expectations but to plan for the time they will
likely be attending the program—an important consideration
for many students who cannot afford to continue their
education without earnings from employment. Therefore, to
minimize burden on institutions while providing meaningful
information to prospective students, an institution must
calculate an on-time completion rate for each program subject
to the gainful employment provisions by:
(1) Determining the number of students who completed the
program during the most recently completed award year.
(2) Determining the number of students in step (1) who
completed the program within normal time, regardless of
whether the students transferred into the program or changed
programs at the institution. For example, the normal time to
complete an associate degree is two years. The two-year
timeframe would apply to all students who enroll in the
program. In other words, if a student transfers into the
program, regardless of the number of credits the institution
accepts from the student's attendance at the prior institution,
the transfer credits have no bearing on the two-year
timeframe. This student would still have two years to complete
from the date he or she began attending the two-year program.
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To be counted as completing on time, a student who enrolls in
the two-year program from another program at the institution
would have to complete the two-year program in normal time
beginning from the date the student started attending the
prior program.
(3) Dividing the number of students who completed within
normal time in step (2) by the total number of completers in
step (1) and multiplying by 100.
With regard to the commenter who believed that a student
could not miss a single day of classes to complete a program
on time, we note that under § 668.4(e) a student can be
excused from attending classes. Under this section, a student
may be excused for an amount of time that does not exceed the
lesser of (1) any thresholds established by the institution's
accrediting agency or State agency, or (2) 10 percent of the
clock hours in a payment period. Absent any State or
accrediting agency requirements, for a typical payment period
of 450 clock hours a student could miss 45 hours. In the
commenter's example of a 1,500 clock hour program, the
student could miss 150 hours and still complete on time for
this requirement. Also, under § 668.41(a), normal time for a
certificate program is the time published in the institution's
catalog and that time may include make-up days. So, an
institution could schedule make-up days, as part of normal
time, to enable students who missed classes to complete the
number of hours required for State licensing purposes.
Changes: Section 668.6(b) has been revised to specify how an
institution calculates an on-time completion rate for its
programs.
Median Loan Debt
Comment: Many commenters objected strongly to the
requirement in proposed § 668.6(a)(4) that an institution
report annually to the Department, for each student attending
a program that leads to gainful employment, the amount each
student received from private education loans and
institutional financing plans.
With regard to private education loans taken out by students,
the commenters argued that because the loans are selfcertified, in many cases an institution is not aware of the loans
and should only have to report the amount of the private loans
it knows about or the amount of those loans that were paid
directly to the institution. Commenters representing students
and consumer advocacy groups contended that most
institutions have preferred lender lists, help students arrange
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private loans, recommend a lender, receive student payments
from a lender, or otherwise have information about the lender.
Consequently, to clarify that an institution cannot avoid
reporting on private loans by feigned ignorance, the
commenters suggested that an institution report any private
loan it knows about or should reasonably know about. To
clarify the meaning of “private education loan” one commenter
suggested that the Department reference the definition in §
601.2.
With regard to institutional financing plans, many
commenters, argued that an institution should only be
required to report the amount of any remaining institutional
loans or debt obligations owed by a student after he or she
completes the program, not the amount of the loan or credit
extended to the student at the start of, or during, the program.
Many commenters asked the Department to clarify whether
median loan debt would include only loan debt incurred by
students who completed a particular program or loan debt
incurred from previously attended programs or institutions.
Some of the commenters argued that it would be difficult to
determine the relevant loan debt of students who enroll in
postbaccalaureate certificate programs and end up
concurrently pursuing an associated master's degree. The
commenters argued that extracting the portion of debt that
applies to the certificate would be difficult, but reporting based
on the total debt accumulated during the graduate-level
enrollment period would overstate the amount borrowed if the
intent was to report on the certificate program. They also
believed that an institution would have to track loan debt
pertaining to credits accepted for a program that were not
necessarily earned by students who continue in a graduate
program, including transfer credits accepted from other
institutions. In addition, the commenters believed that for any
undergraduate work that “transfers up,” the portion of the
loan debt from that period would have to be identified. In view
of these complexities and considering that two-year transfer
programs are excluded from the reporting requirements, the
commenters requested a similar exclusion for graduate
certificate programs where the credits apply directly to a
graduate degree. Along the same lines, other commenters
requested that postbaccalaureate certificate programs or
courses such as a certification as a school principal, district
superintendent, or director of instruction be exempted from
these regulations.
A commenter requested an exemption for four-year degreegranting institutions stating that such institutions only have a
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handful of certificate programs that would be of no concern to
the Department.
A few commenters believed that institutions should either (1)
be allowed to disclose separately the amount of loan debt
students accumulate for institutional charges and the amount
incurred for living expenses, or (2) not be required to disclose
loan debt incurred for living expenses because that debt is
incurred at the student's discretion and not be required to
disclose loan debt incurred by a student at prior, unrelated
institutions.
Other commenters urged the Department to use the mean
instead of the median loan debt arguing that using median
debt would unjustly penalize students attending institutions
with larger numbers of borrowers by
providing a competitive
advantage to institutions with smaller populations of student
loan borrowers.
Many commenters supported the proposed requirement for
disclosing the median debt of students who complete a
program, but suggested that institutions should also disclose
the median debt of noncompleters. The commenters stated
that it was one thing for students to be told that 40 percent
graduate with $20,000 in loan debt, but it's another for them
to understand that the majority of students who don't
complete have $15,000 in loan debt they would have to repay.
The commenters believed that separating the disclosures by
completers and noncompleters would enable better
comparisons between programs, and would not create the
appearance of low median debt for programs with low
completion rates. In addition, to minimize burden the
commenters suggested that collecting the data needed to
calculate the median loan debt could appropriately be limited
to programs in which a significant share of students borrow.
According to the commenters, this approach would ensure that
potential students and the Department know when a program
has high student borrowing rates and low completion rates.
Discussion: We agree with the commenters that the debt an
institution reports under § 668.6(a)(4) for institutional
financing plans is the amount a student is obligated to repay
upon completing the program. Under this same section, an
institution must also report the amount of any private
education loans it knows that students received.
The HEOA amended both the HEA and the Truth-in-Lending
Act (TILA) to require significant new disclosures for borrowers
of private education loans. The HEOA also requires private
education lenders to obtain a private loan self-certification
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form from every borrower of such a loan before the lender may
disburse the private education loan.
Although the term “private education lender” is defined in the
TILA, the Federal Reserve Board considers an entity to be a
private education lender, including an institution of higher
education, if it meets the definition of “creditor.” The term
“creditor” is defined by the Federal Reserve Board in 12 CFR
226.2(a)(17) as a person who regularly extends consumer
credit that is subject to a finance charge or is payable by
written agreement in more than four installments (not
including a down payment), and to whom the obligation is
initially payable, either on the face of the note or contract, or
by agreement when there is no note or contract. A person
regularly extends consumer credit only if it extended credit
more than 25 times (or more than 5 times for transactions
secured by a dwelling) in the preceding calendar year. If a
person did not meet these numerical standards in the
preceding calendar year, the numerical standards must be
applied to the current calendar year.
The term private education loan is defined in 12 CFR
226.46(b)(5) as an extension of credit that:
Is not made, insured, or guaranteed under title IV of the
HEA;
Is extended to a consumer expressly, in whole or in part,
for postsecondary educational expenses, regardless of
whether the loan is provided by the educational
institution that the student attends;
Does not include open-end credit or any loan that is
secured by real property or a dwelling; and
Does not include an extension of credit in which the
covered educational institution is the creditor if (1) the
term of the extension of credit is 90 days or less (shortterm emergency loans) or (2) an interest rate will not be
applied to the credit balance and the term of the
extension of credit is one year or less, even if the credit is
payable in more than four installments (institutional
billing plans).
Examples of private education loans include, but are not
limited to, loans made expressly for educational expenses by
financial institutions, credit unions, institutions of higher
education or their affiliates, States and localities, and
guarantee agencies.
As noted previously, the HEOA requires that before a creditor
may consummate a private education loan, it must obtain a
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self-certification form from the borrower. The Department, in
consultation with the Federal Reserve Board, developed and
disseminated the private loan self-certification form in Dear
Colleague Letter GEN 10-01 published in February of 2010.
The Department's regulations in 34 CFR 601.11(d), published
on October 28, 2009, require an institution to provide the selfcertification form and the information needed to complete the
form upon an enrolled or admitted student applicant's request.
An institution must provide the private loan self-certification
form to the borrower even if the institution already certifies
the loan directly to the private education lender as part of an
existing process. An institution must also provide the selfcertification form to a private education loan borrower if the
institution itself is the creditor. Once the private loan selfcertification form and the information needed to complete the
form are disseminated by the institution, there is no
requirement that the institution track the status of a
borrower's private education loan.
The Federal Reserve Board, in 12 CFR 226.48, built some
flexibility into the process of obtaining the self-certification
form for a private education lender. The private education
lender may receive the form directly from the consumer, the
private education lender may receive the form from the
consumer through the institution of higher education, or the
lender may provide the form, and the information the
consumer will require to complete the form, directly to the
borrower. However, in all cases the information needed to
complete the form, whether obtained by the borrower or by
the private education lender, must come directly from the
institution.
Thus, even though an institution is not required to track the
status of its student borrowers' private education loans, the
institution will know about all the private education loans a
student borrower receives, with the exception of direct-toconsumer private education loans, because most private
education loans are packaged and disbursed through the
institution's financial aid office. The institution must report
these loans under § 668.6(a)(4). Direct-to-consumer private
education loans are disbursed directly to a borrower, not to the
school. An institution is not involved in a certification process
for this type of loan.
We wish to make clear that any loan, extension of credit,
payment plan, or other financing mechanism that would
otherwise not be considered a private education loan but that
results in a debt obligation that a student must pay to an
institution after completing a program, is considered a loan
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debt arising from an institutional financing plan and must be
reported as such under § 668.6(a)(4).
The Department will use the debt reported for institutional
financing plans and private education loans along with any
FFEL or Direct Loan debt from NSLDS that was incurred by
students who completed a program to determine the median
loan debt for the program. In general, median loan debt for a
program at an institution does not include debt incurred by
students who attended a prior institution, unless the prior and
current institutions are under common ownership or control,
or are otherwise related entities. In cases where a student
changes programs while attending an institution or
matriculates to a higher credentialed program at the
institution, the Department will associate the total
amount of
debt incurred by the student to the program the student
completed. So, in the commenter's example where a student
enrolls in a postbaccalaureate certificate program and is
concurrently pursuing a master's degree, the debt the student
incurs for the certificate program would be included as part of
the debt the student incurs for completing the program leading
to a master's degree. If the student does not complete the
master's degree program, but completes the certificate
program, then only the debt incurred by the student for the
certificate program would be used in determining the
certificate program's median loan debt.
The Department will provide the median loan debt to an
institution for each of its programs, along with the median
loan debt identified separately for FFEL and Direct Loans, and
for private education loans and institutional financing plans.
The institution would then disclose these debt amounts, as
well as any other information the Department provides to the
institution about its gainful employment programs, on its Web
site and in its promotional materials to satisfy the
requirements in § 668.6(b)(5).
While we generally agree with the suggestion that disclosing
the median loan debt for students who do not complete a
program may be helpful to prospective students, determining
when or whether students do not complete is problematic for
many programs even for students who withdraw or stop
attending during a payment period—those students may
return the following payment period. Because further review
and analysis are needed before we could propose a
requirement along these lines, institutions will need to report
the CIP code for every student who attends a program subject
to the gainful employment provisions and the total number of
students who are enrolled in each of its programs at the end of
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an award year.
In cases where a student matriculates from one program to a
higher credentialed program at the same institution, the
Department will associate all the loan debt incurred by the
student at the institution to the highest credentialed program
completed by the student. To do this, the institution must
inform the Department that even though a student completed
a program, the student is continuing his or her education at
the institution in another program. We wish to make clear that
an institution would still need to provide the information
under § 668.6(a) about each program the student completes.
The Department will include the student's loan debt in
calculating the median loan debt for the program the student
most recently completed, or delay including the student's
associated loan debt in calculating the median loan debt for
the higher credentialed program. The Department will include
the student's associated debt for the higher credentialed
program when the student completes that program. If the
student does not complete the higher credentialed program,
then only the loan debt incurred by the student for completing
the first program would be used in calculating the median loan
debt for the first program.
Similarly, in cases where a student transfers from school A to
school B, the Department will delay including the loan debt
incurred by a student attending a program at school A pending
the student's success at school B. If the student completes a
higher credentialed program at school B, the median loan debt
for that program includes only the student's loan debt incurred
at school B. If the student does not complete the program at
school B, then only the student's loan debt incurred for
completing the program at school A is included in calculating
the median loan debt for the program at school A. In other
words, a student who completes a program and continues his
or her education at the same institution or at another
institution is considered to be in an in-school status and we
will delay using the student's loan debt until the student
completes a higher credentialed program or stops attending.
The following chart and discussion illustrate this process.
School A
School B
Student
Loan
Loan
debt
debt
Certificate
1
$3,000
Completed
Degree
$4,000
Yes
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Yes
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2
Yes
No
3
Yes
Yes
4
Yes
Yes
5
Yes
No
6
Yes
Yes
Same
School
Student 1. Student is in an in-school status until the degree
program is completed at School B. School A and B would
report loan debt for each of their programs. Only the $4,000
debt incurred by the student at School B would be included in
the median loan debt calculation for the degree program
(highest credential completed). The student's loan debt at
School A would not be included in calculating the median loan
debt for the certificate program.
Student 2. Student is in an in-school status while attending
School B, but does not complete the degree program. Only the
$3,000 debt incurred by the student at School A would be
included in the median loan debt calculation for the certificate
program. The student's loan debt at School B would not be
included in calculating the median loan debt for the degree
program because the student did not complete that program.
Student 3. Student is in an in-school status while attending
School B, but the degree program at School B is not subject to
the gainful employment provisions. When the student
completes the degree program, none of the student's debt
would be included in the median loan debt calculation for the
certificate program and no calculation would be performed for
the degree program because it is not subject to the gainful
employment provisions.
Student 4. Student is in an in-school status until the degree
program is completed. All of the student's debt at
the school
is associated to the degree program and included in the
median loan debt calculation for the degree program. None of
the student's debt is included in calculating the median loan
debt of the certificate program.
Student 5. Student is in an in-school status while attending the
degree program, but does not complete that program. Only the
$3,000 debt incurred by the student for completing the
certificate program would be included in the median loan debt
calculation for that program. None of the student's debt would
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be included in the median loan debt calculation for the degree
program because the student did not complete that program.
Student 6. Student is in an in-school status while attending the
degree program, but the degree program is not subject to the
gainful employment provisions. When the student completes
the degree program, none of the student's debt would be
included in the median loan debt calculation for the certificate
program and no calculation would be performed for the degree
program because it is not subject to the gainful employment
provisions.
The Department disagrees with the suggestions that an
institution should not be required to disclose loan debt
incurred by students for living expenses because many
students cannot afford to enroll in a program without
borrowing to pay for living expenses and other educationrelated costs. Identifying only a portion of the loan debt that a
student is likely to incur not only defeats the purpose of the
disclosure but also may be misleading. With respect to the
comments that loan debt related to living expenses should be
disclosed separately from loan debt tied directly to
institutional charges, we are concerned about how institutions
would make or portray these disclosures and believe that
separating the debt amounts would be confusing to
prospective students.
We find little merit in the argument that using median loan
debt, instead of mean loan debt, would provide a competitive
advantage to institutions with fewer student loan borrowers.
Assuming that an institution with fewer borrowers has the
same enrollment as an institution with a large number of
borrowers, then regardless of whether the mean or the median
is used, the loan debt will be lower for an institution with fewer
borrowers because all of the students who do not borrow
would reduce its mean or median loan debt.
When these regulations take effect on July 1, 2011, the
Department will require institutions to report no later than
October 1, 2011 the information described in § 668.6(a) for the
2006-07, 2007-08, and 2008-09 award years. In accordance
with the record retention requirements under § 668.24(e),
most institutions should have the required information. We
note that many institutions may have an existing practice of
keeping student records for longer periods, or do so for State
or accrediting purposes. If an institution has the records for
the earlier periods, it must report the information described in
§ 668.6(a). Institutions that are not otherwise required to
maintain the information for the 2006-07 award year
described in § 668.6(a) at the time this regulation goes into
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effect on July 1, 2011, should consider doing so for their own
purposes. In any case, if an institution is unable to report all or
some the required information, it must provide an explanation
of why the missing information is not available.
Changes: Section 668.6(a) has been revised to provide that in
accordance with procedures established by the Secretary, an
institution must provide (1) information for the award year
beginning on July 1, 2006 and subsequent award years, (2)
information about whether a student matriculated to a higher
credentialed program at the institution, (3) if it has evidence,
information that a student transferred to a higher credentialed
program at another institution, and (4) if the institution is
unable to report required information, an explanation of why
the missing information is not available.
Student Information Database
Comment: Several commenters questioned the Department's
ability to collect data under section 134 of the HEA which
prohibits the Department from developing, implementing, or
maintaining a Federal database of personally identifiable
information. The commenters claimed that obtaining
identifying information on program completers by CIP code
and program completion date would constitute a violation of
section 134 of the HEA. Some of the commenters suggested
that institutions provide only aggregate information for
individuals by CIP code and opined that the completion date
was not necessary and should be removed. These commenters
reasoned that the Department should use existing
information, such as enrollment and loan repayment data in
NSLDS and in any other systems, to determine when students
are enrolled or have completed their program. Another
commenter cited section 134 of the HEA as a reason why an
institution should not be required to provide information on
private or institutional loans.
Because section 134 of the HEA exempts existing systems that
are needed to operate the student aid programs, some
commenters asked the Department to clarify which current
systems would be used to gather the information requested
under proposed § 668.6(a). Several of the commenters did not
believe that institutions should have to collect and report
information for students who completed their programs in the
past three years and requested that the information be
prospective (students who begin attending a program after
July 1, 2011).
Discussion: Section 134 of the HEA places restrictions on the
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Department's ability to develop, implement, or maintain a new
database of personally identifiable information about
individuals attending institutions and receiving title IV, HEA
program funds, including systems that track individual
students over time. It does not prohibit the Department from
including such information in an existing system that is
necessary for the operation of the Federal student aid
programs. In this case, the information being reported is
already a part of the information that is maintained by
institutions in their student financial aid and academic
records, and is subject to compliance and program reviews.
Institutions reporting that students have started or completed
a program for which those students received title IV, HEA
program funds will augment the existing information in the
Department's systems that are used to monitor and maintain
the operations for the title IV, HEA programs. The information
is also being compiled to create aggregate information to
evaluate whether a program demonstrates that it leads to
gainful employment for its students, rather than to monitor
the individual students attending those programs over time.
For those reasons, the reporting and use of this information is
not prohibited under the law.
Changes: None.
Links to O*Net
Comment: Several commenters agreed it was important to
inform students and the public about possible job
opportunities that could result from enrolling in a program,
but were concerned that the proposed requirement would not
serve to accurately inform students. Some of the commenters
believed that the proposed requirements might work for some
programs like teaching and nursing. However, for graduatelevel programs, like MBAs and PhDs in Psychology, institutions
would be required to provide an unwieldy amount of data.
For example, it would be impossible for an institution to
identify and disclose the full range and number of job
opportunities that might exist for MBA graduates. As an
alternative, the commenters suggested that the Department
require schools to disclose the types of employment found by
their graduates in the preceding three years. Other
commenters had similar concerns and suggested that instead
of disclosing all occupations by name and SOC code, the
Department should allow an institution to disclose a sampling
or representative set of links for the occupations stemming
from its programs. Otherwise, the commenters were
concerned that an institution would run afoul of the
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misrepresentation provisions unless it fully and completely
listed all of the SOC and O*NET codes related to each program
offered at the institution. Another commenter suggested that
an institution should only list those occupations in which a
majority of its program completers were placed.
A commenter claimed that it would be confusing and
misleading to provide information on hundreds of jobs. To
illustrate this point, the commenter stated that entering a CIP
code of 52 for “Business, Management, Marketing and Related
Support Services” would lead to 86 codes representing more
than 300 occupational profiles. To avoid confusing students,
the commenter suggested that an institution provide links only
to those careers where its students have typically found
employment.
One commenter thought that the link to O*Net was
unnecessary because students could use search engines to
research potential jobs.
Another commenter supported the O*NET disclosures because
the additional administrative burden was not significant and
the change was long overdue.
Discussion: In general, we do not believe that the links to
O*NET will lead to an unwieldy amount of information when
the full 6-digit CIP code is entered on the SOC crosswalk at htt
p://online.onetcenter.org/crosswalk/. For example, entering
the full 6 digit CIP code, 52.9999, for Business, Management,
Marketing and Related Support Services, identifies only nine
related occupations (SOCs). As shown below, it is these links
to, and the names of, the nine occupations that an institution
must post on its Web site.
52.9999Business, Management, Marketing, & Related Support
Services, Other
11-9151.00Social and Community Service Managers
11-9199.00Managers, All Other
13-1199.00Business Operations Specialists, All Other
41-1011.00First-Line Supervisors/Managers of Retail Sales
Workers
41-1012.00First-Line Supervisors/Managers of Non-Retail
Sales Workers
41-3099.00Sales Representatives, Services, All Other
41-4011.00Sales Representatives, Wholesale and
Manufacturing, Technical and Scientific Products
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41-4012.00Sales Representatives, Wholesale and
Manufacturing, Except Technical and Scientific Products
41-9099.00Sales and Related Workers, All Other
However, for 6-digit CIP codes that yield more than ten
occupations, an institution may, in lieu of providing links to all
the identified SOCs, provide links to a representative sample of
the SOCs for which its graduates typically find employment
within a few years after completing a program.
Changes: Section 668.6(b) has been revised to allow an
institution to provide prospective students with Web links to a
representative sample of the SOCs for which its graduates
typically find employment within a few years after completing
the program.
Disclosing Program Costs
Comment: Many commenters supported the proposal to
disclose program costs. The commenters lauded this
information as more useful to students than disclosing costs by
credit hour or by semester and several commenters
encouraged the Department to make this section of the
regulations effective as soon as possible.
Some commenters indicated that the program costs in
proposed § 668.6(b)(2) differ from the costs an institution
makes available under § 668.43(g). The commenters suggested
that all costs that a student may incur should be disclosed
including charges for full-time and part-time students,
estimates of costs for necessary books and supplies as well as
estimated transportation costs. Other commenters asked the
Department to clarify how program costs under the proposed
Web site disclosures would be calculated differently than those
required in the student consumer information section of the
regulations. In addition, some of these commenters noted that
although § 668.43 requires an institution to disclose program
cost upon request, many students do not know to ask for it, or
the information is not currently presented in a clear manner.
Another commenter noted that the phrase “institutional costs”
could be interpreted to mean only those costs payable to the
institution and recommended that the phrase be changed to
“cost of attendance.”
Several commenters opined that providing program costs
would confuse students. One of the commenters
recommended using just the net price calculator as that would
also ease institutional burden.
Discussion: Although we recently revised § 668.43(a) to
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provide that an institution must make program cost
information readily available, not just upon the request of a
student, that section does not require the institution to
disclose program costs on its Web site. All of the disclosures in
§ 668.6(b), including the disclosure of program costs, must be
on the same Web page to enable a prospective student to easily
obtain pertinent information about a program and compare
programs. Along these lines, and in view of the recent GAO
investigation (see http://www.gao.gov/new.items/d10948t.p
df) raising concerns over program cost information, § 668.6(b)
specifically requires an institution to disclose on the same Web
page (1) Links to O*NET identifying the occupations stemming
from a program or Web links to a representative sample of the
SOCs for which its graduates typically find employment within
a few years after completing the program, (2) the on-time
graduation rate of students completing the program, (3) the
placement rate for students completing the program, (4) the
median loan debt incurred by students completing the
program, and (5) the costs of that program. The institution
must disclose the total amount of tuition and fees it charges a
student for completing the program within normal time, the
typical costs for books and supplies (unless those costs are
included as part of tuition and fees), and the cost of room and
board if the institution provides it. The institution may include
information on other costs, such as transportation and living
expenses, but in all cases must provide a Web link, or access,
to the institutional information it is required to provide under
§ 668.43(a).
Changes: Section 668.6(b) has been revised to provide that an
institution must disclose, for each program, all of the required
information in its promotional materials and on a single Web
page. The institution must provide a prominent and direct link
to this page on the program home page of its Web site or from
any other page containing general, academic, or admissions
information about the program. In addition, this section is
revised to specify that an institution must disclose the total
amount of tuition and fees it charges a student for completing
the
program within normal time, the typical costs for books
and supplies (unless those costs are included as part of tuition
and fees), and the amount of room and board, if applicable.
The institution may include information on other costs, such
as transportation and living expenses, but must provide a Web
link, or access, to the program cost information it makes
available under § 668.43(a).
One-Year Program
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Comment: A commenter supported removing references to
degree programs in proposed § 600.4(a)(4)(iii) believing it
would avoid confusion and misrepresentation of the programs
subject to the proposed regulations on gainful employment.
Another commenter noted that for technical reasons the
Department should have instead revised § 600.4(a)(4)(i)(C).
To better understand which programs would be subject to the
reporting and disclosure requirements in proposed § 668.6,
another commenter asked the Department to clarify whether
the phrase “fully transferable to a baccalaureate degree” means
that every credit must be transferable to that degree.
Discussion: A program is fully transferable to a baccalaureate
degree if it meets the requirements in § 668.8(b)(1)(ii) and
qualifies a student for admission into a third year of a
bachelors degree program.
We agree that proposed § 600.4(a)(4)(iii) should be removed
in order to avoid confusion and misrepresentation of the
programs subject to the regulations on gainful employment.
We also agree that § 600.4(a)(4)(i)(C) should be revised to
state that an institution of higher education provides an
educational program that is at least a one academic year
training program that leads to a certificate, or other nondegree
recognized credential, and prepares students for gainful
employment in a recognized occupation.
Changes: Proposed § 600.4(a)(4)(iii) has been removed and §
600.4(a)(4)(i)(C) has been revised as noted in the discussion
above.
Definition of a Credit
Hour (§§ 600.2,
602.24, 603.24, and
668.8)
Back to Top
General
Comment: Several commenters supported the Secretary's
proposed definition of a credit hour, including a commenter
representing institutional registrars and admissions officers. A
few commenters believed that institutions are already using
this definition. One commenter believed that the Secretary's
definition aligned with New York State's regulatory definition
of a semester hour.
Discussion: We appreciate the support of those commenters
who approved of the definition of a credit hour. Like some
commenters, we believe that many institutions and others,
including States, are already following the definition of a credit
hour or a reasonably comparable standard that would require
minimal or no adjustment for purposes of participating in
Federal programs.
Changes: None.
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Comment: Several commenters believed that during the
negotiated rulemaking process, Federal and non-Federal
negotiators reached tentative agreement on proposed credithour regulations that did not include a definition of a credit
hour. A few commenters believed that during the negotiated
rulemaking process, most non-Federal negotiators were
opposed to a Federal credit-hour definition. Several of these
commenters believed that the Department should adhere to
the proposed regulations agreed upon during the negotiated
rulemaking process and should remove the credit-hour
definition from the regulations.
Other commenters believed that the Federal and non-Federal
negotiators agreed to proposed regulations that relied more
heavily on accrediting agencies and institutions to determine
credit assignment policies. These commenters believed that
the proposed regulations did not appropriately reflect this
position.
Discussion: The commenters are correct in noting that during
the negotiated rulemaking process tentative agreement was
reached on the proposal related to credit hours that did not
include a definition of a credit hour as proposed by the
Department. Tentative agreement was reached by removing
the definition from the proposals to satisfy one non-Federal
negotiator. The Federal and non-Federal negotiators
tentatively agreed to proposed credit hour regulations that
relied heavily on accrediting agencies and institutions in
determining the appropriate credit hours that represented a
student's academic work. We also agree with the commenters
who proposed continuing this reliance to a significant degree,
and we believe that this reliance is reflected in the final
regulations. We note that tentative agreements reached during
the negotiated rulemaking meetings are not binding on the
Department in form or substance. It is not unusual for most if
not all of the substance of a tentative agreement to be included
in a proposed regulation because the Department sees the
benefits that are realized through the discussion process. In
some cases, though, changes may be made upon further
reflection, or to reinstate concepts that may have been
removed in furtherance of an overall consensus that was not
achieved. In the case of the definition of a credit hour we
determined that the proposed definition of a credit hour is
necessary to establish a basis for measuring eligibility for
Federal funding. This standard measure will provide increased
assurance that a credit hour has the necessary educational
content to support the amounts of Federal funds that are
awarded to participants in Federal funding programs and that
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students at different institutions are treated equitably in the
awarding of those funds.
Changes: None.
Institutional Determination and Flexibility
Comment: Many commenters believed that institutions and
accrediting agencies should have the ultimate responsibility
for determining academic credit. Several commenters believed
that institutions must have the discretion to use their existing
systems of self-review and faculty involvement to determine
the appropriate credit to assign to academic activities. Some of
these commenters also believed that institutional processes
are solely capable of considering the unique qualities of each
class, program, professor, and institution. Two commenters
believed that any problems with credit assignment can be
addressed through existing institutional review procedures.
A few commenters agreed with the provision in proposed
paragraph (3) of the credit-hour definition allowing
institutions to provide reasonable “equivalencies” for the
amount of work specified in proposed paragraph (1) of the
definition. Two of these commenters believed that this
provision allows institutions to use alternative methods of
instruction and measures of credit that are more appropriate
for institutions with nontraditional students entering the
modern workforce. These commenters suggested making
proposed paragraph (3) the first paragraph in the credit-hour
definition in § 600.2. Another of these commenters believed
that this provision would allow institutions the flexibility to
use and develop innovative forms of course content delivery.
Several commenters believed that a Federal definition of a
credit hour would undermine the integrity of the American
higher education system
which they believed has been
effective at assigning credit for over 100 years. One
commenter noted that the education community has been able
to reach consensus on credit determinations despite the lack of
a uniform definition.
Many commenters believed that credit hours are
fundamentally measurements of academic achievement and
others believed that the Secretary's only reason for defining a
credit hour is to have a standard measure for determining
eligibility for and distribution of title IV, HEA program funds.
The commenters believed that credit hours should not be
treated as fiscal units. One of these commenters contended
that the systems of assigning academic credit and determining
the distribution of title IV, HEA program funds are different
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and should be kept separate. Another commenter expressed
concern that treating credit hours as fiscal units would cause
the Federal Government to give consideration to fiscal matters
above all others.
Several commenters believed that the Secretary's proposed
definition of a credit hour is too restrictive and does not
account for institutional or programmatic variances. These
commenters believed that a Federal credit-hour definition is
inapplicable to a diverse educational system composed of
different types of institutions, programs, and course formats.
One commenter expressed concern that the proposed credithour definition did not account for events that may occur
within institutions' academic calendars, such as Federal and
religious holidays, natural disasters, or campus safety issues.
This commenter believed that these events may prohibit
institutions' compliance with proposed paragraph (1) of the
credit-hour definition because institutions may not meet the
requirements for classroom instruction or minimum weeks in
a semester.
A few commenters believed that the proposed credit-hour
definition needed more specificity in proposed paragraph (1)
with regard to the quantity of time that constitutes a credit
hour. One commenter suggested revising the proposed
definition to specifically state that a credit hour consists of 50
minutes of instructor contact for every credit earned in a 16
week semester and two hours of out-of-class work for each
credit. Another commenter suggested defining a credit hour in
proposed paragraph (1) of the definition in terms of clock
hours.
One commenter suggested generalizing the proposed definition
of a credit hour to state: (1) A credit hour is a unit of measure
associated with the achievement of prescribed learning
outcomes for a particular course of study, regardless of
instructional delivery, (2) each institution participating in title
IV, HEA programs must define, document, and consistently
apply its process for the determination of credit for the
achievement of learning outcomes, and (3) some institutions
may also adhere to a standard academic credit conversion rate
as defined by their accrediting agency or State agency.
One commenter believed that all accrediting agencies should
be required to use a more general definition of a credit hour
wherein a semester hour consists of at least 15 hours of
classroom contact; 30 hours of supervised laboratory
instruction, shop instruction, or documented independent
study activities; or not fewer than 45 hours of externship,
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internship, or work related experience. This commenter
believed that a quarter hour should consist of at least 10 hours
of classroom contact; 20 hours of supervised laboratory
instruction, shop instruction, or documented independent
study activities; or not fewer than 30 hours of externship,
internship, or work related experience.
One commenter believed that the proposed credit-hour
definition provided institutions with too much autonomy to
determine an equivalent amount of work as defined in
proposed paragraph (1) because there are no standard
measures for student learning outcomes. This commenter
suggested revising proposed paragraph (1) to equate classroom
time with direct faculty instruction and three hours of
laboratory work with one hour of classroom time and two
hours of out-of-class work. The commenter also suggested
revising proposed paragraphs (2) and (3) to require
institutions to establish and document academic activities
equivalent to the work defined in proposed paragraph (1) and
revising proposed paragraph (3) to require institutions to
compare student achievement to the intended outcomes
assigned and student achievement attained for credit hours
measured under proposed paragraph (1).
Discussion: The credit-hour definition in § 600.2 and the
provisions in §§ 602.24(f) and 603.24(c) were designed to
preserve the integrity of the higher education system by
providing institutions, accrediting agencies, and State agencies
recognized under 34 CFR part 603 with the responsibility for
determining the appropriate assignment of credit hours to
student work. Under proposed §§ 602.24(f) and 603.24(c), the
institution's accrediting agency, or recognized State agency if,
in lieu of accreditation, the institution is approved by one of
the four State agencies recognized under 34 CFR part 603,
would be responsible for reviewing and evaluating the
reliability and accuracy of an institution's assignment of credit
hours in accordance with the definition of credit hour in §
600.2. These final regulations employ these basic principles of
reliance on institutions and on accrediting agencies or, if
appropriate, recognized State agencies, for ensuring
institutions' appropriate determinations of the credit hours
applicable to students' coursework.
The credit-hour definition in § 600.2 is intended to establish a
quantifiable, minimum basis for a credit hour that, by law, is
used in determining eligibility for, and the amount of, Federal
program funds that a student or institution may receive. We
believe that the definition of a credit hour in § 600.2 is
consistent with general practice, provides for the necessary
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flexibilities, and may be used by institutions in their academic
decision-making processes and accrediting agencies and
recognized State agencies in their evaluation of institutions'
credit assignments.
We note, however, that institutions, accrediting agencies
recognized under 34 CFR part 602, and State agencies
recognized under 34 CFR part 603 are required to use the
definition in § 600.2 for Federal program purposes such as
determining institutional eligibility, program eligibility, and
student enrollment status and eligibility. We believe that in
most instances the definition will generally require no or
minimal change in institutional practice to the extent an
institution adopts the definition for its academic purposes
rather than maintaining a separate academic standard.
The provisions in §§ 600.2, 602.24, and 603.24 neither limit
nor prescribe the method or manner in which institutions may
assign credits to their courses for academic or other purposes
apart from Federal programs. These regulations do not require
institutions to adopt the definition of a credit hour in § 600.2
in lieu of existing institutional measurements of academic
achievement, but rather to quantify academic activity for
purposes of determining Federal funding. An institution will
be able to continue using the long-standing credit-assignment
practices that it has found to be most effective for determining
credit hours or equivalent measures for academic purposes, so
long as it either ensures conformity, or uses a different
measure, for determining credit hours for Federal purposes.
This position is consistent with the application of other
Federal program requirements. For example, an institution
may choose to define full-time enrollment status in a semester
for academic purposes as 15 semester hours while it defines
full-time for title IV, HEA program purposes as 12 semester
hours under the minimum requirements of the definition of
full-time in § 668.2.
We do not agree that the proposed definition is too restrictive
or is inapplicable in a diverse educational system. Nor do we
believe that the definition would prevent institutions from
taking into consideration events such as Federal and religious
holidays or campus safety issues. In the event of natural
disasters, the Department has consistently provided guidance
on how the regulations may be applied in such exceptional
circumstances. The credit-hour definition allows an institution
to establish an academic calendar that meets its needs and its
students' needs, while ensuring a consistent measure of
students' academic engagement for Federal purposes.
We do not agree with the commenters that paragraph (1) of the
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proposed credit-hour definition needs more specificity of the
term “one hour.” We believe that it is unnecessary to define
one hour as either 50 minutes or one clock hour because the
primary purpose of paragraph (1) of the proposed credit-hour
definition is to provide institutions with a baseline, not an
absolute value, for determining reasonable equivalencies or
approximations for the amount of academic activity defined in
the paragraph.
We do not agree that the proposed definition should be more
generalized or that differing standards should be adopted. A
credit hour is a basic unit for determining the eligibility of
recipients for, and the amount of, Federal assistance that may
be provided to parties participating in Federal programs. We
believe the proposed definition provides a consistent basis for
the equitable treatment of participants and recipients.
Changes: We have revised the definition of credit hour to
clarify the basic principles applied in the proposed definition
of a credit hour to delineate further that it is an institution's
responsibility to determine the appropriate credit hours or
equivalencies. The revision requires that, except as provided in
§ 668.8(k) and (l), an institution determines the credit hours
applicable to an amount of work represented in intended
learning outcomes and verified by evidence of student
achievement that reasonably approximates not less than the
amount of work described in paragraph (1) or (2) of the
definition of credit hour in § 600.2 of the final regulations. The
final regulations also continue to provide that institutions may
establish other measures that approximate the minimum
standards in paragraph (1) or (2) of the definition in § 600.2,
thus permitting each institution to consider the unique
characteristics of its course and program offerings, as well as,
its distinctive student populations.
Comment: Many commenters believed that credit hours do not
represent a reasonable assessment of student learning. Many
commenters believed that the Secretary's proposed definition
of a credit hour dictates that the outdated concept of “seat
time” is the main metric by which program substance should
be judged rather than the appropriate focus on student
learning outcomes.
A few commenters believed that a credit hour, and in
particular, the Carnegie Unit, does not account for academic
rigor. These commenters believed that a student's completion
of a specified number of hours of direct instruction and out-ofclass work does not provide assurance that the student has
acquired a certain level of competency.
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Two commenters believed that the proposed credit-hour
definition does not consider the actual behavior of students in
American higher education. One commenter believed that the
typical student does not spend two hours on out-of-class work
for every hour of instruction. The other commenter believed
that there has not been enough research into the amount of
time that students are engaged in academic activities.
One commenter believed that the Secretary's proposed credithour definition put too much emphasis on work outside of class
instead of student learning outcomes.
A few commenters believed that credit hours are
measurements of educational inputs. One commenter stated
that credit hours, when used to determine eligibility for
financial aid, are only proximate preconditions for student
learning and are equivalent to other input measures such as
scores on standardized tests, high school GPAs, or faculty
degrees.
One commenter believed that the credit-hour definition would
force institutions to treat all students the same, regardless of
ability, as long as they are in class for the specified number of
hours.
One commenter expressed concern that the Secretary's
proposed credit-hour definition does not consider current
efforts in higher education to increase institutional
accountability. This commenter believed that the proposed
credit-hour definition would undermine institutional efforts to
assess student learning outcomes.
Discussion: We do not agree with the commenters that the
credit-hour definition emphasizes the concept of “seat-time”
as the primary metric for determining student work. We
believe that the definition of a credit hour in § 600.2 in these
final regulations emphasizes that institutions may award
credit to courses for an amount of work represented by
verifiable student achievement of institutionally established
learning outcomes.
Eligibility for Federal programs requires that institutions are
able to demonstrate that the amount of work in a course
assigned credit for Federal purposes will constitute a
reasonable approximation of the amount of academic activity
defined in paragraph (1) of the definition of credit hour in §
600.2. Institutions are responsible and accountable for
demonstrating that each course has the appropriate amount of
educational content to receive credit for Federal program
purposes and for students to achieve the level of competency
defined by institutionally established course objectives.
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Changes: None.
Comment: Many commenters believed that a Federal credithour definition will stifle institutions' ability to develop new
and innovative education models, especially with regard to
delivery methods. Several commenters believed that
institutions' ability to respond creatively to changing
pedagogies, circumstances, and student needs would be
limited under the proposed credit-hour definition.
A few commenters believed that the proposed credit-hour
definition would limit innovation in education at a critical
time. One of these commenters believed that because of the
economic recession, institutions need to be more innovative in
developing alternative delivery methods. One commenter
believed that institutions must be able to respond to the
rapidly changing education sector. Another commenter
believed that other nations are currently developing new
educational models and the United States will fall behind these
nations in education.
Many commenters believed that the Secretary's proposed
credit-hour definition would have a negative impact on
alternative delivery methods such as compressed and
accelerated programs,
online and distance education
programs, and hybrid programs with online and in-class
components. A few commenters believed that the proposed
credit-hour definition would particularly suppress innovation
of delivery methods because institutions would be focused on
ensuring they meet the Federal definition of a credit hour and
not on the desired academic outcomes. These commenters
believed that institutions would not be able to respond to
changing student populations by diversifying delivery
methods. A few commenters noted that minority students and
nontraditional students such as veterans, active military
personnel, and working adults would be particularly harmed
because they rely on programs offered through alternative
delivery methods.
Several commenters believed that the proposed credit-hour
definition is not applicable to alternative delivery methods. A
few commenters believed that credit hours are not compatible
with technological advancements in education. These
commenters believed that the proposed credit-hour definition
would minimize the use of technology in education. Some
commenters believed that proposed paragraph (1) assumed a
classroom or lecture based model of instruction and was not
applicable to online or hybrid programs.
A few commenters questioned how to measure direct faculty
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instruction with regard to an online or hybrid program when
no physical classroom exists. Two commenters noted that in
distance education and hybrid programs, the concept of
contact hours does not apply. The commenters recommended
expanding paragraph (3) of the proposed definition to
specifically address that institutions offering nontraditional
programs including distance delivery programs and
accelerated programs may provide institutionally established
equivalencies for the amount of work required in paragraph (1)
within the discretion of the institution.
Several commenters believed that the Secretary's proposed
credit-hour definition would negatively impact how earned
credits are calculated for online and hybrid courses.
One commenter believed that the Secretary's proposed credithour definition represented an effort by the Secretary to
reinstate a regulation that had been removed in 2002 which
required higher education programs that did not operate in a
standard semester, trimester, or quarter system to offer a
minimum of 12 hours of course work per week to maintain
eligibility for title IV, HEA program funds.
Two commenters believed that the Secretary's proposed credithour regulations would legitimize institutions' use of the
Carnegie Unit, which generally consists of a ratio of two hours
of work outside of class for every hour of classroom time, and
increase scrutiny on institutions that do not currently use the
Carnegie Unit. These commenters believed that under the
proposed regulations, an institutional credit system that is not
currently based on the Carnegie Unit would be undervalued
because these institutions would have a significant burden to
develop and demonstrate student achievement of learning
outcomes that their peers using the Carnegie Unit would not
have.
Discussion: We do not agree with the commenters that the
credit-hour definition in § 600.2 will limit institutions'
flexibility to creatively respond to innovations in educational
delivery methods and changing student needs. A fundamental
component of the credit-hour definition in § 600.2 provides
that institutions must determine the academic activity that
approximates the amount of work defined in paragraph (1)
based on institutionally established learning outcomes and
verifiable student achievement. The definition allows
institutions that have alternative delivery methods,
measurements of student work, or academic calendars to
determine intended learning outcomes and verify evidence of
student achievement.
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All institutions participating in title IV, HEA programs have a
responsibility to ensure appropriate treatment of Federal
funds, regardless of course format or educational delivery
method. The definition in § 600.2 provides institutions with a
baseline for determining the amount of student work
necessary for title IV, HEA program eligibility, but does not
specify the particular program formats or delivery methods
that institutions must use.
The credit-hour definition is not a reinstatement of the old “12hour rule,” that was removed from the Department's
regulations in 2002. The 12-hour rule required programs that
did not operate in standard semester-, trimester-, or quarterterm systems to offer a minimum of 12 hours of course work
per week to maintain eligibility for Federal programs. The
credit-hour definition in these final regulations applies to all
institutions, regardless of whether they operate on a standardterm academic calendar. In addition, while the old 12-hour rule
required 12 hours of instruction, examination, or preparation
offered by an institution per week, the credit-hour provisions
in § 600.2 require institutions to provide students with an
amount of work equivalent to the amount of work described in
paragraph (1) of the credit-hour definition.
Changes: None.
Comment: Several commenters objected to proposed
paragraph (3) of the credit-hour definition. A few commenters
believed that paragraph (3) of the proposed credit-hour
definition is vague regarding the entity responsible for
determining “reasonable equivalencies.” A few commenters
believed that the proposed credit-hour provisions did not
provide enough guidance on what academic activities the
Department would accept as reasonable equivalencies for the
amount of work defined in proposed paragraph (1). A few
commenters believed that the term “reasonable” put the
Department in the position of final arbiter on the
determination of reasonable equivalencies.
One commenter believed that proposed paragraph (3) created
uncertainty and the potential for litigation related to whether
an institution's proposed equivalency for the work defined in
paragraph (1) is reasonable. This commenter expressed
concern that institutions would be liable for using
equivalencies that the Department viewed as unacceptable.
One commenter asked for clarification on the types of
corrective actions that the Department can take to enforce the
provisions of the credit-hour definition in proposed § 600.2.
Discussion: Institutions have a responsibility to ensure that the
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use of Federal program funds is in accordance with applicable
regulations. In addition, the Department has the oversight
responsibility to determine that institutions are acting in
accordance with the definition of a credit hour in these final
regulations to ensure the appropriate use of Federal program
funds. It is therefore necessary and appropriate for the
Secretary to review an institution's assignment of credit for
Federal purposes and an accrediting agencies' or State
agencies' evaluations of an institution's credit polices and their
implementation to determine whether an institution is
assigning credit hours for Federal program purposes in
accordance with these final regulations. If an institution is
found to be out of compliance for Federal program purposes
with the credit-hour definition in § 600.2, the amount or Title
IV, HEA funds awarded under the incorrect assignment of
credit hours may be recalculated to establish a repayment
liability owed by the
institution. In cases where the amount
of credit hours assigned to a program is significantly
overstated, the Secretary may fine the institution or limit,
suspend, or terminate its participation in Federal programs.
Changes: None.
Comment: Some commenters believed that the proposed
credit-hour definition would alter institutions' current credit
assignments and courses. A few of these commenters believed
that a Federal definition of a credit hour sets an expectation
that institutions should assign additional credit to courses if
the work exceeds the amount defined in the proposed
definition. One commenter believed that the proposed
definition would increase the amount of class time that
students are required to complete in order to earn credit.
Another commenter believed that the proposed definition
could cause institutions to increase courses' lecture or theory
content and decrease hands-on training.
One commenter believed that the proposed credit-hour
definition would force accrediting agencies to impose
homework requirements on vocational institutions.
Discussion: The credit-hour definition does not require
institutions to alter their assignment of credit to courses for
academic purposes; however, institutions have the
responsibility to demonstrate that credit hours assigned to
courses for Federal program purposes adhere to the minimum
standards of the credit-hour definition in § 600.2. If an
institution determines that its current assignment of credits to
its programs for Federal program purposes does not satisfy the
minimum standards in the regulation, the institution will
either have to reduce the credits associated with the program,
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increase the work required for the program, or both.
There is no requirement for institutions to assign additional
credit to courses if the amount of work exceeds the amount
described in paragraph (1) of the credit-hour definition. We
have revised the credit-hour definition in § 600.2 to clarify
that the amount of work described in paragraph (1) represents
a minimum acceptable level of academic activity for which
credit can be awarded to constitute a credit hour for Federal
purposes. Institutions may use their discretion to assign
additional credit if the amount of work for a course justifies
such an assignment of credit in accordance with § 600.2.
There is no requirement under the credit-hour definition that
would force accrediting agencies to impose homework
requirements on vocational institutions. In general,
institutions will be assessed to determine if they have
established credit hours for title IV, HEA program purposes
that meet at least the minimum standards in the regulation.
Unless the program is subject to the credit-to-clock-hour
conversion requirements in § 668.8(l) and (k), an institution
would be required to determine the appropriate credit hours in
accordance with paragraphs (1) and (2) of the credit-hour
definition in § 600.2 of these final regulations for a program or
coursework in a program that has no student work outside the
classroom.
Changes: We have revised the credit-hour definition in § 600.2
to clarify that the amount of work specified in paragraph (1) is
a minimum standard and that there is no requirement for the
standard to be exceeded.
Comment: One commenter believed that the proposed
provisions in § 600.2 did not appropriately address faculty
workloads or faculty time in class.
Discussion: We do not believe that § 600.2 should address
faculty workloads or faculty time in class as these issues are
institutional administrative considerations outside the scope
of these final regulations which set minimum standards for the
measurement of credit hours.
Changes: None.
Comment: One commenter questioned why the proposed
credit-hour regulations did not address § 668.9 which
provides in paragraph (b) that a public or private nonprofit
hospital-based school of nursing that awards a diploma at the
completion of the school's program of education is not
required to apply the formula contained in § 668.8(l) to
determine the number of semester, trimester, or quarter hours
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in that program for purposes of calculating Title IV, HEA
program funds. This commenter questioned whether for-profit
hospital-based nursing programs would be subject to the
proposed provisions in § 668.8(k) and (l).
Discussion: Section 481A of the HEA and § 668.9(b) specify
that any regulations promulgated by the Secretary concerning
the relationship between clock hours and semester, trimester,
or quarter hours in calculating student grant, loan, or work
assistance under the title IV, HEA programs do not apply to a
public or private nonprofit hospital-based school of nursing
that awards a diploma at the completion of the school's
program of education.
Changes: None.
Comment: One commenter believed that institutions would
need an accrediting or State agency's review of their programs'
compliance with the proposed credit-hour definition in §
600.2. The commenter believed that the regulations are
unclear on how programs should operate in the interim.
One commenter expressed concern that waiting for accrediting
agencies to revise their standards after the proposed
regulations are finalized would be detrimental to institutions
offering programs in alternative formats.
One commenter believed that institutions will be developing
new credit policies and should be afforded an adjustment
period to receive and react to guidance from State agencies on
their credit assignment policies.
Discussion: The provisions in §§ 602.24 and 603.24 provide
that an institution must have a process for assigning credit
that meets its accrediting agency's or State agency's standards,
as well as, the credit-hour definition in § 600.2. An
institution's credit assignment process is subject to review by
its accrediting agency or, in some cases, a State agency
recognized under 34 CFR part 603. We believe that
institutions already have processes for assigning credit and, to
the extent that these existing processes do not comply with
these final regulations, institutions will need to revise their
credit assignments to comply with the credit-hour definition in
these final regulations for Federal program purposes. During
the interim period between the effective date of these
regulations and an accrediting agency's or State agency's
review of institutions' compliance with the credit-hour
definition in § 600.2, an institution is responsible and
accountable for ensuring that its credit-hour assignments
conform to the provisions of the credit-hour definition in §
600.2 of these final regulations and that its processes are in
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accord with its designated accrediting agency's or recognized
State agency's requirements.
Changes: None.
Out-of-Class Student Work
Comment: Several commenters did not agree with the
component of proposed paragraph (1) of the credit-hour
definition related to student work outside of class. A few
commenters believed that an institution cannot determine
how much time students spend on work outside of class and
that quantifying work outside of the class does not account for
variations in students' learning abilities and styles. One
commenter believed that the Secretary's proposed credit-hour
definition did not take into account the nature of different
courses. This commenter believed that certain courses require
more direct faculty instruction and supervision while other
courses may require more study outside of the classroom.
Two commenters did not agree with the Secretary's proposed
credit-hour definition with regard to the ratio of classroom
time to time outside of class and suggested revising the
proposed definition to allow for more direct classroom
instruction. These commenters recommended revising
proposed paragraph (1) to define a credit hour as one hour of
classroom or direct faculty instruction and a minimum of two
hours of student work in or out of the classroom.
One commenter recommended that the Department
distinguish class time from time outside of class by making
explicit in the proposed definition that class time refers to
instruction.
One commenter asked for clarification of proposed paragraph
(2) regarding whether a credit hour awarded for laboratory
work must consist of one-hour work in the laboratory and two
hours outside the laboratory performing either preparation or
follow up activities.
Discussion: Institutions must demonstrate that the credit
hours awarded for the amount of academic work necessary for
Federal program purposes approximates the amount of work
defined in paragraph (1) of the definition of credit hour in §
600.2. The credit-hour definition in § 600.2 sets a minimum
standard and institutions may offer additional hours of
instructional time to courses or provide for additional student
work outside of class beyond what is specified in paragraph (1)
of the definition at their discretion. We do not believe it is
necessary to decrease the amount of out-of-class time specified
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in paragraph (1) of the definition.
We do not want to limit the interpretation of class time only to
direct instruction in order to take into consideration other inclass activities such as examinations. Similarly, the provisions
related to laboratory work in paragraph (2) of the definition do
not require one hour of work in the laboratory and two hours
of out-of-class work related to the laboratory. Paragraph (2) of
the credit-hour definition allows institutions to use their
discretion to determine the in-class and out-of-class
components for laboratory work to the extent the credit
awarded reasonably approximates the requirements of
paragraph (1) of the credit-hour definition in § 600.2. An
institution's basis for making this determination would be
subject to review by its accrediting agency, the State agency
recognized under 34 part 603, and the Department in order to
demonstrate that it was reasonable.
Changes: None.
Authority and Need To Regulate
Comment: Several commenters believed that the Secretary
does not have the legal authority to promulgate the proposed
regulations in §§ 600.2, 602.24, 603.24, and 668.8. These
commenters believed the credit-hour definition in proposed §
600.2 represented a Federal intrusion into academic matters.
A few commenters believed that the General Education
Provisions Act (20 U.S.C. 1232a) and the Department of
Education Organization Act (20 U.S.C. 3403) prohibit the
Secretary from exercising undue control of curricula,
programs, administration, and personnel of educational
institutions. These commenters believed that the Secretary
needs explicit Congressional authorization to promulgate
regulations that intrude in the academic decision-making
process at institutions. Two commenters recommended
including language in the final regulations reaffirming that it is
appropriate for institutions and accrediting agencies to
address student achievement, but that it is not within the
Secretary's authority.
Many commenters believed that a Federal definition of a credit
hour represents a Federal intrusion into a core academic issue
and the academic decision-making process. A few of these
commenters expressed concern that a Federal definition of a
credit hour would set a precedent for Federal interference in
other academic matters. One commenter representing
institutional registrars and admissions officers believed the
proposed definition of a credit hour should be revised to
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require an institution to make a reasonable determination of
whether the institution's assignment of credit hours conforms
to commonly accepted practice in higher education as
demonstrated in the portability of such credits to other
institutions of higher education offering similar programs.
One commenter believed that the Secretary is not authorized to
make academic decisions and did not want institutions to be
subject to any adverse administrative action by the
Department if the Department did not concur with an
institution's or accrediting agency's determination of
appropriate credit. This commenter suggested that the final
regulations specify that the credit hours awarded for a
program shall be deemed in compliance with the definition of
a credit hour as defined in § 600.2, where the credit hours
awarded have been approved by the institution's accrediting
agency based upon a review performed in accordance with §
602.24(f).
Several commenters believed that the Secretary's proposed
credit-hour definition was incongruent with existing Federal
laws, State regulations, or accrediting agency policies.
One commenter believed that the proposed credit-hour
definition in § 600.2 could conflict with the Americans with
Disabilities Act of 1990, as amended, which requires entities
such as institutions of higher education to make reasonable
accommodations for students with disabilities.
Several commenters believed that the proposed credit-hour
definition would force some institutions that use credit hours
to use clock hours. These commenters believed that this
change would conflict with some State regulations and is not
required by any other Federal agency.
A few commenters believed that the proposed credit-hour
regulations were harmful to institutions that had been
required to convert from clock hours to credit hours by State
mandates. These commenters believed that these institutions
would be at a disadvantage compared to institutions that were
previously using credit hours. One commenter recommended
that the Department allow institutions that have converted to
credit hours based on State mandates to use State-mandated
clock-to-credit-hour conversion rates to determine Federal
program eligibility.
Several commenters believed that the proposed credit-hour
definition may directly violate some State regulations because
it inherently requires that institutions take attendance.
Discussion: The Secretary is authorized under 20 U.S.C. 1221e-
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3, to make, promulgate, issue, rescind, and amend rules and
regulations governing the manner of operation of, and
governing the applicable programs administered by, the
Department. The intent of the regulations in §§ 600.2, 602.24,
603.24, and 668.8 is not to interfere with the academic
decision-making processes at institutions, accrediting
agencies, and recognized State agencies, but to rely on these
processes to ensure the integrity of the Federal programs,
including the title IV, HEA programs. Fundamental to these
decision-making processes is the measurement of the credit
used to determine the amounts of title IV, HEA program funds
provided to eligible students who are enrolled in eligible
programs. Since the regulations establish a minimum
standard, and institutions may choose to include more work
for their credit hours than the minimum amount, credit hours
at one institution will not necessarily equate to credit hours at
another institution for a
similar program. Thus, we do not
agree with the recommendation that an institution should be
required to demonstrate the portability of such credits to other
institutions of higher education offering similar programs as
we believe such a requirement would, in fact, interfere with the
academic decision-making processes at institutions.
These regulations should not be inconsistent with current
Federal laws, State regulations, and accrediting agencies'
policies because of their intended narrow application to the
determination of eligibility for, and distribution of, Federal
program funds. Therefore, to the extent an institution
determines that it may be necessary to use a current credit
assignment system, for example, to comply with other
requirements such as State mandates, an institution may
continue using its current system for purposes unrelated to
Federal programs.
We do not agree with the commenter that the credit-hour
definition in § 600.2 conflicts with the Americans with
Disabilities Act of 1990, as amended. The credit-hour
definition in § 600.2 does not prohibit institutions from
developing policies for academically accommodating students
with disabilities in accordance with the Americans with
Disabilities Act of 1990, as amended. The credit-hour
definition provides institutions with the flexibility to
determine the appropriate credit hours or equivalencies to
award for student work.
Changes: None.
Comment: Several commenters believed that a Federal
definition of a credit hour is unnecessary. Many of these
commenters noted that there has been no history of fraudulent
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practices in credit assignment by institutions in the nonprofit
sector and that any fraud or abuses identified have been in the
for-profit sector. Some of these commenters believed that it is
unfair to apply a Federal definition of a credit hour to all
institutions. One commenter suggested that the credit-hour
definition apply only to institutions that are not accredited by
regional or specialized accreditors.
A few commenters believed that the Secretary's only motive to
define a credit hour stemmed from a report from the
Department's Inspector General regarding one regional
accrediting agency's accreditation of a for-profit institution it
found to have inappropriate credit-hour policies. One
commenter believed that although there have been problems
reported with some institutions' assignment of credit hours,
these problems were primarily related to two regional
accrediting agencies' evaluation of degree programs and not
with vocational career education programs.
One commenter expressed concern that enforcement of
institutions' compliance with the credit-hour definition would
be directed primarily at for-profit institutions even though
there have been inappropriate credit awarding practices at
nonprofit institutions as well.
A few commenters believed that institutional credit assignment
problems identified in the nonprofit sector are effectively
resolved through the existing processes of accreditation and
institutional self-review.
One commenter suggested that instead of establishing a
Federal credit-hour definition, the Department should require
institutions to describe their credit assignment policies in their
catalogs and promotional materials.
Discussion: The Secretary did not intend to define a credit
hour for Federal program purposes as a punitive measure
against institutions in a particular sector or institutions that
have engaged in inappropriate credit awarding practices in the
past. Instead, the revised credit-hour definition is intended to
provide a minimum, consistent standard for all institutions
regardless of State, sector, or accreditor in determining the
amount of student work necessary to award credit hours
equitably for Federal program purposes.
Changes: None.
Comment: A few commenters believed that a Federal credithour definition is unnecessary because State agencies already
review institutions' credit-hour policies within their general
oversight of an institution's integrity.
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Discussion: We do not agree. Many State agencies do not
perform such oversight activities nor do they use a uniform
standard that would assure the equitable administration of
Federal programs.
Changes: None.
Administrative Burden
Comment: Several commenters believed that the proposed
credit-hour provisions would cause an undue administrative
and financial burden on institutions. A few commenters
believed that institutions would be forced to focus their
administrative resources on ensuring that their programs and
courses conform to the Federal credit-hour definition and
remain eligible for title IV, HEA program funds instead of
other important academic matters such as ensuring program
integrity. Other commenters believed that in order to comply
with the proposed credit-hour definition, institutions would be
burdened with administrative tasks such as reevaluating and
significantly restructuring their credit-assignment systems,
ensuring compliance with their accrediting agency's standards,
reconfiguring the use of classroom space, and recalculating
students' financial aid packages.
One commenter believed that State agencies and accrediting
agencies will be burdened by the requirement to focus on
institutions at a more detailed level and will need to increase
their staffs and costs to account for the increased workload.
This commenter believed that increased costs would be passed
to institutions, and subsequently, to students.
Discussion: We do not believe that assigning credit to courses
in accordance with the definition of credit hour in § 600.2 for
Federal program purposes will cause any significant increase
in administrative or financial burden on institutions.
Institutions participating in Federal programs such as title IV,
HEA programs are already responsible for ensuring the
appropriate treatment of Federal funds, including accurate
distribution of Federal funds to students. Institutions will not
be required to change their current systems of awarding credit
for academic purposes which in many instances will already be
compliant with these final regulations, but some institutions
will be required to make the necessary changes to ensure
accurate and equitable credit assignments for Federal program
purposes.
We do not believe that the credit-hour definition will cause any
significant increase in the administrative burden on
accrediting agencies or State agencies recognized under 34
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CFR part 603. Section 496(a)(5) of the HEA requires
accrediting agencies recognized by the Secretary to evaluate an
institution's or program's “measures of program length and
the objectives of the degrees or credentials offered” which
inherently requires accrediting agencies to evaluate the
courses that constitute institutions' programs.
Changes: None.
Accrediting Agency
Procedures (§
602.24(f))
Back to Top
Comment: Several commenters supported the addition of §
602.24(f). These commenters believed that accrediting
agencies are the appropriate entities to ensure institutions'
compliance with the credit-hour provisions in § 600.2.
Many other commenters believed that the proposed provisions
in § 602.24(f) are unnecessary. These commenters
believed
that the integrity of institutions' assignment of credit hours is
already reviewed and evaluated by accrediting agencies
through a system of peer review. These commenters also
believed that the peer-review system is capable of recognizing
how credit hours are defined in different settings. A few
commenters noted that the Secretary has already permitted
accrediting agencies to perform this function and that
accreditors have been diligent in their duties. One commenter
believed that the Secretary could tighten Federal regulatory
control over institutions' credit-hour policies by revising the
existing accrediting agency recognition regulations in 34 CFR
part 602.
One commenter believed that accrediting agencies have longstanding practices, or in the case of some national accrediting
agencies, formulas that provide reasonable measures of credit
hours.
Discussion: We agree with the commenters who believed that
accrediting agencies' peer-review systems are structured to
evaluate the appropriateness of institutions' credit policies and
assignments in diverse educational settings. Amending §
602.24 to add § 602.24(f) initially was a proposal of the nonFederal negotiators representing accrediting agencies to clarify
their role in overseeing the assignment of credit hours by
institutions as it relates to Federal program requirements.
With the addition of the credit-hour definition in § 600.2, we
added § 602.24(f) regarding an accrediting agency's review of
an institution's policies and procedures for assigning credit
hours, and the institution's application of these policies
because this addition indicates how those requirements fit
together and makes the two regulations consistent.
We note that these provisions relate solely to an accrediting
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agency's consideration of an institution's implementation of
the credit-hour definition for Federal program purposes. The
regulations do not require the accrediting agency to use the
definition of credit hour in § 600.2 for non-Federal purposes
nor do the regulations prohibit an accrediting agency from
only using the definition of credit hour in § 600.2.
We believe that § 602.24(f) is the appropriate place to define
accrediting agencies' responsibilities for reviewing institutions'
processes for assigning credit for title IV, HEA program
purposes because § 602.24 defines the procedures
institutional accreditors must have if the institutions they
accredit participate in title IV, HEA programs.
Changes: None.
Comment: Several commenters did not support the addition of
§ 602.24(f) because they believed the proposed provisions
would allow the Department to indirectly regulate academic
matters. A few of these commenters requested that the
Department add language to the regulations making it clear
that no provision in § 602.24 would permit the Secretary to
establish any criteria that specifies, defines, or prescribes the
procedures that accrediting agencies shall use to assess any
institution's credit-hour policies or procedures.
One commenter believed that by requiring accrediting agencies
to ensure institutions' compliance with the proposed credithour definition in § 600.2, the Department would be placing
accrediting agencies into a quasi-regulatory role for which they
are neither designed nor intended. This commenter believed
that over time accrediting agencies' regulatory role will be seen
as their most important role and accrediting agencies will in
effect become government agents. Another commenter
believed that proposed § 602.24(f) would cause accrediting
agencies to focus on institutions' assignment of credit hours
instead of other valuable areas of review.
One commenter requested clarification of whether § 602.24(f)
would allow the Department to rely exclusively on an
accrediting agency's determination of an institution's
definition and assignment of credit, or whether the
Department would have separate authority under the
regulations to evaluate and regulate an institution's definition
or assignment of credit for title IV, HEA program eligibility
purposes.
One commenter believed that an accrediting agency found to
be permitting inappropriate credit assignment activities at
institutions should be cited and forced to address the
identified issues. Another commenter believed that
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institutions' policies for assigning credit are extremely diverse,
and that the Department is not capable of properly
determining whether an accrediting agency has appropriately
evaluated the variety of institutional policies.
One commenter believed the provisions in § 602.24(f) are
unnecessary because section 496(a)(5)(H) of the HEA requires
accrediting agencies to assess institutions' measures of
program length but does not mandate any quantitative
requirements establishing the components necessary for the
measure of credit.
Discussion: The provisions in § 602.24(f) reflect that
accrediting agencies are the oversight bodies responsible for
evaluating the appropriateness of institutions' policies and
procedures for assigning credit that is consistent with Federal
program purposes. This role is in accordance with the
provisions of the HEA under which accrediting agencies have
the primary responsibility, as part of the oversight triad with
the Federal Government and State agencies, to determine
whether institutions participating in Federal programs such as
the title IV, HEA programs, meet minimum standards of
educational quality. The provisions in § 602.24(f) further
support accrediting agencies in fulfilling these responsibilities
but do not prescribe the methods by which accrediting
agencies must perform these evaluations.
If the Secretary determines that a recognized accrediting
agency does not comply with the provisions in § 602.24(f) for
purposes of Federal programs, or is not effective in its
performance with respect to these provisions, then the
Secretary may restrict or remove the agency's recognition in
accordance with 34 CFR part 602, subpart C.
We do not agree that the provisions in § 602.24(f) are
unnecessary. While section 496(a)(5)(H) of the HEA requires
accrediting agencies to assess institutions' measures of
program length, we believe the provisions in § 602.24(f)
provide necessary clarification regarding the means of
evaluating an institution's assignment of credit hours.
Changes: None.
Comment: A few commenters believed that the provisions in §
602.24(f) were not specific enough with regard to the
requirements for accrediting agencies.
One commenter proposed that the Department require
accrediting agencies to base their evaluations of the validity of
institutions' credit-hour assignments on the manner in which
other institutions offering similar programs assess and accept
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credits for purposes of evaluating credit for transfer.
One commenter asked the Department to revise proposed §
602.24(f)(1)(ii) to specify that accrediting agencies must make
a determination of whether an institution's assignment of
credit hours conforms to the provisions in proposed § 600.2.
One commenter recommended that the Department require
accrediting agencies to prescribe clearly the methodologies
and equivalencies that will be utilized by institutions to
determine the amount of work specified by the credit assigned
to courses as
represented through stated student learning
outcomes and demonstrated achievement of those outcomes,
regardless of the delivery method.
One commenter recommended revising the proposed
accrediting agency requirements in § 602.24(f) to state that in
the case of competency-based programs that do not use clock
hours or classroom time as a basis for credit, an accrediting
agency must determine the appropriate assignment of credit
by reviewing a well-substantiated list of competencies and
assessing documented evidence of student achievement of
competencies.
A few commenters requested that the Department revise
proposed § 602.24(f)(2) to clarify that accrediting agencies
have the authority and autonomy to determine review
methodologies and techniques.
One commenter believed that it would be appropriate for an
accrediting agency to review a sample of an institution's
curriculum to determine whether the credit assignment
policies were being appropriately applied by an institution, but
it would not be appropriate for an accrediting agency to
employ an unspecified sample of other institutions to
determine whether or not the credits awarded for a particular
course or program conformed to commonly accepted practice
in higher education. This commenter suggested revising
proposed paragraph § 602.24(f)(2) to specify that the agency
must sample courses within an institution's program of study.
One commenter suggested that accrediting agencies review
annual institutional submissions of data, policies, and
procedures for assigning credit hours.
Discussion: We do not believe that further specificity is
appropriate or necessary in § 602.24(f). Accrediting agencies
must have the flexibility to review institutional creditassignment processes that may vary widely in their policies and
implementation and may have differing methods for
measuring student work such as direct assessment. We believe
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that accrediting agencies are capable of developing
appropriate methods for evaluating institutional credit
processes without providing further specificity in the
regulations. We note that accrediting agencies must
demonstrate their ability to appropriately review these areas in
order to receive recognition by the Secretary as reliable
authorities on the quality of education or training offered by
the institutions and programs they accredit, and that
evaluation by the Secretary continues during periodic reviews
of accrediting agencies.
We believe that it is not necessary to specify how an accrediting
agency should review a competency-based program that does
not use credit hours or clock hours as a basis for credit. In the
case of a competency-based program, the institution may
either base the assignment of credit on the time it takes most
students to complete the program, or the program must meet
the definition of a direct assessment program in § 668.10. In
the first scenario, the institution's accrediting agency would
review the institution's compliance with the provisions in §
600.2 or § 668.8(k) and (l) as applicable. In the second
scenario, the institution's accrediting agency must review and
approve each of the institution's direct assessment program's
equivalencies in terms of credit hours or clock hours.
Changes: None.
Comment: A few commenters opposed the proposed provisions
in § 602.24(f)(1)(i)(A) and (B) requiring accrediting agencies
to evaluate an institution's policies and procedures for
determining credit hours in accordance with proposed § 600.2
and to evaluate an institution's application of those policies
and procedures to its programs and courses. Two commenters
suggested that the provisions should not require accrediting
agencies to evaluate compliance with proposed § 600.2 but
should permit institutions to justify the manner in which
credit hours are assigned and permit accrediting agencies to
determine whether an institution's application of its policies
and procedures are appropriate. These commenters believed
that the proposed provisions require accrediting agencies to
instruct institutions to follow a specific approach to assigning
credit hours.
A few commenters suggested that the cross reference to the
proposed credit-hour definition in § 600.2 be stricken from
proposed § 602.24(f)(1)(i)(A) and replaced with a provision
requiring accrediting agencies to conduct their review of an
institution's assignment of credit hours consistent with the
provisions of § 602.16(f).
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Discussion: We do not believe that the provisions in proposed
§ 602.24(f) require accrediting agencies to mandate specific
policies for institutions with regard to assigning credit hours to
programs and coursework. However, we do believe that it is
necessary to specify in § 602.24(f) that accrediting agencies
must review an institution's policies and procedures for
determining credit hours, and the application of those policies
and procedures to programs and coursework in accordance
with § 600.2 for title IV, HEA program purposes.
Accreditation by an accrediting agency recognized by the
Secretary is an institutional and programmatic requirement
for eligibility for the title IV, HEA programs.
It is appropriate to specify the responsibilities of an accrediting
agency in reviewing institutions' processes for assigning credit
hours in § 602.24, and not § 602.16. The provisions in §
602.24 are related specifically to procedures accrediting
agencies must have for institutions they accredit to obtain
eligibility to participate in title IV, HEA programs. The
provisions in § 602.16(f) address the processes used by
accrediting agencies in setting standards in statutorily-defined
areas required for agencies to be recognized by the Secretary.
Changes: None.
Comment: A few commenters expressed concern about
proposed § 602.24(f)(1)(ii), which requires accrediting
agencies to determine whether an institution's assignment of
credit hours conforms to commonly accepted practice in
higher education.
A few commenters believed that this proposal was inconsistent
with the proposed credit-hour definition in § 600.2 and
expressed a preference for the language in proposed §
602.24(f)(1)(ii).
One commenter suggested striking this proposed provision
from the regulations and including this information in the
“Guide to the Accrediting Agency Recognition Process” issued
by the Department. This guide was issued in August 2010
under the title “Guidelines for Preparing/Reviewing Petitions
and Compliance Reports.”
One commenter suggested revising proposed § 602.24(f)(1)(ii)
to require accrediting agencies to evaluate institutions'
assignment of credit hours based on a comparative study of
similar institutions.
Discussion: We do not agree that the provisions in §§ 600.2
and 602.24(f)(1)(ii) are inconsistent. The provisions in § 600.2
establish a title IV, HEA program requirement for institutions
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to award credit hours for an amount of academic work that is a
reasonable equivalency to the amount of work defined in
paragraph (1) of the credit-hour definition. By comparison, the
reference to “commonly accepted practice in higher education”
in § 602.24(f)(1)(ii) establishes the parameters for accrediting
agencies to determine whether institutions establish
reasonable equivalences for the amount of work in paragraph
(1) of the credit-hour definition within the framework of
acceptable institutional practices at comparable institutions of
higher education.
We believe that it is necessary to include § 602.24(f)(1)(ii) in
the regulations, rather than solely in the Department's
“Guidelines for Preparing/Reviewing Petitions and
Compliance Reports.” The regulations provide the
requirements for accrediting agencies recognized by the
Secretary whereas the “Guidelines for Preparing/Reviewing
Petitions and Compliance Reports” provides guidance to
accrediting agencies seeking the Secretary's recognition and
does not have the force of regulations. We will rely upon the
accrediting agencies to choose the methods used to evaluate
institutions' processes for assigning credit hours.
Changes: None.
Comment: One commenter expressed concern that the
reference to “commonly accepted practice in higher education”
in proposed § 602.24(f)(1)(ii) may require institutions that
primarily use clock hours to adopt credit-hour assignment
policies that were developed by traditional four-year degree
granting institutions, but are unsuitable for specialized
institutions.
Discussion: The reference to “commonly accepted practice in
higher education” in § 602.24(f)(1)(ii) is not a requirement for
clock-hour institutions to convert to credit hours.
Changes: None.
Notification Requirements
Comment: Several commenters opposed proposed § 602.24(f)
(4) that would require an accrediting agency, that identifies
noncompliance with the agency's policies regarding an
institution's credit assignments during a review under
proposed § 602.24(f), to notify the Secretary of the identified
deficiencies. A few commenters believed that proposed §
602.24(f)(4) lacked due process provisions. Some of these
commenters believed that the notification requirement would
force accrediting agencies to report minor or trivial credit-
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hour problems to the Department. One commenter believed
that institutions would not be afforded an opportunity to
respond to allegations or attempt immediate corrective actions
which may lead to delayed resolutions to credit assignment
problems.
A few commenters believed that proposed § 602.24(f)(4) was
redundant with regard to the existing notification
requirements in § 602.27. These commenters suggested
removing proposed paragraph § 602.24(f)(4) and crossreferencing § 602.27.
One commenter believed that proposed § 602.24(f)(4)
contradicts the requirements of proposed § 602.24(f)(3) which
requires an accrediting agency to take appropriate action to
address any institutional deficiencies it identifies as part of its
review under proposed § 602.24(f)(1)(i).
A few commenters believed that the terms “systemic
noncompliance” and “significant noncompliance” in proposed
§ 602.24(f)(4) need clarification. One commenter suggested
specifying that if an accrediting agency has any reason to
believe that an institution is failing to meet its title IV, HEA
program responsibilities, or is engaged in fraud or abuse, then
that agency must notify the Department in accordance with
existing regulations. Another commenter suggested specifying
that if an accrediting agency determines that an institution
does not develop and adhere to an acceptable credit
assignment policy, then the agency must promptly notify the
Secretary. This commenter also suggested that because
institutions will be developing new credit policies, they should
be afforded an adjustment period to receive and react to
guidance from accrediting agencies on their credit assignment
policies prior to being reported to the Secretary.
Discussion: We agree with the commenters that § 602.24(f)(4)
does not specify due process provisions for institutions.
Section 602.24(f)(4) only requires an accrediting agency to
report its findings and an agency's process of establishing and
reporting a finding will rely upon the agency's own procedures.
The Secretary recognition process ensures that accrediting
agency procedures provide due process. Further, we believe §
602.24(f)(4) is needed because it corresponds to the
provisions in § 602.27 that require an accrediting agency to
submit information upon request from the Secretary about an
accredited or preaccredited institution's compliance with its
title IV, HEA program responsibilities. The provisions in §
602.24(f)(4) specify the agency's existing responsibility under
§ 602.27 with regard to inappropriate institutional processes
for assigning credits.
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We do not agree with the commenter who believed that §
602.24(f)(3) and (f)(4) is contradictory. The provisions in §
602.24(f)(3) require an accrediting agency to take appropriate
action to address any institutional deficiencies it identifies as
part of its review under § 602.24(f)(1)(i). Section 602.24(f)(4),
however, requires an accrediting agency to notify the Secretary
of any severe deficiencies such as systemic or significant
noncompliance with the agency's policies identified at an
institution during a review under § 602.24(f).
The terms “systemic noncompliance” and “significant
noncompliance” do not encompass trivial or minor
deficiencies. The term “systemic noncompliance” refers to an
institutional process for awarding credits that is
fundamentally flawed with regard to assigning credit hours in
accordance with the credit-hour definition in § 600.2 and its
accrediting agencies policies. The term “significant
noncompliance” refers to institutional assignment of credit
hours to individual courses or programs that are particularly
egregious with regard to the compliance with § 600.2.
We do not believe that it is necessary to delay the effective date
of the definition of a credit hour in § 600.2 or § 602.24(f) in
these final regulations. An institution must implement the
definition of a credit hour regardless of whether its accrediting
agency has issued guidance on the implementation of §
602.24(f). While an accrediting agency is required to
implement § 602.24(f) effective July 1, 2011, we will review on
a case-by-case basis, based on an adequate justification as
determined by the Secretary, any reasonable request from an
accrediting agency for a delayed implementation date.
Changes: None.
State Agency
Procedures (§
603.24(c))
Back to Top
General
Comment: Several commenters opposed proposed § 603.24(c).
A few commenters believed that the proposed provisions
would be confusing for State agencies and that State agencies
do not have the administrative capabilities to review
institutions' credit-hour policies. One commenter believed that
the proposed provisions would lead to inconsistencies and
inequalities between States based on States' reviews of
institutions' credit policies and enforcement of institutions'
compliance with the proposed credit-hour definition at §
600.2.
One commenter believed that some State agencies, such as
those in Iowa, would not be able to comply with proposed §
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603.24(c) because the agencies may operate within the defined
scope authorized by the State code and compliance would
require changes in State law. This commenter also believed
that some State agencies would not have the expertise to
evaluate institutions' credit policies.
One commenter suggested specifying that if a State agency
determines that an institution does not develop and adhere to
an acceptable credit assignment
policy, the agency must
promptly notify the Secretary.
One commenter believed that with regard to proposed §
603.24(c)(2), it would be appropriate for a State agency to
review a sample of an institution's curriculum to determine
whether the credit assignment policies were being
appropriately applied by an institution, but it would not be
appropriate for a State agency to employ an unspecified
sample of other institutions to determine whether the credits
awarded for a particular course or program conformed to
commonly accepted practice in higher education. This
commenter suggested revising proposed § 603.24(c)(1) to
require State agencies to evaluate an institution's assignment
of credit hours based on a comparative study of similar
institutions, and to revise proposed § 603.24(c)(2) to specify
that the agency must sample courses within an institution's
program of study.
Discussion: We do not agree with the commenters who
believed that State agencies subject to the recognition criteria
in 34 CFR part 603 will be confused by § 603.24(c) or will lack
the administrative resources to meet these requirements. To
be subject to § 603.24(c), a State agency must be an agency
recognized by the Secretary under 34 CFR part 603 as a
reliable authority regarding the quality of public
postsecondary vocational education in its State. The only
States that currently have recognized State agencies under 34
CFR part 603 are New York, Pennsylvania, Oklahoma, and
Puerto Rico.
As with accrediting agencies that are recognized by the
Secretary, we do not believe it is necessary to define the
specific methods that State agencies recognized by the
Secretary should use to evaluate institutions' processes for
assigning credit hours.
We believe that § 603.24(c)(4) provides the necessary level of
specificity with regard to a recognized State agency's
notification to the Secretary in case of institutional
noncompliance with the credit-hour definition in § 600.2.
Changes: None.
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Program Eligibility:
Clock-to-CreditHour Conversion (§
668.8)
Back to Top
Comment: One commenter questioned whether it is necessary
to have a clock-to-credit-hour conversion if a credit hour is
defined in the regulations and accrediting agencies are
required to review institutional policies for awarding credits to
ensure compliance. Two commenters believed that proposed
§§ 600.2 and 668.8(l) define a credit hour in two different
ways and are therefore inconsistent. These commenters
believed that it is illogical to define credit hours for purposes
of the title IV, HEA programs in different ways depending on
whether or not a program is subject to the clock-hour-tocredit-hour conversion.
Discussion: On October 1, 1990, the Secretary published
proposed regulations (55 FR 40148-40150) to establish
standards for clock-to-credit-hour-conversion for
undergraduate vocational training programs and on July 23,
1993, the Secretary published final regulations (58 FR 3961839623) based on the public comments. The Secretary published
the regulations to address significant abuse in the title IV,
HEA programs, citing, for example, a 309 clock-hour program
that was converted to a 27.7 quarter-credit program. We
believe that the potential for such abuse continues to exist and
that § 668.8(k) and (l) continues to be essential to the
administrative integrity of the title IV, HEA programs. In §
668.8(l)(2) of the final regulations, we have included
consideration by an institution's accrediting agency of the
institution's policies and procedures, and their
implementation, for determining credit hours in a program if
an institution seeks to establish any conversions that are less
than the conversion rate specified in § 668.8(l)(1).
Due to the separate conversion formula in new § 668.8(l),
programs that are subject to the clock-to-credit-hour
conversion in § 668.8(l) are exempted from using the credithour definition in § 600.2. Therefore, we do not believe there is
any inconsistency between the definition in § 600.2 and the
provisions of § 668.8(l).
Changes: None.
Comment: One commenter asked for clarification regarding
whether an institution that was recently approved for a degree
program must wait for students to graduate from the program
before it utilizes the exemption, in proposed § 668.8(k)(1)(ii),
from the requirements to perform a clock-to-credit-hour
conversion under the provisions in proposed § 668.8(l) with
regard to students in a diploma program in which all credits
are fully transferable to the new degree program.
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Discussion: Section 668.8(k)(1)(ii) provides that an
institution's shorter length program is not subject to the
conversion formula in § 668.8(l) if each course within the
shorter program is acceptable for full credit toward a degree
that is offered by the institution that requires at least two
academic years of study. Additionally, under § 668.8(k)(1)(ii),
an institution would be required to demonstrate that students
enroll in, and graduate from, the longer length degree
program. Thus, for a recently approved degree program that is
at least two academic years in length, an institution must use
clock hours for its title IV, HEA programs that are fully
accepted for transfer into the new degree program until
students graduate from the new degree program unless the
institution offers other degree programs, each with graduates,
and all the coursework in the first year of the program is
acceptable for full credit toward one or more of these other
degree programs. After students graduate from the new degree
program, the programs at the institutions that are fully
accepted for transfer into the new degree program will qualify
under the exception in § 668.8(k)(1)(ii). We believe that it is
essential that an institution is able to demonstrate that
students graduate from the longer length degree program to
ensure that the exception provided in § 668.8(k)(1)(ii) is being
appropriately applied. We note that in an instance where a
student is enrolled in a new degree program in which the first
year of study may lead to a certificate or diploma and the
second year provides an associate's degree, any student in the
first year must have eligibility for title IV, HEA programs
determined on a clock-hour basis until students graduate from
the program with a degree after completing the second year.
Changes: None.
Comment: Several commenters did not agree with the
provisions in proposed § 668.8(k)(2)(i)(A) and (B), which
provide for when a program is required to measure student
progress in clock hours.
Two commenters believed that if an institution's State licensing
board or accrediting agency approve a credential to be
awarded in credit hours, then that approval should be
sufficient to award title IV, HEA program funds based on
credit hours. These commenters believed that the provisions in
§ 668.8(k)(2)(i)(A) and (B) create an unnecessary duplication
of services provided by these approving entities. One
commenter believed that this provision would be detrimental
to institutions that have received licensing, accrediting, or
Federal approval to use credit hours because these institutions
would need to convert to clock hours.
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A few commenters believed that proposed § 668.8(k)(2)(i)(A)
is unclear on the requirement to measure student progress in
clock hours. These commenters believed that State agencies'
disclosure and calculation requirements may involve clock
hours
but do not necessarily require that an institution
measure student progress in clock hours. These commenters
recommended revising proposed § 668.8(k)(2)(i)(A) so that an
institution is not required to measure student progress in clock
hours unless the Federal or State authority requires the
institution to measure student progress exclusively in clock
hours. One commenter believed that many accrediting
agencies and State agencies require institutions to include a
clock-to-credit-hour conversion rate as part of the new
program submission process, but it is not the agencies' intent
to consider these credit-hour programs as clock-hour
programs. The commenter suggested adding a provision to
proposed § 668.8(k)(2)(i)(A) so that it does not apply to
institutions that are required to include a clock-to-credit-hour
conversion rate in their accrediting agency or State application
for a new program.
One commenter believed that accrediting agencies' standards
vary with regard to requirements for programs offering a
certain number of clock hours in order for a graduate to be
eligible to take a certification or licensure exam and students'
requirement to attend the programs' clock hours. This
commenter believed that there should be no requirement for a
program to be a clock-hour program unless an accrediting
agency specifies that students must attend the clock hours to
take the certification or licensure exam.
A few commenters believed that credit-hour programs are
more recognized by employers and institutions. These
commenters believed that it is difficult for students in clockhour programs to transfer to credit-hour programs. The
commenters also believed that employer-paid or employerreimbursed tuition programs are generally administered based
on credit hours.
One commenter believed that the proposed clock-to-credithour conversion provisions that only use credit hours were not
consistent concerning States throughout the proposed
regulations.
Discussion: The provisions in § 668.8(k)(2)(i)(A) provide that
a program must be considered a clock-hour program for title
IV, HEA program purposes if the program is required to
measure student progress in clock hours for Federal or State
approval or licensure. We believe that any requirement for a
program to be measured in clock hours to receive Federal or
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State approval or licensure, and any requirement for a
graduate to complete clock hours to apply for licensure or
authorization to practice an occupation demonstrates that a
program is fundamentally a clock-hour program, regardless of
whether the program has received Federal, State, or
accrediting approval to offer the program in credit hours. As
clock-hour programs, these programs are required to measure
student progress in clock hours for title IV, HEA program
purposes. In these circumstances where a requirement exists
for the program to be measured in clock hours, this becomes
the fundamental measure of that program for title IV, HEA
program purposes. This outcome is not changed for such a
program when an institution's State licensing board or
accrediting agency also allows the institution to award a
credential based upon credit hours, or when a State licensing
board may require that a program be measured in clock hours
but the program is approved by the institution's accrediting
agency in credit hours. Further, because the institution is
already required to report or otherwise establish the
underlying clock hours of a program, we do not agree that
provisions in § 668.8(k)(2)(i)(A) and (B) create an
unnecessary duplication of services provided by these
approving entities. We also do not believe that using clock
hours for title IV, HEA program purposes will be detrimental
to institutions that have received licensing, accrediting, or
Federal approval to use credit hours for academic purposes. In
the case of institutions that are required to include a clock-tocredit-hour conversion rate in their accrediting agency or State
application for a new program, we do not believe those
accrediting agency or State requirements would affect the
application of the provisions of § 668.8(k)(2)(i)(A) and (B)
because the institution is clearly required to establish the clock
hours in the program to receive approval.
With regard to the commenters who believed that credit-hour
programs are more recognized and accepted by employers and
institutions, there are no provisions in § 668.8(k) and (l) that
would prevent a program that must be considered a clock-hour
program for title IV, HEA program purposes from also being
offered in credit hours for academic or other purposes. We
agree there was an inconsistency in proposed § 668.8(l)(2)
with State requirements. Proposed § 668.8(l)(2) incorrectly
referred to an institution's relevant State licensing authority
when it should have referred to an institution's recognized
State agency for the approval of public postsecondary
vocational institutions that approves the institution in lieu of
accreditation by a nationally recognized accrediting agency.
This has been corrected.
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Changes: Section 668.8(l)(2) has been modified to remove the
reference from proposed § 668.8(l)(2) to an institution's
relevant State licensing authority and now refers to an
institution's recognized State agency for the approval of public
postsecondary vocational institutions.
Comment: Several commenters did not agree with proposed §
668.8(k)(2)(iii) that provides that an institution must require
attendance in the clock hours that are the basis for credit
hours awarded, except as provided in current § 668.4(e).
Some of these commenters questioned the effect this provision
would have on institutions' attendance policies and asked that
the Department clarify whether institutions are required to
take attendance and have attendance policies that prohibit
students from having absences. Two commenters believed that
institutions would be required to take attendance in clock
hours and credit hours. A few commenters noted that
institutions that recently converted to systems using credit
hours instead of clock hours, but that do not take attendance,
would be particularly burdened.
A few commenters believed that the Department did not
address how institutions should handle typical classroom
absences or extended leaves of absence when calculating clock
hours completed or converting credit hours to clock hours.
One commenter expressed concern that this provision in
proposed § 668.8(k)(2)(iii) would decrease institutions' ability
to address students' needs in regard to absences. A few
commenters asked whether a student must attend 100 percent
of the clock hours in a course in order to receive credit for the
course.
One commenter believed that the proposed provision is
impractical because most institutions use a 50-minute
instructional hour instead of a 60-minute clock hour. This
commenter also believed that the provision was unclear on
whether the relevant clock hours would be considered to be
provided if no instructor appeared for the clock hour.
One commenter believed that the Department should clearly
state in the final regulations that § 668.8(k)(2)(iii) is not
intended to be a test of the reasonable equivalencies that
institutions can develop with regard to determining credit
hours as that term is defined in proposed § 600.2.
Discussion: We believe it is essential for an institution to
require students to
complete the clock hours that are the
basis for the credit hours awarded in a program even when an
institution converts a program to credit hours under the
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provisions of § 668.8(k) and (l). These programs are still
required to contain the clock hours that support the
conversion under the regulations, and institutions are
expected to make sure that those clock hours are completed by
the students, subject to the institution's existing policies for
excused absences and make-up classes.
We do not agree with the commenters who believe that §
668.8(k)(2)(iii) does not provide for excused absences or
would require 100 percent attendance, because the regulations
for clock hour programs already account for excused absences.
Section 668.8(k)(2)(iii) specifically accounts for excused
absences in accordance with the current regulations in §
668.4(e) which provides guidance on when an institution, in
determining whether a student has successfully completed the
clock hours in a payment period, may include clock hours for
which the student has an excused absence. An institution
should ensure that students taking a program in credit hours
are still completing the clock hours associated with the
conversion, and excused absences from the classes should be
within the tolerance permitted in the clock hour regulations.
With regard to a leave of absence, an institution is expected to
ensure that a student returning from an approved leave of
absence still completes the clock hours that are needed to
support the conversion for the program.
We do not agree with the commenter who believed that §
668.8(k)(2)(iii) is impractical because most institutions use a
50-minute instructional hour instead of a 60-minute clock
hour. A clock hour is currently defined in § 600.2 as (1) a 50to 60-minute class, lecture, or recitation in a 60-minute
period; (2) a 50- to 60-minute faculty-supervised laboratory,
shop training, or internship in a 60-minute period; or (3) sixty
minutes of preparation in a correspondence course. We also do
not agree with this commenter's belief that the provision is
unclear on whether the relevant clock hours would be
considered to be provided if no instructor appeared for the
clock hour. If a student is unable to complete a clock hour
because the instructor is not present, there is no clock hour to
be counted towards meeting the required clock hours unless it
may be counted as an approved absence.
Changes: None.
Comment: One commenter believed that the Department
should clearly state in the final regulations that § 668.8(k)(2)
(iii) is not intended to be a test of the reasonable equivalencies
that institutions can develop with regard to determining credit
hours as that term is defined in § 600.2.
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Discussion: We do not believe it is necessary to amend §
668.8(k)(2)(iii) to state that the provision is not intended to be
a test of the reasonable equivalencies that institutions can
develop with regard to determining credit hours as defined in
§ 600.2. The credit-hour definition in § 600.2 specifically
excludes its applicability to a program subject to the
conversion formula in § 668.8(l).
Changes: None.
Comment: Many commenters believed that proposed §
668.8(l) would decrease students' eligibility for title IV, HEA
program funds. These commenters believed that students
enrolled in short-term and nondegree programs measured in
credit hours would unjustly experience a decrease in their
eligibility for title IV, HEA program funds because the
proposed clock-to-credit-hour conversion would require
institutions to use 900 clock hours instead of the current 720
clock hours to support the same amount of credit hours.
These commenters believed that students' decreased eligibility
would force them to withdraw from short-term and nondegree
programs or rely on loans which would increase their debt.
One of these commenters expressed concern that the
decreased eligibility for title IV, HEA program funds would
disproportionately impact nontraditional and financially
disadvantaged students.
Discussion: We do not agree with the commenters who
believed that students currently enrolled in short-term or
nondegree programs would unjustly experience a decrease in
their eligibility for title IV, HEA program funds nor do we
believe that the conversion formula inappropriately impacts
students' title IV, HEA program eligibility. We do not believe
that the clock-to-credit-hour conversion rate in current §
668.8(l) provides equitable outcomes for students taking
similar programs measured in clock-hours and credit hours.
The current regulations result in students in some credit hour
programs having greater eligibility based on a conversion from
clock hours to credit hours that assumed student work outside
of class is always present in the same ratio to the time the
students spend in class. The changes to the conversion formula
in § 668.8(l) of these final regulations provide for a more
equitable accounting for student work outside of class. New §
668.8(l)(2) would provide for conversion based on the varying
rates of work outside class for particular educational activities
within a student's courses or program rather than mandating
the use of a constant ratio that may be incorrect. An institution
applying the appropriate conversion rate to a program in
accordance with § 668.8(l)(1) would be considered compliant
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with § 668.8(l).
Changes: None.
Comment: Many commenters believed that the proposed
clock-to-credit-hour conversion formula would force
institutions to increase the lengths of their programs or offer
associate's degrees in order to retain their eligibility for title
IV, HEA program funds. Several of these commenters believed
that increasing program lengths would cause financial
hardships for students by delaying students' entry into
workforce and increasing tuition. A few commenters believed
that many programs would be potentially eliminated because
of the institutional burden of unnecessarily extending program
lengths.
Discussion: We do not agree with these commenters. Under
the current regulations in § 668.8(d), public and private
nonprofit institutions and proprietary institutions offering
undergraduate programs may have eligible programs with a
minimum of 600 clock hours, 16 semester or trimester hours,
or 24 quarter hours. To the extent that any short-term
programs would not have been eligible for title IV, HEA
program funds in the past due to the inequitable clock-tocredit-hour conversion rate, we believe that students enrolled
in these programs should not have been eligible for title IV,
HEA program funds. Short-term programs offered in credit
hours that contained outside work that met or exceeded the
assumed outside work that was implicit in the conversion
should be in compliance with the new requirements and
unaffected by the change.
Changes: None.
Comment: A few commenters questioned how proposed §
668.8(l) would affect institutional credit policies. One
commenter believed that programs that were designed to be
compliant with the clock-to-credit-hour conversion ratio for a
semester hour in current § 668.8(l) cannot be easily or quickly
changed because using the ratio alters the delivery, design, and
curricular structure of the programs.
One commenter requested clarification of how the conversion
should be applied when one program has courses that require
outside work and other courses that do not.
Discussion: We do not believe that it is necessary for programs
to change their structure or credit assignments for academic
purposes if they are subject to the conversion formula in new §
668.8(l); however, institutions are responsible for ensuring
that the credit hours awarded for title IV, HEA program
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purposes comply with the provisions in § 668.8(l). In some
instances, there may be no discernable difference between
institutions' determinations of credit hours for academic
purposes and title IV, HEA program purposes depending on
the outcome of determinations of work outside of class and
instructional periods within a program. Some institutions may
currently award fewer credits then the existing regulations
allow or would be allowed under the final regulations.
The provisions in § 668.8(l)(2) provide an exception to the
minimum standard for converting clock hours to credit hours
in § 668.8(l)(1) for coursework in a program that qualifies for a
lesser rate of conversion based on additional student work
outside of class. In a case where a program offers courses with
work outside of class, an institution must use the standards in
§ 668.8(l)(1) for the courses without the work outside of class
and may apply the exception in § 668.8(l)(2) to courses with
work outside of class.
Changes: None.
Comment: One commenter supported proposed § 668.8(l)(2)
because it provides institutions the ability to account for work
outside of class. One commenter supported the provision, but
recommended that the Department specify when an
institution is eligible to use work outside of class as part of the
total clock-hour calculation.
A few commenters asked for clarification regarding proposed §
668.8(l)(2) and the work outside of class that may be
combined with clock hours of instruction in order to meet or
exceed the numeric requirements established in § 668.8(l)(1).
These commenters requested clarification on how institutions
should measure student's completion of work outside of class,
whether work outside of class should be identified in course
syllabi, whether work outside of class should be graded, and
what entity should determine that a program is suited to
include work outside of class.
Discussion: Under § 668.8(l)(2), an institution may use a
determination of appropriate amounts of work outside of class
for various educational activities in a course or program in
determining the appropriate conversion rate from clock hours
to credit hours for each educational activity in the course or
program. However, we do not believe that it is appropriate for
the Department to provide more specificity for determining
the appropriate conversion rates for various educational
activities in a course or program. An institution, in accordance
with the requirements of its designated accrediting agency, or
State agency for the approval of public postsecondary
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vocational institutions, recognized under 34 CFR 603, is
responsible for making determinations of the appropriate
credit hours under proposed § 668.8(l)(2). If an institution is
unsure of how to apply the provisions of § 668.8(l)(2) to a
program, it would be considered compliant if it uses the
appropriate conversion ratio specified in § 668.8(l)(1).
Changes: None.
Comment: One commenter suggested eliminating the
provision in proposed § 668.8(k)(2)(ii) that requires
institutions to measure student progress in clock hours in any
program if the credit hours awarded for the program are not in
compliance with the definition of credit hour in § 600.2. The
commenter believed the Secretary's proposed credit-hour
definition in § 600.2 allowed the Secretary to interfere in
academic matters.
Discussion: The definition of credit hour in § 600.2 is intended
to establish a quantifiable, minimum basis for a credit hour for
Federal program purposes, including the title IV, HEA
programs. We believe that it is necessary to establish the
standards by which a program that awards credit hours that
are not in compliance with the definition of credit hour in §
600.2 may still be eligible for title IV, HEA program funds.
Thus, § 668.8(k)(2)(ii) provides that a program that does not
award credit hours in compliance with § 600.2 may still be
eligible for title IV, HEA programs using the underlying clockhours of the program.
Changes: None.
Comment: A few commenters requested clarification on how to
address students that are already enrolled in programs that
may change the measurement of student progress to comply
with proposed § 668.8(k) and (l). A few of these commenters
also requested additional time to comply with the proposed
regulations in these sections. One commenter requested that
current students should be permitted to complete their
programs using the current conversion ratio. One commenter
asked that the Secretary allow institutions that offered credithour programs in the 2010-11 academic year, but will need to
measure student progress in clock hours under proposed §
668.8(k)(2)(i)(B), to continue measuring student progress in
these programs using credit hours.
One commenter asked whether institutions are required to
execute revised Enrollment Agreements with currently
enrolled students when the new regulations take effect.
One commenter suggested that the conversation rate in §
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668.8(l) should not be applied to existing programs for at least
one year from July 1, 2011 to allow for accrediting agencies to
create procedures for assessing institutions' assignment of
credit hours. This commenter added that only new programs
should be required to use the proposed conversion rate.
One commenter requested that the proposed provisions in §
668.8(l)(2)(i) not take effect for two award years in order for
institutions that use clock hours to have time to redesign their
programs.
Discussion: We agree with the commenters' concerns
regarding the applicability of the changes to § 668.8(k) and (l)
to students enrolled prior to the effective date of these
regulations in programs affected by the changes in the
requirements. We agree that for students enrolled in programs
subject to the provisions in § 668.8(k) and (l) as of the July 1,
2011 effective date of these final regulations, an institution
may choose to apply the regulations in current § 668.8(k) and
(l) until these students complete the program or to apply
amended § 668.8(k) and (l) in these final regulations for all
students enrolled in payment periods or assigned to the 201112 and subsequent award years. For students who enroll or
reenroll on or after July 1, 2011 in programs affected by
changes in § 668.8(k) and (l), institutions must determine title
IV, HEA eligibility using § 668.8(k) and (l) in these final
regulations.
We do not agree that a delay in the effective date is needed for
institutions to allow institutions more time to bring their
existing programs into compliance. If an institution's
accrediting agency, or State agency, is not yet compliant with
the provisions of § 602.24(f) for an accrediting agency, or §
603.24(c) for a State agency, the institution must use the
conversion formula in § 668.8(l)(1) of these final regulations
until the State agency and accrediting agency are compliant.
Changes: None.
State Authorization
(§§ 600.4(a)(3),
600.5(a)(4),
600.6(a)(3), 600.9,
and 668.43(b))
Back to Top
General—No Mandate for a State Licensing Agency
Comment: Several commenters believed the proposed
regulations would create mandates for States to create new
State oversight bodies or licensing agencies, or compel States
to create bureaucratic structures that would further strain
higher education resources. Some commenters believed that a
majority of the States would have to modify licensing
requirements or adopt new legislation and that the regulations
would cause a major shift in State responsibility.
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Discussion: These final regulations do not mandate that a State
create any licensing agency for purposes of Federal program
eligibility. Under the final regulations, an institution may be
legally authorized by the State based on methods such as State
charters, State laws, State constitutional provisions, or articles
of incorporation that authorize an entity to offer educational
programs beyond secondary education in the State. If the State
had an additional approval or licensure requirement, the
institution must comply with those requirements. In the case
of an entity established as a business or nonprofit charitable
organization, i.e., not as an educational institution, the entity
would be required to have authorization from the State to offer
educational programs beyond secondary education. While
these final regulations require the creation of a State licensing
agency, a State may choose to rely on such an agency to legally
authorize institutions to offer postsecondary education in the
State for purposes of Federal program eligibility.
Changes: None.
Comment: Several commenters supported the proposed
regulations as an effort to address fraud and abuse in Federal
programs through State oversight. An association representing
State higher education officials noted that despite differences
in State practice, all the States, within our Federal system,
have responsibilities to protect the interests of students and
the public in postsecondary education and supported the basic
elements of proposed § 600.9. A State agency official praised
the Department's proposed regulations but suggested that the
Department insert “by name” in the proposed § 600.9(a)(1) to
provide some protection against recurrence of situations such
as the one in California when the State licensing agency lapsed
prior to the State renewing the agency or a successor to the
agency and no State approval was in place that named an
institution as licensed or authorized to operate in the State.
Discussion: We appreciate the support of the commenters. We
agree with the commenter that a State's authorization should
name the institution being authorized. We believe that by
naming the institution in its authorization for the institution to
offer postsecondary education in the State, the State is
providing the necessary positive authorization expected under
§ 600.9.
Changes: We are amending proposed § 600.9, where
appropriate, to recognize that an institution authorized by
name in a State will meet the State authorization requirements
as discussed further in response to other comments.
Comment: Some commenters believed that the proposed
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regulations exceeded the Department's authority and infringed
on the States' authority. One commenter requested that the
proposed regulations be eliminated because private
institutions are authorized through various unique
authorizations. Another commenter believed that the
proposed regulations upset the balance of the “Triad” of
oversight by States, accrediting agencies, and the Federal
Government. One commenter questioned whether the
Department could impose conditions restricting a State's
freedom of action in determining which institutions are
authorized by the State by requiring that a State's
authorization must be subject to, for example, adverse actions
and provision for reviewing complaints. The commenter
believed that there was no intent to have the Department
impose such conditions. Another commenter believed that
proposed § 600.9 unnecessarily intruded on each State's
prerogative to determine its own laws and regulations relative
to the authorization of higher education institutions and to
define the conditions for its own regulations. One commenter
suggested that the Department only apply proposed § 600.9 to
the problem areas that the commenter identified as
substandard schools, diploma mills, and private proprietary
institutions.
One commenter believed that the proposed regulations would
infringe upon the States' sovereignty by commanding state
governments to implement legislation enacted by Congress.
Specifically, the commenter noted that under the proposed
regulations the States must adopt legislation or rules that
expressly authorize institutions to offer postsecondary
programs and further make such an authorization subject to
adverse action by the State and that the proposed regulations
would require that States establish a process to act on
complaints about the institution and enforce State laws against
the institution. The commenter believed that the Department
would improperly direct State officials to participate in the
administration of a federally enacted regulatory scheme in
violation of State Sovereignty. By doing so, the commenter
believed that the Federal Government would be forcing State
governments to absorb the financial burden of implementing a
Federal regulatory program, while allowing the Federal
government to take credit for “solving” problems without
having to ask their constituents to pay for the solutions with
higher Federal taxes. The commenter believed that the
Department cannot construe the HEA to require a State to
regulate according to the Department's wishes. The
commenter believed that such a construction would exceed the
Department's authority under the HEA and violate the States'
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rights under the Tenth Amendment.
Discussion: We disagree with the commenters that the
proposed regulations exceed the Department's authority and
infringe on States' authority. Under the provisions of the HEA
and the institutional eligibility regulations, the Department is
required to determine whether an institution is legally
authorized by a State to offer postsecondary education if the
institution is to meet the definition of an institution of higher
education, proprietary institution of higher education, or
postsecondary vocational institution (20 U.S.C. 1001 and
1002) as those terms are defined in §§ 600.4, 600.5, and
600.6 of the institutional eligibility regulations. In accordance
with the provisions of the HEA, the Department is establishing
minimum standards to determine whether an institution is
legally authorized to offer postsecondary education by a State
for purposes of Federal programs. The proposed regulations
do not seek to regulate what a State must do, but instead
considers whether a State authorization is sufficient for an
institution that participates, or seeks to participate, in Federal
programs.
Contrary to the commenter's suggestion that the Department is
upsetting the Triad, we believe these regulations clarify the
role of the States, a key participant in the Triad, in establishing
an institution's eligibility for Federal programs. Further, the
Department believes that clarifying the State role in the Triad
will address some of the oversight concerns raised by
another commenter regarding problem areas with certain types
of institutions.
Changes: None.
Comment: Several commenters questioned the need for
proposed § 600.9. For example, several commenters
questioned whether the Department's concern that the failure
of California to reinstate a State regulatory agency was
justified. Commenters believed that the regulations would not
have prevented the concerns the Department identified in the
case of the lapsing of the California State agency. One
commenter believed the California issue was resolved and that
accreditation and student financial aid processes worked.
Some commenters believed that the current State regulatory
bodies or other authorization methods were sufficient. One
commenter stated that authorizations are spelled out in State
statutes, and there is no need for the regulations. Some
commenters believed that additional information is needed,
such as a State-by-State review of the impact of proposed §
600.9, or the States with adequate or inadequate oversight.
Several commenters were concerned that proposed § 600.9
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would unnecessarily impact small States without discernable
problems. Some commenters believed there is no evidence of
marginal institutions moving to States with lower standards
and that there is no danger to title IV, HEA program funds.
One commenter believed that proposed § 600.9 should be
eliminated because the commenter believed that its full effect
is not known and that it will be chaotic if implemented.
Another commenter believed that proposed § 600.9 would be
burdensome, is not economically feasible, and would leave an
institution at the mercy of the State. One commenter believed
that proposed § 600.9 would encourage for-profit institutions
to undermine State agencies such as through lobbying to
underfund an agency and would stall reconsideration of
legislation.
Some commenters believed that the Department's concerns
were valid. One of these commenters believed that, in the
absence of regulations, many States have forfeited their public
responsibilities to accrediting agencies. In the case of the
interim lapse of the State regulatory agency in California, the
commenter believed that we do not know yet the extent of the
mischief that may have occurred or may still occur, but the
commenter has received reports that schools began operating
in the gap period and are being allowed to continue to operate
without State approval until the new agency is operational.
The commenter understood that at least one of those schools
closed abruptly, leaving many students with debts owed and
no credential to show for their efforts.
Some commenters believed that the proposed regulations
would not address issues with degree mills as they are not
accredited. Some commenters urged the Department to offer
leadership and support of Federal legislation and funding to
combat diploma mills.
One commenter recommended that the Department use
Federal funds for oversight. Another commenter suggested
that the Department encourage the Federal Government to
provide incentives to the States.
Discussion: We do not agree with the commenters who believe
that proposed § 600.9 should be eliminated. For example, we
believe these regulations may have prevented the situation in
California from occurring or would have greatly reduced the
period of time during which the State failed to provide
adequate oversight. While it may appear that the California
situation was satisfactorily resolved as some commenters
suggested, the absence of a regulation created uncertainty. As
one commenter noted, during the period when the State failed
to act, it appears that problems did occur, and that no process
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existed for new institutions to obtain State authorization after
the dissolution of the State agency. We are concerned that
States have not consistently provided adequate oversight, and
thus we believe Federal funds and students are at risk as we
have anecdotally observed institutions shopping for States
with little or no oversight. As a corollary effect of establishing
some minimal requirements for State authorization for
purposes of Federal programs, we believe the public will
benefit by reducing the possibilities for degree mills to operate,
without the need for additional Federal intervention or
funding. We do not believe that additional information is
needed to support § 600.9 in these final regulations as § 600.9
only requires an institution demonstrate that it meets a
minimal level of authorization by the State to offer
postsecondary education. Because the provisions of § 600.9
are minimal, we believe that many States will already satisfy
these requirements, and we anticipate institutions in all States
will be able to meet the requirements under the regulations
over time. This requirement will also bring greater clarity to
State authorization processes as part of the Triad. Since the
final regulations only establish minimal standards for
institutions to qualify as legally authorized by a State, we
believe that, in most instances they do not impose significant
burden or costs. States are also given numerous options to
meet these minimum requirements if they do not already do
so, and this flexibility may lead to some States using different
authorizations for different types of institutions in order to
minimize burden and provide better oversight. The question of
whether these regulations will impact the ability of any group
to seek changes to a State's requirements is beyond the
purview of these final regulations. As one commenter
requested, we will continue to support oversight functions as
provided under Federal law, and we believe that these final
regulations will provide the necessary incentives to the States
to assure a minimal level of State oversight.
Changes: None.
Comment: Some commenters questioned how the Department
would enforce the proposed regulations. One commenter
stated that the Department has no mechanism to enforce the
proposed regulations and asks how they will improve program
integrity. One commenter questioned why an institution may
be held accountable for the actions of the State over which it
has no direct control.
Discussion: Any institution applying to participate in a Federal
program under the HEA must demonstrate that it has the legal
authority to offer postsecondary education in accordance with
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§ 600.9 of these final regulations. If a State declines to provide
an institution with legal authorization to offer postsecondary
education in accordance with these regulations, the institution
will not be eligible to participate in Federal programs.
As to an institution's inability to control the actions of a State,
we do not believe such a circumstance is any different than an
institution failing to comply with an accreditation requirement
that results in the institution's loss of accredited status. We
believe that in any circumstance in which an institution is
unable to qualify as legally authorized under § 600.9 of these
final regulations, the institution and State will take the
necessary actions to meet the requirements of § 600.9 of these
final regulations.
Changes: None.
Comment: One commenter believed that proposed § 600.9
would result in an unfunded mandate by the Federal
Government. Another commenter stated that many States may
see proposed § 600.9 as a revenue-generating opportunity and
pass the costs of this requirement on to institutions, which
would have no choice but to pass that cost on to students.
Discussion: We do not agree that § 600.9 of these final
regulations will result in an unfunded mandate by the Federal
Government, since many States will already be compliant and
options are available that should permit other States to come
into compliance with only minimal changes in procedures or
requirements if they want to provide acceptable State
authorizations for institutions. The regulations also include a
process for an institution to request additional time to become
compliant. Furthermore, if a State is unwilling to become
compliant with § 600.9, there is no requirement that it do so.
We also do not agree that States will see coming into
compliance with § 600.9 as a revenue-generating opportunity,
since any required changes are likely to be minimal.
Changes: None.
Implementation
Comment: Some commenters believed that the proposed
regulations are ambiguous in meaning and application or are
vague in identifying which State policies are sufficient. For
example, one State higher education official suggested that
proposed § 600.9 should be amended to differentiate among
authorities to operate arising from administrative
authorization of private institutions from legislation and from
constitutional provisions assigning responsibility to operate
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public institutions. The commenter believed that proposed §
600.9 obfuscated the various means of establishing State
authorization and the fundamental roles of State legislatures
and State constitutions and recommended that these means of
authorization and roles of State entities should be clarified.
Several commenters questioned what authorizing an
institution to offer postsecondary programs entails. A few
commenters pointed out that there is a wide array of State
approval methods and many institutions were founded before
the creation of State licensing agencies. An association
representing State higher education officials urged that ample
discretionary authority explicitly be left to the States. One
commenter indicated that proposed § 600.9 failed to address
when more than one State entity is responsible for a portion of
the oversight in States where dual or multiple certifications are
required. Another commenter believed that proposed § 600.9
did not adequately address the affect an institution's
compliance with proposed § 600.9 would have if one of two
different State approvals lapsed and both were necessary to be
authorized to operate in the State or if the State ceased to have
a process for handling complaints but the institutions
continued to be licensed to offer postsecondary education.
Some commenters asked whether specific State regulatory
frameworks would meet the provisions of the proposed
regulations. For example, one commenter believed that, under
State law and practice in the commenter's State, the private
institutions in the State already met the requirements in
proposed § 600.9 that the commenter believed included: (1)
The institution being authorized by a State through a charter,
license, approval, or other document issued by an appropriate
State government agency or State entity; (2) the institution
being authorized specifically as an educational institution, not
merely as a business or an eleemosynary organization; (3) the
institution's authorization being subject to adverse action by
the State; and (4) the State having a process to review and
appropriately act on complaints concerning an institution. The
commenter noted that all postsecondary institutions in the
State must either have a “universal charter” awarded by the
legislature or be approved to offer postsecondary programs.
The commenter noted that these institutions are authorized as
educational institutions, not as businesses. In another
example, a commenter from another State believed that
current law in the commenter's State addresses and covers
many of the requirements outlined in proposed § 600.9. The
commenter noted that many of the State laws are enforced by
the State's Attorney General and attempt to protect individuals
from fraud and abuse in the State's system of higher
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education. However, the commenter believed that it remained
unclear whether the State would be required to create an
oversight board for independent institutions like the
commenter's institution or would be subject to State licensure
requirements via the State licensure agency. The commenter
believed that either option would erode the autonomy of the
commenter's institution and add layers of bureaucracy to
address issues currently covered by State and Federal laws.
One commenter suggested that proposed § 600.9(a)(1) be
amended to provide that authorization may be based on other
documents issued by an appropriate State government agency
and delete the reference to “state entity.” The commenter
believed that the documents would affirm or convey the
authority to the institution to operate educational programs
beyond secondary education by duly enacted State legislation
establishing an institution and defining its mission to provide
such educational programs or by duly adopted State
constitutional provisions assigning authority to operate
institutions offering such educational programs.
Some commenters questioned whether there were any factors
that a State may not consider when granting legal
authorization. One commenter requested confirmation that
under the proposed regulations authorization does not
typically include State regulation of an institution's operations
nor does it include continual oversight. A few commenters
expressed concern regarding the involvement of the States in
authorization and that a State's role may extend into defining,
for example, curriculum, teaching methods, subject matter
content, faculty qualifications, and learning outcomes. One
commenter was concerned that proposed § 600.9 would create
fiscal constraints on an institution due to, for example,
additional reporting requirements or would impose
homogeneity upon institutions that would compromise their
unique missions. One commenter stated that the Department
does not have the authority to review issues of academic
freedom or curriculum content.
One commenter wanted assurances that the Department does
not intend to use the proposed regulations to strengthen State
oversight of colleges beyond current practices. One commenter
was concerned that States could exercise greater and more
intrusive oversight of private colleges.
One commenter suggested that the Department grandfather all
institutions currently operating under a State's regulatory
authority without a determination of its adequacy. Another
indicated that private colleges and universities operating
under a State-approved charter issued prior to 1972 are
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already subject to State regulation, even as they are exempt
from State licensing. One commenter believed that the
Department should accept State laws and regulations that can
be reasonably interpreted as meeting the regulatory
requirements.
Discussion: We agree with the commenters who were
concerned that proposed § 600.9 may be viewed as ambiguous
in describing a minimal standard for establishing State legal
authorization. We agree, in principle, with the State higher
education official who suggested that proposed § 600.9 should
be amended to differentiate the
types of State authorizations
for institutions to operate, but not based upon whether the
source of the authorization is administrative or legislative. We
believe the distinction for purposes of Federal programs is
whether the legal entities are specifically established under
State requirements as educational institutions or instead are
established as business or nonprofit charitable organizations
that may operate without being specifically established as
educational institutions. We believe this clarification addresses
the concerns of whether specific States' requirements were
compliant with § 600.9 as provided in these final regulations.
We continue to view State authorization to offer postsecondary
educational programs as a substantive requirement where the
State takes an active role in authorizing an institution to offer
postsecondary education. This view means that a State may
choose a number of ways to authorize an institution either as
an educational institution or as a business or nonprofit
charitable organization without specific authorization by the
State to offer postsecondary educational programs. These legal
means include provisions of a State's constitution or law, State
charter, or articles of incorporation that name the institution
as established to offer postsecondary education. In addition,
such an institution also may be subject to approval or licensure
by State boards or State agencies that license or approve the
institution to offer postsecondary education. If a legal entity is
established by a State as a business or a nonprofit charitable
organization and not specifically as an educational institution,
it may be subject to approval or licensure by State boards or
State agencies that license or approve the institution to offer
postsecondary education. The key issue is whether the legal
authorization the institution receives through these means is
for the purpose of offering postsecondary education in the
State.
In some instances, as one commenter noted, a State may have
multiple State entities that must authorize an institution to
offer postsecondary programs. In this circumstance, to comply
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with § 600.9, we would expect that the institution would
demonstrate that it was authorized to offer postsecondary
programs by all of the relevant State entities that conferred
such authorizations to that type of institution.
We do not believe it is relevant that an institution may have
been established prior to any State oversight. We are
concerned that institutions currently be authorized by a State
to offer postsecondary education, although we recognize that a
State's current approval for an institution may be based on
historical facts. We therefore do not believe it is necessary to
grandfather institutions currently operating under a State's
regulations or statutes nor are we making any determination
of the adequacy of a State's methods of authorizing
postsecondary education apart from meeting the basic
provisions of § 600.9 in these final regulations. If a private
college or university is operating under a State-approved
charter specifically authorizing the institution by name to offer
postsecondary education in the State, a State may exempt an
institution from any further State licensure process. The
requirement to be named specifically in a State action also
applies if the institution is exempt from State licensure based
upon another condition, such as its accreditation by a
nationally recognized accrediting agency or years in operation.
Further, these regulations only require changes where a State
does not have any authorizing mechanisms for institutions
other than an approval to operate as a business entity, or does
not have a mechanism to review complaints against
institutions. We anticipate that many States already meet
these requirements, and will have time to make any necessary
adjustments to meet the needs of the institutions.
With regard to the commenters who were concerned with the
potential scope of a State's authority, we note that the
Department does not limit a State's oversight of institutions,
and only sets minimum requirements for institutions to show
they are legally authorized by a State to provide educational
programs above the secondary level. These regulations neither
increase nor limit a State's authority to authorize, approve, or
license institutions operating in the State to offer
postsecondary education. Further, nothing in these final
regulations limits a State's authority to revoke the
authorization, approval, or license of such institutions. Section
600.9 ensures that an institution qualifies for Federal
programs based on its authorization by the State to offer
postsecondary education.
Changes: We are amending proposed § 600.9 to distinguish
the type of State approvals that are acceptable for an
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institution to demonstrate that it is authorized by the State to
offer educational programs beyond the secondary level.
An institution is legally authorized by the State if the State
establishes the institution by name as an educational
institution through a charter, statute, constitutional provision,
or other action to operate educational programs beyond
secondary education, including programs leading to a degree
or certificate. If, in addition, the State has an applicable State
approval or licensure process, the institution must also comply
with that process to be considered legally authorized.
However, an institution created by the State may be exempted
by name from any State approval or licensure requirements
based on the institution's accreditation by an accrediting
agency recognized by the Secretary or based upon the
institution being in operation for at least 20 years.
If the legal entity is established by a State as a business or a
nonprofit charitable organization and not specifically as an
educational institution, the State must have a separate
procedure to approve or license the entity by name to operate
programs beyond secondary education, including programs
leading to a degree or certificate. For an institution authorized
under these circumstances, the State may not exempt the
entity from the State's approval or licensure requirements
based on accreditation, years in operation, or other
comparable exemption.
The following chart and examples illustrate the basic principles
of amended § 600.9:
Meets State Authorization Requirements* Back to Top
Legal entity
Entity description
Approval or licensure
process
Educational
A public, private nonprofit, or
The institution must
institution
for-profit institution established
comply with any
by name by a State through a
applicable State
charter, statute, or other action
approval or licensure
issued by an appropriate State
process and be
agency or State entity as an
approved or licensed
educational institution
by name, and may be
authorized to operate
exempted from such
educational programs beyond
requirement based on
secondary education,
its accreditation, or
including programs leading to
being in operation at
a degree or certificate
least 20 years, or use
both criteria.
A for-profit entity established
The State must have a
by the State on the basis of an
State approval or
authorization or license to
licensure process, and
conduct commerce or provide
Business
the institution must
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services
comply with the State
approval or licensure
process and be
Examples
Institutions considered legally authorized under amended §
600.9:
A college has a royal charter from the colonial period
recognized by the State as authorizing the institution by
name to offer postsecondary programs. The State has no
licensure or approval process.
A community college meets the requirements based upon
its status as a public institution.
A nonprofit institution has State constitutional
authorization by name as a postsecondary institution;
State does not apply a licensure or approval process.
A nonprofit institution has a State charter as a
postsecondary institution. State law, without naming the
institution, considers the institution to be authorized to
operate in lieu of State licensure based on accreditation
by a regional accrediting agency.
An individual institution is owned by a publically traded
corporation that is incorporated in a different State from
where the institution is located. The institution is licensed
to provide educational programs beyond the secondary
level in the State where it is located.
An institution is owned by a publicly traded corporation
established as a business without the articles of
incorporation specifying that the institution is authorized
to offer postsecondary education, but the institution is
licensed by the State to operate postsecondary education
programs.
An individual institution is owned by a publically traded
corporation that is incorporated in a different State from
where the institution is located. The State licenses the
institution by name as a postsecondary institution.
Rabbinical school awarding only a certificate of Talmudic
studies has exemption as a religious institution offering
only religious programs.
Tribal institution is chartered by the tribal government.
Institutions not considered legally authorized under amended
§ 600.9:
An institution is a publicly traded corporation established
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as a business without the articles of incorporation
specifying that it is authorized to offer postsecondary
education, and the State has no process to license or
approve the institution to offer postsecondary education.
A nonprofit institution is chartered as a postsecondary
institution. A State law considers the institution to be
authorized based on accreditation in lieu of State
licensure but the institution is not named in the State law
and does not have a certification by an appropriate State
official, e.g., State Secretary of Education or State
Attorney General, that it is in compliance with the
exemption for State licensure requirements.
An institution is established as a nonprofit entity without
specific authorization to offer postsecondary education,
but State law considers the institution to be authorized
based on it being in operation for over 30 years. The State
Secretary of Education issues a certificate of good
standing to the institution naming it as authorized to offer
postsecondary education based on its years in operation.
A Bible college is chartered as a religious institution and
offers liberal arts and business programs as well as Bible
studies. It is exempted by State law from State licensure
requirements but does not meet the definition of a
religious institution exempt from State licensure for
Federal purposes because it offers other programs in
addition to religious programs.
An institution is authorized based solely on a business
license, and the State considers the institution to be
authorized to offer postsecondary programs based on
regional accreditation.
Comment: One commenter provided proposed wording to
amend proposed § 600.9(a)(1) to clarify that the State entity
would include a State's legal predecessor. The commenter
believed that the change was necessary to ensure that colonial
charters would satisfy the State authorization requirement.
Discussion: If a State considers an institution authorized to
offer postsecondary education programs in the State based on
a colonial charter that established the entity as an educational
institution offering programs beyond the secondary level, the
institution would be considered to meet the provisions of §
600.09(a)(1)(i) of these final regulations so long as the
institution also meets any additional licensure requirements or
approvals required by the State.
Changes: None.
Comment: Several commenters expressed concern that all
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institutions within a State could lose title IV, HEA program
eligibility at once and that the regulations put students at risk
of harm through something neither they nor the institution
can control.
One commenter was concerned with how the Department
would specifically assess State compliance with proposed §
600.9. Another commenter believed
that the Department
should accept State laws and regulations that can be
reasonably interpreted as meeting the requirements of § 600.9
especially if State officials interpret their laws and regulations
in such a manner.
One commenter requested that the Department explain how it
would address currently enrolled students if a State is deemed
not to provide sufficient oversight in accordance with Federal
regulatory requirements. Another commenter asked how the
Department will avoid such negative consequences as granting
closed school loan discharges for large numbers of enrolled
students. One commenter requested that the Department
provide for seamless reinstatement of full institutional
eligibility when a State meets all eligibility requirements after
losing eligibility.
Discussion: We do not anticipate that all institutions in a State
will lose title IV, HEA program assistance due to any State
failing to provide authorization to its institutions under the
regulations, because States may meet this requirement in a
number of ways, and also with different ways for different
types of institutions. If a State were to undergo a change that
limited or removed a type of State approval that had
previously been in place, it would generally relate to a
particular set of institutions within a State. For example, a
licensing agency for truck driving schools could lapse or be
closed at a State Department of Transportation without
providing another means of authorizing postsecondary truck
driving programs. Only the eligibility of truck driving schools
in the State would be affected under § 600.9 while the State
could continue to be compliant for all other institutions in the
State. It also seems likely that the State would consider
alternate ways to provide State authorization for any
institutions affected by such a change.
We believe that the provisions in amended § 600.9 are so basic
that State compliance will be easily established for most
institutions. The determination of whether an institution has
acceptable State authorization for Federal program purposes
will be made by the Department. We also note that the
regulations permit a delayed effective date for this
requirement under certain circumstances discussed below,
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and this delay will also limit the disruption to some
institutions within a State.
If an institution ceased to qualify as an eligible institution
because its State legal authorization was no longer compliant
with amended § 600.9, the institution and its students would
be subject to the requirements for loss of eligibility in subpart
D of part 600 and an institution would also be subject to §
668.26 regarding the end of its participation in those
programs. If an institution's State legal authorization
subsequently became compliant with amended § 600.9, the
institution could then apply to the Department to resume
participation in the title IV, HEA program.
Changes: None.
Comment: Several commenters were concerned that students
may lose eligibility for title IV, HEA program funds if a State is
not compliant with proposed § 600.9. Some commenters
noted that States may have to take steps to comply, which may
include making significant statutory changes, and the
regulations therefore need to allow adequate time for such
changes, reflecting the various State legislative calendars. In
some cases, the commenters believed a State's noncompliance
would be because the State could no longer afford to meet the
provisions of proposed § 600.9. One commenter believed that
alternative pathways should be allowed for meeting State
authorization and that States that exempt or grant waivers
from licensing should be considered to fulfill requirements of
proposed § 600.9 and another questioned whether a State that
is not in compliance would have an opportunity to cure
perceived problems before all institutions operating in the
State lost institutional eligibility.
Discussion: We recognize that a State may not already provide
appropriate authorizations as required by § 600.9 for every
type of institution within the State. However, we believe the
framework in § 600.9 is sound and provides a State with
different ways to meet these requirements. Unless a State
provides at least this minimal level of review, we do not believe
it should be considered as authorizing an institution to offer an
education program beyond secondary education.
If a State is not compliant with § 600.9 for a type or sector of
institutions in a State, we believe the State and affected
institutions will create the necessary means of establishing
legal authorization to offer postsecondary education in the
State in accordance with amended § 600.9. However, in the
event a State is unable to provide appropriate State
authorizations to its institutions by the July 1, 2011 effective
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date of amended § 600.9(a) and (b), we are providing that the
institutions unable to obtain State authorization in that State
may request a one-year extension of the effective date of these
final regulations to July 1, 2012, and if necessary, an additional
one-extension of the effective date to July 1, 2013. As
described in the section of the preamble entitled
“Implementation Date of These Regulations,” to receive an
extension of the effective date of amended § 600.9(a) and (b)
for institutions in a State, an institution must obtain from the
State an explanation of how a one-year extension will permit
the State to modify its procedures to comply with amended §
600.9.
Changes: None.
Comment: A few commenters requested that the Department
identify, publish, and maintain a list of States that meet or do
not meet the requirements. One commenter cited an analysis
that estimated that 13 States would comply with the proposed
regulations upon implementation; 6 States would clearly not
be in compliance; and 37 States would likely have to amend,
repeal, or otherwise modify their laws. One commenter
requested data to be provided by the Department for each
sector of postsecondary education, including how many States
are out of compliance, how many institutions are within those
States, and how many students are enrolled at those
institutions.
Discussion: We do not believe that there is a need to maintain
and publish a list of States that meet, or fail to meet the
requirements. States generally employ more than one method
of authorizing postsecondary education. For example, a State
may authorize a private nonprofit university through issuing a
charter to establish the university, another private nonprofit
college through an act of the State legislature, a for-profit
business school through a State postsecondary education
licensing agency, a cosmetology school through a State
cosmetology board, and a truck-driving school through the
State's Department of Transportation. We believe that an
institution of whatever sector and type already is aware of the
appropriate State authorizing method or methods that would
establish the institution's legal authorization to offer
postsecondary education and publication of any list is
unnecessary.
Changes: None.
Comment: One commenter expressed concern with whether a
State must regulate the activities of institutions and exercise
continual oversight over institutions.
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Discussion: While a State must have a process to handle
student complaints under amended § 600.9(a) for all
institutions in the State except Federal and tribal institutions,
the regulations do not require, nor do they prohibit, any
process that would lead to continual oversight by a State.
Changes: None.
Comment: Several commenters expressed concern regarding
the financial burden on the States to make changes in State
laws and the amount of time that would be needed to make the
necessary changes. Commenters feared that the States would
most likely have to reduce further State tax subsidies provided
to public institutions. As a result, costs will be increased for
students at public institutions to cover lost revenues and
increase costs for the title IV, HEA programs. One commenter
stated that schools could delay progress of degree completion
at State funded universities because they will be forced to
reduce offerings.
Discussion: We do not believe that it would impose an undue
financial burden on States to comply with the provisions in §
600.9. In most instances we believe that a State will already be
compliant for most institutions in the State or will need to
make minimal changes to come into compliance. Thus, we do
not agree with commenters who believed that the regulations
would generally impact the funding of public institutions in a
State or would necessitate a reduction in the offerings at public
institutions.
Changes: None.
Exemptions: Accreditation and Years of Operation
Comment: Several commenters supported the existing practice
by which a State bases an institution's legal authorization to
offer postsecondary education upon its accreditation by a
nationally recognized accrediting agency, i.e., an accrediting
agency recognized by the Secretary. The commenters believed
that proposed § 600.9 should be revised or clarified to permit
existing practices allowing exemption by accreditation.
Another commenter indicated that several States have
exempted accredited institutions from State oversight unless
those institutions run afoul of their accreditors' requirements.
One commenter believed that proposed § 600.9 would require
the creation of unnecessary, duplicative, and unaffordable new
bureaucracies, and recommended that its State should
continue its partial reliance on nationally recognized
accrediting agencies. Another commenter believed it
appropriate that a State delegate some or all of its licensure
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function to a nationally recognized accrediting agency
provided that the State enters into a written agreement with
the accrediting agency.
One commenter stated that the Department should eliminate
the ambiguity about how much a State may rely on accrediting
agencies. Several commenters stated that the regulations are
confusing as to which exemptions are permissible and which
are not. One commenter believed that the Department should
make it clear that although a State is not prohibited from
relying on accrediting agencies for quality assessments, the
essential duties of State authorization cannot be collapsed into
the separate requirement for accreditation.
Some commenters noted that an institution's legal
authorization may be based on a minimum number of years
that an institution has been operating. One of the commenters
cited a minimum number of years used by States that ranged
as low as 10 years of operation while two other commenters
noted that institutions had been exempted in their State
because they had been in operation over 100 years and were
accredited. The commenters believed that the Department
should consider it acceptable for a State to rely on the number
of years an institution has been operating.
Some commenters did not think that States should be allowed
to defer authorization to accrediting agencies. One of these
commenters believed that basing State authorization on
accreditation was contrary to law. One commenter believed
that existing law makes clear that institutional eligibility for
title IV, HEA programs is based on the Triad of accreditation,
State authorization, and the Federal requirements for
administrative capability and financial responsibility. As a
result the commenter believed that the extent to which States
may rely on accrediting agencies should be clear and limited.
Along the same lines, another commenter believed strongly
that accrediting agencies should never be allowed to grant
authorization to operate in a State, and that further
clarifications about the ways in which accrediting agencies
may substitute for State agencies is necessary. One commenter
encouraged the Department to study more carefully the role of
State entities and accreditation agencies. Another commenter
believed that relying on accrediting agencies to be surrogates
for State authorization is inappropriate and should not be the
sole determinant for authorization. One commenter stated
that accreditation may not be accepted as a sufficient basis for
granting or continuing authorization to operate and that the
authorization process must be independent of any
accreditation process or decision.
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One commenter believed that proposed § 600.9 would
undermine the role of accreditation and the public-private
partnership and would call for States to intrude into academic
areas. The commenter believed that the proposed regulations
would move toward establishing accreditation as a State actor,
a role that is incompatible with accreditation's commitment to
self-regulation and peer and professional review. Another
commenter believed that the Department should make it clear
that although a State is not prohibited from relying on
accrediting agencies for quality assessments, the essential
duties of State authorization cannot be collapsed into the
separate requirement for accreditation. If an institution's State
and accrediting agency have different standards, one
commenter was concerned regarding which entity's standards
would be applied.
Discussion: While we recognize and share the concerns of
some commenters that States should not be allowed to defer
authorization to accrediting agencies, we believe that such a
practice would be permissible so long as it does not eliminate
State oversight and clearly distinguishes the responsibilities of
the State and accreditor under such an arrangement. We also
do not agree that additional study is needed of the roles of
State entities and accrediting agencies as we believe these
relationships are well understood.
We believe that accreditation may be used to exempt an
institution from other State approval or licensing
requirements if the entity has been established by name as an
educational institution through a charter, statute,
constitutional provision, or other action issued by an
appropriate State entity to operate educational programs
beyond secondary education, including programs leading to a
degree or certificate. For such an educational institution, a
State could rely on accreditation to exempt the institution
from further approval or licensing requirements, but could not
do so based upon a preaccredited or candidacy status.
We also agree with the commenters that States may utilize an
institution's years in operation to exempt it from State
licensure requirements, but only, as with accreditation, for a
legal entity that the State establishes as an educational
institution authorized to offer postsecondary education.
However, we believe that there should be a minimum standard
for allowing years of operation to exempt an institution to
ensure that this exemption is not set to a short period of time
that would not provide a historical basis to
evaluate the
institution. Based on our consideration of the public comment,
we believe that standard should be at least 20 years of
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operation. As in the case of accreditation, such an exemption
could only be used if the State has established the entity as an
educational institution. As noted above, a State may use a
separate process to recognize by name the entity as an
educational institution that offers programs beyond the
secondary level if an institution was not authorized by name to
offer educational programs in its approval as a legal entity
within a State. We note that a State may also base a licensing
exemption on a combination of accreditation and the number
of years an institution has been in operation, as long as the
State requirements meet or exceed at least one of the two
minimum requirements, that is, an institution must be fully
accredited or must have been operating for at least 20 years.
If an institution is established as a legal entity to operate as a
business or charitable organization but lacks authorization to
operate by name as an educational institution that offers
postsecondary education, the institution may not be exempted
from State licensing or approval based on accreditation, years
in operation, or comparable exemption from State licensure or
approval.
We do not believe that permitting such exemptions from State
licensing requirements will distort the oversight roles of the
State and an accrediting agency. We believe these comments
are based on a misunderstanding of the role of a State agency
recognized by the Secretary under 34 CFR part 603 as a
reliable authority regarding the quality of public
postsecondary vocational education in its State. Public
postsecondary vocational institutions are approved by these
agencies in lieu of accreditation by a nationally recognized
accrediting agency. As noted in the comments, there are
overlapping interests among all members of the Triad in
ensuring that an educational institution is operating soundly
and serving its students, and a State may establish licensing
requirements that rely upon accreditation in some
circumstances.
If an institution's State and accrediting agency have different
standards, there is no conflict for purposes of the institution's
legal authorization by the State, as the institution must
establish its legal authorization in accordance with the State's
requirements.
Changes: We have amended proposed § 600.9 to provide that,
if an institution is an entity that is established by name as an
educational institution by the State and the State further
requires compliance with applicable State approval or
licensure requirements for the institution to qualify as legally
authorized by the State for Federal program purposes, the
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State may exempt the institution by name from the State
approval or licensure requirements based on the institution's
accreditation by one or more accrediting agencies recognized
by the Secretary or based upon the institution being in
operation for at least 20 years. If an institution is established
by a State as a business or a nonprofit charitable organization,
for the institution to qualify as legally authorized by the State
for Federal program purposes, the State may not exempt the
institution from the State's approval or licensure requirements
based on accreditation, years in operation, or other
comparable exemption.
Complaints
Comment: An association of State higher education officials
recommended that the States, through their respective
agencies or attorneys general, should retain the primary role
and responsibility for student consumer protection against
fraudulent or abusive practices by postsecondary institutions.
The commenter stated that handling complaints is not a role
that can or should be delegated to nongovernmental agencies
such as accrediting agencies, nor should it be centralized in the
Federal Government. Another commenter asked about the role
of State enforcement of laws unrelated to postsecondary
institutions licensure such as a law related to fraud or false
advertising. A few commenters asked for clarification as to
whether State consumer protection agencies or State Attorneys
General could retain the primary role for student consumer
protection and handling student complaints. One commenter
believed that the proposed regulations failed to address
circumstances where the State licensure or approval agency
and the agency handling complaints are different agencies.
Several commenters recommended that the Department allow
States to rely on accrediting agencies but require a
memorandum of understanding with the accrediting
association that would include, at a minimum, procedures for
periodic reports on actions taken by the association and
procedures for handling student complaints. One commenter
strongly believed that accrediting agencies should never be
allowed to handle complaints in lieu of the State.
One commenter expressed concern that the Department is
requiring States to serve as an additional check on
institutional integrity, but believed that there would be no
check on the State.
One commenter from an accrediting agency believed that
proposed § 600.9(b)(3) is an unnecessary use of limited public
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resources, is impractical, and would be impractical and chaotic
to administer. Several other commenters expressed concern
that requiring States to act on complaints would be duplicative
because 34 CFR 602.23 already requires accrediting agencies
to have a process to respond to complaints regarding their
accredited institutions. One commenter requested that the
Department exempt public postsecondary institutions from
the complaint processes. Otherwise, the commenter asked that
the Department clarify that a State is permitted to determine
whether an institution within its borders is sufficiently
accountable through institutional complaint and sanctioning
processes. One commenter requested that the Department
clarify that student complaints unrelated to violations of State
or Federal law are not subject to State process or reviewing
and acting on State laws, instead the commenter believed that
student complaints are appropriately addressed at the
institutional level. A commenter questioned how the
requirements for State review of complaints relate to student
complaints about day-to-day instruction or operations and
whether the potential review process represents an expansion
of State authority. The commenter believes that student
complaints that are unrelated to violations of State or Federal
law are appropriately addressed at the institutional level and
thus not subject to the process for review of complaints
included as part of proposed § 600.9.
One commenter suggested that the Department's Office of
Ombudsman respond to student complaints as an alternative
if a State does not have a process for complaints.
Discussion: We agree with the commenters who believed that
the States should retain the primary role and responsibility for
student consumer protection against fraudulent or abusive
practices by some postsecondary institutions. For an
institution to be considered to be legally authorized to offer
postsecondary programs, a State would be expected to handle
complaints regarding not only laws related to licensure and
approval to operate but also any other State laws including, for
example, laws related to fraud or false advertising. We agree
that a State may fulfill this role through a State agency or
the
State Attorney General as well as other appropriate State
officials. A State may choose to have a single agency or official
handle complaints regarding institutions or may use a
combination of agencies and State officials. All relevant
officials or agencies must be included in an institution's
institutional information under § 668.43(b). Directly relying
on an institution's accrediting agency would not comply with §
600.9(a)(1) of these final regulations; however, to the extent a
complaint relates to an institution's quality of education or
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other issue appropriate to consideration by an institution's
accrediting agency, a State may refer a complaint to the
institution's accrediting agency for resolution. We do not
believe it is necessary to prescribe memoranda of
understanding or similar mechanisms if a State chooses to rely
on an institution's accrediting agency as the State remains
responsible for the appropriate resolution of a complaint.
Section 600.9(a)(1) requires an institution to be authorized by
a State, thus providing an additional check on institutional
integrity; however, we do not believe there are inadequate
checks on State officials and agencies as they are subject to
audit, review, and State legislative action.
We do not agree with the commenters that proposed §
600.9(b)(3) would unnecessarily use State resources, be
impractical, or be chaotic to administer. There are complaints
that only a State can appropriately handle, including enforcing
any applicable State law or regulations. We do not agree that
public institutions should be exempt from this requirement as
a complainant must have a process, independent of any
institution—public or private, to have his or her complaint
considered by the State. The State is not permitted to rely on
institutional complaint and sanctioning processes in resolving
complaints it receives as these do not provide the necessary
independent process for reviewing a complaint. A State may,
however, monitor an institution's complaint resolution process
to determine whether it is addressing the concerns that are
raised within it.
We do not agree with the suggestions that the Department's
Student Loan Ombudsman is an appropriate alternative to a
State complaints process. The Ombudsman is charged, under
the HEA, with the informal resolution only of complaints by
borrowers under the title IV, HEA loan programs. By
comparison, a State's complaint resolution process would
cover the breadth of issues that arise under its laws or
regulations.
Changes: We have amended proposed § 668.43(b) to provide
that an institution must make available to a student or
prospective student contact information for filing complaints
with its accreditor and with its State approval or licensing
entity and any other relevant State official or agency that
would appropriately handle a student's complaint.
Comment: One commenter believed that proposed § 668.43(b)
under which an institution must provide to students and
prospective students the contact information for filing
complaints with the institution's State approval or licensing
entity should make allowance for situations in which a State
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has no process for complaints, or defers to the accrediting
agency to receive and resolve complaints. Another commenter
believed that, in the case of distance education, the institution
should be responsible for responding to complaints. Instead of
providing students and prospective students, under proposed
§ 668.43(b), the contact information for filing complaints with
the institution's accrediting agency and State approval or
licensing entity, the commenter recommended that the
institution provide students with the institution's name,
location, and Web site to file complaints.
Discussion: We do not agree that proposed § 668.43(b) needs
to make allowance for an institution in a State without a
process for complaints, since every State is charged with
enforcing its own laws and no institution is exempt from
complying with State laws. If no complaint process existed, the
institution would not be considered to be legally authorized.
With respect to an institution offering distance education
programs, the institution must provide, under § 668.43(b), not
only the contact information for the State or States in which it
is physically located, but also the contact information for
States in which it provides distance education to the extent
that the State has any licensure or approval processes for an
institution outside the State providing distance education in
the State.
Changes: None.
Reciprocity and Distance Education
Comment: In general, commenters expressed concerns
regarding legal authorization by a State in circumstances
where an institution is physically located across State lines as
well as when an institution is operating in another State from
its physical location through distance education or online
learning. One commenter urged the Department to include
clarifying language regarding a State's ability to rely on other
States' authorization in the final regulation rather than in the
preamble. Several commenters requested that the Department
limit the State authorization requirement in § 600.9 to the
State in which the institution is physically located. One
commenter believed that a State should only be allowed to rely
on another State's determination if the school has no physical
presence in the State and the other State's laws, authority, and
oversight are at least as protective of students and taxpayers.
One commenter asked whether the phrase “the State in which
the institution operates” is the same as “where the institution
is domiciled”. The commenter asked for clarification of the
meaning of “operate” including whether it means where online
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students are located, where student recruiting occurs, where
an instructor is located, or where fundraising activity is
undertaken. One commenter requested that the Department
clarify and affirm that reciprocity agreements that exist
between States with respect to public institutions operating
campuses or programs in multiple States are not impacted by
these regulations. Another commenter believed that the
Department should issue regulations rather than merely
provide in the preamble of the NPRM that a State is allowed to
enter into an agreement with another State. One commenter
asked whether an institution that operates in more than one
State can rely on an authorization from a State that does not
meet the authorization requirements. One commenter urged
the Department to clarify that States may rely on the
authorization by other States, particularly as it relates to
distance education. One commenter stated that the proposed
regulations would be highly problematic for students who
transfer between different States.Another commenter feared
that large proprietary schools that are regional or national in
scope would likely lobby States to turn over their oversight to
another State where laws, regulations, and oversight are more
lax. Another commenter was concerned that for-profit
institutions may lobby a State to relinquish its responsibilities
to a State of those institutions' choosing. This situation could
result in a State with little regulation that is home to a large
for-profit institution actually controlling policies in many
States where the corporation does business. One commenter
suggested that if an institution is not physically located in a
State, the State could enter into an agreement with other
States where the
institution does have physical locations to
rely on the information the other States relied on in granting
authority. In this case, the commenter recommended that the
oversight be at least as protective of students and the public as
those of the State, and the State should consider any relevant
information it receives from other sources. However, the
commenter thought the State should retain authority to take
independent adverse action including revoking the authority
to offer postsecondary programs in the State. Another
commenter expressed concern that the proposed regulations
would confuse and burden the States and institutions because
they are not clear regarding whether a State can continue to
rely on the authorization of another State. The commenter
believed that without clarification, an institution that offers
education to students located in other States might be
needlessly burdened with seeking authorization from each of
those States. Another commenter expressed concern that the
proposed regulations could potentially require an institution
offering distance education courses in 50 different States to
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obtain authorization in each State, which would be an
administrative burden that could result in increased tuition
fees for students. Another commenter stated that during the
negotiations, the Department indicated it was not its intent to
require authorization in every State. Therefore, the commenter
urged the Department to include this policy expressly in the
final regulations.
Discussion: We agree with the commenters that further
clarification is needed regarding legal authorization across
State lines in relation to reciprocity between States and to
distance education and correspondence study. In making these
clarifications, we are in no way preempting any State laws,
regulations, or other requirements established by any State
regarding reciprocal agreements, distance education, or
correspondence study.
To demonstrate that an institution is legally authorized to
operate in another State in which it has a physical presence or
is otherwise subject to State approval or licensure, the
institution must demonstrate that it is legally authorized by
the other State in accordance with § 600.9. We continue to
believe that we do not need to regulate or specifically authorize
reciprocal agreements. If both States provide authorizations
for institutions that comply with § 600.9 and they have an
agreement to recognize each other's authorization, we would
consider the institution legally authorized in both States as
long as the institution provided appropriate documentation of
authorization from the home State and of the reciprocal
agreement. In addition, the institution must provide the
complaint contact information under 34 CFR 668.43(b) for
both States.
If an institution is offering postsecondary education through
distance or correspondence education in a State in which it is
not physically located, the institution must meet any State
requirements for it to be legally offering distance or
correspondence education in that State. An institution must be
able to document upon request from the Department that it
has such State approval.
A public institution is considered to comply with § 600.9 to the
extent it is operating in its home State. If it is operating in
another State, we would expect it to comply with the
requirements, if any, the other State considers applicable or
with any reciprocal agreement between the States that may be
applicable.
Changes: We have revised § 600.9 to clarify in paragraph (c)
that, if an institution is offering postsecondary education
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through distance or correspondence education to students in a
State in which it is not physically located, the institution must
meet any State requirements for it to be legally offering
postsecondary distance or correspondence education in that
State. We are further providing that an institution must be
able to document upon request by the Department that it has
the applicable State approval.
State Institutions
Comment: Many commenters requested that public
institutions be exempted from the proposed regulations. They
were concerned that requiring States to reexamine their State
authorization for public colleges would not be a good use of
resources. One commenter requested that the Department
explicitly state that public institutions are by definition agents
of the State and thus need no further authorization. One
commenter from a State university system believed that the
Federal Government should not impose a uniform model with
“one size fits all States.” Another commenter noted that a State
may not have legal power over decisions made by authorities
given under the State's constitution for oversight of certain
public postsecondary institutions. One commenter believed
that public institutions should be exempt from the proposed
requirements for adverse actions and complaint processes.
Discussion: As instrumentalities of a State government, State
institutions are by definition compliant with § 600.9(a)(1)(i),
and no exemption from the provisions of § 600.9 of these final
regulations is necessary. We do not agree that State
institutions should be exempt from the requirement that a
State have a process to review and appropriately act on
complaints concerning an institution. We believe that
students, their families, and the public should have a process
to lodge complaints that is independent of an institution.
Changes: None.
Religious Institutions
Comment: Two commenters requested a definition of the term
religious institution. One of these commenters felt strongly
that a religious exemption must be tailored to prevent
loopholes for abuse but needed to offer an alternative for
religious institutions so that changes to a State's constitution
would not be necessary. The commenter suggested that a
religious institution should be exempted if the institution is
owned, controlled, operated, and maintained by a religious
organization lawfully operating as a nonprofit religious
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corporation pursuant to the Internal Revenue Code and meets
the following requirements:
Instruction is limited to the principles of that religious
organization.
A diploma or degree awarded by the institution is limited
to evidence of completion of that education.
The institution offers degrees and diplomas only in the
beliefs and practices of the church, religious
denomination, or religious organization.
The institution does not award degrees in any area of
physical science.
Any degree or diploma granted by the institution contains
on its face, in the written description of the title of the
degree being conferred, a reference to the theological or
religious aspect of the degree's subject area.
A degree awarded by the institution reflects the nature of
the degree title, such as “associate of religious studies,”
“bachelor of religious studies,” “master of divinity,” or
“doctor of divinity.”
Discussion: We agree with the commenters that a definition of
a religious institution is needed to clarify the applicability of a
religious exemption. We also agree that a modification to the
proposed regulations is needed to allow a State to provide an
exemption to religious institutions without requiring the State
to change its constitution.
Changes: We have expanded § 600.9(b) to provide that an
institution is considered to be legally authorized by the State if
it is exempt from State
authorization as a religious
institution by State law in addition to the provision of the
proposed regulations that the exemption by law, or exempt
under the State's constitution. We have also included a
definition of a religious institution, which provides that an
institution is considered a religious institution if it is owned,
controlled, operated, and maintained by a religious
organization lawfully operating as a nonprofit religious
corporation and awards only religious degrees or religious
certificates including, but not limited to, a certificate of
Talmudic studies, an associate of biblical studies, a bachelor of
religious studies, a master of divinity, or a doctor of divinity.
We note, however, that a religious institution is still subject to
the requirement in § 600.9(a)(1) of these final regulations that,
for the institution to be considered to be legally authorized in
the State, the State must have a process to review and
appropriately act on complaints concerning the institution.
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Tribal Institutions
Comment: One commenter suggested the Department should
exempt from State authorization any institution established
and operated by tribal governments. Three commenters stated
that the Department should recognize that tribal institutions
would not be subject to State oversight but instead the tribe
would exercise oversight. One of those commenters suggested
amending the regulations to add “tribal authority” wherever
State authority is mentioned in the proposed regulations.
Discussion: We agree that tribal institutions are not subject to
State oversight for institutions operating within tribal lands.
Proposed § 600.9(a)(2) provided that a tribal college would be
considered to meet the basic provisions of proposed § 600.9(a)
(1) if it was authorized to offer educational programs beyond
secondary education by an Indian tribe as defined in 25 U.S.C.
1802(2). However, proposed § 600.9(b), could be read as
inappropriately making a tribal institution subject to adverse
actions by the State and a State process for handling student
complaints. We did not intend to make a tribal institution
subject to any State process for handling complaints and have
clarified the language in § 600.9. If a tribal college is located
outside tribal lands within a State, or has a physical presence
or offers programs to students that are located outside tribal
lands in a State, the tribal college must demonstrate that it has
the applicable State approvals needed in those circumstances.
Changes: Section 600.9 has been revised to clarify the status of
tribal institutions. As noted elsewhere in this preamble, we
have removed proposed § 600.9(b)(2) regarding adverse
actions. Further, we are providing that, in § 600.9(a)(2)(ii) of
the final regulations, the tribal government must have a
process to review and appropriately act on complaints
concerning a tribal institution and enforce applicable tribal
requirements or laws.
Part 668Student
Assistance General
Provisions Retaking
Coursework (§
668.2)
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Comment: Many commenters agreed with the Secretary's
proposal to amend the definition of full-time student in §
668.2(b) to allow repeated coursework to count towards a
student's enrollment status in term-based programs. The
commenters believed the change would alleviate the
administrative burden related to tracking student coursework
to prevent payment based on repeated coursework, as is
currently required.
Discussion: The Department agrees with the commenters that
amending the definition of full-time student in § 668.2(b) will
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be beneficial for students who retake coursework.
Changes: None.
Comment: Several commenters asked the Department to
clarify whether amending the definition of full-time student
will apply to all students, regardless of their enrollment status,
including less-than-half-time, half-time, and three-quartertime enrollment statuses.
Discussion: Less-than-half-time, half-time, and three-quartertime statuses are generally defined in relation to the definition
of a full-time student. In § 668.2 half-time and three-quartertime statuses generally are defined as at least one-half and
three quarters of the academic workload of a full-time student,
respectively. Less-than-half-time status is not defined, as the
term is self-explanatory in its relationship to half-time and
full-time statuses. Thus, including this provision in the
definition of full-time student will apply to less-than-full-time
students who are enrolled in term-based programs.
Changes: None.
Comment: Some commenters asked the Department to allow
early implementation of this retaking coursework provision,
because the Department's current guidance in the Federal
Student Aid Handbook does not provide for this benefit.
Discussion: We have determined, as a general policy, that no
provisions of these final regulations should be designated for
early implementation. We will update the Handbook for the
2011-2012 award year to reflect the amended definition of fulltime student in these final regulations.
Changes: None.
Comment: Some commenters questioned whether institutions
may continue to set their own policy in regards to retaking
coursework and awarding credits for repeated coursework.
One commenter asked the Department to clarify if the
proposed regulation on retaking coursework would allow a
student to repeat courses already passed to achieve a higher
grade. Another commenter asked the Department to clarify
whether a student who has already earned the maximum
number of remedial courses allowed could be paid to retake
coursework if the student repeats more remedial courses.
Discussion: In general, the regulations do not affect an
institution's policies governing whether a student may retake
coursework in term-based programs, including repeating
courses to achieve a higher grade, as these regulations apply
only to determining enrollment status for title IV, HEA
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program purposes. Moreover, the regulations do not limit an
institution's ability to establish policies for title IV, HEA
program purposes to the extent those policies are not in
conflict with title IV, HEA program requirements. However,
with respect to repeating coursework previously passed by a
student in a term-based program, the student's enrollment
status for title IV, HEA purposes may include any coursework
previously taken in the program, but we are limiting the
provision so that it may not include more than one repetition
of a previously passed course or any repetition of previously
passed coursework that would be taken due to a student's
failure of other coursework. In other words, an institution may
pay a student one time for retaking previously passed
coursework if, for example, the student needed to meet an
academic standard for that particular course, such as a
minimum grade. Conversely, an institution may not pay a
student for retaking previously passed courses if the student is
required to retake those courses because the student failed a
different course in a prior term. For example, if a student
enrolls in four classes in the fall semester and passes three of
them, the institution could require the student to retake the
failed class and also require the student to retake the other
three classes because of failing the one class. If the student
retakes the four classes in the spring semester, the failed class
would be included in the student's enrollment
status, but the
three classes passed in the fall would not be included in
determining the student's enrollment status for the spring
semester for purposes of the title IV, HEA programs. We
believe these revisions are necessary to limit potential abuse
from courses being retaken multiple times, while providing
institutions sufficient flexibility to meet the needs of most
students.
We would also note that an institution's satisfactory academic
progress policy could further limit a student from retaking
coursework, because the credits associated with any course the
student retakes count toward the maximum time-frame
requirement.
The regulations do not affect the one-year academic limitation
on noncredit and reduced-credit remedial coursework under §
668.20(d) and (f). For example, if a student repeats a remedial
course that exceeds the one-year limitation, the course could
not be considered in the student's enrollment status.
Changes: We have revised the definition of full-time student in
§ 668.2(b) to provide that a student's enrollment status for a
term-based program may include repeating any coursework
previously taken in the program but may not include more
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than one repetition of a previously passed course, or any
repetition of a previously passed course due to the student's
failing other coursework.
Comment: One commenter recommended that the change in
the definition of full-time student should be expanded to
include nonstandard-term and nonterm programs.
Discussion: Since the change in the definition applies to all
term-based programs, the change would apply to standard
terms, including semesters, trimesters, and quarters, as well as
nonstandard terms. Under the definition of a nonterm
payment period in § 668.4(c), a student's coursework is
divided into payment periods based on the hours and weeks of
instructional time in the program. In general, under these
nonterm provisions a student must successfully complete the
credit or clock hours in a payment period to advance to the
next payment period, and may not be paid for repeating
coursework regardless of whether the student successfully
completed it unless the provisions of § 668.4(g) apply.
Changes: None.
Written
Arrangements (§§
668.5 and 668.43)
Back to Top
General
Comment: Several commenters agreed with the proposed
regulations relating to written arrangements. One commenter
commended the Department's proposals on this topic, noting
that they strike a fair balance in the presence of many minutiadriven concerns. Some commenters stated that the proposed
changes eliminate inconsistencies that exist in the current
regulations and provide better information to students while
allowing institutions to determine the best way to disseminate
the required information. Other commenters stated that they
agreed with the proposed changes in §§ 668.5 and 668.43
because if an eligible institution enters into a written
arrangement with another eligible institution, under which the
other eligible institution provides part of the educational
program to students enrolled in the first institution, it is
important for all parties to have a clear understanding of
which institution is providing the credential and the majority
of the education and training.
Discussion: We appreciate the commenters' support of the
proposed changes reflected in §§ 668.5 and 668.43.
Changes: None.
Written Arrangements Between Two or More Eligible
Institutions (§ 668.5(a))
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Comment: Some commenters objected to the Department's
assertion—in the preamble of the NPRM (75 FR 34806, 34815)
—that students who want to take more than 50 percent of an
educational program at another institution could transfer to
the institution that provides the preponderance of the
program's coursework. One commenter stated that students
should be allowed to take courses at more than one campus of
eligible institutions that have a written arrangement without
needing to go through unnecessary activities related to
transfer of credit.
Several commenters disagreed with the proposed changes
reflected in § 668.5(a)(2)(ii). First, they argued that imposing
a limitation on the portion of an educational program one
institution can provide under a written arrangement is not
consistent with the purpose of consortium agreements, which
is to allow students to obtain a degree or certificate from their
institution of choice while allowing them to satisfy course
requirements by taking courses delivered by another
institution. Second, the commenters disagreed with the
limitation because we do not place similar restrictions on
institutions when they accept transfer students who have
earned more than half of the credits that will go toward their
educational program at another institution. Finally, the
commenters argued that more students are attending multiple
institutions before completing their degree or certificate
programs and a requirement that the credential-granting
institution must provide 50 percent of the individual student's
educational program would be a barrier to the students'
postsecondary success.
In addition, a few commenters noted that current articulation
agreements allow students to further their education at
another institution that may accept enough credits on transfer
that the student has less than 50 percent of the program
remaining to be completed. Some commenters expressed the
view that the proposed regulations governing written
arrangements should not apply to articulation agreements
while others sought clarification of whether the Department's
position is that they do apply to such agreements. Commenters
expressed concern that the proposal would result in undue
hardship and fewer opportunities for students in small
communities who take a portion of their coursework locally.
One commenter asked whether the proposed changes reflected
in § 668.5 affect students who obtained college credit while
still in high school.
Discussion: There appears to be some confusion about the
scope of the proposed changes to § 668.5. Under proposed §
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668.5(a)(1), eligible institutions that are not under common
ownership may enter into a written arrangement (which may
include the type of consortium agreements mentioned by the
commenters) under which the non-degree-granting institution
offers part of the degree-granting institution's educational
program; this provision does not impose a specific limitation
on the portion of the educational program that may be offered
by the non-degree-granting institution. In contrast, under
proposed § 668.5(a)(2)(ii), if a written arrangement is between
two or more eligible institutions that are under common
ownership (i.e., are owned or controlled by the same
individual, partnership or corporation), the degree- or
certificate-granting institution must provide more than 50
percent of the educational program. In this situation, a student
is considered a regular student at the degree- or certificategranting institution while taking a portion of the educational
program at another institution under common ownership.
Under this regulatory framework, a consortium agreement
between two eligible institutions that are not under common
ownership is not subject to the 50 percent limitation in §
668.5(a)(2)(ii).
Moreover, § 668.5(a) does not apply to articulation agreements
under which
institutions agree to accept credits when
students transfer from one institution to another, or to cases
where individual students transfer to a different institution to
complete their educational programs. Students who enroll in
an institution and have college credits accepted on transfer
that were earned while in high school also do not come within
the scope of this regulation.
Changes: None.
Comment: A number of commenters disagreed with proposed
§ 668.5(a)(2), which has the effect of limiting the relative
portions of an educational program provided by more than
one institution under the same ownership or control. Some
commenters argued that the limit is arbitrary and
inappropriate because—for all intents and purposes—
institutions under common ownership are the same. A few
commenters suggested that the regulations should focus more
narrowly on the institutions with problems as opposed to all
institutions under common ownership. Some commenters
were unclear about what constitutes “common ownership” and
what types of written arrangements are subject to the 50
percent limitation in § 668.5(a)(2)(ii).
Some commenters indicated that the proposed regulations
should apply to all institutions and not apply only to for-profit
institutions. Several commenters expressed concern about the
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applicability of this provision to the many written
arrangements between public institutions within a State and
whether a State is considered to “own” all of its institutions.
Other commenters asked the Department to clarify that public
and private nonprofit institutions are not covered by the
proposed language in § 668.5(a)(2).
In addition, commenters raised concerns about the potential
impact these regulations could have on students who move to
another area and want to transfer to another location of the
same institution. One commenter stated that the proposed
change would discourage students who finish a program from
transferring to another institution under the same control for a
higher level program.
Some commenters objected to the Department's assertions in
the preamble of the NPRM that written arrangements are used
by institutions under common ownership to circumvent other
regulations and argued that the Department provided only
anecdotal evidence to support the proposed changes in §
668.5. Commenters stated that institutions that are
circumventing the current regulations will find other
opportunities to do so and should face sanctions under the
misrepresentation provisions.
Discussion: As indicated in the preamble to the NPRM, the
Department focused its regulatory changes on the types of
institutions and situations where problems have been
identified rather than expanding a requirement for accrediting
agencies to review written arrangements between institutions
under common ownership. We modeled these regulations on
the language in § 668.5(c)(3)(ii)(B), regarding written
arrangements between an eligible institution and an ineligible
institution or organization because that section of the
regulations refers to institutions that are owned or controlled
by the same individual, partnership, or corporation.
We do not agree with the commenter who stated that the
regulations are arbitrary and inappropriate because
institutions under common ownership are the same entity.
This is because institutions are approved to participate in the
Federal student aid programs as separate entities, and they
must individually demonstrate eligibility as an institution,
eligibility for the programs they offer, program compliance,
cohort default rates, financial responsibility, and
administrative capability. Some limitations on institutions that
are based on program measures can be circumvented if
programs that appear to be offered by one institution are
actually offered by another institution. The prohibition in this
regulation will ensure that the institution providing most of
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the program will be the one associated with the students that
are taking the program.
Section 668.5(a)(2) does not apply to public or private
nonprofit institutions because these institutions are not owned
or controlled by other entities and generally act autonomously.
Some nonprofit institutions may have business relationships
through management agreements or service agreements where
similar concerns could arise, but those instances are expected
to be infrequent and will be addressed on a case-by-case basis.
These provisions do not impact the ability of individual
students to transfer to another location of the same institution
or to another institution under the same ownership or control
either to complete an educational program or to enroll in a
higher-level program. When a student transfers to a new
institution and enrolls for the purpose of completing a degree
or certificate, the new institution becomes the degree-granting
institution.
We agree that institutions that circumvent or otherwise violate
regulations should face appropriate sanctions.
Changes: None.
Comment: A number of commenters supported the proposed
changes to § 668.5 regarding the limitations on the portion of
the educational program that may be offered by another
institution under a written arrangement, but sought
clarification on how to measure portions of educational
programs for these purposes. These commenters suggested
that, for the purposes of determining the percentage of the
educational program provided by each institution, we should
track the provision of educational services on a programmatic
basis rather than by the amount of coursework an individual
student may elect to take.
Discussion: For purposes of determining the portions of the
educational program provided by each institution under any
written arrangement under § 668.5, the degree-granting
institution is responsible for limiting the amount of the
program that may be taken from any other institution.
Because an institution cannot offer more than 50 percent of an
educational program through another institution that is under
common ownership or control, if an institution offered an
educational program on campus and online (through a written
arrangement with another institution under common
ownership) and offered students the option of taking courses
by either method, the institution must ensure that each
student completes more than 50 percent of the educational
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program on campus. If the same institution enrolled students
who live beyond a reasonable commuting distance to the
campus and, therefore, take the online portion of the program
first, the institution must be able to demonstrate that the
students intend to attend on campus to complete at least 50
percent of their educational program.
Changes: None.
Comment: Some commenters agreed that the institution that
grants the degree or certificate should provide more than 50
percent of the educational program, but suggested that
monitoring for compliance with this regulatory provision
should be done by accrediting agencies rather than the
Department. These commenters noted that to the extent that
written arrangements are part of a deliberative process related
to the development of curriculum and academic requirements,
they are part of a decision-making process best performed by
an institution's faculty and leadership and best evaluated by
accrediting agencies. Some commenters stated that the
Department should rely on accrediting agencies to set
appropriate limits on the portion of an
educational program
that can be provided by the non-degree-granting institution.
One commenter stated that, currently, some national
accrediting agencies allow students the opportunity to take
more than 50 percent of their educational program from the
non-degree-granting institution.
Discussion: We acknowledge the important role that an
institution's faculty and leadership play in the development of
written arrangements as well as the role of accrediting
agencies in monitoring the use of such arrangements in
accordance with their standards. However, as we learned
during negotiations, accrediting agencies have differing
practices concerning the review of written arrangements, and
some accrediting agencies do not routinely review written
arrangements. As such, we believe that it is important to
establish a threshold for the amount of the educational
program that can be offered under a written arrangement by
an institution under common ownership with a host
institution. Accrediting agencies may establish a more
restrictive measure if they wish to do so.
Changes: None.
Comment: One commenter expressed concern that proposed §
668.5(a) would affect the Service Members Opportunity
College Army Degree (SOCAD) Institution Agreements
currently in place, which allow 75 percent of an educational
program to be provided by the non-degree-granting
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institution. However, the Contract Administrator of SOCAD
provided a separate comment stating that the proposed
regulations would not affect the current relationships provided
to members of the military.
Discussion: As noted earlier, the proposed limitations in §
668.5(a)(2) apply only to written arrangements between two
or more eligible institutions that are owned or controlled by
the same individual, partnership, or corporation. To the extent
that the eligible institutions that participate in SOCAD are not
owned or controlled by the same individual, partnership, or
corporation, they are not subject to the proposed changes in §
668.5(a)(2).
Changes: None.
Comment: One commenter supported the clarification that the
enrolling institution has all the necessary approvals to offer an
educational program in the format in which it is being
provided. Another commenter argued that it is nonsensical to
require the enrolling institution to have all the same approvals
as the providing institution. The commenter stated that
written arrangements exist to permit flexibility for students
and additional options for students in pursuing their
education goals. One of the benefits of such arrangements,
argued the commenter, is to provide student access to learning
resources and opportunities that the degree-granting
institution cannot provide. For example, written arrangements
may afford students access to online learning from an
institution with demonstrated competencies in providing
distance education. Our clarification in the preamble to the
NPRM that the institution enrolling the student must have the
approval to offer an education program in the format in which
it is being offered limits the ability for campus-based schools
to offer cutting-edge online delivery methods for some
programs even when these online courses are provided by
affiliated and fully accredited institutions. One commenter
argued that the Department had failed to provide data to
support this limitation. Another commenter suggested that
there should be a transition or grace period to allow
institutions to get any needed approvals.
Discussion: We agree that written arrangements are designed
to provide educational flexibility for students and to allow
them access to resources and opportunities that may not be
available from their degree-granting institution. However, we
believe that it is important that the degree-granting institution
have all the necessary approvals to offer the educational
program in the format in which it is being offered. We note
that only in cases in which an institution is offering more than
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50 percent of an educational program through distance
education is the institution required to receive approval from
its accrediting agency to offer distance education. Therefore, a
student who is taking only a few courses online as part of a
written arrangement would not be likely to trigger the
requirement that an institution seek approval from its
accrediting agency to offer distance education. We do not see a
need for a transition or grace period to allow institutions to get
any needed approvals because we believe that most
institutions already have the necessary approvals in place.
Changes: None.
Requirements for Arrangements Between Eligible
Institutions and Ineligible Institutions or Organizations
(§ 668.5(c))
Comment: One commenter supported the expansion of the list
of conditions that preclude an arrangement between an
eligible institution and an ineligible entity reflected in
proposed § 668.5(c). Another commenter stated that the list of
exclusions in proposed § 668.5(c) is overly broad. This
commenter agreed with the Department's intent but pointed
out that denial of recertification (§ 668.5(c)(iv)) may be due to
a factor such as program length. The commenter suggested
that we narrow § 668.5(c)(iv) to cover only denials of
recertification that are based on the institution's lack of
administrative capability or financial responsibility.
Discussion: We appreciate the support for the expansion of the
list of conditions that preclude an arrangement between an
eligible institution and an ineligible entity reflected in §
668.5(c). We disagree with the commenter who recommended
that we limit the denial of recertification condition to cover
only those recertification denials that are based on the
institution's lack of administrative capability or financial
responsibility. An institution that has its recertification denied
because it does not offer one or more programs of sufficient
length to qualify to participate in the Title IV, HEA programs
has committed a serious programmatic violation that the
Department believes should be included in this prohibition.
Changes: None.
Disclosures to Students (§§ 668.5(e) and 668.43(a)(12))
Comment: Several commenters supported the requirement
that institutions providing an educational program under §
668.5(a), (b), or (c) inform students when part of their
educational program is provided by a different institution and
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of additional charges that the student may incur when
enrolling in an educational program that is provided in part by
another institution. They noted that all communication to
students should be clear, user-friendly, and understandable.
One commenter suggested that we revise § 668.43(a)(12)(ii) to
require the institution to include in its description of its
written arrangements the Web sites along with the names and
locations of the other institutions or organizations that are
providing the portion of the educational program that the
degree- or certificate-granting institution is not providing.
Another commenter asked whether § 668.43(a)(12)(iv)
requires the institution to include in its description of its
written arrangements an estimate of the costs incurred by
students taking online courses (e.g., the costs of purchasing a
computer and obtaining Internet access).
A few commenters requested clarification on whether the
required student notifications apply only to educational
programs that require
students to take coursework at
another institution or whether they apply to institutions that
enter into arrangements when students choose to take
coursework at another institution. The commenters stated that
if the notifications apply to both situations, the regulations
would create an overwhelming burden for institutions. These
commenters expressed concern that this burden would result
in institutions limiting the use of written arrangements and
that this, in turn, would result in less choice for students.
Discussion: We appreciate the support for requiring additional
disclosures regarding the portion of a program being provided
by a different institution and the additional costs that a
student may incur under such an arrangement. We agree that
these disclosures should be clear and understandable. While
we agree that providing the Web site of the non-degreegranting institution in the disclosures may be helpful to
students, on balance, we determined that requiring that
particular disclosure is not necessary and that the decision to
include such information in the disclosure should be left to the
degree-granting institution's discretion.
As noted by the commenters, the required disclosures include
disclosure of the estimated additional costs students may incur
as the result of enrolling in an educational program that is
provided, in part, under a written arrangement. Therefore,
when the coursework provided through the written
arrangement is provided online, it would be appropriate to
include estimated additional costs such as the costs of
purchasing a computer and obtaining Internet access.
As stated in the preamble to the NPRM, the disclosure
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requirements reflected in §§ 668.5(e) and 668.43(a)(12) apply
to written arrangements between or among institutions under
which the degree-granting institution can offer educational
programs that are provided, in part, by another institution
(i.e., on an educational program-by-program basis) and not to
individual, student-initiated written arrangements. We
acknowledged that requiring disclosures to individual,
student-initiated written arrangements would be impractical,
burdensome and unnecessary because the student is a party to
the arrangement and would already have the information
required to be disclosed.
Changes: None.
Incentive
Compensation (§
668.14(b))
Back to Top
General
Comment: A significant number of commenters supported the
Secretary's proposed changes to § 668.14(b)(22), which they
stated would align the regulations with the statute and
comprehensively ban the use of commissions, bonuses, and
other direct forms of compensation based on success in
securing enrollments or the award of financial aid. These
commenters supported our efforts to ensure the integrity of
the Federal student aid programs and to protect students
against aggressive admissions and recruitment practices. They
agreed that the current regulations, which included the
language describing permitted compensation activities
(i.e.,“safe harbors”), did not achieve the goals intended by the
Congress. These commenters expressed the belief that the
current safe harbors enable institutions to circumvent the law.
Several commenters stated that the proposed definitions
reflected in § 668.14(b)(22)(iii) would be particularly helpful
and expressed appreciation for our readiness to provide broad
and appropriate guidance to institutions, rather than opinions
on an individual institution's arrangements, in evaluating
compensation issues.
Numerous commenters, particularly groups representing
admissions counselors, specifically supported the deletion of
the twelve safe harbors. The groups representing admissions
counselors stated that they believe that counselors should be
compensated in the form of a fixed salary. They further argued
that because the admissions profession is a form of counseling,
admissions professionals can only discharge their ethical
obligations if they are free of vested interests in the enrollment
decisions made by the prospective students they advise. The
commenters representing admissions personnel also noted
that elimination of the safe harbors would help prevent a
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recruiter's financial interest from overriding a student's
academic interest.
Discussion: The Secretary appreciates the support offered by
the commenters.
Changes: None.
Comment: A number of commenters who expressed support
for the Secretary's goal in proposing changes to § 668.14(b)
(22) requested modifications to the regulatory language or to
the preamble discussion. The majority of these commenters
requested clarifications to assist institutions in understanding
whether particular compensation activities would be
prohibited under proposed § 668.14(b)(22).
Many commenters opposed the proposed changes and
appealed for the Department to retain the current safe
harbors. They challenged the legal adequacy of the changes
and asserted that the need for the proposed changes remained
unsupported by any evidence or data. Some commenters
alleged that the Department had failed to specify sound
reasons for the change in policy and instead had offered
nonspecific references to its reviews of compensation practices
and expenditures of resources.
Other commenters asked whether all payments permitted
under the current safe harbors would be prohibited under this
new regulatory framework.
Discussion: Under section 410 of the General Education
Provisions Act (20 U.S.C. 1221e-3), the Secretary has the
authority to make, promulgate, issue, rescind, and amend
rules and regulations governing the manner of operation of,
and governing applicable programs administered by, the
Department. For regulations governing the title IV, HEA
programs, the Secretary also must ensure that the
development and issuance of those regulations comply with
the negotiated rulemaking requirements in section 492 of the
HEA. In 2002, the Department adopted the incentive
compensation safe harbors reflected in current § 668.14(b)
(22)(ii) under the statutory authority granted in GEPA and the
negotiated rulemaking requirements in the HEA. The
Department adopted the current safe harbors based on a
“purposive reading of section 487(a)(20) of the HEA.” (67 FR
51723 (August 8, 2002).) Since that time, however, the
Department's experience has demonstrated that unscrupulous
actors routinely rely upon these safe harbors to circumvent the
intent of section 487(a)(20) of the HEA. As such, rather than
serving to effectuate the goals intended by Congress through
its adoption of section 487(a)(20) of the HEA, the safe harbors
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have served to obstruct those objectives and have hampered
the Department's ability to efficiently and effectively
administer the title IV, HEA programs.
For example, it has been the Department's experience that
many institutions routinely use employee evaluation forms
that acknowledge that the number of students enrolled is an
important, if not the most important, variable, in determining
recruiter compensation. These forms also list certain
qualitative factors that are ostensibly considered in making
compensation decisions. The forms, on
their face, appear to
demonstrate compliance with the first safe harbor, which
permits compensation schemes that are not “solely” based on
the number enrolled. However, the Department has been
repeatedly advised by institutional employees that these other
qualitative factors are not really considered when
compensation decisions are made, and that they are identified
only to create the appearance of title IV compliance. It is clear
from this information that institutions are making actual
compensation decisions based exclusively on the numbers of
students enrolled.
The Department's need to look behind the documents that
institutions allege they have used to make recruiter
compensation decisions requires the expenditure of enormous
amounts of resources, and has resulted in an inability to
adequately determine whether institutions are in compliance
with the incentive compensation ban in many cases.
For these reasons, we believe it is appropriate to remove the
safe harbors and instead to require institutions to demonstrate
that their admissions compensation practices do not provide
any commission, bonus, or other incentive payment based in
any part, directly or indirectly, upon success in securing
enrollments or the award of financial aid to any person or
entity engaged in any student recruitment or admission
activity or in making decisions regarding the award of title IV,
HEA program funds. We believe that institutions can readily
determine if a payment or compensation is permissible under
section 487(a)(20) of the HEA by analyzing—
(1) Whether it is a commission, bonus, or other incentive
payment, defined as an award of a sum of money or something
of value paid to or given to a person or entity for services
rendered; and
(2) Whether the commission, bonus, or other incentive
payment is provided to any person based in any part, directly
or indirectly, upon success in securing enrollments or the
award of financial aid, which are defined as activities engaged
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in for the purpose of the admission or matriculation of
students for any period of time or the award of financial aid.
If the answer to each of these questions is yes, the commission,
bonus, or incentive payment would not be permitted under the
statute.
Therefore, going forward, actions that were permitted under
current § 668.14(b)(22) will neither be automatically
prohibited, nor automatically permitted. Instead, institutions
will need to re-examine their practices to ensure that they
comply with § 668.14(b)(22). To the extent that a safe harbor
created an exception to the statutory prohibition found in
section 487(a)(20) of the HEA, its removal would establish
that such an exception no longer exists.
Changes: None.
Current Safe Harbors
Comment: Several commenters stated that removing the safe
harbor from current § 668.14(b)(22)(ii)(B), which permits
compensation to recruiters based upon enrollment of students
in ineligible title IV, HEA programs, is contrary to
congressional intent. These commenters stated that the HEA
was not intended to regulate other educational endeavors of
the institution. In addition, one commenter asked about a
specific practice permitted by some State cosmetology boards
that allows two non-title IV, HEA eligible programs to be
combined and in that form, to become eligible for title IV, HEA
aid. Another commenter asked about how the removal of this
safe harbor would impact advanced education classes that are
not title IV eligible.
Discussion: In our experience, institutions have used the safe
harbor reflected in § 668.14(b)(22)(ii)(B) to steer students
away from title IV, HEA programs. We believe that retaining
this safe harbor would continue to allow institutions to
manipulate the system by initially enrolling students in nontitle IV, HEA eligible programs so that the institutions pay
incentive compensation to recruiters based on such
enrollments, only to later re-enroll the same students in title
IV, HEA eligible programs.
We do not agree that the removal of this safe harbor is contrary
to congressional intent. In particular, the only exception
Congress provided in section 487(a)(20) of the HEA is to the
recruitment of foreign students residing in foreign countries
who are not eligible to receive Federal student assistance. For
the reasons addressed in the preceding discussions, we believe
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it is inappropriate to carve out a further exception to include
non-foreign students who are not immediately receiving Title
IV funds.
Moreover, as to the comment regarding cosmetology schools,
there is nothing in the identified practice that supports
allowing compensation to be paid to recruitment personnel
that is otherwise inconsistent with section 487(a)(20) of the
HEA.
Finally, to the extent that the HEA's ban on the payment of
incentive compensation is not otherwise limited to students
enrolled in title IV, HEA eligible programs, institutions need to
make sure that they are in compliance with the prohibition on
incentive compensation regardless of the nature of the
particular program of instruction.
Changes: None.
Comment: A few commenters expressed concerns about the
safe harbor reflected in current § 668.14(b)(22)(ii)(C), which
permits compensation to recruiters who arrange contracts
between an institution and an employer, where the employer
pays the tuition and fees for its employees (either directly to
the institution or by reimbursement to the employee). One
commenter noted that because under this type of contract
there is no direct contact between the entity or individual
seeking the arrangement and the student, these contracts seem
to be permissible. Another commenter asked whether the
following type of arrangement would be permissible without
this safe harbor: An employee secures contracts for nondegree training that is not eligible for title IV, HEA program
funding, and such contracts are billed at a flat rate and are
paid for by the employer. This commenter specifically asked
whether the employee in this situation may be compensated
based on revenue from those contracts.
Discussion: This safe harbor permits compensation that is
ultimately based upon success in securing enrollments.
Because this is inconsistent with section 487(a)(20) of the
HEA, we believe that the safe harbor should not be retained in
these final regulations. We agree with the commenter that in
some instances compensation to recruiters who arrange
contracts between an institution and an employer, where the
employer pays the tuition and fees for its employees, would be
permissible under the ban on incentive compensation. As
previously discussed, we encourage institutions to apply the
two-part test provided within the NPRM in evaluating whether
a particular compensation practice is permissible. Given the
number of possible variables within any particular proposal,
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the Department is not prepared to say that the examples
generally offered by commenters will always be permissible,
but we acknowledge that there are circumstances where such
arrangements may prove to be compliant with the HEA.
We strongly believe that institutions do not need to rely on safe
harbors to protect compensation that complies with section
487(a)(20) of the HEA. Ultimately, the institution must
determine whether its compensation is based in any part,
directly or indirectly, on securing enrollments or the award of
financial aid. If it is not, such compensation would continue
to be permissible even with the removal of the safe harbor
from current § 668.14(b)(22)(ii)(C).
Changes: None.
Comment: A number of commenters voiced their support for
the safe harbor from current § 668.14(b)(22)(ii)(E), which
permits compensation based upon a student's successfully
completing his or her educational program or one academic
year of his or her educational program, whichever is shorter.
Some commenters expressed concern that removal of this safe
harbor would eliminate an important safeguard for students
because this safe harbor encourages institutions to admit only
qualified students. Other commenters noted that to disallow
incentive compensation based on completion of an educational
program is contrary to the Administration's stated goal of
student retention. Several commenters suggested that the
Department should measure the positive effect that incentive
payments based on completion of an educational program can
have on students' educational experience. Another commenter
asked whether payments based on a graduated student's
employment in the student's field of study would be permitted
under the new regulatory framework for incentive
compensation.
Discussion: The Department believes that an institution's
resolute and ongoing goal should be for its students to
complete their educational programs. Employees should not
be rewarded beyond their standard salary or wages for their
contributions to this fundamental duty. The safe harbor in
current § 668.14(b)(22)(ii)(E) permits compensation that is
“indirectly” based upon securing enrollments—that is, unless
the student enrolls, the student cannot successfully complete
an educational program. With the proliferation of short-term,
accelerated programs, and the potential for shorter and
shorter programs, we have seen increased efforts by
institutions to rely upon this safe harbor to incentivize
recruiters. Accordingly, we believe that the retention of the
current safe harbor can be readily exploited, and that it is not
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necessary for institutions to appreciate the value of keeping
students in school. On balance, we believe that the
proliferation of these types of programs justify any benefit that
this safe harbor allegedly provided students by encouraging
institutions to admit only qualified students.
We disagree with the commenter who stated that removal of
this safe harbor is inconsistent with the Administration's goal
of increasing student retention in postsecondary education.
Institutions should not need this safe harbor allowing
incentive payments to recruiters to demonstrate their
commitment to retaining students within their program of
instruction.
In addition, there is nothing about the making of incentivized
payments to recruiters based upon student retention that
enhances the quality of a student's educational experience. If
the program of instruction has value and is appropriate for a
student's needs, a student will likely enjoy a positive
educational experience regardless of the manner in which the
student's recruiter is compensated.
Finally, the Department's experience has shown that some
institutions pay incentive compensation to recruiters based
upon claims that the students who the recruiter enrolled
graduated and received jobs in their fields of study. Yet,
included among the abuses the Department has seen, for
example, is a circumstance where a student's field of study was
culinary arts, and the so-called employed student was working
an entry-level position in the fast food industry. Such a
position did not require the student to purchase a higher
education “credential.” As a result, we believe that paying
bonuses to recruiters based upon retention, completion,
graduation, or placement remain in violation of the HEA's
prohibition on the payment of incentive compensation.
Changes: None.
Comment: Many commenters questioned our rationale for
eliminating the safe harbor in current § 668.14(b)(22)(ii)(G),
which exempts managerial and supervisory employees who do
not directly manage or supervise employees who are directly
involved in recruiting or admissions activities, or the awarding
of title IV, HEA program funds from the prohibition on
receiving incentive payments. These commenters argued that a
bright line designation is needed and that the incentive
compensation ban should only apply to employees who are
involved in direct recruitment or admission of students or
decisions involving the award of title IV, HEA aid. Others
recommended that we retain this safe harbor, and that we
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clarify that the words “indirectly or directly” do not apply to
the determination of which persons are covered by the
prohibition. Several commenters expressed their concerns
about having the regulations prohibit compensation practices
at any level of an organization, no matter how far removed
from actual recruitment, admissions, or financial aid activity.
These commenters argued that such an approach would
prevent institutions from evaluating top management with
respect to student population metrics or any other business or
organizational metric that is a function of student enrollment.
A few commenters raised more specific concerns about the
compensation of top college officials in situations where the
president attends an open house or speaks with potential
students who the institution is recruiting, either in a group or
individually. Some commenters also asked whether the
proposed regulations would permit a president to receive a
bonus or other payment if one factor in attaining the bonus or
other payment was meeting an institutional management plan
or goal that included increasing minority enrollment by a
certain percentage.
Finally, a few commenters asked whether institutions can still
reward athletic coaches whose student athletes stay in school
and graduate.
Discussion: We intend the incentive compensation ban in §
668.14(b)(22)(i) to apply to all employees at an institution who
are engaged in any student recruitment or admission activity
or in making decisions regarding the award of title IV, HEA
program funds. We interpret these employees to include any
higher level employee with responsibility for recruitment or
admission of students, or making decisions about awarding
title IV, HEA program funds. To make this clearer, we are
revising § 668.14(b)(22)(iii) to add a definition for the term
entity or person engaged in any student recruitment or
admission activity or in making decisions about the award of
financial aid. This new definition expressly includes any
employee who undertakes recruiting or admitting of students
or who makes decisions about and awards title IV, HEA
program funds, as well as higher level employees as specified.
Therefore, the actions of a college president could potentially
come within the HEA's prohibition on the payment of
incentive compensation. However, the Department does not
see how mere attendance at an open house or speaking with
prospective students about the value of a college education or
the virtues of attending a particular institution would violate
the incentive compensation plan. Other activities should be
evaluated within the context of the Department's previously
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discussed two-part test to receive assistance as to whether a
particular activity is permissible.
Finally, recruitment of student athletes is not different from
recruitment of other students. Incentive compensation
payments to athletic department staff are governed by the
restrictions included in § 668.14(b)(22). If the payments are
made based on success in securing enrollments or the award of
financial aid, the payments are prohibited; however, the
Department does not consider “bonus” payments made to
coaching staff or other athletic department personnel to be
prohibited if they are rewarding performance other than
securing enrollment or awarding financial aid, such as a
successful athletic season, team academic performance, or
other measures of a successful team.
Changes: We have added a definition of the term entity or
person engaged in any student recruitment or admission
activity or in making decisions about the award of financial
aid to § 668.14(b)(22)(iii). New paragraph (b)(22)(iii)(C) of
this section provides that the term means—
(1) With respect to an entity, any institution or organization
that undertakes the recruiting or the admitting of students or
that makes decisions about and awards title IV, HEA program
funds; and
(2) With respect to a person, any employee who undertakes
recruiting or admitting of students or who makes decisions
about and awards title IV, HEA program funds, and any higher
level employee with responsibility for recruitment or
admission of students, or making decisions about awarding
title IV, HEA program funds.
Comment: One commenter asked how the removal of the safe
harbor from current § 668.14(b)(22)(ii)(H), which permits an
institution to provide a token gift not to exceed $100 to an
alumnus or student provided that the gift is not in the form of
money and no more than one gift is provided annually to an
individual, will affect institutions compensating students for
referrals. The commenter asked whether an individual who is
referred can be given a scholarship for friends or family of the
individual who is referring or a tuition waiver.
Discussion: Section 668.14(b)(22) does not prohibit
institutions from providing any commission, bonus, or
incentive payment to students who are referrals. Therefore, an
individual who is referred to an institution should be able to
receive whatever scholarship money or tuition assistance that
he or she may otherwise be eligible to receive without violating
the HEA.
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Changes: None.
Comment: Several commenters asked for clarification
regarding the safe harbor in current § 668.14(b)(22)(ii)(J)
permitting an institution to award compensation for Internetbased recruitment and admission activities that provide
information about the institution to prospective students, refer
prospective students to the institution, or permit prospective
students to apply for admission online. Specifically, the
commenters asked us to clarify that institutions can make
payments to third parties that provide Internet-based
recruitment and admission services as long as they do not
otherwise violate the statutory prohibition. Other commenters
asked for confirmation that click-through payments are
permitted if the third party is paid based on those who click,
not those who enroll. Other commenters requested examples
of permitted relationships.
Discussion: The HEA does not prohibit advertising and
marketing activities by a third party, as long as payment to the
third party is based on those who “click” and is not based in
any part, directly or indirectly, on the number of individuals
who enroll or are awarded financial aid; therefore, the
regulatory language would not prohibit such click-through
payments. Further, institutions may make payments to third
parties and entities with formal third-party arrangements as
long as the parties are not compensated in any part, directly or
indirectly, based on success in securing enrollments or the
award of financial aid.
Changes: None.
Comment: Many commenters offered suggestions regarding
the safe harbors reflected in current § 668.14(b)(22)(ii)(K) and
(b)(22)(ii)(L), which both involve payments to third parties for
shared services. A number of commenters representing
organizations that provide a variety of services to institutions
asked for clarification about their continued ability to assist
institutions in this way, as long as the compensation
arrangements are not prohibited by the HEA. Many
commenters asked whether tuition-sharing arrangements with
third-parties to secure servicers that include recruitment
would be permitted. They questioned whether these
arrangements should be treated the same as arrangements
involving volume-driven payments. Several commenters
expressed concern about the affect these regulations will have
on third parties who provide services to assist students who
study abroad.
One commenter suggested that entities that provide enrollment
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services be able to elect to be treated as “third-party servicers,”
with all of the restrictions, obligations, liabilities, reporting
requirements, and oversight that accompany that status.
Other commenters asked whether institutions would be held
accountable for the actions of third-party servicers. A few
commenters also requested the Department to provide
examples of arrangements with third parties that would be
permitted under the new regulatory framework (i.e., with the
removal of the safe harbors from current § 668.14(b)(22)(ii)
(K) and (b)(22)(ii)(L)).
Discussion: The Department understands the value of
partnerships between institutions and entities that provide
various support and administrative services to these
institutions. Such arrangements are permitted under these
regulations as long as no entity or person engaged in any
student recruitment or admission activity or in making
decisions about the award of financial aid (as defined in §
668.14(b)(22)(iii)(C)) is compensated in any part, directly or
indirectly, based upon success in securing enrollments or the
award of financial aid.
In addition, as the Department stated in the NPRM,
arrangements under which an institution is billed based on the
number of student files that are processed (e.g., a volumedriven arrangement) are not automatically precluded, provided
that payment is not based in any part, directly or indirectly, on
success in securing student enrollments or the award of
financial aid.
Further, it is longstanding Department policy that an
institution is responsible for the actions of any entity that
performs functions and tasks on the institution's behalf. The
definition of a third-party servicer is established in § 668.2;
the responsibilities of a third-party servicer are described in §
668.25. No additional language is needed.
Changes: None.
Permissible Compensation Activities
Comment: Many commenters requested clarification on the
types of compensation that would be permitted under
proposed § 668.14(b)(22) and section 487(a)(20) of the HEA.
A few commenters who supported the proposed changes to §
668.14(b)(22) suggested additional alterations to strengthen
the language—such as moving language we had included in the
NPRM preamble to the regulatory text—to ensure that
incentive payments are not based “in any part” on success in
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securing enrollments or financial aid.
In addition, several commenters suggested that more than two
changes in pay in a calendar year should be considered
evidence that the payments are incentive compensation.
These commenters also requested guidance about allowable
salary
adjustments, including whether raises (for
promotions) would be permitted and whether reductions (for
demotions) would be permitted. Some commenters requested
clarification on whether a salary could be paid. One
commenter asked whether benefits could be paid at
differential rates by class of employee or on a sliding scale by
salary.
Discussion: Based on these comments, the Secretary agrees
that some modifications to the language in proposed §
668.14(b)(22) would be helpful to ensure that incentive
payments are not based “in any part” on success in securing
enrollments or financial aid. In particular, we agree that it is
appropriate to add language to avoid confusion as to whether
some part of an individual's compensation may be based on
incentive compensation. For this reason, we are revising §
668.14(b)(22)(i) to reinforce the idea that compensation must
not be based in any part, directly or indirectly, on success in
securing enrollments or the award of financial aid.
In addition, we support revising the regulations to provide that
an employee who receives multiple compensation adjustments
in a calendar year is considered to have received adjustments
based upon success in securing enrollments or the award of
financial aid in violation of the incentive compensation ban in
§ 668.14(b)(22) if those adjustments create compensation that
is based in any part, directly or indirectly, upon success in
securing enrollments or the award of financial aid.
Finally, with respect to the requests for clarification on
allowable salary adjustments, we note that individuals may be
compensated in any fashion that is consistent with the
prohibition identified in section 487(a)(20) of the HEA.
Accordingly, while not commenting on any specific
compensation structure that an institution may choose to
implement, the Department recognizes, for example, that
institutions often maintain a hierarchy of recruitment
personnel with different amounts of responsibility. As long as
an institution complies with section 487(a)(20) of the HEA, it
may be appropriate for an institution to have salary scales that
reflect an added amount of responsibility. Institutions also
remain free to promote and demote recruitment personnel, as
long as these decisions are consistent with the HEA's
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prohibition on the payment of incentive compensation.
Finally, it is appropriate to pay recruitment personnel a fixed
salary.
Changes: We have revised § 668.14(b)(22)(i)(A) (which has
been redesignated as § 668.14(b)(22)(i)) to clarify that a
prohibited incentive compensation includes any commission,
bonus, or other incentive payment based in any part, directly
or indirectly, upon success in securing enrollments or the
award of financial aid to any person or entity engaged in any
student recruitment or admission activity or in making
decisions regarding the award of title IV, HEA program funds.
In addition, we have redesignated proposed § 668.14(b)(22)(i)
(B) as § 668.14(b)(22)(i)(A) and added a new paragraph (b)
(22)(i)(B) to provide that, for the purposes of this paragraph,
an employee who receives multiple adjustments to
compensation in a calendar year and is engaged in any student
enrollment or admission activity or in making decisions
regarding the award of title IV, HEA program funds is
considered to have received such adjustments based upon
success in securing enrollments or the award of financial aid if
those adjustments create compensation that is based in any
part, directly or indirectly, upon success in securing
enrollments or the award of financial aid.
Finally, we have revised § 668.14(b)(22)(ii) to provide that
eligible institutions, organizations that are contractors to
eligible institutions, and other entities may make merit-based
adjustments to employee compensation provided that such
adjustments are not based in any part, directly or indirectly,
upon success in securing enrollments or the award of financial
aid.
Comment: Commenters raised a number of questions related
to the two-part test the Department has offered that will
demonstrate whether a compensation plan or payment
complies with the statute and the implementing regulations.
Many commenters seemed confused about the application of
the two-part test and raised a wide range of specific questions
about employment possibilities and compensation practices.
For example, some commenters asked for clarification about
the types of items that could be considered something of value,
such as letters of recommendation to volunteer interns.
Several commenters asked that we include the language of the
two-part test in the regulatory text.
Finally, one commenter asserted that the two-part test will not
add clarity on compensation issues but instead will raise
questions about the legality of certain types of merit-based
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compensation systems that seem to fall outside the scope of
compensation restriction but that could fail to satisfy the twopart test.
Discussion: As discussed earlier in this preamble, the
Department has described a two-part test for evaluating
whether a payment constitutes a commission, bonus, or other
incentive payment based in any part, directly or indirectly,
upon success in securing enrollments or the award of financial
aid to any person or entity engaged in any student recruitment
or admission activity or in making decisions regarding the
award of title IV, HEA program aid in violation of the ban
reflected in § 668.14(b)(22)(i). The Department first described
this test in the preamble to NPRM. (See 75 FR 34818 (June 18,
2010).) The test consists of the following two questions, the
answers to which will permit an institution to know whether
the compensation is considered incentive compensation:
(1) Whether the payment is a commission, bonus, or other
incentive payment, defined as an award of a sum of money or
something of value paid to or given to a person or entity for
services rendered; and
(2) Whether the commission, bonus, or other incentive
payment is provided to any person based in any part, directly
or indirectly, upon success in securing enrollments or the
award of financial aid, which are defined as activities engaged
in for the purpose of the admission or matriculation of
students for any period of time or the award of financial aid.
If the answer to each of these questions is yes, the payment
would not be permitted under section 487(a)(20) of the HEA
or § 668.14(b)(22). The Department merely provided this test
as a tool to help institutions evaluate compensation practices
they may consider implementing. The test does not add any
substantive requirements that are not otherwise included in §
668.14(b)(22)(i). For this reason, we do not think it is
necessary or appropriate to include the text of the test in the
regulations.
The Department further notes that, as a general matter, it does
not believe that the provision of letters of recommendation to
volunteer interns would constitute a proscribed incentive
payment.
Finally, we disagree with the comment that the two-part test
will not serve generally to answer institutions' questions
regarding a particular compensation plan. As previously
stated, we believe that the prohibition identified in section
487(a)(20) of the HEA is clear and that institutions should not
have difficulty maintaining
compliance with the new
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regulatory language. To the extent an institution has questions
about what it intends to do, the Department has offered the
two-part test as an aid to reaching a proper conclusion. To the
extent that an institution does not wish to use the test to assist
it in evaluating its practices, it is not required to do so.
Changes: None.
Comment: A number of commenters questioned the use of the
term “indirectly” in the prohibition on incentive compensation
in proposed § 668.14(b)(22). They expressed concern about
the broad scope of this term and believed that interpretive
discord will result from its inclusion in § 668.14(b)(22). These
commenters argued that any compensation involving an
institution of higher education is based indirectly on success in
securing enrollments and asked how far removed an activity
must be in order for it not to be considered indirectly related.
Other commenters specifically requested that we define the
term “indirectly.”
Several commenters suggested that proposed § 668.14(b)(22)
(i)(A) should use the term “solely” rather than “directly or
indirectly” (i.e.,“it will not provide any commission, bonus, or
other incentive payment based solely upon success” rather
than “it will not provide any commission, bonus, or other
incentive payment based directly or indirectly upon success”).
These and other commenters alleged that the language in
proposed § 668.14(b)(22)(i)(A) is not consistent with
congressional intent. Many of these commenters cited to the
conference report, which states that the use of the term
“indirectly” does not mean that institutions are prohibited
from basing salaries on merit; they may not, however, be
based “solely” on the number of students recruited, admitted,
enrolled, or awarded.
Discussion: The Department does not agree with the view that
the use of the phrase “directly or indirectly” will lead to
interpretation problems or that it is inconsistent with
congressional intent. Given the Department's experience with
how the safe harbor in current § 668.14(b)(22)(i)(A), which
permits up to two salary adjustments per year provided that
they are not based solely on the number of students recruited,
admitted, enrolled, or awarded financial aid, has been abused,
the Department does not believe that it serves congressional
intent to limit the incentive compensation ban in section
487(a)(20) of the HEA to those payments that are based solely
upon success in securing enrollments or the award of financial
aid. The Department believes that, consistent with section
487(a)(20) of the HEA, incentive payments should not be
based in any part, directly or indirectly, on success in securing
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enrollments or the award of financial aid.
The safe harbor in current § 668.14(b)(22)(i)(A) has led to
allegations in which institutions conceded that their
compensation structures included consideration of the
number of enrolled students, but averred that they were not
solely based upon such numbers. In some of these instances,
the substantial weight of the evidence suggested that the other
factors purportedly analyzed were not truly considered, and
that, in reality, the institution based salaries exclusively upon
the number of students enrolled. After careful consideration,
the Department determined that removal of the safe harbor
was preferable to retaining but revising the safe harbor. For
example, we considered suggestions that we change the word
solely to some other modifier, such as “primarily” or
“substantially,” but ultimately determined that doing so would
not correct the problem. With such a change, we believe the
evaluation of any alternative arrangement would merely shift
to whether the compensation was “primarily” or
“substantially” based upon enrollments. Such a shift would not
reduce the ability of an unscrupulous actor to claim that
student enrollments constituted this lesser factor within a
recruiter's evaluation and would foster the same sorts of
abuses that have become apparent by institutions attempting
to assert that their compensation practices are not solely based
on enrollments.
Changes: None.
Comment: A number of commenters raised questions about
proposed § 668.14(b)(22)(ii), which allows eligible
institutions, organizations that are contractors to eligible
institutions, and other entities to make merit-based
adjustments to employee compensation provided that such
adjustments are not based upon success in securing
enrollments or the award of financial aid. They expressed
concern that limiting merit-based adjustments to those that
are not based upon success in securing enrollments or the
award of financial aid would make it impossible for them to
award merit increases for employees whose job it is to enroll
students. They noted that there are no standard evaluative
factors concerning enrollment that are not directly or
indirectly based on securing enrollments.
Some commenters requested clarification about whether an
increase could be based on seniority or length of employment,
including whether a retention bonus could be paid based on
the employee's retention at the institution if it is paid evenly to
all employees.
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Some commenters argued that the regulations should
recognize and permit compensation based on the performance
of, and success at, the core job functions of admissions
representatives and financial aid officials. They questioned
how it would be possible to measure employee performance
without evaluating success. They asked that we provide
concrete guidance about how institutions can make salary
adjustments without violating the incentive compensation
prohibition.
Discussion: Section 668.14(b)(22) does not prohibit meritbased compensation for financial aid or admissions staff. An
institution may use a variety of standard evaluative factors as
the basis for this type of compensation; however, consistent
with section 487(a)(20) of the HEA and § 668.14(b)(22), an
institution may not consider the employee's success in
securing student enrollments or the award of financial aid in
providing this type of compensation. Further, an increase in
compensation that is based in any part either directly or
indirectly on the number of students recruited or awarded
financial aid is prohibited.
As previously mentioned, many institutions currently claim to
evaluate their recruitment personnel on a series of qualitative
factors, as well as on the number of enrolled students, to
demonstrate compliance with the safe harbor reflected in
current § 668.14(b)(22)(i)(A), which prohibits compensation
based solely on the number of students enrolled. As a result, it
appears that these institutions have identified other factors
that are not dependent upon student enrollments that we
believe could by themselves be considered for making a meritbased compensation decision. In addition, seniority or length
of employment is an appropriate basis for making a
compensation decision separate and apart from any
consideration of the numbers of students enrolled. Finally, as
many commenters from groups representing admissions
personnel noted, as a general matter, recruitment personnel
should be compensated with a fixed salary to ensure that their
ability to focus on what is in a student's best interest is not
compromised.
Changes: None.
Comment: Several commenters raised issues about the
relationship between an institution's goals and payments to
employees. Many asked whether
employees could be
rewarded through profit-sharing or other payments for success
in meeting retention, graduation, and placement goals as long
as they are not rewarded for the number of students recruited
and admitted. These commenters requested that we define an
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acceptable percentage of an employee's compensation
adjustment that can be based on the number of students
recruited, admitted, enrolled, or awarded financial aid.
One commenter asked that we clarify whether payments tied to
overall institutional revenues, including profit-sharing,
pension, and retirement plans are allowed. A number of
commenters asked more broadly whether such plans would be
permissible. A few commenters requested changes to
incorporate the distribution of profit-sharing or bonus
payments under certain circumstances, such as when a
payment is made to a broad group of employees.
Discussion: While there is no statutory proscription upon
offering employees either profit-sharing or a bonus, if either is
based in any part, directly or indirectly, upon success in
securing enrollments or the award of financial aid, it is not
permitted under section 487(a)(20) of the HEA or § 668.14(b)
(22).
The Department agrees with commenters that there are
circumstances when profit-sharing payments should be
permitted. Under proposed § 668.14(b)(22), an institution
may distribute profit-sharing payments if those payments are
not provided to any person who is engaged in student
recruitment or admission activity or in making decisions
regarding the award of title IV, HEA program funds. The
Department believes that such payments are consistent with
the HEA as they are not being made to a particular group who
is active in admissions or financial aid.
For this reason, we are making a change to § 668.14(b)(22)(ii)
to provide that institutions may make payments, including
profit-sharing payments, so long as they are not provided to
any person who is engaged in student recruitment or
admission activity or in making decisions regarding the award
of title IV, HEA program funds.
Changes: We have revised § 668.14(b)(22)(ii) to clarify that,
notwithstanding the ban in § 668.14(b)(22)(i), eligible
institutions, organizations that are contractors to eligible
institutions, and other entities may make profit-sharing
payments, so long as such payments are not provided to any
person who is engaged in student recruitment or admission
activity or in making decisions regarding the award of title IV,
HEA program funds.
Comment: Several commenters asked us to clarify what kinds
of activities would not be considered under the definition of
securing enrollments or the award of financial aid. They
asked that we revise the regulations to provide explicitly that
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payments based on any additional activities are not allowed if
they are directly or indirectly based on enrollment or the
awarding of aid.
Other commenters raised questions about the use of
“aggregators,” that is, entities that assist an institution with
the institution's outreach efforts. These efforts include but are
not limited to, identifying students, offering counseling and
information on multiple institutions, and encouraging
potential students to fill out an application directly with the
individual institutions. Aggregators are paid based on the
student remaining at the institution for a certain time period
rather than based on the fact that the student enrolls.
Commenters asked us to clarify whether these practices are
permitted under section 487(a)(20) of the HEA and §
668.14(b)(22).
Some commenters focused on arrangements under which
institutions pay third parties for student contact information
and asked whether such information may be sorted or
qualified. Further, they questioned whether institutions would
be permitted to pay only for information that yields actual
contact with a student. They asked that we confirm that
institutions may pay students for contact information on a per
person basis as long as payments are not based on the number
of students who apply or enroll. In addition, they suggested
that we allow qualitative factors to be included in the
consideration of the price to provide incentives to third parties
to appropriately identify students that more closely fit an
institution's profile.
Some commenters believed that the proposed definition of
securing enrollments or the award of financial aid does not
make it clear that the activities are prohibited through the
completion of a student's educational program.
Discussion: The Department agrees that it would be helpful to
clarify the type of activities that are and are not considered
securing enrollments or the award of financial aid. For this
reason, we have revised the definition of securing enrollments
or the award of financial aid to specifically include (as
examples) contact through preadmission or advising activities,
scheduling an appointment for the prospective student to visit
the enrollment office or any other office of the institution,
attendance at such an appointment, or involvement in a
prospective student's signing of an enrollment agreement or
financial aid application (see § 668.14(b)(22)(iii)(B)(1) of these
final regulations).
We also revised the definition to clarify that it does not include
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making a payment to a third party for the provision of student
contact information provided that such payment is not based
on any additional conduct by the third party, such as
participation in preadmission or advertising activities,
scheduling an appointment to visit the enrollment office or
any other office of the institution or attendance at such an
appointment, or the signing, or being involved in the signing
of a prospective student's enrollment agreement or financial
aid application (see § 668.14(b)(22)(iii)(B)(2) of these final
regulations).
With respect to the comments requesting guidance on
“aggregators,” we do not believe it is necessary or appropriate
for the Department to indicate whether these types of activities
would, across the board, be permitted. Each arrangement
must be evaluated on its specific terms. As noted earlier in this
preamble, we believe any institution can determine whether a
payment it intends to make is prohibited by § 668.14(b)(22) by
applying the two-part test we have described. Specifically, the
first step for an institution in determining if payment for an
activity or action is considered incentive compensation is to
evaluate whether the entity is receiving something of value,
then to determine whether the payment is made based in any
part, directly or indirectly, on success in securing enrollments
or the award of financial aid.
Finally, we agree with commenters that the definition of the
term securing enrollments or the award of financial aid
should be revised to specify that these activities include
activities that run throughout completion of the student's
educational program.
Changes: We have revised the definition of securing
enrollments or the award of financial aid in § 668.14(b)(22)
(iii)(B) to provide more detail about actions that are considered
to be covered by the definition. We also have revised the
definition to clarify that it includes activities through the
completion of an educational program.
Comment: Numerous commenters requested that the
Department offer guidance on the practical implementation of
the proposed definitions. Many expressed concern about our
stated intention to address
only broadly applicable principles
rather than responding to questions on individual
compensation issues. These commenters asserted that
institutions need guidance before they should be the subject of
an investigation or legal action. They raised concerns about the
confusion that could result without additional clarification and
the attendant costs to partners in the student aid process in
“today's legal environment.” They believed that the
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Department already knows that guidance will be needed based
on our pre-2002 experiences and noted that issuing guidance
is a fundamental purpose of the Department and should be
continued.
Discussion: The Department believes the proposed language is
clear and reflective of section 487(a)(20) of the HEA. As
modified, it is designed to appropriately guide institutions as
they evaluate compensation practices. To the extent that
ongoing questions arise on a particular aspect of the
regulations, the Department will respond appropriately in a
broadly applicable format and will distribute the information
widely to all participating institutions. This response may
include a clarification in a Department publication, such as the
Federal Student Aid Handbook or a Dear Colleague Letter. The
Department does not intend to provide private guidance
regarding particular compensation structures in the future and
will enforce the regulations as written.
Changes: None.
Satisfactory
Academic Progress
(§§ 668.16(e),
668.32(f), and
668.34)
Back to Top
General
Comment: Many commenters supported the proposed changes
to the Satisfactory Academic Progress (SAP) regulations.
Several commenters noted that the consolidation of the SAP
requirements into § 668.34 would ease compliance and
suggested that it would be helpful to revise the Federal Student
Aid (FSA) Handbook to mirror the new organization of the
requirements in the regulations.
Several commenters noted that they appreciated that the
proposed SAP regulations retain the flexibility provided under
the current regulations for institutions to establish policies
that best meet the needs of their students.
Many commenters expressed support for the proposed changes
to the SAP regulations because they viewed them as a means
for helping hold students accountable for their academic goals
earlier in their careers, which they believed would lead to
lower student debt levels. Several commenters noted that their
current policy and practices either met or exceeded the
requirements in the proposed regulations.
Many commenters supported, in particular, the definition of
the terms financial aid warning and financial aid probation
as well as the standardized definitions of other terms related to
SAP. These commenters stated that this standardization would
lead to a more consistent application of the SAP regulations
among institutions, which, in turn, will make them more
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understandable to students.
Many commenters also supported the SAP regulations because
they give those institutions that choose to evaluate SAP more
frequently than annually the ability to use a financial aid
warning status, which they viewed as being beneficial to
students. They stated that such a warning would lead to early
intervention for students who face academic difficulties.
Commenters also noted that the financial aid warning status
will allow financial aid offices to strengthen their SAP policies
to encourage students to use designated support services on
campus and lead to further student success.
Discussion: The Department appreciates the support of its
efforts to improve program integrity through its SAP
regulations. With regard to the comment recommending that
we revise the FSA Handbook to align it with the changes we
have made in the SAP regulations, we will take this
recommendation into account during the next revision of the
FSA Handbook.
Changes: None.
General
Comment: Several commenters did not support the proposed
changes to the SAP regulations. Two commenters stated that
the Department should delay implementation of the SAP
regulations, including proposed § 668.34, so that we can
resubmit these proposals for negotiation and evaluation in a
future negotiated rulemaking proceeding. These commenters
argued that the Department had not made a sufficient
argument for what would be gained by the changes, and how
these benefits would justify the additional burden imposed
upon institutions by these regulations.
Two commenters stated that institutions were in the best
position to design and implement a satisfactory academic
progress policy that fit their institutional needs, and that the
current regulations were sufficient for achieving this purpose.
These commenters asserted that the proposed changes were
intrusive and would lead to increased audit exceptions. These
commenters also noted that the Department should consider
incentives to encourage institutions to research student
success in light of their own SAP policies. One commenter
stated that the proposed regulations were too prescriptive, and
that institutions would require significant guidance in the FSA
Handbook in order to be able to comply with the new
regulations.
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Two commenters stated that while they generally agreed with
the Department's desire to clarify the SAP regulations and
with the proposed approach reflected in the NPRM, the
regulations had a number of unintended consequences. These
commenters indicated that the Department's proposal would
force institutions to choose whether to take on additional
workload by evaluating students each term, or to take on the
additional workload caused by the dramatic increase in
appeals. One of the commenters noted as an example an
institution that has a number of Alaskan Native students to
whom it provides significant support, particularly early in their
careers; in this case, the commenter stated that these students
would be significantly harmed by these SAP regulations as the
students often cannot remedy their academic problems in a
short period of time. Both of these commenters noted that
while the Department believes that it has to address abuses
with the current regulations, that it should weigh this against
the unintended consequences of the proposed regulations,
which include increased workload for institutions and unfair
impact on certain groups of students.
Discussion: The Department disagrees with the commenters
who suggested that these regulations should be resubmitted
for the negotiated rulemaking process. The proposed changes
to the SAP regulations in §§ 668.16(e), 668.32(f), and 668.34
have already been through the negotiated rulemaking process.
In fact, the negotiators reached tentative agreement on these
proposed changes. During negotiations, most negotiators
stated that it was appropriate for the Department to provide
certain flexibilities for those institutions that chose to check on
the satisfactory academic progress of students more often than
was required by the statutory minimum of annually. Many of
the negotiators said that they supported the proposed changes
to the SAP regulations because they continued to provide
significant flexibilities for institutions to craft SAP policies that
met the needs of their student bodies
while still preserving
program integrity. For the commenter who suggested that the
Department should encourage institutions to study the
consequences of their SAP policies and allow incentives for
doing so, we will take this under advisement when we next
have the opportunity to develop experimental site proposals.
We do not agree with the commenters who suggest that the
SAP regulations are too prescriptive or intrusive. Section
484(c)(1)(A) of the HEA requires that an eligible student be
making satisfactory progress towards program completion,
and that institutions check at least annually for programs
longer than a year, that a student is annually meeting that
requirement. These regulations do not require institutions to
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do any more than what is required by the HEA, and are not
more difficult to comply with than the current regulations.
Therefore, institutions should not experience increased
incidents of noncompliance. We will continue to provide any
applicable and needed guidance in the FSA Handbook to assist
institutions in complying with the regulations.
We do agree with the commenters who stated that an increase
in SAP monitoring to a payment period by payment period
basis would increase administrative burden. However,
institutions are free to continue to monitor as frequently as
they currently do, and are not required to change their SAP
policy and monitor every payment period. As for the
unintended consequences for particular groups of students,
these regulations allow for institutions to craft SAP policies
that best fit the needs of their students. An institution could
evaluate the needs of any special student groups and find ways
to work effectively with those students. For example, a specific
student may need to have assistance developing an academic
plan that will enable him or her to be successful.
Changes: None.
Delayed Implementation
Comment: Several commenters suggested that implementation
of the proposed changes to §§ 668.16(e), 668.32(f) and 668.34
should be delayed for a couple of years to allow institutions to
prepare their policies and procedures to comply with the
regulatory changes. One commenter recommended that
implementation be delayed until the 2012-13 award year to
allow for institutions to make changes to their monitoring
systems. Another commenter encouraged the Department to
delay implementation of the regulations for SAP, but noted
that if we do not delay implementation, then the Department
should issue guidance as to how the new regulations will affect
summer crossover payment periods. This commenter
expressed concern that, without this additional guidance, it
will be unclear as to which SAP regulations apply to students
enrolled in summer.
Discussion: While the Department appreciates that some
institutions may have to make changes to computer
monitoring systems, or written policies and procedures, we do
not believe that the changes to the SAP regulations are
extensive enough to warrant delayed implementation.
Institutions that may have to adjust or change their SAP policy
will have to publicize such a change to students, and let
students know when any new SAP policy is effective. As such,
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the summer crossover payment period would be addressed by
the school's new policy and would be subject to the effective
date of the school's new policy. For example, a school may
decide that for the purpose of this policy change, a 2011-12
summer crossover period will be subject to their current SAP
policy and procedures, as part of the 2010-11 award year. This
would be acceptable, and should be addressed in the school's
notification to their students of the effective date of any new
policy.
Changes: None.
Satisfactory
Academic Progress
(§ 668.34)
Back to Top
Comment: Two commenters stated that the term “financial aid
applicants” should be substituted for the word “students” in §
668.34. The commenters indicated that students who had not
applied for financial aid would be confused by notifications
about eligibility under the SAP regulations. These commenters
argued that institutions should only be required to send
notifications to financial aid applicants, and that the proposed
requirement that notifications be sent to all of an institution's
students is unreasonable.
Discussion: There is no requirement in the proposed
regulations for schools to notify students who are not applying
or receiving title IV, HEA aid of their eligibility under SAP.
These regulations do not impose such a requirement.
Moreover, we do not believe it is necessary to replace the term
“student” with the term “financial aid applicant” in these
regulations since we are referring to general student eligibility
criteria, which affect not only financial aid applicants, but
recipients of title IV, HEA funds as well. There is no attempt to
regulate any other students in these regulations.
Changes: None.
Consistency Among Categories of Students
Comment: One commenter noted that proposed § 668.34(a)(2)
retained the language from current § 668.16(e)(3) that the
institution's policy must be consistent among categories of
students. This commenter questioned whether, within the
categories of students, an institution could evaluate subcategories of students differently. For example, within the
group of undergraduate students, could an institution choose
to evaluate freshmen and sophomore students every payment
period but upperclassmen only once a year. The commenter
noted that this approach might be used if the institution
determined that students in the first two years needed more
intervention, and that after that time students were more
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likely to remain enrolled until graduation. The commenter also
asked if this approach is allowable, could the institution use a
financial aid warning for those students who are evaluated
every payment period.
One commenter noted that proposed § 668.34(a)(2) does not
appear to allow for different evaluation periods based upon the
type of student or program being evaluated. For example, this
commenter noted that an institution may want to evaluate
undergraduates each payment period and evaluate graduate
students annually. The commenter proposed changes to the
regulatory language that would allow for such a difference.
Discussion: These regulations retain the flexibility for an
institution to evaluate different categories of students
differently, as long as the policy provides for consistent
application of standards within each of the categories of
students. Institutions retain flexibility to create a policy within
those groups of students to best meet the needs of its student
body. If they wish to institute a policy that evaluates freshmen
and sophomores every payment period, and juniors and
seniors annually, an institution is free to do so. Such a policy
would only allow for the automatic financial aid warning status
to be used for those students who are evaluated every payment
period. This would, however, allow for a policy that is sensitive
to the needs of the institution's student body. For this reason,
we do not believe that any changes are needed to respond to
the commenters' concerns.
Changes: None.
Frequency of Evaluation
Comment: One commenter supported the proposed
regulations, but expressed concern that an institution may not
have
time prior to the start of the next term to evaluate SAP,
thereby resulting in students owing a repayment of title IV,
HEA funds. Several commenters noted that for some academic
periods there is not enough time to evaluate students prior to
the beginning of the next payment period. These commenters
noted that this is particularly true for institutions with
quarters and even most traditional calendar schools for the
period after the summer term. One commenter stated that, in
order to accommodate the realities of institutions that use the
quarter system, all institutions that monitor their students'
satisfactory academic progress more frequently than annually
should be allowed to use the financial aid warning status.
Several commenters argued that the Department should not
require institutions to evaluate more frequently than annually.
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Numerous commenters did not agree with the Department
giving additional flexibilities to those institutions that evaluate
the satisfactory academic progress of its students each
payment period rather than annually.
One commenter stated that it was unfair to “pressure”
institutions to check a student's satisfactory academic progress
more frequently than once per year, particularly if they have
stable student populations and good graduation rates. This
commenter argued that these types of institutions should be
allowed to use the flexibility of the financial aid warning status
even if they monitored SAP less frequently than every payment
period. Another commenter representing an association noted
that some of its members objected to what they perceived as
the Department restricting flexibility when an institution is in
compliance with the minimum yearly requirement established
under section 484(c)(1)(A) of the HEA. Another commenter
argued that it would decrease student success to require all
institutions to check satisfactory progress each payment
period, as students would not know from one term to the next
what their eligibility for aid might be. This commenter
expressed concern that this would particularly disadvantage
low income and minority students.
One commenter argued that by strengthening other parts of
the SAP regulations, only one probationary period for
example, abuses could be curtailed, and institutions would not
be encouraged to create more lenient policies.
Discussion: The Department appreciates the fact that there
could be an increased administrative burden for some
institutions to change the frequency with which they monitor
the satisfactory academic progress of their students to a
payment period-by-payment period basis. However, changing
the frequency for monitoring satisfactory academic progress is
not required under these regulations; institutions still have the
flexibility to create a policy that best meets the needs of their
student body. If an institution believes, for example, that
evaluating SAP every payment period would create too much
uncertainty for their students, then they are not required to
develop such a policy.
With respect to the commenter who suggested that institutions
with stable student populations and good graduation rates
should be able to use the flexibility of the financial aid warning
status even if they monitored SAP on an annual basis, we do
not believe it is appropriate to allow extended periods of
financial aid warning because this is essentially providing title
IV, HEA aid to students who are not making progress towards
program completion. We understand that some institutions
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believe that the Department is unfairly placing restrictions on
institutions that choose to stay with minimum annual
evaluations, or to evaluate less frequently than every payment
period. However, we do not believe that it is appropriate to
continue to allow a student who does not meet eligibility
criteria to continue to receive title IV, HEA funds without a
formal intervention by the institution in the form of an appeal
approval or an academic plan.
Changes: None.
Comment: Several commenters noted that students who attend
quarter schools face an inequity under proposed § 668.34 in
that they could lose title IV, HEA eligibility after 20 weeks,
whereas for a student at a semester school, they could lose title
IV, HEA eligibility after 30 weeks, which is an academic year.
These commenters asserted that this subjects the student at a
quarter school to more rigorous evaluation. These commenters
expressed concern that institutions might choose to evaluate
the SAP of their students annually in order to level the playing
field for their students, as well as relieve administrative
burden.
One commenter expressed concern that the term “annually” in
§ 668.34 was subject to interpretation and that questions
would arise as to whether this term referred to every calendar
year, every 12 months, or every academic year. This
commenter suggested that the Department revise § 668.34(a)
(3)(ii) and (d) to refer to “every academic year” rather than
“annually”.
Discussion: The Department notes that a student in a quarter
program would be evaluated three times in an academic year,
while the student in a semester program would be evaluated
twice in an academic year. While some institutions may view
this as a more rigorous evaluation, it also allows more
opportunities for intervention by the institution. We would
hope that an institution would develop a policy that would best
serve the needs of students, and that if the institution believes
that more frequent evaluations would be beneficial, that it
would work with faculty and other parties to attempt to make
such a review possible, for example, by shortening the amount
of time that it takes grades to become available for evaluation.
The Department notes that institutions that currently review
student progress annually choose to review all students at a
specific point in time, such as at the end of the spring term or
spring payment period. The Department agrees that this is an
appropriate and reasonable institutional policy for an
institution that reviews academic progress annually. We do
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not believe that further regulatory language is necessary to
specify that the reviews happen every academic year because if
the review happens annually, it necessarily will happen every
academic year.
Changes: None.
Comment: Several commenters indicated that the proposed
SAP regulations will not work well for nonterm and
nonstandard term programs. They noted that because students
in these types of programs complete payment periods at
various points during the year, institutions with these types of
programs would be unable to evaluate SAP at the end of each
payment period. One commenter specifically asked the
Department to clarify how SAP in a nonterm program could be
evaluated under proposed § 668.34. Another commenter
noted that institutions with 8-week terms would find it overly
burdensome to evaluate academic progress every payment
period. This commenter indicated that an unintended
consequence of the proposed changes reflected in § 668.34
would be that institutions with nonstandard term or nonterm
programs would evaluate less frequently than currently, due to
the administrative burden. Several commenters suggested that
to avoid this unintended consequence, the regulations should
allow institutions with nonterm programs to set evaluations
based upon
calendar dates rather than payment period
completion. One commenter stated that these “scheduled
satisfactory academic progress calculation” periods could then
be used as the basis for the student's continued receipt of aid
or placement on financial aid warning. This commenter also
suggested that we revise § 668.34 to make the financial aid
warning status available to those institutions with nonterm
programs that evaluate student academic progress more
frequently than annually but not in conjunction with payment
periods. The commenter expressed that much confusion will
result if the Department does not address how institutions
with nonterm programs, where the annual review date chosen
for SAP review does not coincide with a payment period, can
comply with these regulations.
Another commenter stated that the Department should
consider studying different instructional delivery models in
order to determine how to best regulate accountability for
institutions that need to evaluate SAP for students in
nonstandard programs.
Discussion: The Department recognizes the complicated
monitoring that institutions with nonterm and nonstandard
term programs will need to implement to comply with §
668.34 for evaluating the academic progress of students in
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these programs, if they choose to evaluate SAP on a payment
period-by-payment period bases. This is because, for these
programs, institutions could have students completing
payment periods on a daily basis. We understand why
institutions may find it easier to set one particular calendar
date to evaluate the SAP of all of their students in these
programs. However, we do not believe that this approach will
work because on any given date, any particular student could
be at the beginning, middle, or end of a payment period. The
SAP review must account for completed coursework, and
students in the middle of a payment period, for example,
might still have days or weeks to go to finish that work. We do
believe that the institution could set a particular time period
when it evaluates SAP for all of its students. For example, the
institution could set a policy that SAP evaluation will occur for
all students upon the completion of the payment period in a
given month(s). The evaluation would then include all of the
coursework that an individual student completes for the
payment period completed in that month. We do not believe
that evaluating students at any moment in time other than at
the end of a payment period is an appropriate measure of the
student's current progress towards program completion, as it
is not generally possible to evaluate the work in progress. By
evaluating all of the most recently completed work, a SAP
evaluation will be most accurate in portraying a student's
progress, and will enable the institution to evaluate SAP prior
to making the payment for the next payment period thereby
insuring payments only to eligible students. We have,
therefore, made a change to the proposed regulations to clarify
that the evaluation must occur at the end of a payment period.
With regards to the commenter who suggested that the
Department should conduct a study in order to determine the
best way to regulate accountability for students in
nontraditional programs, we will take this recommendation
under advisement.
Changes: We have revised § 668.34(a)(3)(ii) to provide that,
for programs longer than an academic year in length,
satisfactory academic progress is measured at the end of each
payment period or at least annually to correspond to the end
of a payment period.
Comment: Two commenters noted that the proposed SAP
regulations do not address students with disabilities and their
needs, especially during the appeals process, as such students
may need several appeals.
Discussion: When evaluating a student appeal under § 668.34,
an institution may take into consideration factors that could
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have affected the student's academic progress. These factors
can include whether the student has a disability or other
extenuating circumstances. Additional considerations may
also be given in an academic plan for a student who has a
disability as long as applicable title IV, HEA program
requirements are followed. Therefore, we do not believe that it
is necessary to include any additional regulatory language on
evaluating the SAP of students with disabilities or the appeals
process for those students.
Changes: None.
Comment: One commenter, who expressed concern that the
proposed SAP regulations were cumbersome, asked whether
the regulations would permit two specific types of situations.
First, the commenter asked whether an institution could retain
the ability to utilize the financial aid warning status if its SAP
policy stated that it would begin monitoring a student's
academic progress after the student's first academic year, and
then continue to monitor the student's progress every payment
period thereafter. Second, the commenter asked whether a
student could continue to receive title IV, HEA aid without
further appeal if the student is in financial aid warning status
and he or she submits, and continues to meet the terms of, an
acceptable academic plan.
Discussion: The proposed regulations allow for significant
flexibilities for institutions. If the institution wishes to monitor
at different periods in time, such as at the end of the first year,
and then by payment period after that, it is free to do so. In
this situation, only those students who are evaluated each
payment period may receive the automatic financial aid
warning status.
With regard to the second scenario described by the
commenter, a student who has appealed a determination that
he or she is not meeting satisfactory academic progress and is
attending his or her program under an approved academic
plan because he or she is on financial aid warning status
remains eligible for title IV, HEA aid as long as he or she
continues to meet the conditions of that plan. In such a
situation, the student's academic progress would simply be reevaluated at the same time as the institution's other title IV,
HEA aid recipients are evaluated, unless its policy called for a
different review period.
Changes: None.
Comment: One commenter noted that at his institution
summer is considered a trailing term, and the institution
evaluates SAP at the end of the spring term. The commenter
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asked whether summer coursework could be used retroactively
as part of the student's academic plan. The commenter also
questioned whether the institution could state in its SAP policy
that it reviews SAP after all work for the academic year is
completed. Under this approach, the institution would review
some students in the spring and others after they complete
summer term. Another commenter asked how to handle an
optional summer term.
Discussion: An institution may choose to state in its SAP policy
that it monitors academic progress at the end of the student's
completion of the academic year. These SAP regulations still
leave the flexibility to the institution to determine what policy
will best serve its students. We note, however, that under an
institution's SAP policy, the institution must evaluate all of the
student's coursework at some point, and that the financial aid
warning status described in § 668.34(b) is only available to
institutions that evaluate a student's academic progress every
payment period.
If an institution evaluates SAP by payment period, then it
would evaluate a student's academic progress at the end of
each payment period that the student attends. If the
institution evaluates SAP
annually, then it would evaluate all
of the coursework that the student has attempted and
completed since the last annual evaluation to determine
whether the student is making satisfactory academic progress.
There are no periods of the student's attendance that are not
considered in the evaluation.
Changes: None.
Minimum GPA
Comment: One commenter noted that, under current §
668.34(b), a student must have a “C” average or its equivalent
after two years in order to make satisfactory academic
progress. The commenter noted that the Department's
guidance in this area has been that the student must have a “C”
average or its equivalent after two years of attendance,
regardless of the student's enrollment status during that time.
The commenter stated that proposed § 668.34(4)(ii) states
that the “C” average is required at the end of two academic
years. The commenter asked the Department to clarify
whether the use of the phrase “two academic years” as opposed
to the phrase “two years” results in any substantive change in
how the Department interprets this requirement. Another
commenter stated that the current regulations are sufficient in
this area, because they allow institutions to interpret the
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phrase “two years” in the way that is best for their students.
Discussion: The term “academic year” is used in section 484(c)
(1)(B) of the HEA, which states that a student is considered to
be maintaining satisfactory academic progress if the student
has a cumulative “C” average, or its equivalent or academic
standing consistent with the requirements for graduation, as
determined by the institution, at the end of the second such
academic year. We changed the reference from “year” to
“academic year” in § 668.34 to more closely align this
regulatory language with the corresponding statutory
language. This change, however, does not alter the
Department's interpretation that this requirement means that
a student must have a “C” average or its equivalent after two
years of attendance, regardless of the student's enrollment
status.
Changes: None.
Pace
Comment: Two commenters noted that proposed § 668.34(a)
(5)(ii) states that an institution is not required to include
remedial coursework when determining the attempted and
completed hours for purposes of evaluating a student's pace
toward completion of the program. Both commenters
requested clarification that an institution may, but is not
required to, include remedial coursework when making its
SAP determination.
Discussion: It is the Department's longstanding position that
an institution is not required to include remedial courses when
calculating the student's progress towards program
completion. While an institution is not required to include
remedial courses when calculating pace under the SAP
analysis, it may do so as long as its SAP policy otherwise meets
the requirements in § 668.34.
Changes: None.
Comment: One commenter, who noted that its students enter a
program at multiple points during the year, asked the
Department to clarify how to calculate a student's “pace”
toward program completion under proposed § 668.34(a)(5)
(ii). This commenter also asked whether full time or part time
enrollment should be used to calculate pace toward
completion under these regulations. Another commenter
asked the Department to clarify how pace relates to maximum
timeframe under these regulations. This commenter
questioned whether a time component of weeks or months to
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program completion needed to be part of the pace
measurement. Another commenter expressed concern that
proposed § 668.34(a)(5) is less clear than a strict percentage of
completion policy. This commenter, who came up with a 67
percent minimum required completion rate when applying the
pace formula and the maximum timeframe requirements to
the normal BA graduation requirements, argued that the
Department should revise the regulations to list the minimum
completion rate that would allow a student to complete his or
her program in a 150 percent maximum timeframe (67 percent
completion in the commenter's calculation).
This commenter also stated that any institution that had a
stricter than minimum SAP policy, such as higher required
completion rates, should be allowed to use the financial aid
warning status, even if it only checked SAP on an annual basis.
The commenter stated that this would allow those institutions
with stricter policies and high completion rates to use the
flexibility offered through the use of the financial aid warning
status.
Discussion: Proposed § 668.34(a)(5)(i), together with the
definition of maximum timeframe in § 668.34(b), defines
“pace” for purposes of SAP evaluations; it is the pace at which
a student must progress through his or her educational
program to ensure that the student will complete the program
within the maximum timeframe and provides for
measurement of the student's progress at each SAP evaluation.
Proposed § 668.34(a)(5)(ii) provides the formula that an
institution must use at each SAP evaluation to calculate pace:
divide the cumulative number of hours the student has
successfully completed by the cumulative number of hours the
student has attempted. This calculation is to be used
regardless of the student's enrollment status, as the formula is
designed to measure completion appropriately for each
student regardless of whether that student attends full time or
part time. The Department believes that these requirements
for measuring pace toward program completion provide
maximum flexibility for both students and institutions.
Students are free to attend at whatever enrollment status is
appropriate for them, and institutions can measure the pace as
appropriate for their students. Because a graduated pace
standard (i.e., 50 percent the first year, 60 percent the second
year, and 70 percent every year thereafter) is permissible, the
Department does not believe it is appropriate to regulate a
specific completion rate for all students in all programs at all
institutions.
Changes: None.
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Transfer Credits
Comment: Several commenters stated that, for purposes of
calculating pace toward program completion under §
668.34(a)(5), transfer credits should only count in the
completed hours category, but not the attempted hours
category, because those credits were not taken at the
institution determining SAP. Another commenter stated that
transfer credits should only be counted in the attempted hours
category but not the completed hours category. One
commenter requested clarification as to whether the
requirement in § 668.34(a)(6) to count transfer credits as both
attempted and completed means that institutions are required
to request and evaluate all applicable transcripts.
Discussion: Whether or not an institution evaluates the
transcripts of all coursework taken by a student at previous
institutions is a decision left to the institution. The
Department has not required institutions to request
transcripts for previously completed work, and is not doing so
now. However, in so much as credits taken at another
institution are accepted towards the student's academic
program under the institution's academic requirements, we do
believe it is appropriate to include those credits in both the
attempted and completed hours
category when measuring
pace towards completion for each SAP evaluation period.
Changes: None.
Comment: One commenter recommended that the Department
revise § 668.34(a) to require transfer credits to be considered
when determining progress towards maximum timeframe, but
not for purposes of determining the pace of completion for
each evaluation period. This commenter stated that counting
transfer credits when looking at each evaluation period would
give transfer students an unfair advantage in the pace to
completion calculation.
Another commenter noted that the practice of excluding
courses that were not degree applicable from the pace
calculation for evaluating SAP has prompted many students to
change majors in order to retain financial aid eligibility. The
commenter opined that this practice leaves the door open to
abuse of the system. Additionally, the commenter stated that
the Department should require that all courses that the
student had attempted and completed in his entire career be
included in the pace computation for purposes of determining
the student's progress toward program completion.
Discussion: The Department acknowledges that transfer
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students may have a slight advantage over other students
when an institution calculates their pace toward program
completion. However, this inclusion of transfer credits in the
calculation of pace will allow for a more level playing field for
all students, and standardize treatment of completed credits in
the SAP evaluation. This is because including transfer credits
in the calculation of pace means we are considering all
completed work for all students.
We also note that the Department has had a longstanding
policy that institutions are free to set their own SAP policy that
deals with major changes as they relate to measurement of
maximum timeframe. Therefore, if an institution wishes to
limit the number of major changes that it will allow a student,
then it is free to set a policy that does so.
Changes: None.
Financial Aid Probation and Financial Aid Warning
Statuses
Comment: Many commenters found the definitions of the
terms financial aid warning and financial aid probation in
proposed § 668.34(b) to be helpful. These commenters stated
that it was very useful to have standard vocabulary to use
when discussing SAP. Some commenters noted that these
terms and concepts matched their current policy while others
requested slight changes to the terms or definitions so that
they align more closely with their own institution's policies.
Several commenters sought clarification, however, as to
whether institutions are required under these regulations to
use the newly defined terms of financial aid warning and
financial aid probation in their consumer information and
other communications with students, or whether we would
allow them to continue to use their current terminology. These
commenters expressed concern that their students might be
confused if they changed the terminology used in this area.
Discussion: The Department intends to allow institutions to
have as much flexibility as possible in developing an
appropriate SAP policy for their institution as well as
consumer information materials for their students. However,
institutions must incorporate these regulations changes into
the information that they provide to students; this includes
ensuring that the information made available by the
institution uses the terminology used in these regulations.
Changes: None.
Comment: Several commenters expressed support for the
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addition of the concept of a financial aid warning status, but
believed that the use of this status should be available to all
institutions, regardless of how often they performed a SAP
evaluation. Some of the commenters asserted that this would
allow institutions additional flexibility in administering SAP
that would be beneficial for students. Some commenters also
noted that it would be an administrative burden to review
students more frequently. Others indicated that they had
stable student populations and did not need to evaluate more
often than annually. At least one commenter opined that
schools with good graduation and completion rates should be
able to use the financial aid warning status regardless of how
often they checked SAP. Some commenters argued that the
financial aid warning status should be an option for all
institutions to use automatically and without intervention, and
for periods as long as a year or until the next scheduled
evaluation. One commenter suggested that in exchange for
allowing all institutions to use the financial aid warning status
regardless of how often they evaluate students' academic
progress, institutions should be required to remind students of
their SAP standards at the end of any payment period in which
an evaluation is not done. Some commenters wanted to know
if the financial aid warning status could be used to evaluate a
student's progress and to help to prepare an academic plan
and appeal for the student, so that the student would not
suffer a lapse in eligibility.
Discussion: While we appreciate the fact that institutions
support the flexibility that the financial aid warning status
provides, the Department feels strongly that this option should
only be available when an institution evaluates SAP each
payment period. It is important to remember that a student
who is on a financial aid warning status is one who is not
actually meeting SAP standards.
If an institution has a stable student population and does not
believe it needs to evaluate SAP each payment period, then it is
not required to do so. We recognize that there is an additional
administrative burden involved for institutions to evaluate
every payment period, but we also believe students benefit
from the early intervention of this approach. We believe that
this approach will impact favorably on student completion
rates, as well as help minimize student debt levels for those
that are not on track to complete a program successfully. We
note that, during the negotiated rulemaking process, several
negotiators had a SAP policy that required checking a
student's academic progress each payment period. These
negotiators related numerous student success stories that
resulted from early intervention. This demonstrated success
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with this approach led to the negotiators supporting the
proposed SAP regulations.
We believe that it is important to get students back on track as
soon as possible, and not allow the continued provision of title
IV, HEA aid to students who are not making progress towards
program completion under the institution's SAP standards.
Allowing a financial aid warning status for one payment period
allows the institution to provide an alert to that student of his
status, as well as provide any needed support services. The
institution could use the time to meet with the student and, if
the situation means that an appeal will be necessary, to help
the student prepare that appeal or to prepare an academic
plan. The same benefit is not realized if the student simply
receives notice of the institution's SAP policy, as he may not
understand his individual status with regards to the policy.
Changes: None.
Comment: Several commenters expressed support for the
financial aid warning and financial aid probation
statuses
proposed in § 668.34, but requested that the Department add
to the SAP regulations a defined term for a student who has
lost eligibility for title IV, HEA aid as a result of an institution's
evaluation under the SAP regulations. Several other
commenters questioned what status would be assigned to a
student who was reinstated on an academic plan and was
making progress under that plan. These commenters
wondered whether these individuals would still be considered
to be on financial aid probation status, or if the Department
planned to define another term to refer to them.
Discussion: A student who is not meeting SAP is simply not
eligible to receive title IV, HEA aid, as he or she does not meet
one of the basic student eligibility criteria. For this reason, we
do not believe it is necessary to define another term to describe
this individual, just as we do not have specific terms to
describe students who may not be meeting other basic student
eligibility criteria.
A student who has been reinstated to eligibility under an
academic plan and is making progress under that plan is
considered to be an eligible student. The student is not
considered to be on financial aid warning status or financial
probation status, provided he or she is otherwise making
satisfactory progress.
Changes: None.
Comment: A few commenters argued that proposed §
668.34(c) could be interpreted to allow an institution to place
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a student on financial aid warning status for more than one
payment period, and that, under this interpretation, the
student would be able to get title IV, HEA aid for multiple
payment periods when the student is on financial aid warning
status as long as the student was within range of moving into
compliance with the institution's SAP standards. These
commenters stated that the language in § 668.34(c) does not
need to be interpreted so narrowly so as to limit the number of
payment periods during which a student could be placed on
financial aid status to one payment period.
Other commenters suggested that students could develop and
follow an academic plan during the period of their financial aid
warning and that this approach would allow for students to be
put on financial aid warning status for multiple periods. These
commenters all opined that there was a range of deficiencies
within any category of student failure, and that students may
require differing amounts of intervention to get back on track
to meet the institution's SAP standards. The commenters
stated that institutions should be able to define different bands
of need for assigning financial aid warning statuses. Several
other commenters requested that the Department clarify that
students may be placed on financial aid warning or financial
aid status for multiple payment periods throughout their
academic careers.
Other commenters asked the Department to clarify whether the
requirements around financial aid warning or financial aid
probationary statuses allow students to receive title IV, HEA
aid for more than one payment period. One commenter
indicated that lack of financial aid during a period in which the
student is on financial aid probationary status would cause
problems for students. The commenter stated that this would
cause barriers for the most needy and at-risk students.
Discussion: The financial aid warning status and the financial
aid probationary status are both defined in § 668.34(b). A
student who has not made satisfactory academic progress and
is placed under one of these statuses may continue to receive
title, IV HEA aid for one payment period only, under very
specific circumstances. We do not intend for the language in §
668.34(b) to be interpreted in any other fashion. To respond
to the commenter who believed that lack of financial support
during this period would disadvantage students, it is
important to note that both of these statuses provide for one
payment period of title IV, HEA funds. It is possible for
institutions that are able to use the financial aid warning
status to do any sort of intervention with a student that they
deem appropriate during the period of time the student is in
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that status, including help them to prepare an appeal or refer
them to other student support services. We do not believe that
it is appropriate, however, to continue placing students on a
financial aid warning status for more than one payment period
because these are students who are not making progress
toward program completion. We do not believe it is
appropriate to put the student on an academic plan and simply
continue such a plan without an appropriate appeal. This is
because we believe that a student should be required to file an
appeal and explain the reason that he or she has not been able
to meet the SAP standards, and what in his or her situation has
changed. It is important for the student to have ownership in
his or her current situation and the resulting academic plan,
with an understanding of the consequences the student faces if
he or she fails to follow the academic plan. We do agree with
the commenters who suggest that it is possible for a student to
be subject to more than one period of financial aid warning, or
to submit more than one appeal throughout an academic
career, if the institution's SAP policy allows it.
Changes: None.
Comment: Numerous commenters objected to the requirement
in the proposed regulations for institutions to check SAP on a
payment period-by-payment period basis. They argued that it
is unreasonable for the Department to impose such a
requirement on institutions that do not have any history of
abuse in this area and that otherwise have good SAP policies.
These commenters noted that it would be overly burdensome
to require institutions to change their SAP procedures to
require SAP evaluations every payment period.
Discussion: Section 668.34(a)(3) is consistent with current §
668.16(e)(2)(ii)(B), which requires institutions to check
academic progress for programs that are longer than an
academic year at least annually. While institutions can check
academic progress for these programs more frequently, they
are not required to do so. Under these regulations, institutions
are only required to evaluate satisfactory academic progress
more frequently if the program is shorter than an academic
year.
Changes: None.
Comment: A couple of commenters asked the Department to
confirm that the financial aid warning and financial aid
probation status would be applied to the student's next
payment period (following the institution's determination that
the student is not maintaining SAP) and not simply to the next
payment period at the institution. These commenters argued
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that it was important to apply the status to the student during
the next term that the student was actually in attendance.
One commenter believed that a program of an academic year in
length or shorter should not be allowed to use the financial aid
warning status because a student in such a program would
never be denied title IV, HEA funds for not making SAP.
Discussion: Under these regulations, an institution would
apply the financial aid warning or financial aid probation
status to a student during the student's next period of
attendance. It is not reasonable to assume that the student
would be considered to be on financial aid warning, for
example, if he or she were not in attendance. For shorter
programs (i.e., those that are an academic year or less), the
definition of a payment period does not allow
disbursement
of aid until the student has successfully completed the
previous payment period. For such programs, if an institution
places the student on financial aid warning, the student will
either complete the program or withdraw. If the student
completes the program, then he or she has been successful. If
he or she withdraws, then the return of funds requirements in
§ 668.22 will apply. In either case, the student received only
those funds for which he or she was eligible. We do not plan to
make any changes in this area.
Changes: None.
Appeals
Comment: Many commenters agreed with allowing students
who would otherwise lose eligibility for title IV, HEA aid to
appeal the loss of eligibility. Some commenters expressed
concern that the requirements for an appeal were too
prescriptive; for example, the commenters noted that §
668.34(b) requires that students articulate what had changed
in their situation and that students might not be able to
comply with this requirement. Other commenters stated that
the Department should make the SAP appeal regulations more
prescriptive, including by specifying the type of documentation
required to be submitted with an appeal. Several commenters
believed that it was too burdensome on institutions to require
them to address student appeals, while others stated that it
was too burdensome to require institutions to develop or
evaluate academic plans for students who appeal.
Discussion: These SAP regulations do not require that an
institution accept or evaluate student appeals of
determinations that the student is not making SAP. Moreover,
the regulations do not require institutions to develop or
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process an academic plan for a student who appeals. These are
merely offered as options for institutions who wish to allow
those students who are no longer meeting the SAP standards
to continue to receive title IV, HEA aid. It is important to note
that an academic plan for a student may be as complicated as a
course by course plan toward degree completion, or as simple
as a mathematical calculation that specifies the percentage of
coursework that the student must now complete. Academic
plans need not be complicated or detailed; the purpose of
these plans is merely to put the student on track to successful
program completion. Section 668.34(a)(10) does require that
an institution that does not accept appeals notify students as
to how eligibility for title IV, HEA aid can be regained by those
who do not meet SAP standards. An institution is free to craft
a SAP policy that allows appeals or not, and to specify when
and how such appeals will be permitted as well as how often
and how many times a student may appeal. Likewise, an
institution may or may not allow an academic plan to be
submitted for a student. The SAP policy of the institution
should specify the conditions under which an academic plan
might be approved, or if one will be considered at all. Because
institutions have significant flexibility in this area, the
Department does not believe that these regulations will impose
any additional burden.
Changes: None.
Comment: Some commenters requested clarification as to
when students on an academic plan would be evaluated.
Several commenters requested that we clarify that a student
may submit more than one appeal during the course of his or
her academic career. A couple of commenters inquired
whether students could appeal the 150 percent completion
requirement, and exceed this maximum timeframe if they are
progressing under an approved academic plan.
One commenter also asked the Department to clarify what is
meant by the requirement in § 668.34(c)(3)(iii)(B) and (d)(2)
(iii)(B) that an academic plan ensure that the student meet the
SAP standards at a specific point in time. The commenter
noted that the student could actually be able to graduate the
following term, and questioned whether an appeal could be
approved at that point.
Discussion: Under these regulations, the institution has the
flexibility to specify whether students on an academic plan
would have their academic progress evaluated at the same
time as other students, or whether they would be subject to
more frequent SAP evaluations. They should determine what
is best for students and make their policy clear in their SAP
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standards.
As noted earlier in this preamble, an institution also retains
flexibility under these SAP regulations to allow multiple
appeals by an individual student. Alternatively, an institution
could decide not to allow appeals at all. We note, however, that
because pace to program completion within 150 percent of the
published length of the educational program is required to be
evaluated each SAP evaluation period, it would be reasonable
to assume that a student who is not meeting the institution's
SAP standards is not on schedule to complete the program
within the required maximum timeframe. Therefore, this
component of the SAP standards would be subject to appeal, if
the institution chooses to permit appeals. Finally, we expect
institutions to assist a student who appeals on this basis to plot
a course to successful completion within a new maximum
timeframe and to then monitor this pace toward completion.
Any academic plan would need to take into account the
student's progression to completion of his or her program,
which could, in fact, be the next term.
Changes: None.
Maximum Timeframe
Comment: Several commenters stated that the Department
should clarify the 150 percent maximum timeframe
requirement. One of the commenters noted that § 668.34(b)
did not define maximum timeframe, as applied to programs
that are a combination of credit and clock hours or a
combination of undergraduate and graduate work. One of the
commenters argued that the final regulations should reinforce
the 150 percent maximum timeframe requirement for all
programs. Another commenter stated that we should clarify
that the 150 percent maximum timeframe only applies to
determining title IV, HEA eligibility. This commenter
suggested that this maximum timeframe should not be used
for other purposes. For example, the commenter stated that it
was not appropriate for the Government to determine whether
or not a student should be allowed to complete a degree simply
because title IV, HEA eligibility had run out. Another
commenter asked whether the 150 percent maximum
timeframe applied to the student's entire academic career or
only to the student's current academic program. The
commenter gave the example of a student who had one degree,
and asked if an institution would include those earned credits
when evaluating whether the student was progressing in his or
her program within the maximum timeframe.
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Discussion: The Department believes in allowing institutions
the flexibility to define the 150 percent maximum timeframe in
the most appropriate way for the program in question. In
particular, individual institutions are in the best position to
determine whether their combined programs, such as those
noted by the commenters, should be evaluated as the sum of
its parts (i.e., part clock hour and part credit for example) or as
one type of program based on the structure of the majority of
the program.
The 150 percent maximum timeframe only applies to the
student's eligibility to receive title IV, HEA aid. The
Department has never regulated whether or not a student is
able to continue on
to degree completion under an
institution's academic criteria. The Department also wishes to
clarify that the 150 percent maximum timeframe applies only
to the student's current program of study. Under these
regulations, institutions retain flexibility to define their
programs of study in their SAP policy, as well as how they will
determine how previously taken coursework applies to the
student's current program of study.
Changes: None.
Notification
Comment: Several commenters requested clarification of the
notification requirement in § 668.34(a)(11). Specifically, these
commenters questioned whether this provision would require
institutions to notify all students or only those who were not
making SAP.
Discussion: Proposed § 668.34(a)(11) only requires institutions
to notify students of the results of their SAP evaluation if the
results affect the student's eligibility to receive title IV, HEA
aid. Institutions are not required to notify students who are
making SAP of the results of the evaluation.
Changes: None.
Evaluating the
Validity of High
School Diplomas (§
668.16(p))
Back to Top
High School Diploma (§ 668.16(p))
The Department received over 100 submissions about the new
high school diploma regulation. Most of these supported our
proposed changes, either with little or no qualification, or with
suggested modifications and concerns. Others offered
suggestions and concerns without explicitly supporting the
proposed regulation.
We noted in the preamble to the NPRM that the Department
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intends to add questions on the Free Application for Federal
Student Aid (FAFSA) asking for the name of the high school
the student graduated from and the State where the school is
located. The 2011-2012 FAFSA will have one question with
three fields. Students who indicate that they will have a high
school diploma when they begin college for the 2011-2012 year
are instructed to provide the name of the high school where
they received or will receive that diploma and the city and state
where the school is located. In the online application, FAFSA
on the Web, students will not be allowed to skip this question,
though for 2011-2012 it will only be presented to first-time
undergraduate students. There will be a drop-down list of both
public and private high schools, populated by the National
Center for Education Statistics (NCES), within the Department
of Education, from which most students will be able to select
the high school that awarded them a diploma. Students who
cannot find their school and those who complete a paper
FAFSA will write in the name, city, and State of their high
school. It is important to note that the absence of a high school
on the drop-down list does not mean that the high school the
student indicated he or she graduated from is not legitimate. It
just means that the school was not included in the NCES list.
Similarly, the inclusion of a high school on the drop-down list
does not necessarily mean that the high school is legitimate.
In addition to the information in the following discussions, we
will provide more guidance on implementing § 668.16(p), as
necessary, in Dear Colleague Letters, electronic
announcements, and the Federal Student Aid Handbook.
Comment: Several commenters observed that many
institutions already perform some kind of high school
evaluation as part of their admission process, and one noted
that because of this, it is appropriate for the Department to
establish regulations requiring the validation of high school
diplomas. One commenter appreciated that proposed §
668.16(p) would help institutions when they are challenged by
students or high school diploma mills for looking into the
validity of high school diplomas. Another commenter noted
that a list of “good” high schools would be valuable for
students in deciding whether they would want to obtain a
diploma from a given source. Another commenter opined that
the identification of suspect schools benefits students.
Discussion: We appreciate the support of these commenters.
The list of schools that will appear on FAFSA on the Web is
meant only as an aid for students in completing the FAFSA. It
is not a list of “good” schools, and it may happen that an
institution will need to evaluate the diploma from one of these
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schools. Also, a school that does not appear on the list should
not be inferred to be “bad.” The intent of new § 668.16(p) is to
have institutions develop a process for evaluating the
legitimacy of a student's claim to have completed high school
and not to have simply purchased a document that purports
they completed a high school curriculum. Under this
provision, institutions must develop and follow procedures to
evaluate the validity of a student's high school completion if
the institution or the Secretary has reason to suspect the
legitimacy of the diploma.
Changes: None.
Comment: Many commenters requested that the Department
provide institutions with clear guidance on how to review the
validity of high school diplomas and that it provide this
guidance as soon as possible. Although, as noted previously,
many institutions review high school credentials, one large
college noted that there are no common practices for these
types of reviews and asked that the Department delay the
effective date of this regulatory requirement if it is unable to
release the needed guidance far enough in advance of July 1,
2011. This commenter stated that such a delay would be
needed for schools to have enough time to create their
procedures and train their employees on following the
procedures. One commenter asked what the effect of this
requirement would be on the student's eligibility for title IV,
HEA program assistance when an institution is unable to
determine whether a given diploma is valid.
Discussion: There is no plan to delay the implementation of §
668.16(p). As noted earlier in this discussion, more guidance
will be forthcoming about evaluating the validity of high school
diplomas, and many institutions have been evaluating the
validity of high school diplomas for years. We encourage
financial aid administrators (FAAs) to consult with each other
in this matter, which can be especially useful for similar types
of institutions in the same State, where differing levels of
oversight by State departments of education will have a
significant effect on what procedures an institution might
establish.
With respect to the comment asking about student eligibility
for title IV, HEA program assistance when an institution is
unable to determine whether the student's diploma is valid, we
note that there are alternatives for the student to establish aid
eligibility under § 668.32(e), such as passing an ATB test, or
completing six credits of college coursework that apply to a
program at the current school.
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Changes: None.
Comment: Various commenters either requested that we create
a list of fraudulent or “bad” high schools or asked if we
planned to do so. Many commenters asked that we make
available both a list of “bad” high schools and a list of
acceptable schools and that we update them frequently, some
suggesting at least quarterly. Some commenters requested that
the effective date for this regulatory provision be delayed until
at least 2012-2013 so the Department can have a complete list
of acceptable schools and can address
issues such as foreign
postsecondary schools, defunct schools, and missing records.
Finally, some commenters asked what we would consider
acceptable documentation when a high school does not appear
in the Department's database of acceptable high schools.
Discussion: As noted earlier in this preamble, we are not
delaying the effective date of § 668.16(p). We believe it is an
important new provision that can be implemented for the
2011-2012 year on the basis we describe in this preamble.
To emphasize a point earlier in this preamble, a school's
inclusion on the list on FAFSA on the Web does not mean that
it is exempt from possible review by an institution. Acceptable
documentation for a review can include a high school diploma
and a final transcript that shows all the courses the student
completed.
Changes: None.
Comment: One commenter requested that the high school
diploma validation required under § 668.16(p) apply only to
undergraduates. Others asked for institutions to be able to
waive diploma validation for students who are substantially
older than traditional college age and for students whose high
school no longer exists or cannot be readily identified.
Discussion: For 2011-2012, the Department will only ask firstyear undergraduate students to provide on FAFSA on the Web
information about the high school they graduated from.
However, § 668.16(p) requires institutions to review any high
school diploma if the institution or the Secretary has reason to
believe the diploma is not valid. In those instances the
institution must evaluate the validity of the student's high
school completion whether the diploma was obtained by an
undergraduate or other student and regardless of whether the
student's high school no longer exists or is not easily
identified. We do not believe it is appropriate to limit this
requirement to only undergraduate students or those whose
high schools are not easily identified because the student
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eligibility requirement to have a high school diploma or its
recognized equivalent or to meet an alternative standard
applies to all students.
Changes: None.
Comment: Several commenters expressed concern about the
difficulty of validating high schools, not only for older
students, but also for students who graduated from a high
school in a different part of the country, or in another country.
One commenter suggested that the Department permit
institutions to use copies of foreign secondary school
credentials, attestations, and proof of entry into the United
States after the age of compulsory attendance, when evaluating
the secondary school education of foreign-born students.
Another commenter stated that many admissions offices use
the “credential score” for foreign countries instead of the name
of the school, and that the Department should give guidance
on how institutions can use that score to evaluate diplomas
from foreign schools. A couple of commenters expressed
concern that under proposed § 668.16(p) students who went to
foreign schools would be adversely affected and possibly
denied access to postsecondary education.
Discussion: An institution may consider various kinds of
documentation when developing its procedures for evaluating
the validity of a student's high school diploma. For example,
there are companies that provide services for determining the
validity of foreign secondary school diplomas; documentation
from such companies can inform an institution's diploma
evaluation.
Changes: None.
Comment: A couple of commenters asked if there will be an
appeal process for students if an institution determines that
their high school diploma is invalid. Others observed that
different institutions may decide differently about a given high
school's diploma and asked whether the Department will be
the final arbiter in these situations.
Discussion: The regulations do not provide for an appeal
process for students if an institution determines their high
school diploma is invalid. The Department considers
institutions to be our agents in administering the title IV, HEA
programs and to have final authority in many decisions.
Consequently, we do not generally have appeal processes in
place for institutional determinations of student eligibility.
Moreover, the Department will not intervene in cases where a
high school diploma is deemed valid at one institution but not
another.
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Changes: None.
Comment: Several commenters asked what the effect of
proposed § 668.16(p) would be on homeschooling, and some
commenters noted that a home school credential is different
from a high school diploma and asked that the Department
emphasize this difference. Others asked that we provide
guidance on State-granted credentials for homeschoolers and
best practices for verifying home school credentials. One
organization asked that the achievements of homeschoolers
not be ignored, and that the proposed regulations and any
related FAFSA changes recognize that graduates of home
schools receive a diploma from their program.
Finally, one commenter questioned why the Department is so
interested in the quality of a high school diploma (which is not
defined in the HEA or the Department's regulations) when
homeschooled students are taught by their parents, who
(typically) lack credentials and curriculum standards.
Discussion: Section 668.16(p) does not apply to homeschooled
students. For guidance pertaining to homeschooled students,
please see Chapter 1 of Volume 1 of the Federal Student Aid
Handbook.
Changes: None.
Comment: Many commenters asked if there would be, or
suggested that there should be, a mechanism for schools and
State and local agencies, accrediting bodies, and education
departments to suggest schools that should be added to any
acceptable and unacceptable lists that the Department
develops in connection with § 668.16(p). One commenter
requested that when we ask States to provide lists of approved
schools, they provide all high schools and not just public high
schools, which the commenter noted fall under more State
oversight. Another commenter recommended referring to the
College Entrance Examination Board (CEEB) code for high
schools to determine whether those are acceptable, and
another suggested consulting the College Board and the
Department of Defense to help build the list of acceptable high
schools. A few commenters asked what will happen when an
institution evaluates a diploma from a school not on the
Department's list of acceptable high schools and finds that the
school is acceptable. The commenter wondered if this will
mean that institutions will have their own lists of acceptable
schools separate from the Department's.
Discussion: As noted earlier in this preamble, we intend to use
information from NCES to create a drop-down list in FAFSA
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on the Web populated by the names of public and private high
schools that NCES provides to us. Neither inclusion on the list
nor exclusion from it is an indication of whether a high school
will need to be reviewed by a postsecondary institution under §
668.16(p).
There is a procedure by which private schools may submit their
name for inclusion on the private school list. Postsecondary
institutions are not
responsible for submitting the names of
secondary schools.
Changes: None.
Comment: A couple of commenters distinguished between a
high school diploma and a transcript, and suggested that a
transcript is more valuable for institutions to use to determine
the validity of the student's high school completion. Another
commenter noted that transcripts and diplomas are not
interchangeable and that the Department should clarify this.
Discussion: We agree that a high school transcript is not the
same as a diploma. It is the latter that is required under the
student eligibility regulations and the statute, not the former.
A transcript may be a valuable tool in determining whether a
high school diploma is valid because by listing the courses the
student completed, it demonstrates the extent of his or her
secondary school education.
Changes: None.
Comment: One commenter seemed to think that an institution
would submit documentation to the Department for review if a
student was chosen for verification due to not answering the
FAFSA questions about his or her high school diploma.
Discussion: The Department does not plan to require
institutions to submit individuals' high school documentation
for validation. Moreover, the Department does not intend to
select applicants for verification just because they did not
complete the high school diploma questions on the FAFSA.
Changes: None.
Comment: A few commenters suggested that institutions
should not be considered to have reason to believe that an
applicant's high school diploma is not valid or was not
obtained from an entity that provides secondary school
education, unless the information from FAFSA processing
suggests that. These commenters argued that institutions
should not be obligated to investigate whether every
applicant's high school diploma is valid, nor should the
institution be required, if it is an institution that collects
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diploma information as part of the admissions process, to
cross-check that information against the information from the
FAFSA because that would be too burdensome.
Discussion: For the 2011-2012 award year, we will not provide
any additional high school diploma information on the
Institutional Student Information Record (ISIR) beyond what
the student submitted on the FAFSA. We will not expect
institutions to check the ISIR high school data for every
student against other information obtained by the institution
during the admissions process. However, if an institution has
reason to believe (or the Secretary indicates) that a high school
diploma is not valid, the institution must follow its procedures
to evaluate the validity of the diploma.
Changes: None.
Comment: One commenter requested that the Department
declare that § 668.16(p) will not be retroactive.
Discussion: This requirement will apply to institutions
beginning on July 1, 2011, the effective date for these
regulations. This means that institutions will be required to
follow the procedures developed under § 668.16(p) for any
applicant who completes a FAFSA beginning with the 20112012 award year.
Changes: None.
Comment: Several commenters requested that we allow FAAs
to forego diploma validation for students who have completed
six credits of college coursework that applies to a program of
study at the institution or if the student's ability to be admitted
to the institution or eligibility for title IV, HEA aid is otherwise
not affected.
Discussion: It is correct that a student without a high school
diploma would be eligible for title IV, HEA aid if he or she
meets one of the other academic criteria, such as successfully
completing six credits or 225 clock hours of college-level
coursework that apply to a program at the current institution.
However, because students have that flexibility does not
obviate the requirement that for an institution to be eligible, it
must admit as regular students only those with a high school
diploma, or the recognized equivalent, or who are beyond the
age of compulsory school attendance.
Changes: None.
Comment: One commenter asked that if the Department
permits waivers to the requirement in § 668.16(p) to follow
procedures to check the validity of a high school diploma, that
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institutions, in particular those that do not admit students
without a diploma or the equivalent, be permitted to evaluate
the validity of a diploma if they choose.
Discussion: There will be no waivers of the requirement that an
institution must evaluate the validity of a high school diploma
when it or the Secretary has reason to believe that the diploma
is not valid or was not obtained from a school that provides
secondary school education.
Changes: None.
Comment: One commenter asked that we interpret section 123
of the HEA (20 U.S.C. 1011l) to apply to high school diploma
mills as well as college diploma mills.
Discussion: This section of the HEA provides that the
Department will, among other things, maintain information
on its Web site to educate students, families, and employers
about diploma mills and that it will collaborate with other
Federal agencies to broadly disseminate to the public
information on how to identify diploma mills. While section
105 of the HEA (20 U.S.C. 1003) defines diploma mill only in
terms of postsecondary education, we intend to examine the
issue of high school diploma mills further.
Changes: None.
Comment: One commenter urged the Department's Office of
Inspector General to be actively engaged with other agencies in
detecting fraud, especially given that high school diploma mills
may adopt names of legitimate schools.
Discussion: The Department's Office of Inspector General will
continue to work with other agencies as appropriate to detect
fraud in this area.
Changes: None.
Comment: One institution commented that it finds it difficult
to explain to students who present questionable high school
credentials why those credentials are not sufficient for
receiving title IV, HEA aid.
Discussion: In a situation such as this, we believe that it would
be appropriate for the institution to explain to students the
concept of a high school diploma mill, i.e., an entity that offers
a credential, typically for a fee, and requires little or no
academic work on the part of the purchaser of the credential.
We believe that students with a credential from a diploma mill
would not have a sufficient educational foundation for success
at the postsecondary level and should not receive title IV, HEA
aid.
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Changes: None.
Comment: One commenter urged the Department to clarify
that the diplomas of high schools that are not accredited are
not necessarily invalid under § 668.16(p). Several commenters
asked whether a new high school that was operating but had
not yet received accreditation would be acceptable under this
regulation. A small private high school expressed concern that
the new provision would hinder its students from going to
college because it is not accredited and this provision may be
misinterpreted to mean that non-accredited high schools are
not acceptable. The school asked that we disabuse the public of
the mistaken notion that for students to receive title IV, HEA
aid, their high school diplomas must be from accredited
schools.
Discussion: Diplomas issued by high schools that are not
accredited (more common among private than public high
schools) often meet college admissions standards and are
generally acceptable for receiving title IV, HEA aid. We have
noted for several years in the Federal Student Aid Handbook
that high schools do not need to be accredited for their
diplomas to be acceptable for title IV, HEA eligibility. The
Department's recognition of accreditation exists only at the
postsecondary level.
Changes: None.
Comment: One organization representing colleges suggested
that we should not remove a high school from any list we
create if that school closes.
Discussion: We do not plan to remove closed schools from a
list.
Changes: None.
Comment: One commenter expressed concern that because
many for-profit colleges do not require proof of a high school
diploma (many require only that the applicant provide a
signed statement of high school completion), they will not be
diligent when evaluating the validity of their applicants' high
school diplomas.
Discussion: Whether any institution fails to appropriately
investigate the validity of a student's high school completion
will be determined in program reviews, audits, and other
Department oversight processes.
Changes: None.
Comment: One commenter claimed that institutions are not
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qualified to determine the quality of anyone's high school
diploma, education, or secondary learning.
Discussion: We disagree with this commenter. Section
668.16(p) only requires that institutions develop and follow
procedures to determine the validity of a student's high school
completion when they or the Secretary have reason to believe
that the high school diploma is not valid or was not obtained
from an entity that provides secondary school education. We
do not believe that an institution will need any unique
qualifications to make this determination; as noted earlier,
many institutions already evaluate the high school completion
of students during the admissions process.
Changes: None.
Comment: One commenter opined that using a list of
unacceptable schools is a less effective method of dealing with
high school validation, and that the best method would be to
have a large database of all high school graduation records.
Discussion: While we appreciate the commenter's suggestion,
we do not believe that the creation or use of a single database
of all graduation records from the entire country is feasible.
Changes: None.
Comment: One commenter stated that some institutions do
not have the resources to evaluate the validity of high school
diplomas and that the Department should make those
determinations with the help of appropriate State agencies.
Discussion: We believe that administrators at institutions, who
have direct contact with applicants, are in the best position to
evaluate the validity of high school completions. We will issue
further guidance on how to make those evaluations efficient
and will try to minimize the administrative burden on
institutions.
Changes: None.
Comment: One commenter claimed that the Department wants
to keep the list of acceptable high schools secret to avoid
having to defend its inclusion of the schools on the FAFSA list.
Discussion: As noted earlier in this preamble, FAFSA on the
Web will include a list of schools to help students fill out the
application; it will not be a list of acceptable schools. It will be
available to the public via FAFSA on the Web, though whether
it can be accessed without filling out the application and
whether it will be available as a separate document, such as the
Federal School Code List, are not yet decided.
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Changes: None.
Comment: Several commenters expressed concern that
complying with § 668.16(p) would place a disproportionate
burden on institutions and students, and that community
colleges in particular would be burdened because of their
larger numbers of immigrant and non-traditional students.
These commenters noted that the FAFSA will get larger by two
questions. One commenter noted that the added questions are
acceptable even with the Department's attempt to simplify the
FAFSA, while another opined that requiring a high school
diploma does not seem to be a significant hurdle.
Discussion: The Department will be mindful of ways in which
to limit the additional burden § 668.16(p) will impose.
However, because one of the statutorily defined eligibility
criteria for receiving title IV, HEA aid is that a student
completed high school, we do not consider it an unacceptable
burden on students to report on their FAFSA the name, city,
and State of the high school that awarded them their diploma.
Also, there are enough alternatives to having a high school
diploma that make satisfying the academic criterion for
student eligibility reasonable. Finally, we consider the
inclusion on the FAFSA of three additional, easy-to-answer
fields a reasonable increase in the size of the FAFSA.
Changes: None.
Comment: One commenter noted that the new questions on
the FAFSA will not solve the problem of identifying
questionable diplomas because the questions will only
determine if a high school is on the approved list.
Discussion: We agree that the Department's list of schools will
not solve the problem. Section 668.16(p), however, requires
institutions to develop and follow procedures to determine the
validity of a student's high school completion when they or the
Secretary has reason to believe that the high school diploma is
not valid or was not obtained from an entity that provides
secondary school education. Accordingly, we believe that the
new FAFSA question and the requirements in § 668.16(p) will
go a long way to identifying those schools that are providing
invalid diplomas.
Changes: None.
Comment: One commenter expressed the opinion that
institutions should be responsible for verifying high school
diplomas or General Education Development (GED)
certificates with a copy of either document, or with a
transcript. The commenter argued that if students cannot
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provide this documentation to the institution, they should be
required to take an ability-to-benefit (ATB) test. Other
commenters stated that all institutions should be required to
verify that every title IV, HEA aid recipient has a high school
diploma or GED.
Discussion: We do not plan to require that all institutions ask,
in every instance, for a copy of a student's diploma or
transcript. Moreover, ATB tests are not the only alternative to
a high school diploma or GED certificate for establishing title
IV, HEA eligibility; for example, as noted earlier in this
preamble, students who complete six credit hours or 225 clock
hours of college coursework that apply to a program at the
current institution and are beyond the age of compulsory
school attendance do not need to have a high school diploma.
Therefore, we decline to make any changes to the regulations
in response to these comments.
Changes: None.
Comment: One commenter argued that verifying authenticity
of high school diplomas is a waste of resources because even
students who have
completed high school and obtained a
valid high school diploma might still not be ready for college.
The commenter stated that the Department should focus
instead on improving secondary school education and not
connect title IV, HEA eligibility to the high school credential
until the work of improving high schools has been completed.
Discussion: Improving high school education is an important
objective of the Secretary; however, the Department does not
consider it necessary to refrain from requiring institutions to
develop and follow procedures for evaluating the validity of
high school diplomas until the task of improving high school
education nationwide has been completed. And we believe
verifying the validity of high school diplomas is necessary to
ensuring compliance with the eligibility requirements for the
receipt of title IV, HEA aid.
Changes: None.
Comment: One commenter suggested that because § 668.16(p)
does not require documentation of a diploma or graduation
from an applicant's high school directly, the fraud surrounding
this issue will just switch to the use of fraudulent diplomas or
transcripts purportedly from legitimate high schools. Also, this
commenter pointed out that it will be easy for unscrupulous
college employees to skirt this requirement by telling students
to simply list the name of a legitimate school or where to get a
forged diploma, just as recruiters now tell students where they
can buy a high school diploma.
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Discussion: Institutions are free to request that documentation
come directly from the high school. We also acknowledge that
it will be impossible to eliminate all potential fraud, yet we
believe that the extra step of requiring validation under §
668.16(p) will help to eliminate some of it. As we noted in the
preamble to the NPRM, the Department has other avenues for
addressing fraudulent activities committed at an institution.
Changes: None.
Comment: One commenter noted that when an institution is
evaluating the validity of a student's high school education and
his or her diploma or transcript is not available, it should be
able to accept a certified statement from the student that
serves as documentation of graduation and explains why the
student could not obtain a copy of the diploma.
Discussion: A certified statement from a student is not
sufficient documentation of this requirement. It should be rare
that students cannot provide a copy of either their high school
diploma or final transcript, and there might be such instances
where an institution can still validate a student's high school
education without a copy of the diploma or transcript. But
FAAs should remember that there are established alternatives
for a high school diploma, such as the GED certificate or ATB
test.
Changes: None.
Comment: One commenter suggested that the Department
should determine if a significant number of students indicated
they had valid diplomas, when they, in fact, did not. The
commenter recommended that the Department make §
668.16(p) voluntary or require compliance through a pilot
program because building and maintaining an accurate
database will be difficult and students will make mistakes that
could delay their eligibility for a semester, a year, or a whole
degree program.
Discussion: We do not plan to make compliance with §
668.16(p) voluntary or part of a pilot program. We expect that
delays resulting from evaluation of high school diplomas will
be minimal or nonexistent.
Changes: None.
Comment: One commenter stated that the new FAFSA
questions on high school completion should be required and
that students should not be able to enter an invalid school, or
leave the questions blank.
Discussion: As noted earlier, we intend to require that students
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who indicate that they have a high school diploma also give the
name of the school that awarded the diploma and the city and
State in which the school is located. They will be able to select
a school from the Department's list or be prompted to write in
the name of the school. Students will be unable to complete
the online FAFSA unless they provide this information.
Changes: None.
Comment: Commenters noted that, even if students indicate
that their diploma is from an acceptable school, it does not
prove the student actually graduated from that school. These
commenters argued that proposed § 668.16(p) is not an
improvement to the current practice, and that the extra step
required under the new regulatory provision will not help for
institutions that do not require a diploma for admission.
Discussion: The proposed change reflected in § 668.16(p) is
designed to reduce the number of students who indicate that
they have a high school diploma, but who do not, or who only
possess a credential from a “diploma mill.” We believe that
many students with such credentials will indicate the name of
the entity they received it from, either because they honestly
believe they have a legitimate high school diploma or because
they will be reluctant to provide the name of a school they did
not graduate from because the financial aid office will easily be
able to determine that such a statement is false. All
institutions, including those that do not require a high school
diploma for admission, will be subject to the requirements in §
668.16(p) and, therefore, will need to evaluate the credentials
supplied by students as proof of high school completion if they
or the Department has reason to believe the credential is not
valid. We believe that this required process will reduce the
number of bad credentials.
Changes: None.
Comment: One commenter suggested that unless the
Department clarifies what is a valid high school diploma, it
should not, as part of a program review, substitute its
judgment for an institution's determination. The commenter
argued that if an institution acted reasonably, the eligibility of
a student should not be questioned, even if the Department, or
another school, reaches a different conclusion about the high
school the student attended. Another commenter asked that
the Department make clear in this preamble that institutions
may change their determinations about a given high school.
New information may move a school from the “good” list to
the “bad” one, or vice versa. The commenter wanted to ensure
that the Department does not dissuade institutions from
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making such adjustments by deeming that a later
determination indicates an earlier one was inappropriate.
Discussion: We do not plan to second-guess the decisions of
college administrators in these matters, such as moving a high
school from a “good” list to a “bad” list (or vice versa), as long
as they are reasonable.
Changes: None.
Comment: One commenter stated that it was not fair to require
students to provide a high school diploma because, in the
commenter's experience, homeschooled students have only a
transcript as proof of completing a secondary school
education.
Discussion: As we noted earlier in this preamble, the procedure
for determining the validity of homeschooled students'
education is not affected by § 668.16(p).
Changes: None.
Comment: One commenter observed that students in high
school special education programs might receive a certificate
or award that is not a high
school diploma when they did not
complete the required coursework to receive an actual diploma
from the school and that these students may incorrectly
believe that the certificate or award is a diploma.
Discussion: Students who do not complete the required
coursework to receive a high school diploma from their
secondary school by definition did not earn a high school
diploma. These students are not eligible for title IV, HEA aid
unless they meet the academic requirement under one of the
alternatives to a high school diploma in § 668.32(e), or they
are students with intellectual disabilities who are seeking Pell,
FSEOG, or FWS program assistance under § 668.233.
Changes: None.
Comment: One commenter asked us to clarify what would
cause an institution to have “reason to believe that the high
school diploma is not valid or was not obtained from an entity
that provides secondary school education.”
Discussion: We expect that there may be a number of
situations in which an institution will have reason to believe
that an applicant's high school diploma is not valid or was not
obtained from an entity that provides secondary school
education. For example, institutions may come across
information that suggests that the applicant's diploma or
transcript was purchased with little work expected of the
student. Often FAAs receive conflicting information from
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students themselves, typically as remarks that cast doubt on
some element of the students' application information. We
expect the same regarding valid high school diplomas.
Moreover, institutions may have reason to believe that a high
school diploma is invalid if they recognize the name of the high
school as an entity that they identified in the past as being a
high school diploma mill.
Changes: None.
Comment: One commenter requested that we add a check box
on the FAFSA for applicants who completed secondary school
in a foreign country and an empty space for them to fill in the
name of their secondary school. The commenter suggested
that in this situation, the student's FAFSA would receive a “C”
code, not automatically, but at random, so that due diligence
would still be required by the institution.
Discussion: When completing the FAFSA, applicants will be
able to enter the name of their high school if it is not on the
Department's drop-down list.
Changes: None.
Comment: One commenter expressed concern that the
wording of the second new question proposed for the FAFSA,
as noted in the preamble to the NPRM, could be misleading
and suggested that the Department use either of the following
questions instead:
In what State is the school listed in question #1 located?
or
In what State was the school in which the student
completed high school located?
Discussion: As we noted earlier in this preamble, the 20112012 FAFSA asks for applicants to indicate the name of the
high school where they received or will receive their diploma
and the city and State where the school is located.
Changes: None.
Return of Title IV,
HEA Program
Funds (§§
668.22(a),
668.22(b),
668.22(f), and
668.22(l))
Back to Top
Treatment of Title IV, HEA Program Funds When a
Student Withdraws From Term-Based Programs With
Modules or Compressed Courses (§§ 668.22(a), 668.22
(f) and 668.22 (l))
Comment: Approximately 80 commenters, mostly
representing institutions, commented on the proposed
changes to the treatment of title IV, HEA program funds when
a student withdraws from a program offered in modules.
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Approximately 26 of these commenters opposed the proposed
changes, with some commenters recommending that the
Department not issue final regulations at this time and instead
seek further input from the community.
Many of these commenters believed the proposed changes
would be too burdensome to institutions. Several commenters
were concerned about the additional administrative and
financial burden the proposed changes would impose on
institutions by requiring them to identify and process more
students as withdrawals. A few commenters believed that, as a
result of this burden, the proposed regulations would
discourage schools from offering programs in modules,
potentially causing disruptive changes in course offerings at
institutions. A few commenters believed institutions would be
unable to comply with the proposed regulations because they
are too complicated or too difficult to explain to students. One
commenter believed the proposed regulations would force an
institution to delay disbursements to prevent the institution or
student from having to return unearned title IV, HEA program
funds if the student withdrew.
Many of these commenters also believed that the proposed
changes would be harmful to students because some students
who withdrew after completing one course in one module
would earn less title IV, HEA program funds. In particular,
some commenters believed it was unfair to treat as a
withdrawal a student who withdrew from a course or courses
in the payment period or period of enrollment, but who would
attend courses later in the same payment period or period of
enrollment, and wanted to know how to handle title IV, HEA
program funds in such cases. A few commenters believed the
proposed regulations would discourage students from
enrolling in programs structured in modules, including
compressed courses to accelerate completion of their program,
which the commenters believed was in conflict with the
provisions for two Federal Pell Grants in one award year,
which were implemented to support and make equitable aid
available for students who wish to complete their program
sooner. A few commenters were concerned that a student who
would now be counted as a withdrawal would be burdened
with more debt: To the institution for any remaining balance
of tuition and fees, and to the Department for Federal loans
and or grant overpayments. One commenter noted that
treating a student as a withdrawal also has negative
consequences for a student under the provisions on
satisfactory academic progress and loan repayment.
A few commenters believed the proposed regulations unfairly
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targeted certain programs or institutions. Some of the
commenters believed the proposed changes would treat
students in module programs inequitably when compared to
students in more traditional programs where courses are
offered concurrently. One commenter believed that the
proposed regulations would have a disproportionately negative
affect for students in career technical programs, as many of
those programs are taught in a condensed, modular form.
Some commenters believed the proposed regulations unfairly
focused on only term-based credit-hour programs.
Approximately 25 of the commenters expressed an
understanding of the Department's concern with students
receiving full or large amounts of title IV, HEA program funds
for a short period of attendance during a payment period or
period of enrollment. A couple of those commenters agreed
with the proposed changes. Others believed that the current
guidance from Dear Colleague Letter of December 2000, GEN00-24, Return of Title IV Aid-Volume #1—which provided that
a student who completed only one module or compressed
course within a term was not considered to have
withdrawn
—should be incorporated into the regulations. These
commenters believed that a student who has earned credits in
a payment period or period of enrollment who then ceases
attendance should not be treated as a withdrawal, as the
existing regulations in 34 CFR 690.80(b)(2)(ii), requiring
recalculations of title IV, HEA program funds when a student
did not begin attendance in all classes, are a sufficient
safeguard against students receiving full or large amounts of
title IV, HEA program funds for a short period of attendance
in a program offered in modules. Two commenters believed
that the satisfactory academic program provisions should be
sufficient to prevent long-term abuse by students of title IV,
HEA program funds.
Several commenters suggested alternative approaches to
ensure that students are not receiving title IV, HEA program
funds for periods in which they are not in attendance. A few
commenters believed that a student attending a certain
percentage of the payment period or period of enrollment
(commenters suggested 60 percent) should be deemed to have
completed a payment period or period of enrollment. A couple
of commenters believed that the determination of whether a
student should be treated as a withdrawal should be based on
credit hours completed, rather than days completed, meaning
that a student who ceased attendance would not be treated as
a withdrawal as long as the student completed the minimum
number of credits required to be eligible for a particular title
IV, HEA program. A few commenters supported setting a
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minimum length of a module that must be completed, after
which a student who ceased attendance would not be
considered to have withdrawn. A few commenters suggested
requiring institutions to award or pay title IV, HEA program
funds by module, or to delay payment until a student has
earned enough credits to support the enrollment status
necessary for eligibility of the aid. One commenter suggested
limiting the amount of title IV, HEA program funds that can
be earned by a student to the lesser of actual charges or the
amount calculated under the Return of Title IV Funds
provisions (i.e., the provisions of § 668.22). A couple of
commenters believed an institution should be able to exercise
professional judgment or use its own discretion to determine
whether a student has truly withdrawn from class. One
commenter suggested that, for clock-hour and nonterm
programs, a student be considered to have withdrawn if the
student had not been in attendance for 35 consecutive days
and had not completed the payment period or period of
enrollment.
One commenter believed that the proposed changes addressing
completion of a payment period or period of enrollment by
students in clock-hour programs were incorrect as all
determinations of title IV, HEA program funds earned by
students who withdraw from clock-hour programs aid are
based on scheduled hours, and the changes referred to clock
hours completed.
Discussion: We note that these final regulations do not change
how institutions are currently required to treat students when
they withdraw from programs offered in modules (i.e.,
sequentially) in nonterm credit-hour programs, and some
nonstandard-term credit-hour programs. The Secretary
believes that the approach proposed in the NPRM treats
students more equitably across all programs by eliminating the
major differences in the treatment of students who withdraw
from term-based and nonterm-based programs offered in
modules and, therefore, is a better approach than basing the
determination of completion of a payment period or period of
enrollment on completion of one course/module, even if a
minimum length of such a course/module were set. In
addition, this approach more accurately reflects the statutory
requirement in section 484B(a)(1) of the HEA that applies the
Return of Title IV Funds requirements to any recipient of title
IV, HEA program funds who “withdraws from an institution
during a payment period or period of enrollment in which the
student began attendance” and the fact that title IV, HEA
program funds are awarded for an entire payment period or
period of enrollment. Some of the alternatives suggested by
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the commenters—determining completion based on
attendance of a certain percentage of the payment period or
period of enrollment; using credit hours completed, instead of
days completed; delaying awarding or paying title IV, HEA
program funds; equating unearned aid to actual charges; and
leaving the determination of completion of the period up to
institutional discretion—are not supported by the HEA, which
requires in section 484B(a) that students earn title IV, HEA
program funds on a pro rata basis up through the 60 percent
point of a period based on days completed, for credit-hour
programs, and clock hours completed, for clock-hour
programs. Completing more than 60 percent of the period
then entitles a student to have earned 100 percent of the funds
for the period. The law therefore does not permit the
alternative measures of when a student may keep 100 percent
of the title IV, HEA program funds that were suggested by the
commenters.
The Secretary agrees that it is reasonable to allow an institution
not to treat as a withdrawal a student who ceases attendance
during a payment period or period of enrollment, but intends
to attend a course later in the payment period or period of
enrollment. This position is consistent with the guidance
provided in the Department's Dear Colleague Letter of
December 2000, GEN-00-24, Return of Title IV Aid-Volume
#1, for the treatment of title IV, HEA program funds when a
student withdraws without completing at least one course in a
payment period or period of enrollment. These final
regulations have been modified to incorporate this policy and
provide that a student is not considered to have withdrawn if
the student ceased attending the modules he or she was
scheduled to attend, but the institution obtains a written
confirmation from the student at the time of the withdrawal
that he or she will attend a module that begins later in the
same payment period or period of enrollment. This will
provide more flexibility for a student who provides the
authorization. This confirmation must be obtained at the time
of withdrawal, even if the student has already registered for
subsequent courses. However, these final regulations provide
that, for nonterm and nonstandard-term programs, a
confirmation is valid only if the module the student plans to
attend begins no later than 45 calendar days after the end of
the module the student ceased attending. If the institution has
not obtained a written confirmation that the student intends to
return to a nonterm or nonstandard-term program within 45
calendar days of the end of the module the student ceased
attending, the student is considered to have withdrawn. A
student who has provided written confirmation of his or her
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intent to return is permitted to change the date of return to a
module that begins even later in the same payment period or
period of enrollment, provided that the student does so in
writing prior to the return date that he or she had previously
confirmed, and, for nonterm and nonstandard-term programs,
the later module that he or she will attend begins no later than
45 calendar days after the end of the module the student
ceased attending. If an institution obtains a written
confirmation of future attendance but the student does not
return as scheduled, the student is
considered to have
withdrawn from the payment period or period of enrollment
and the student's withdrawal date and the total number of
calendar days in the payment period or period of enrollment
would be the withdrawal date and total number of calendar
days that would have applied if the student had not provided
written confirmation of future attendance.
Title IV, HEA program funds are awarded to a student with the
expectation that the student will complete the period of time
for which the aid has been awarded. When a student does not
complete enough of his or her education to earn all of the
originally awarded title IV, HEA program funds, it is in the
best interest of the taxpayer to have the unearned Federal
funds returned to the government as expeditiously as possible
for use by other students. It is also fairer to all students
receiving title IV, HEA program funds to have the way those
funds are earned be comparable regardless of the way their
programs are structured. In general, the Secretary believes
that long gaps in attendance during a payment period or
period of enrollment are not in the best interest of students
and increase the likelihood that a student will not return to the
institution. Should the student not return, the Secretary does
not wish to unduly delay the return of title IV, HEA program
funds. The Secretary agrees with the suggestion that, for clockhour and nonterm programs, a student be considered to have
withdrawn if the student has not been in attendance for a
specified period of time and has not completed the payment
period or period of enrollment, although the Secretary believes
that 45 days, rather than 35 days, as suggested by the
commenter, is an appropriate period of time. Thus, in addition
to limiting a student's confirmation of return in a nonterm or
nonstandard-term program to a module that begins no later
than 45 calendar days after the end of the module the student
ceased attending, if a student in a nonterm or nonstandardterm program is not scheduled to begin another course within
a payment period or period of enrollment for more than 45
calendar days, the institution must treat the student as a
withdrawal for title IV, HEA program fund purposes, unless
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the student is on an approved leave of absence, as defined in §
668.22(d).
We do not believe that students should be penalized if they do
not confirm an intent to return to a module later in the
payment period or period of enrollment, but do return to the
module anyway, or if they are not scheduled to begin a course
within a payment period or period of enrollment in a nonterm
or nonstandard-term program for over 45 days, but do return
and begin a course within that payment period or period of
enrollment. Thus, in these situations, we believe it is
appropriate for the institution to “undo” the Return of Title IV
Funds calculation and treat those students as if they had not
ceased attendance. This final regulation is consistent with
current regulations for students who withdraw from clockhour programs and nonterm credit-hour programs. Under §
668.4(f), a student who returns to a nonterm credit-hour
program or clock-hour program (regardless of whether the
program is offered in modules) within 180 days after
withdrawing is treated as if he or she did not cease attendance
(i.e., is considered to remain in that same payment period, and
is eligible to receive any title IV, HEA program funds for which
he or she was eligible prior to withdrawal, including funds that
were returned by the institution or student under the
provisions of § 668.22). If a student returns to a clock-hour or
nonterm credit-hour programs after 180 days, the student's
withdrawal is not “undone”; he or she must begin a new
payment period and aid for that period is determined in
accordance with the provisions of § 668.4(g). The Secretary
believes that similar treatment is warranted for students who
withdraw from term-based programs offered in modules. That
is, if a student returns to a term-based credit-hour program
offered in modules prior to the end of the payment period or
period of enrollment, the student is treated as if he or she did
not cease attendance, and is eligible to receive any title IV,
HEA program funds for which he or she was eligible prior to
withdrawal, including funds that were returned by the
institution or student under the provisions of § 668.22.
However, the institution must make adjustments to reflect any
changes to the student's enrollment status.
While we acknowledge that requiring institutions to treat as
withdrawals students who cease attending at any point during
the payment period or period of enrollment, rather than just
those students who cease attending before completing at least
one course, is likely to increase the number of Return of Title
IV Fund calculations an institution must perform for these
programs, we note that institutions have always had to track
students in module programs beyond the first course/module
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to determine whether a student began attendance in all the
courses they were scheduled to attend, in case the student's
enrollment status changed upon ceasing attendance, resulting
in required recalculations of the title IV, HEA program funds
awarded. While we recognize that some students must
withdraw due to circumstances beyond their control, we are
concerned with the commenters' contention that there will be
a substantial increase in burden due to the number of students
who cease attendance during a payment period or period of
enrollment. We do not believe that it is in a student's best
interest to withdraw and we would expect that institutions are
doing all they can to prevent withdrawals through counseling,
student support services, and proper enrollment procedures.
In response to the commenter who believed the proposed
regulations would force institutions to delay disbursements to
prevent the institution or student from having to return
unearned title IV, HEA program funds if they withdraw, we are
providing that, under amended § 668.164(i), an institution
would be required to provide a way for a Federal Pell Grant
eligible student to obtain or purchase required books and
supplies by the seventh day of a payment period under certain
conditions if the student were to have a title IV credit balance.
The commenter who noted that the determination of title IV,
HEA program funds that are earned by a student who
withdraws from a clock-hour program are based on scheduled
hours is correct in that once it has been determined that a
student has not completed the payment period or period of
enrollment, the percentage of the payment period or period of
enrollment completed is determined by dividing the total
number of clock hours in the payment period or period of
enrollment into the number of clock hours scheduled to be
completed at the time the student ceased attending (§
668.22(f)(1)(ii)(A)). However, a student has not completed a
clock hour payment period or period of enrollment until he or
she has completed all the hours and all of the weeks of
instructional time that he or she was scheduled to attend in
that period.
Because different institutions use different names to refer to
this type of program structure, in amended § 668.22(l)(6), we
have defined the term “offered in modules” to mean if a course
or courses in the program do not span the entire length of the
payment period or period of enrollment. In addition, to clarify
the types of programs that are considered to be nonstandardterm programs or nonterm programs, in amended § 668.22(l)
(8), we have defined the term “nonstandard-term program” as
a term-based program that does not qualify under 34 CFR
690.63(a)(1) or (2) to calculate Federal Pell Grant payments
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under 34 CFR 690.63(b) or (c). We note that nonterm
programs include any program offered in clock hours for title
IV, HEA program purposes as well as any nonterm credit-hour
program.
Changes: Section 668.22(a)(2) has been revised to provide
that, for a payment period or period of enrollment in which
courses in the program are offered in modules, a student who
would otherwise be considered to have withdrawn from an
institution because, prior to ceasing attendance the student
has not completed all of the days or scheduled hours he or she
was scheduled to attend, is not considered to have withdrawn
if the institution obtains written confirmation from the student
at the time of withdrawal that he or she will attend a module
that begins later in the same payment period or period of
enrollment, provided that, for a nonterm or nonstandard-term
program, that module begins no later than 45 days after the
end of the module the student ceased attending. However, if
that student does not return as scheduled, the student is
considered to have withdrawn from the payment period or
period of enrollment and the student's withdrawal date and
the total number of calendar days in the payment period or
period of enrollment would be the withdrawal date and total
number of calendar days that would have applied if the
student had not provided written confirmation of future
attendance in accordance with § 668.22(a)(2)(ii)(A).
Section 668.22(a)(2) also has been revised to cross-reference §
668.4(f), which provides that, if a student withdraws from a
nonterm credit-hour or clock-hour program during a payment
period or period of enrollment and then reenters the same
program within 180 days, the student remains in that same
period when he or she returns and, subject to conditions
established by the Secretary, is eligible to receive any title IV,
HEA program funds for which he or she was eligible prior to
withdrawal, including funds that were returned by the
institution or student under the provisions of this section.
Section 668.22(a)(2) has been further revised to provide that,
if a student withdraws from a term-based credit-hour program
offered in modules during a payment period or period of
enrollment and reenters the same program prior to the end of
the period, the student remains in the same payment period or
period of enrollment when he or she returns and, subject to
conditions established by the Secretary, is eligible to receive
any title IV, HEA program funds for which he or she was
eligible prior to withdrawal, including funds that were
returned by the institution or student under the provisions of
this section.
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In addition, § 668.22(a)(2) has been revised to provide that, if
a student in a nonterm or nonstandard-term program is not
scheduled to begin another course within a payment period or
period of enrollment for more than 45 calendar days, the
institution must treat the student as a withdrawal for title IV,
HEA program fund purposes, unless the student is on an
approved leave of absence, as defined in § 668.22(d).
Finally, § 668.22(a)(2) has been revised to clarify that a student
in a clock hour program has not completed a payment period
or period of enrollment until the student has completed both
the weeks of instructional time and the clock hours scheduled
to be completed in the period.
Section 668.22(l)(6) and (8) has been revised to add
definitions of a program that is offered in modules and of a
nonstandard-term program.
Comment: Approximately 40 commenters asked the
Department to clarify how the regulations would apply in
different situations. Some of these commenters questioned
how enrollment status changes due to an institution's
add/drop policy would be differentiated from a withdrawal.
For example, some commenters asked for guidance on the
handling of title IV, HEA program funds when a student
withdraws without beginning attendance in all courses, or
notifies the institution that he or she will not be attending a
future module that he or she was scheduled to attend. One
commenter believed that the proposed regulations would be in
conflict with the Department's guidance that allows a Direct
Loan to be disbursed based on anticipated enrollment during a
term, such as a summer term, where a student is enrolled for
two consecutive courses. The commenter's understanding is
that if the student does not begin the second course to
establish half time enrollment, the student can keep the funds.
Discussion: A student that begins attending but then ceases
attendance in all classes during a payment period is a
withdrawal unless the institution obtains written confirmation
from the student that he or she plans to attend a course that
begins later in the payment period or period of enrollment, as
applicable. Anytime a student begins attendance in at least one
course, but does not begin attendance in all the courses he or
she was scheduled to attend, regardless of whether the student
is a withdrawal, the institution must check to see if it is
necessary to recalculate the student's eligibility for Pell Grant
and campus-based funds based on a revised enrollment status
and cost of education (34 CFR 690.80(b)(2)(ii)). If the student
is a withdrawal, this recalculation must be done before
performing a Return of Title IV Funds calculation, and the
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institution must use the recalculated amounts of aid in the
Return of Title IV Funds calculation. If the student has not
begun attendance in enough courses to establish a half-time
enrollment status, the institution may not make a first
disbursement of a Direct Loan to the student (34 CFR
685.303(b)(2)(i)), or a second disbursement of Pell Grant
funds, although the funds are included as aid that could have
been disbursed in the Return of Title IV Funds calculation.
Courses that were officially dropped prior to the student
ceasing attendance are not days that the student was
scheduled to attend, unless the student remained enrolled in
other courses offered on those days. Correspondingly, courses
that were officially added prior to the student ceasing
attendance are days the student was scheduled to attend.
If a student officially drops a course or courses he or she was
scheduled to attend and doing so does not result in the student
no longer attending any courses, the student is not a
withdrawal, and the dropped courses are handled as changes
in enrollment status, as applicable.
An institution can determine whether a student in a program
offered in modules is a withdrawal by answering the following
questions:
(1) After beginning attendance in the payment period or period
of enrollment, did the student cease to attend or fail to begin
attendance in a course he or she was scheduled to attend? If
the answer is no, this is not a withdrawal. If the answer is yes,
go to question 2.
(2) When the student ceased to attend or failed to begin
attendance in a course he or she was scheduled to attend, was
the student still attending any other courses? If the answer is
yes, this is not a withdrawal, however other regulatory
provisions concerning recalculation may apply. If the answer is
no, go to question 3.
(3) Did the student confirm attendance in a course in a module
beginning later in the period (for nonterm and nonstandard
term programs, this must be no later than 45 calendar days
after the end of the module the student ceased attending). If
the answer is yes, this is not a withdrawal, unless the student
does not
return. If the answer is no, this is a withdrawal.
Take, for example, a student who is a recipient of title IV, HEA
program funds who is scheduled to complete two courses in
each of the first two of three modules within the payment
period.
Scenario 1: The student begins attendance in both courses in
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the first module, but ceases to attend both courses after just a
few days and does not confirm that he will return to any
courses in modules two or three. The student is a withdrawal
because he or she ceased to attend courses he or she was
scheduled to attend (Yes to question 1); was not still attending
any other courses (No to question 2); and did not confirm
attendance in a course in a module beginning later in the
period (No to question 3).
Scenario 2: If, however, the student begins attendance in both
courses in the first module, but drops just one of the courses
after just a few days, the student is not a withdrawal. Although
the student ceased to attend a course he or she was scheduled
to attend (Yes to question 1), the student was still attending
another course (Yes to question 2).
Scenario 3: If the student completes both courses in module
one, but officially drops both courses in module two while still
attending the courses in module one, the student is not a
withdrawal. Because the student officially dropped both
courses in module two before they began, the student did not
cease to attend or fail to begin attendance in a course he or she
was scheduled to attend (No to question 1). However, because
the student did not begin attendance in all courses, other
regulatory provisions concerning recalculation may apply.
Changes: None.
Comment: Several commenters asked the Department to
clarify what it means to “complete all the days” or “complete
all of the clock hours” in a payment period or period of
enrollment. More specifically, commenters asked if students
would be required to attend every day of every course, or be in
attendance on the last day of the payment period or period of
enrollment. Some of the commenters noted that, due to
individual student schedules, students do not attend all days in
the payment period or period of enrollment. Commenters were
concerned that a student who was not in attendance on the last
day of the payment period would be counted as a withdrawal.
To address this concern, one commenter suggested that the
wording of the regulations be changed to say that a student is
considered to have withdrawn from a payment period or
period of enrollment if the student does not complete
substantially all of the days in the payment period or period of
enrollment.
Some of the commenters asked how limited absences (for
example, for illness), incompletes, and leaves of absence would
be treated. Commenters also asked if a student is considered
to have completed a course in a payment period or period of
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enrollment if the student received a grade for that course or,
for a clock-hour program, earns all the clock hours for the
course, regardless of absences. A couple of the commenters
asked if the definition of what it means to complete all the
days or complete all the clock hours would affect in-school
deferments for title IV, HEA program loans. Some
commenters asked under what circumstances an institution
would have to prove that the student attended all days in a
period and what documentation would constitute that proof.
Commenters asked if the issue would arise only if all of a
student's grades are Fs or if it becomes otherwise apparent
that the student has ceased attendance without formally
withdrawing. A few commenters wanted to know how
intersessions—a period of time between terms when courses
are offered—would be handled.
A few commenters asked the Department to clarify what the
length of the payment period or period of enrollment is when
performing a Return of Title IV Funds calculation for a
withdrawn student who was not scheduled to attend courses
over the entire term and how an institution would determine
whether the student has completed more than 60 percent of
the payment period or period of enrollment (i.e., earned all of
his or her title IV, HEA program funds). One commenter
believed there would be no possible way for an institution to
determine the days the student was scheduled to attend for an
on-line class that is self-paced as there are no “scheduled days”
in a self-paced program.
Discussion: Section 668.22(f)(1)(i) has always required an
institution to determine the days in the payment period or
period of enrollment that were completed by a student who
withdraws from a program offered in credit hours in order to
determine the percentage of the payment period or period of
enrollment completed by the student. These final regulations
do not change what it means to complete days for credit-hour
programs, or clock hours for clock-hour programs, for
purposes of the determination of the amount of aid earned by
a student who withdraws from a program, nor do they change
an institution's responsibility for having a procedure for
determining whether a title IV recipient who began attendance
during a period completed the period or should be treated as a
withdrawal. The Department does not require that an
institution use a specific procedure for making this
determination; however, we have provided guidance to assist
institutions in making these determinations. For example,
consistent with the Department's guidance provided in its
Dear Colleague Letter of November 2004, GEN-04-12, Return
of Title IV Aid, an institution may presume a student
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completed the period in a program offered in modules if the
student did not officially withdraw from the institution and
received a passing grade in all courses the student was
scheduled to attend during the period. If a student in a
program offered in modules does not receive a passing grade
in the last course or courses he or she was scheduled to attend,
the institution must otherwise demonstrate that the student
completed the period, which can sometimes be done using the
institution's grading policy if the failing grades reflect whether
the student participated in those courses. Consistent with
current requirements, if a student is determined to have
withdrawn from an institution under § 668.22, the student is
no longer considered to be enrolled and in attendance at an
institution and, therefore, is ineligible for an in-school
deferment and must be reported by the institution as a
withdrawal for this purpose (34 CFR 674.34(b)(1)(i) and 34
CFR 685.204(b)(1)(i)(A)).
Consistent with the guidance provided in the Department's
Dear Colleague Letter of December 2000, GEN-00-24, Return
of Title IV Aid-Volume #1, for the treatment of title IV, HEA
program funds when a student withdraws without completing
at least one course in a payment period or period of
enrollment, to determine whether the percentage of the
payment period or period of enrollment completed for a
student who withdraws from a program offered in modules,
the institution would include in the denominator (the total
number of calendar days in the payment period or period of
enrollment) all the days in the modules the student was
scheduled to attend, except for scheduled breaks of at least five
consecutive days and days when the student was on an
approved leave of absence. The numerator would include the
number of the total days in the payment period or period of
enrollment that the student has
completed. For example, a
student was scheduled to attend an intersession of three weeks
of instructional time at the end of a fall semester, and, in
accordance with the Department's past guidance, the
institution has included that intersession with the fall term for
purposes of the program's academic calendar when
determining the payment of title IV, HEA program funds. In
this circumstance the days in that intersession are included in
the total number of days in the payment period for that
student, except for scheduled breaks of at least five
consecutive days, and days in which the student was on an
approved leave of absence. Note that all the courses in the fall
term are considered modules for purposes of a Return of Title
IV Funds calculation when the intersession is included in the
payment period.
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Regarding the comment that there would be no possible way
for an institution to determine the days the student was
scheduled to attend for an on-line class that is self-paced, we
note that, for Title IV, HEA program purposes, an institution is
required to determine a program schedule for a payment
period or period of enrollment.
Changes: Section 668.22(f)(2)(ii) has been revised to clarify
that, when determining the percentage of payment period or
period of enrollment completed, the total number of calendar
days in a payment period or period of enrollment does not
include, for a payment period or period of enrollment in which
any courses in the program are offered in modules, any
scheduled breaks of at least five consecutive days when the
student is not scheduled to attend a module or other course
offered during that period of time.
Withdrawal Date for
a Student Who
Withdraws From an
Institution That Is
Required To Take
Attendance (§§
668.22(b) and
668.22(l))
Back to Top
Comment: Commenters were unsure about the effect of the
proposed changes, and a number of them asked for
clarification. A few commenters expressed concern that the
Department was requiring institutions to take attendance.
Others thought that, in instances in which individual faculty
members take attendance by choice, the entire institution
would then be considered an institution required to take
attendance. Some commenters believed that if an institution
or an outside entity required attendance taking for students in
some but not all programs, then the institution would be
considered one that has to take attendance for students in all
programs. Other commenters believed that the proposed
regulations would require institutions that take attendance for
a limited period of time and use those attendance records, to
continue to take attendance beyond that point.
Some commenters advocated a more restricted definition of an
institution that is required to take attendance, suggesting that
an institution should only be required to take attendance if an
outside entity collects and maintains those records. One
commenter did not believe that an outside entity should be
able to require an institution to take attendance, and others
opposed the provision that institutions required by an outside
entity to take attendance must use these attendance records
for the purposes of a Return of Title IV Funds calculation.
In general, we received comments on the application of the
regulations to subpopulations of students and on the use of
attendance records during a limited period. With respect to
attendance requirements for subpopulations of students, most
commenters did not object to the current policy that if some
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students at the institution are subject to attendance taking
requirements, then institutions would have to follow the last
day of attendance regulations for those students. Other
commenters agreed with this position, but believed that this
condition should only be applied when taking attendance is
required for the entire payment period, for all classes the
student enrolls in, and only when imposed by an outside
entity. One commenter disagreed with our position on the
treatment of subpopulations of students, recommending that
we modify the regulations to specify that the taking attendance
requirement must be imposed by an outside entity and be
applicable to the entire institution in order for an institution to
be considered one required to take attendance.
One commenter supported the proposed change that if an
institution requires the taking of attendance for a limited
period of time, then those attendance records must be used to
determine a withdrawal date. A few commenters objected to
considering institutions that take attendance during a limited
period of time to be institutions required to take attendance,
even for only that limited period, suggesting that this provision
should only be applied when taking attendance is required for
the entire payment period or period of enrollment.
Discussion: The regulations do not require institutions to take
attendance. Instead, under the regulations the Department
considers an “institution that is required to take attendance” to
include not only an institution that is required to take
attendance by an outside entity, but also an institution that
itself requires its faculty to take attendance in certain
circumstances.
Regarding faculty attendance records, if an institution does not
require faculty to take attendance, but a faculty member
chooses to take attendance, then the institution would not
then be considered an institution required to take attendance.
If, however, the institution requires its faculty to take
attendance, whether at the program, department, or
institutional level, then those attendance records must be used
by the institution in determining a student's date of
withdrawal. Institutions that do not require the taking of
attendance and are not required to take attendance by an
outside entity are not prohibited from using individual faculty
members' attendance records in determining a student's date
of withdrawal. The Department encourages institutions to use
the best information available in making this determination.
We do not agree with commenters who believed that if
attendance taking is required for some students, then the
institution would be required to take attendance for all
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students. These final regulations do not change our existing
policy. Under our current guidance and regulations, if an
outside entity requires an institution to take attendance for
only some students, for instance, for students receiving
financial assistance under a State program, the institution
must use its attendance records to determine a withdrawal
date for those students. Similarly, under these final
regulations, if the institution itself requires attendance taking
for students in certain programs or departments, then the
institution must use its attendance records to determine a
withdrawal date for students in those programs or
departments. These attendance taking regulations only apply
when an institution either requires the taking of attendance or
is required by an outside entity to take attendance, but not
when a student is required to self-certify attendance directly to
an outside entity. For example, a veterans' benefits
requirement that benefit recipients self-report attendance
would not result in an institutional requirement to take
attendance of those students unless the institution is required
to verify the student's self-certification.
An institution that is required by an outside entity to take
attendance during a limited period, or that requires its faculty
to do so, must use any attendance records from that limited
period in determining a withdrawal date for a student. For
students in attendance at the end of that limited period, if the
institution is not required to take attendance and does not
require its faculty to do so, then the guidelines for determining
a withdrawal date for an institution that is not required to take
attendance would apply. The Department continues to believe
that the best data available should be used in determining a
student's withdrawal date from classes, and, accordingly, if an
institution requires the taking of attendance or is required to
take attendance for any limited period, then those records
must be used.
Lastly, we disagree with the comment that an outside entity
should not be able to require an institution to take attendance.
We continue to believe that our policy that an “institution that
is required to take attendance” means an institution that is
required to take attendance by an outside entity is a
reasonable interpretation of the statute. The phrase “required
to take attendance” presupposes that an entity has this
requirement, and under this regulation, that entity may be
either the institution itself or a separate entity.
Changes: None.
Comment: A few commenters expressed concern about who
would decide what “required to take attendance means.”
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Specifically, they were concerned that the Department would
determine that an institution or outside entity had a
requirement that attendance be taken at an institution, even if
the institution or outside entity disagreed with that conclusion.
The commenters believed that the entity requiring the taking
of attendance should make the determination about when
attendance must be taken and what kind of documentation to
support attendance taking is necessary, and that the
Department should not superimpose its view of attendance
taking on that entity. In particular, a few commenters opposed
the idea that the Department would consider clock-hour
institutions to be institutions required to take attendance if an
outside entity or the institutions themselves did not believe
that they were. One commenter recommended that we remove
§ 668.22(b)(3)(i)(C), believing that an institution could be
found in noncompliance by the Department if the institution
or outside entity had a different interpretation of whether
taking attendance was required.
A couple of commenters requested clarification that, in a case
where a student must be physically present to demonstrate a
competency or skill, attendance taking would not be
automatically required. Instead, the institution or another
outside entity would have the responsibility of deciding
whether attendance taking was necessary. Further, one
commenter suggested that a “requirement” to take attendance
should mean a written regulation or policy tied to determining
seat time and not a quality inherent to the type of program.
Discussion: For institutions that are required to measure the
clock hours a student completes in a program, the Department
believes that this is, in substance, a requirement for those
institutions to take attendance for those programs since they
satisfy both the requirement of determining that a student is
present and that the student is participating in a core
academic activity. The Department is looking at the substance
of the information that is available rather than the way that
information is described or portrayed by the institution or
outside entity. If the institution is required to collect
information or record information about whether a student
was in attendance during a payment period, or during a
limited period of time during a payment period, that
information should be used to determine if the student ceased
attendance during that period.
Changes: None.
Comment: Commenters had a number of questions about the
documentation and the maintenance of attendance records,
generally requesting clarification about how attendance must
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be documented and what constitutes attendance in an
academic or academically-related activity. One commenter
asked for specific guidance as to the definition of an
attendance record, and requested clarification as to how often
attendance must be taken at an institution required to take
attendance. Another commenter asked what documentation
would be sufficient to demonstrate attendance in cases in
which students do not physically attend class but watch a
video or podcast of the lecture remotely. Similarly, a
commenter asked whether a student would be considered in
attendance if he or she participated in an academically-related
activity but was not physically present, such as working with
an instructor by phone or e-mail. A few commenters requested
clarification and guidance about what the Department believes
constitutes attendance in a distance education context and
how an institution should document that attendance. One
commenter requested that the Department ensure that the
evidence required of last day of attendance in online programs
for the purpose of a Return of Title IV Funds calculation be
substantially comparable to that required of traditional, faceto-face programs. The same commenter was also concerned
that the Department would be requiring documentation
beyond that required in the past without providing sufficient
time for institutions to implement this change.
Discussion: In accordance with § 668.22(b)(2) and (c)(4), an
institution must document a student's withdrawal date and
maintain that documentation as of the date of the institution's
determination that the student withdrew. As noted in the
Federal Student Aid Handbook (FSA Handbook), the
determination of a student's withdrawal date is the
responsibility of the institution; a student's certification of
attendance that is not supported by institutional
documentation would not be acceptable documentation of the
student's last date of attendance at an academically-related
activity. As with other title IV, HEA program records,
documentation of attendance must be retained and be
available for examination in accordance with the provisions of
§ 668.24. If an institution is required to take attendance or is
an institution that is not required to take attendance, but is
using a last date of attendance at an academically-related
activity as a withdrawal date, it is up to the institution to
ensure that accurate records are kept for purposes of
identifying a student's last date of academic attendance or last
date of attendance at an academically-related activity. An
institution must also determine and maintain the records that
most accurately support its determination of a student's
withdrawal date and the institution's use of one withdrawal
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date over another if the institution has conflicting information.
To count as attendance for title IV, HEA program purposes,
attendance must be “academic attendance” or “attendance at
an academically-related activity.” We have defined those terms
in new § 668.22(l)(7) by providing examples of academicallyrelated activities that institutions that are not required to take
attendance may use in determining a student's last date of
attendance at an academically-related activity. Certainly,
traditional academic attendance is acceptable, i.e., a student's
physical attendance in a class where there is an opportunity
for direct interaction between the instructor and students.
Additionally, academically-related activities may include an
exam, a tutorial, computer-assisted instruction, academic
counseling, academic advising, turning in a class assignment,
or attending a study group that is assigned by the institution.
The
Department has provided further guidance on this
policy in the FSA Handbook, specifying that living in
institutional housing and participating in the institution's meal
plan are examples of activities that are not academicallyrelated. The Department finds it acceptable for an institution
that is required to take attendance to use the institution's
records of attendance at the activities listed in § 668.22(l)(7)
as evidence of attendance, provided there is no conflict with
the requirements of the outside entity that requires the
institution to take attendance or, if applicable, the institution's
own requirements.
However, in these final regulations, we are revising the list of
acceptable activities because the Secretary no longer considers
participation in academic counseling or advising to be an
activity that demonstrates academic attendance or attendance
at an academically-related activity. The Secretary has
encountered several instances of abuse of this particular
provision by institutions that contact students who have
ceased attendance, and treated that contact as “academic
counseling” to facilitate a later withdrawal date, resulting in an
inflated amount of “earned” title IV, HEA program funds. The
Secretary does not view such contact as evidence of academic
attendance, but notes that if the student resumed attendance
and completed the period of enrollment no return calculation
would be needed. Even if the student resumed attendance and
later stopped attending, the student's participation in other
activities that are already included on the list of academic
activities could be used to establish a later withdrawal date.
Thus, participation in academic counseling or advising without
subsequent participation in other academic or academicallyrelated activities is no longer an acceptable example of
participation in an academically related activity.
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With respect to what constitutes attendance in a distance
education context, the Department does not believe that
documenting that a student has logged into an online class is
sufficient by itself to demonstrate academic attendance by the
student because a student logging in with no participation
thereafter may indicate that the student is not even present at
the computer past that point. Further, there is also a potential
that someone other than the student may have logged into a
class using the student's information to create the appearance
the student was on-line. Instead, an institution must
demonstrate that a student participated in class or was
otherwise engaged in an academically-related activity, such as
by contributing to an online discussion or initiating contact
with a faculty member to ask a course-related question. This
position is consistent with the current guidance the
Department has provided to individual institutions regarding
the applicability of the regulations to online programs.
When assessing an institution's compliance with any program
requirement, the Department looks at information provided by
the institution in support of the compliance of its policies and
procedures.
Changes: We have removed the reference to academic
counseling and advising in current § 668.22(c)(3)(ii) and have
added to the regulations a combined definition of academic
attendance and attendance at an academically-related
activity in § 668.22(l)(7) to clarify that both institutions
required to take attendance and those that are not required to
take attendance may use institutionally-documented
attendance at certain activities as a student's withdrawal date.
We have also redesignated current § 668.22(c)(3)(i) as §
668.22(c)(3) to reflect the removal of § 668.22(c)(3)(ii).
We have added to the definition at § 668.22(l)(7) both existing
guidance from the FSA Handbook and examples of academic
attendance for online programs. For additional clarity, we
have specified that physically attending a class where there is
an opportunity for direct interaction between the instructor
and students is considered academic attendance and have
specified that participating in academic counseling or advising
is not considered academic attendance.
Comment: A number of commenters opposed the proposed
changes, believing that they would impose additional burdens
on institutions, be too complex to administer, and prove
counterproductive to the goals of the Department.
In terms of additional burden, the commenters argued that the
proposed regulations could become too complex, noting that
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institutions might have different attendance taking
requirements, depending on the program or academic
department. Others suggested that it would be too confusing
and burdensome to take attendance for only a limited period.
Two commenters did not support adverse actions or audit
findings by the Department against institutions that did not
demonstrate 100 percent compliance with the attendance
taking requirements.
Commenters also pointed out potential barriers to
administering these regulations properly. A few believed that it
would be difficult to ensure complete and accurate attendance
records across faculty and programs, arguing that these
records would not necessarily fully reflect a student's
attendance at academically-related activities. A couple of
commenters questioned the feasibility of achieving full
compliance with attendance taking policies across faculty. One
commenter did not believe that attendance records held by
individual faculty members or departments should constitute
available data. One commenter believed that the additional
complexity of the regulations would make it impossible to
complete a Return of Title IV Funds calculation in the required
timeframe.
The commenters also argued that the additional burden and
complexity of the regulations would ultimately undermine
attempts to mitigate the potential for fraud and abuse of
Federal funds and would hamper attempts to improve student
success in higher education. Specifically, a number of
commenters believed that the proposed regulations would
create an economic disincentive to taking attendance, causing
many institutions that voluntarily take attendance to stop
doing so. They argued that this provision would make it more
difficult to identify a date on which a student has withdrawn
from classes, compelling more institutions to use a mid-point
date when performing a Return of Title IV Funds calculation.
The commenters further asserted that institutions take
attendance for a variety of reasons, and that ending this
practice would lead to lower retention and graduation rates
and, subsequently, higher student loan default rates.
Due to the perceived complexity of this issue, two commenters
requested that the Department delay the implementation of
these regulations. One suggested gathering additional input
from the community to develop proposed regulations, while
the other recommended reconvening a negotiated rulemaking
committee to further consider these issues.
Discussion: We appreciate the concerns of the commenters
about possible harms that might come from the proposed
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changes. The goal of determining the amount of funds a
student earned before he or she stopped attending should be a
shared one, and the claim that the institutions would stop
taking attendance in order to increase the funds a student
would receive beyond the point where the student stopped
attending is troubling. The Department continues to believe
that institutions should use the best data available in
determining a student's withdrawal date from classes.
Accordingly, if an institution requires the taking of attendance
or is required to take attendance for any limited period of a
semester or other payment period, then those records should
be used when determining a student's date of withdrawal for
the purposes of a Return of Title IV Funds calculation.
With respect to comments regarding the complexity of the
regulations, they address the taking attendance policies that
are either required by an outside party or required by the
institution itself. Institutions would already be expected to
follow these requirements, and the regulations provide for that
attendance information to be used when it indicates a student
has stopped attending during this limited period. For students
in attendance at the end of that limited period, the guidelines
for determining a withdrawal date for an institution that is not
required to take attendance would apply until the start of the
next period during which attendance taking is required. Any
increase in overall burden is mitigated since this requirement
is tied to policies for taking attendance that are already in
place at institutions, and uses the existing requirements for
determining the amount of Federal funds a student earned
based upon that information. Cases of noncompliance are
addressed on a case by case basis when the occurrences are
isolated, and institutions are expected to take appropriate
corrective actions when an error is brought to their attention
during a self-audit, a compliance audit, or a program review.
Accordingly, the Department does not believe it is necessary to
delay the implementation date of these regulations, or to
reopen the issue for negotiation.
Changes: None.
Comment: A few commenters opposed the proposed changes,
arguing that the proposed regulations exceed the Secretary's
authority under the law. The commenters believed that
Congress intentionally allowed institutions the option to use
the midpoint of the payment period because it recognized that
institutions have already incurred costs when a student fails to
withdraw officially. A few commenters believed that the
definition of last day of attendance under the statute is
sufficient and that the Department should not make any
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changes to the regulations. Some commenters opposed the
proposal that an “institution required to take attendance”
includes an institution that takes attendance voluntarily,
arguing that the wording of the statute, which states
“institutions that are required to take attendance” and not
“institutions that take attendance,” indicates that Congress did
not intend to include institutions that choose to take
attendance in that category. Other commenters expressed
strong support for the broadened definition.
Discussion: Under the law, institutions that are required to
take attendance must use that information to determine when
students who do not complete a class stopped attending. It is
common for the Department to view requirements established
by an institution, such as an institutional refund policy, as
being a requirement for that institution. The Secretary believes
it is reasonable to interpret the law to include instances where
the institution itself is establishing the requirement to take
attendance for a program, a department, or the entire
institution. The regulations do not include instances where a
faculty member would monitor student attendance but was
not required to do so by the institution. Furthermore, there is
no reason that attendance information required by an
institution would be different in substance from attendance
information required by other entities. It is the process of
taking attendance itself that leads to the information being
available, regardless of whether it is required by the institution
or an outside entity. The law provides that institutions that are
required to take attendance must use that information for
students who stop attending, and the regulations define the
term “required to take attendance” to include instances where
the institution itself is establishing that requirement for a
program, a subpopulation of a program, a department, or the
entire institution. The Secretary also believes that this
information should be used when it is available, even if
attendance is not required and is only taken for a limited
period during the payment period or period of enrollment.
Changes: None.
Comment: A number of commenters requested clarification
about whether an institution would be required to perform a
Return of Title IV Funds calculation for students that were not
in attendance on the last day of a limited census period.
Specifically, a few commenters believed that § 668.22(b)(3)
(iii)(B) could be interpreted in different ways. First, it could be
read to mean that an institution must treat a student who is
not in attendance on the last day of a limited period of
attendance taking as a withdrawal, even if the student
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continued to attend classes or was engaged in another
academically-related activity after the end of the limited
period. Along these lines, a few commenters pointed out that it
could be difficult for an institution to ascertain whether a
student actually withdrew, or whether the student was in fact
only absent for a class or two. Second, it could be read to mean
that if an institution has attendance records during a limited
period, the institution must use those attendance records, as
the best available source of information, in determining a
student's date of withdrawal. One commenter believed that
this interpretation could require an institution not otherwise
required to take attendance to take attendance beyond the end
of the limited attendance period to determine if the student
came back. The commenter further requested clarification
about when an institution in this situation would have to
determine that the student actually withdrew.
Three commenters provided potential modifications to the
language related to taking attendance during a limited time
period. The first suggested replacing the words “in attendance
at the end of the limited period” with the words “in attendance
during the limited period” to account for the fact that a student
might have attended earlier in the limited period but was only
absent on that last day, perhaps due to illness or another
legitimate reason. The second commenter recommended
modifying the words “a student in attendance” to read “a
student determined by the institution to be in attendance” in
order to give institutions the necessary flexibility to determine
that a student actually withdrew from all courses and was not
just absent on that particular day. The third commenter
suggested replacing the phrase “in attendance at the end of the
limited period” with “in attendance at the last regularly
scheduled class meeting prior to the census date” to account
for courses that do not meet on the last day of the limited
period.
One commenter believed that the Department should require
institutions to have a limited number of hours or credits that a
student may miss without having to be considered a
withdrawal.
Discussion: Standing alone, information that a student was
absent on the last date attendance was taken during a limited
period of time is the best evidence that the student has ceased
attendance. That presumption is easily refuted when a student
has gone on to complete the payment period, since the student
will have earned a grade for the class. For a student who did
not complete the class, the institution may determine whether
there
is evidence that the student was academically engaged
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in the class at a point after the limited period when attendance
was taken. Unless an institution demonstrates that a
withdrawn student who is not in attendance at the end of the
limited period of required attendance taking attended after the
limited period, the student's withdrawal date would be
determined according to the requirements for an institution
that is required to take attendance. That is, the student's
withdrawal date would be the last date of academic
attendance, as determined by the institution from its
attendance records. If the institution demonstrates that the
student attended past the end of the limited period, the
student's withdrawal date is determined in accordance with
the requirements for an institution that is not required to take
attendance. So, for a student the institution has determined
attended past the limited period and has unofficially
withdrawn, the student's withdrawal date is the midpoint of
the payment period of period of enrollment unless the
institution uses a later date when the student was academically
engaged in the class. The institution therefore has the option
to document a student's last date of attendance at an
academically-related activity, but an institution is not required
to take attendance past the end of the limited period of
attendance taking.
We do not interpret a requirement to take attendance in one
class for a “census date” as taking attendance for purposes of
this regulation. For example, some institutions have courses
that meet only on Mondays and Wednesdays, and other
courses that meet on Tuesdays and Thursdays. In those cases,
a “census date” may be taken on two different days in order to
establish attendance in both sets of courses that meet on
alternate days. With respect to the suggestion that an
institution be permitted to have a policy to establish a different
procedure or presumption for a student who is absent at the
end of a limited period of attendance taking, this is addressed
in practice by having the institution determine if the student
participated in an academically related activity at a later point
in the payment period, not by adding a regulation that
otherwise ignores an absence on the last date attendance was
taken for the student.
Changes: None.
Comment: A few commenters believed that the proposed
regulations would cause a greater financial burden for a
student who withdraws from courses prior to the midpoint of
the semester. A few commenters noted that institutions that
voluntarily maintain attendance records would now have to
use those records to determine the student's actual last date of
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attendance instead of using a midpoint date. In the case of
clock-hour institutions, commenters were concerned that
institutions would be required to use an actual last date of
attendance instead of a scheduled last date of attendance. In
these situations, a student might receive fewer funds to cover
costs incurred for the entire payment period, even if he or she
withdrew before the end of that payment period.
Discussion: The Department recognizes that using an actual
last date of attendance instead of a midpoint of the semester
may require an institution to return more unearned aid; this
outcome, however, is equitable. For institutions using credit
hours that are determined to be required to take attendance
for all or a part of the period, the regulation may establish an
earlier date of withdrawal for a student that stops attending
during a period when attendance is taken. This outcome
provides a more consistent treatment with other institutions
that have programs where student progress is tracked by
measuring clock hours, and more closely tracks the
requirements in the law that students earn title IV funds as
they progress through a period until they complete more than
60 percent of the period. Institutions are responsible for
determining the amount of title IV, HEA program assistance
that a student earned under the applicable regulations, and
unearned funds for a student must be returned in accordance
with the procedures in § 668.22. By establishing a more
accurate date a student ceased attendance during a period
when attendance is taken, the regulation will tend to increase
the amount of unearned funds that are used to reduce the loan
amounts students received for that period under § 668.22(i).
Changes: None.
Comment: A number of commenters from cosmetology schools
believed that the proposed regulations would put some
institutions in a position of being unable to comply with both
Federal and State regulations. Specifically, they were
concerned that the proposed regulations would require
institutions that are credit-hour institutions to become clockhour institutions if they take attendance, forcing them,
depending on individual State laws, to be out of compliance
with State requirements that those institutions use credit
hours.
Discussion: We do not agree that these regulations create a
conflict between Federal and State laws. Institutions that use
clock hours for a program for State reporting or licensing
purposes will be treated as institutions that are required to
take attendance under this regulation, and the clock hours
attended will be used to determine when a student ceased
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attendance. To the extent that such an institution uses credit
hours for its academic purposes, that institution will not be
affected by this regulation. The requirement to determine the
amount of aid a student earned before ceasing attendance is
separate from the question of whether that institution uses
credit hours for academic purposes. The clock hours are used
to measure the amount of funds a student earned, the same
way that other institutions that are required to take attendance
will measure earnings under this regulation.
Changes: None.
Comment: A few commenters suggested modifications to the
regulatory language that would require institutions to use the
best information available in determining a student's
withdrawal date. Specifically, one commenter recommended
amending § 668.22(c) to make the midpoint of the payment
period the “last resort” option for determining a student's last
date of attendance when a student unofficially withdraws such
that a school would be required to use the midpoint of the
payment period only in the absence of other documentation of
a student's attendance. Another commenter recommended
that we require institutions to use the best available data when
determining a withdrawal date instead of allowing schools that
are not required to take attendance to use a default date of the
midpoint of the payment period of period of enrollment. The
commenter believed that using this language would best
support the Department's goals.
Discussion: We do not believe that the suggested modifications
are supportable under the HEA because the requirement to
use attendance information is only applicable for periods when
attendance taking is required. Under section 484B(c)(1) of the
HEA, if a student stops attending an institution at a point
where attendance taking is not required, the institution uses
the midpoint of the payment period, or may use a later date
when the student was participating in an academically related
activity.
Changes: None.
Comment: One commenter was concerned that if an institution
that is required to take attendance did not have a valid ISIR
before a student's last date of attendance, the student would be
unintentionally penalized and unable to receive title IV, HEA
program assistance.
Discussion: We do not agree. An institution must act in
accordance with § 668.164(g), which contains the
requirements for making a late disbursement, including
circumstances where a student did not have a valid SAR or
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valid ISIR on the student's last date of attendance.
Changes: None.
Verification and
Updating of Student
Aid Application
Information
(Subpart E of Part
668)
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General (§ 668.51)
Comment: One commenter questioned whether the
Department would describe, in the final regulations, our plans
to provide training to assist institutions to prepare for and
comply with verification requirements reflected in subpart E of
part 668.
Discussion: The Department will issue guidance through the
Application and Verification Guide and other training
materials, as needed. The Department will also provide
training through our regional training officers. For
information on our current and future training activities and
learning resources, institutions should visit the Training for
Financial Aid Professionals Web site at http://www2.ed.gov/
offices/OSFAP/training/index.html.
Changes: None.
Comment: Some commenters requested that the Department
delay implementing the new verification requirements until
the 2012-13 award year to give institutions sufficient time to
train their staff and make the necessary system changes.
Discussion: The Department recognizes that institutions may
need time to make changes to their institutional processing
systems to comply with the requirements in subpart E of part
668. Accordingly, as described in the DATES section of these
final regulations, we will delay the effective date of the changes
to this subpart until July 1, 2012, which means that it will be
effective for the 2012-13 award year.
Changes: None.
Comment: Some commenters noted that because no new loans
can be certified under the Federal Family Education Loan
(FFEL) Program effective July 1, 2010, all references to the
FFEL Program and loan certification should be removed from
the regulatory language in this subpart.
Discussion: We concur with the commenters. We had not
removed the references to FFEL in the NPRM because that
notice was already under development when the legislative
change to end new lending under the FFEL Program was
enacted. Our intent was to make the necessary technical
corrections in the final regulations.
Changes: Throughout subpart E of part 668, we have removed
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references to the FFEL Program and any corresponding
regulatory citations. Specifically, we have removed references
to “Subsidized Stafford Loan,” “Unsubsidized Stafford Loan,”
“Federal PLUS Loan,” and “lender” as well as certifications for
Subsidized Stafford loans from §§ 668.52, 668.58, and 668.60.
Definitions (§
668.52)
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Comment: Some commenters expressed support for the
Department's efforts to simplify and clarify the definitions
used throughout the verification regulations under subpart E
of part 668. One commenter noted that changing the defined
term application to FAFSA, and using the term FAFSA
information in place of the term application helps distinguish
the FAFSA from other financial aid applications used at many
institutions.
Discussion: We appreciate the commenters' support.
Changes: None.
Comment: Two commenters suggested that we change the
names of the defined terms FAFSA information, subsidized
student financial assistance programs, and unsubsidized
student financial assistance programs. Specifically, one
commenter suggested that we use the term “Federal
Methodology (FM) need analysis data” or “ISIR data” rather
than FAFSA information to better reflect what institutions
receive once the data reported on the FAFSA have been
processed. In addition, one commenter stated that using the
terms “subsidized” and “unsubsidized” to modify student
financial assistance programs will confuse applicants because
those terms are more commonly used when referring to loan
programs. The commenter stated that families would better
understand the type of aid we are referring to by using the
terms “need-based student financial assistance programs” and
“non-need-based student financial assistance programs.”
Another commenter requested that the Department include in
the regulations definitions for the terms “applicant” and
“timely manner.”
Discussion: While we appreciate the suggestions, we do not
believe the suggested changes are necessary. We also do not
agree that using the term “subsidized” and “unsubsidized”
throughout subpart E will confuse applicants and their
families about the type of aid we are referring to since these
regulations are written for FAAs at institutions of higher
education and not applicants and their families. An institution
may, when communicating with students and families, use
whatever terminology it believes will best be understood by its
students and families.
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However, we did make some revisions to the list of definitions
under § 668.52. Specifically, we determined that the
definitions for Free Application for Federal Student Aid
(FAFSA), Institutional Student Information Record (ISIR),
and Student Aid Report (SAR) would be more appropriately
included in § 668.2(b) of subpart A because these terms are
used throughout part 668 of the Student Assistance General
Provisions regulations and not just under subpart E.
We also revised the definitions for Valid Student Aid Report
(valid SAR) and Valid Institutional Student Information
Record (valid ISIR) in § 668.2(b) to specify that a valid ISIR is
an ISIR on which all the information reported on a student's
FAFSA is accurate and complete as of the date the application
is signed, and a valid SAR is a student aid report on which all
of the information reported on a student's FAFSA is accurate
and complete as of the date the application is signed.
In addition, we also changed the defined terms from Student
Aid Report (SAR) to Valid Student Aid Report (valid SAR) and
Institutional Student Information Record (ISIR) to Valid
Institutional Student Information Record (valid ISIR) under
§§ 668.54(b), 668.58, 668.59, and 668.61. Prior to these final
regulations, an institution was not required to obtain a valid
SAR or valid ISIR in order to make a disbursement under the
campus-based programs and the title IV, HEA loan programs.
Institutions could rely on their own calculations to determine
an applicant's award amount without having to submit
corrections through the Department's Central Processing
System (CPS) and receiving the corrected SAR or ISIR.
Consistent with the revisions to § 668.59(a), which require
that any change to a nondollar item and any change to a dollar
item on the FAFSA that is $25 or more must be submitted to
the CPS for reprocessing, an institution must have a valid SAR
or a valid ISIR to disburse funds from the subsidized student
financial assistance programs. By definition, a valid SAR or
valid ISIR can only be created after information has been
processed through the Department's Central Processing
System.
Finally, we also determined that we no longer need to define
the terms valid SAR or valid ISIR under 34 CFR 690.2
of the
Federal Pell Grant Program regulations as they are defined in
part 668 because they apply to all of the title IV, HEA
programs. For this reason, we have removed these definitions
from this section.
Changes: The terms and corresponding definitions for Free
Application for Federal Student Aid (FAFSA), Institutional
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Student Information Record (ISIR), and Student Aid Report
(SAR) have been removed from § 668.52. Instead, we now
define Free Application for Federal Student Aid (FAFSA),
Institutional Student Information Record (ISIR), and Student
Aid Report (SAR) under General definitions in § 668.2(b). We
have also revised the definitions for valid Institutional Student
Information Record (valid ISIR) and valid Student Aid
Report (valid SAR) in § 668.2(b). We have removed the
definitions for the terms valid Student Aid Report (valid SAR)
and valid Institutional Student Information Record (valid
ISIR) from 34 CFR 690.2(b) and revised the definition of these
terms under § 668.2(b) to no longer refer to the definitions in
34 CFR 690.2(b) of the Federal Pell Grant Program
regulations.
Comment: One commenter asked the Department to clarify the
meaning of the term “applicant” as used throughout the
verification regulations. The commenter suggested that the
regulations should use the term “applicant” to refer to a
student who is accepted for admission at an institution, rather
than to a student who submits a FAFSA. The commenter
argued that having “applicants” cover all students who submit
a FAFSA would be administratively burdensome for
institutions because it would require them to verify CPSselected transactions for students who do not enroll at the
institution.
Discussion: The term “applicant,” as used throughout the
verification regulations, refers to an individual who applies for
assistance under the title IV, HEA program by completing and
submitting a FAFSA.
While the term “applicant,” as used in subpart E of part 668
covers individuals who may not enroll at the institution, we
note that § 668.54 only requires an institution to verify the
FAFSA information selected by the Secretary under § 668.56
and any FAFSA information the institution has reason to
believe is inaccurate. Therefore, only those applicants who are
enrolled at the institution and whose FAFSA information falls
into one of these categories are subject to verification.
Changes: None.
Policies and
Procedures—
Professional
Judgment (§
668.53(c))
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Comment: Many commenters expressed support for §
668.53(c), which requires an institution to complete
verification prior to exercising the professional judgment
authority allowed under section 479A of the HEA. These
commenters indicated that this requirement, which is
consistent with their policy to complete verification first, is
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important to ensure that the data reported on the FAFSA is
accurate before making any adjustments to it.
Discussion: We appreciate the commenters' support.
Changes: None.
Comment: Some commenters questioned the process for
completing verification prior to exercising professional
judgment in special circumstances that require a dependency
override in order to create a valid Student Aid Report (valid
SAR) or valid Institutional Student Information Record (valid
ISIR).
Discussion: The authority given to FAAs to exercise
professional judgment under section 479A of the HEA is
separate and apart from the authority given FAAs to make a
dependency override decision under section 480(d)(1)(I) of
the HEA. Section 479A of the HEA authorizes an FAA to make
adjustments on a case-by-case basis to the cost of attendance
or to the values of the data items used to calculate the EFC to
allow for treatment of an individual eligible applicant with
special circumstances as long as the adjustments are based on
adequate documentation.
In the definition of “independent student” in section 480(d)(1)
(I) of the HEA, an applicant may be considered to be an
independent student if the FAA makes a documented
determination that the applicant is independent by reason of
other unusual circumstances.
In practice, an FAA would first determine whether an
otherwise dependent applicant should be considered an
independent student using the FAA's authority under section
480(d)(1) of the HEA, in order to obtain a valid SAR or valid
ISIR, and then would subsequently make any corrections or
professional judgment adjustments to the applicant's FAFSA
information.
We will provide guidance in the Federal Student Aid Handbook
to address operational details as needed.
Changes: None.
Comment: Several commenters expressed concern that
requiring an institution to complete verification before
exercising professional judgment would make it difficult for
institutions to appropriately handle emergency situations. The
commenters noted that delays would occur as a result of
having to complete verification, submit any changes to CPS,
and wait for the new SAR or ISIR upon which the professional
judgment decision would be based. Some commenters
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suggested making modifications to systems software, i.e. FAA
Access, to allow multiple changes to be made simultaneously
to resolve this problem.
Discussion: We appreciate the commenters' suggestion for
improving our operational process. We will take this
suggestion into consideration as we look for ways to improve
our services to institutions.
Currently, the CPS will process changes to an applicant's
FAFSA information as a result of the verification process or a
professional judgment determination and report the results on
a new ISIR sent to the institution usually the next day.
However the two transactions cannot be processed on the
same day. This is because after the institution receives the
ISIR that was created as a result of verification, the institution
would use that ISIR transaction to make adjustments to the
applicant's FAFSA information using the professional
judgment process. While we understand the commenters'
concerns about any delay that may occur with having to
submit transactions separately, we believe that any delay will
be slight. In addition, institutions have the option of making
interim disbursements, as allowed under § 668.58, until a
corrected valid SAR or valid ISIR is received.
Changes: None.
Comment: One commenter asked whether an applicant who is
selected to verify the parent's household size, but who requests
that the institution use its professional judgment authority
under section 479A of the HEA to examine the parent's income
listed on the FAFSA, would be required to verify all five items
before the institution could exercise its professional judgment.
Another commenter argued that the requirement to complete
verification before exercising professional judgment would
delay the financial aid process and would create an additional
hurdle for families in need. This commenter questioned why
institutions have to go through an extra step to evaluate an
applicant's eligibility through the verification process if the
institution is updating those same fields when exercising
professional judgment to revise an applicant's eligibility under
section 479A of the HEA.
Discussion: Under these final regulations, an institution must
verify the items selected for verification before making any
professional judgment adjustments regardless of whether an
institution is making adjustments to the item being verified.
Prior to the effective date for subpart E of part 668 of these
final regulations, for an application selected for verification, an
institution must verify the data elements identified in current
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§ 668.56 before making any adjustments regardless of whether
an institution is making adjustments to the item being
verified.
Changes: None.
Comment: One commenter asked whether an institution must
complete verification prior to exercising professional judgment
if the applicant's FAFSA information is selected for verification
by the institution, rather than by the Secretary.
Discussion: To ensure that any professional judgment
adjustments made by an institution are based on accurate
information, we believe that all FAFSA information selected
for verification, whether selected by the Secretary or the
institution, must be verified before the institution can exercise
professional judgment. We are making a change to § 668.53(c)
to make this clearer.
Changes: We have revised § 668.53(c) by removing the phrase
“by the Secretary” after the words “selected for verification” to
provide that verification, regardless of whether the FAFSA
information to be verified is selected by the Secretary or the
institution, must be completed prior to exercising professional
judgment.
Selection of FAFSA
Information for
Verification (§
668.54)
Back to Top
Comment: Many commenters supported our proposal to target
verification to those items reported on the FAFSA that are
most prone to error, based on a set of criteria that identifies
which items are most likely to contain erroneous data, instead
of requiring verification of all five items listed in current §
668.56 for FAFSAs selected for verification.
Another commenter agreed with proposed § 668.54(b)(1)(iii),
which excludes from verification applicants who only receive
unsubsidized student financial assistance. This commenter
stated that this approach would be more efficient for
applicants and free up time for institutional staff to help other
applicants.
Discussion: The Department appreciates the commenters'
support.
Changes: None.
Comment: Many commenters opposed removing the
institutional option to limit the total number of applicants who
must be verified to 30 percent of all applicants. They argued
that removing this limitation, which is reflected in current §
668.54(a)(2)(ii), would increase the workload of FAAs already
struggling with reductions in staff and in State budgets, with a
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multitude of regulatory changes, and with increased
enrollments. Some commenters noted that the Department
currently targets Pell-eligible applicants for verification and
were concerned that community colleges would be unduly
impacted if the 30 percent limitation were removed.
Commenters stated that more institutions may need to use the
30 percent limit to manage their workload due to the large
increase in applicants applying to institutions with open
enrollment. Many commenters expressed concern that the
Department would significantly increase the number of
applicants whose FAFSAs are selected for verification if a limit
is not established in the regulations.
One commenter noted that additional study of the current
verification process is needed to determine which corrections
provide the most meaningful improvements in program
integrity.
A commenter recommended that we retain the 30 percent limit
for at least two years, during which time we can monitor
whether the proposed approach of targeting information to be
verified, as reflected in § 668.56, actually reduces an
institution's burden. If, after this two-year period, we have
evidence to show that burden on institutions has been
reduced, the commenter suggested that the limit on the
percentage of applicants whose FAFSAs must be verified
should be lifted or modified.
Discussion: The Department reviews, studies, and analyzes
verification data on an ongoing basis. Annually, the
Department develops a comprehensive predictive model by
applying sophisticated statistical techniques to FAFSA
application data from the most recent application filing years
along with corresponding payment data from those same
years. The model is designed to identify the characteristics of
FAFSA applications containing information that is likely to
have errors which, if not corrected, will result in an improper
payment of title IV, HEA program funds. The model contains a
series of application groupings that identifies that application's
statistical likelihood of error. The Department selects
applications with the highest likelihood of significant error for
verification.
We are confident that, when fully implemented, the targeted
selection of FAFSA information to be verified will result in a
more efficient and effective verification process. While some
institutions, particularly those that enroll greater numbers of
Pell Grant applicants, have more applicants whose FAFSA
information is selected for verification, we believe that overall
burden will be reduced across institutions. This is because for
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each applicant whose FAFSA information is selected, the items
to be verified will be limited to specific items the Secretary has
selected for that applicant (see proposed § 668.56(b)) rather
than all five items listed in current § 668.56. For example, one
applicant may be required to verify the five items required
under the current regulations (because the Secretary includes
them in the Federal Register notice published under §
668.56(a) and specifies that those items must be verified for
that one applicant) while another applicant may only be
required to verify adjusted gross income (AGI) and household
size (because the Secretary includes these two items in the
Federal Register notice published under § 668.56(a) and
specifies that these are the only items that must be verified for
this applicant). The Department also notes that it does not
view the 30 percent limitation as applying to its own
enforcement and monitoring activities, including program
reviews and audits.
Changes: None.
Comment: Some commenters asked the Department to clarify
how subpart E of part 668 will affect institutions that are
currently allowed to establish their own verification criteria
under the Quality Assurance (QA) Program.
Discussion: The changes made to the verification regulations in
subpart E of part 668 will not diminish the importance of the
QA Program. In fact, we are currently in the process of
developing a plan to expand the number of institutions that
participate in the QA Program. We are especially interested in
increasing the participation of minority serving institutions,
community colleges, proprietary institutions, and institutions
that serve non-traditional students or that offer instruction in
non-traditional ways. Also, the changes made to the
verification regulations are not expected to alter the way the
QA Program operates. In fact, the Department expects that
data and results generated from institutions participating in
the QA Program will help us assess the effectiveness of the new
verification regulations in subpart E of part 668.
Changes: None.
Comment: Two commenters stated that the FAFSA
information of
applicants who are incarcerated at the time
verification would occur and applicants who are immigrants
who recently arrived in the United States should not be subject
to verification. One commenter noted that verification in these
cases would require institutions to spend a significant amount
of time explaining the Federal requirements to these
applicants when their eligibility for aid may not be affected by
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the data gathered to complete verification. Another
commenter stated that a dependent applicant whose parents
are deceased or are physically incapacitated should also be
excluded from verification.
Discussion: We do not agree with the commenters. Applicants
who are incarcerated, recent immigrants to the United States,
or whose parents are physically incapacitated, should be able
to provide the documentation required to complete
verification by providing their institution with the
documentation that was used to complete the FAFSA.
An applicant whose parents are deceased would be
independent and therefore there would be no verification of
parental information on an independent student's FAFSA.
Changes: None.
Comment: Several commenters expressed concern that the
new process for verifying different FAFSA items would cause
difficulties because, after one instance of verification, there
potentially would be other items that the applicant would need
to verify during subsequent transactions (a “verification
loop”). One commenter suggested that if the Department uses
the targeted approach for verification, it should limit
verification selection to one time per applicant and accept a
subsequent correction for that targeted item as closure of the
verification process for that application. One commenter noted
that repeated verification does not currently occur because,
under the current regulations, applicants are required to verify
all items the first time. One commenter expressed concern that
multiple verifications may occur for one student if the
institution submits corrections to CPS and the student also
initiates changes to the ISIR data. The commenter
recommended including some protections for institutions that
submit corrections to ISIR data. One commenter asked for
guidance on what an institution is required to do when an
applicant is selected for verification, completes it, is then
selected for verification again but fails to complete the second
verification process.
Discussion: As noted earlier, the Department has delayed
implementation of the changes to subpart E of part 668,
including §§ 668.54 and 668.56, which provide for the
targeted approach to verification, until the 2012-13 award
year. Therefore, for the 2011-12 award year, institutions will
continue to verify, for all FAFSAs selected for verification by
the Secretary, the five data items listed in current § 668.56. As
we develop the selection criteria for determining which FAFSA
information must be verified for an individual applicant (i.e.,
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selection criteria for determining which FAFSA information is
prone to error), we will build into the system procedures that
limit the possibility of any applicant being subject to additional
FAFSA items needing verification after the first selection has
been made. However if our analysis shows that, based on
submissions of corrections, additional FAFSA information
should be verified, perhaps because it is inconsistent with the
“corrected information,” an applicant may have to verify those
additional items.
In the NPRM, we inadvertently omitted § 668.54(a)(4) from
the verification regulations. Under current § 668.54(a)(4), if
an applicant is selected for verification by the Secretary, the
institution must require the applicant to verify the information
as specified in § 668.56 on each additional application the
applicant submits for the award year except for information
already verified for the applicable award year. We are restoring
§ 668.54(a)(4) to provide that if an applicant is selected by the
Secretary to verify his or her FAFSA information, the
institution must require the applicant to verify the information
in accordance with § 668.56 if the applicant is selected for a
subsequent verification of FAFSA information, except that
applicant is not required to provide documentation for that
FAFSA information previously verified to the extent that the
FAFSA information previously verified remains unchanged.
Under current regulations, an applicant who has completed
verification once, whose FAFSA information is selected a
second time for verification, is only required to verify FAFSA
information not verified previously. When the revised §
668.54(a)(4) becomes effective, such an applicant would be
required to complete the second verification process if the
FAFSA information selected has changed for that award year.
If the applicant fails to do so, he or she may forfeit eligibility
for title IV aid in accordance with § 668.60(b).
Changes: We have revised § 668.54 by reinstating current §
668.54(a)(4) to provide that if an applicant is selected by the
Secretary to verify his or her FAFSA information under §
668.54(a)(1), the institution must require the applicant to
verify the information as specified in § 668.56 if the applicant
is selected for a subsequent verification of FAFSA information,
except that applicant is not required to provide documentation
for the FAFSA information previously verified to the extent
that the FAFSA information previously verified remains
unchanged.
Comment: Some commenters suggested that the proposed
verification requirements in subpart E of part 668 would
increase barriers for the neediest students to apply for
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financial aid to pursue higher education.
Discussion: We do not agree. When this subpart is fully
implemented in the 2012-13 award year, the verification
process is expected to be more efficient and effective for both
students and institutions. Thus, we do not expect that these
new requirements will add a burden or increase barriers for
students, including those from low-income backgrounds. We
have not been presented with any evidence to support that
these requirements will increase barriers for the neediest
students to apply for financial aid to pursue higher education.
Changes: None.
Updating
Information (§
668.55)
Back to Top
Comment: While a few commenters supported the
requirement in § 668.55(a)(1)(ii), which may result in making
dependency status updates in mid-year, many stressed the
difficulties that would arise as a result of this requirement. A
primary concern expressed was that this requirement would
result in a substantial increase in burden for institutions,
particularly because a student's financial aid package is
affected by the student's dependency status. One commenter
claimed that to comply with this requirement, institutions
would need to hire extra staff, which would not be possible in
the current economy. In addition, some commenters noted
that there would be undesirable consequences for the student:
One who marries and becomes independent could lose
eligibility for the Pell Grants already awarded and received
because the spouse's financial data would be taken into
account. Others stated that students might get married to
increase their Pell eligibility or that divorce, rather than
marriage, would decrease Pell eligibility; as one institution
noted, many of its dependent students become eligible for
more aid after they marry and become independent. Some
commenters requested that there be no change in this area or
that FAAs be permitted to make dependency status changes
under certain circumstances, such as during verification, or at
their discretion. For example, one commenter suggested
requiring the reporting of a change to dependency status until
the first disbursement of title IV, HEA aid has been made and
that if the dependency status update results in a change in the
applicant's EFC, the lower value should be used. A couple of
commenters observed that students who married late in the
award year would become independent and need to have their
aid repackaged for the award year. One commenter opposed
all mid-year dependency status changes because they
undermine the “snapshot” approach to the application process
and create a large administrative burden. Another commenter
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noted the potential for students who divorced and became
dependent again to lose eligibility for the aid they received
because their parents would refuse to provide information for
the application. Still another remarked that it is hard for
institutions to track dependency status during the award year
because accurate tracking requires that students notify the
institution of changes. One commenter, who stated that he
appreciated that when an update is due to a change in the
student's marital status, institutions would only be required to
make the update if notified by the student, also noted that this
approach can penalize the student who is honest and reports
the marital status change. This commenter argued that such a
change in dependency status should be reflected in the
application for the following year, as occurs under the current
regulations. Another commenter suggested that although the
Department affirmed that it is not the institution's
responsibility to initiate updating, this view ignores the burden
imposed on institutions to resolve conflicts in information they
receive from different sources. This commenter requested
relief for institutions so that they would only need to make a
dependency status change in ISIR information if the student
or family was the source of the information supporting the
dependency change. Another commenter asked whether
institutions are required to keep track of potential dependency
status changes that are indicated by other campus offices when
the student does not report the change. One commenter asked
that there be a cut-off date after which an institution would no
longer be required to make dependency status changes.
Another commenter agreed with the Department's logic for
not having a cut-off date, and asked that institutions be
permitted to set their own date based on their academic
calendar.
One commenter who supported mid-year dependency status
changes requested that the Department allow updates to
household size and number in college when there is a change
in marital status. Another commenter asked for early
implementation of § 668.55(c) because students are adversely
affected by the current regulations.
Discussion: We agree that mid-year verification updates to
household size and number in college and dependency status
updates would be burdensome to institutions if they resulted
from a change in a student's marital status. Accordingly, we
have revised § 668.55(a) to provide that if an applicant's
dependency status changes at any time during the award year,
the applicant must update his or her FAFSA information,
except when the dependency status change is due to a change
in the applicant's marital status. Also, to reduce burden to
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institutions with regard to updating information, in §
668.55(b)(2), we specify that an applicant is not required to
provide documentation of household size, number in college,
or the financial data of an applicant's spouse during a
subsequent verification of these data items if the information
has not changed. However, new paragraph (c) of this section
would allow the institution, at its discretion, to require an
applicant to update the applicant's marital status, even if it
results in a change in the applicant's dependency status, if the
institution determines the update is necessary to address an
inequity or to reflect more accurately the applicant's ability to
pay.
In response to the comments about establishing cut-off dates
for making updates, we note that under the revised provisions,
an institution that decides to have marital status updated
pursuant to § 668.55(c) may also incorporate in its policy a
cut-off date after which it will not consider any updates to a
student's marital status.
Changes: We have revised § 668.55(a) to provide that if any of
the factors that impact an applicant's dependency status
changes at any time during the award year, the applicant must
update his or her FAFSA information, except if the item is the
applicant's marital status.
Paragraph (b) of § 668.55 has been revised to provide that an
applicant who is selected for verification of his or her
household size or number in college must update those items
to be correct as of the date of verification, except when the
update is due to a change in the applicant's marital status. As
revised, § 668.55(b)(2) also provides that an applicant is not
required to provide documentation of household size or
number in college during a subsequent verification for the
same award year of either item if the information has not
changed. Finally, paragraph (c) of § 668.55 provides that an
institution may, at its discretion, update an applicant's marital
status, even if the update will result in a change in the
applicant's dependency status if the institution determines the
update is necessary to address an inequity or to reflect more
accurately the applicant's ability to pay.
Comment: One commenter asked whether, when a student's
marital status is updated, the student must have his or her
spouse's income reported to the CPS for recalculation of the
student's EFC. Another commenter requested that the
Department clarify how to treat income in cases when the
student marries or divorces, regardless of whether verification
was performed. A third commenter wondered why the
household size and number in college items are updated while
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the income and assets items are not updated for new family
members (e.g., the stepparent of a dependent student or the
spouse of an independent student).
Discussion: As we stated earlier in this preamble, we have
revised § 668.55 to provide that there is no updating of an
applicant's dependency status based on a change in marital
status except at the discretion of an FAA. In such cases where
an FAA chooses to update a student's dependency status as a
result of a change in the student's marital status regardless of
whether the student is being verified, all of the information
must be consistent with the change to the marital status. This
includes income (either adding the spouse's income or
deducting a former spouse's income) as well as household size
and number in college. Note, however, that the revised
regulations do not allow for updating when an otherwise
independent student marries or divorces, i.e., there is no
change in dependency status and the student is not selected
for verification.
During verification, household size and number in college are
updated, but the income and assets of new family members are
not typically includable items on the FAFSA; for example, the
income or assets of a grandparent who comes to live in the
dependent student's family would not be includable.
Moreover, section 475(f)(3) of the HEA excludes a stepparent's
income and assets from being reported on the
FAFSA when a
dependent student's parent remarries after the FAFSA was
submitted, though we have stated for several years in the
Application and Verification Guide that an institution may use
professional judgment to include the stepparent's financial
information.
Changes: As noted earlier in this discussion, we have revised §
668.55 to provide that applicants are not required to update
their household size, number in college, and dependency
status when the update is needed as a result of a change in the
student's marital status, unless the institution chooses to
update those items. When the institution determines that
updates are required as a result of a change in a student's
marital status, the student's FAFSA information needs to
reflect the accurate household size, number in college,
dependency status, and the spouse's financial information.
Comment: Some commenters questioned whether, when
completing the FAFSA, students could project their marital
status. One commenter argued that students should not be
able to project marital status as they project household size
based on unborn children.
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Discussion: Because projected marital status is prone to error,
applicants may not project their marital status when
completing the FAFSA.
Changes: None.
Comment: A few commenters asked whether the student or the
institution is responsible for updating information that
impacts dependency status.
Discussion: Students and institutions both are able to update
information that impacts an applicant's dependency status.
Students can use FAFSA Corrections on the Web (COTW) or a
paper SAR to submit updates. Institutions can use FAA Access
to CPS Online or other Departmental electronic processes to
submit updates on the student's behalf.
Changes: None.
Comment: One commenter asked us to clarify whether an
institution must process a change in dependency status if a
student is no longer enrolled at the institution.
Discussion: An institution is not required to process a change
in an applicant's dependency status if the student does not
enroll or is no longer enrolled at the institution. However, if
the student subsequently enrolls or reenrolls for the award
year, required updates must be made.
Changes: None.
Information To Be
Verified (§ 668.56)
Comment: Several commenters expressed concern that even
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targeted approach reflected in § 668.56 will be reduced, the
though the number of items to be verified under the new
new approach will not alleviate the burden on the applicant or
the institution because the institution must still identify and
resolve discrepancies in the information the institution
receives from different sources pursuant to § 668.16(f). For
example, if a student were selected to verify AGI or untaxed
IRA income, and the documentation for that is the tax return,
the institution will need to check the other data on the tax
return to ensure there are no conflicts with what was reported
on the FAFSA. One of these commenters stated that it will
continue to require full verification of all data items and to
collect all documentation unless the applicant uses the IRS
Data Retrieval Process. Another commenter suggested that
relaxing the requirement to resolve discrepancies in
information under § 668.16(f) would be a reasonable solution
if the Department is using historical data that supports
targeting specific data elements.
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Discussion: Under § 668.16(f), an institution is required to
resolve discrepancies in the information it receives from
different sources with respect to a student's application for
financial aid under the title IV, HEA programs. Therefore,
conflicting information between the FAFSA information and
other information at the institution must be resolved, and
these regulations under subpart E do not change this. We have
no reason to believe that the new approach to selecting items
for verification will increase instances of conflicting
information since any such conflicts would occur under the
current regulations where every applicant selected for
verification must verify information from a tax return.
Changes: None.
Comment: Some commenters disagreed with the proposed
targeted approach to select items to be verified reflected in §
668.56 because they predicted that it would add to the burden
of institutions. One commenter stated that having verifiable
items different from the current five would require institutions
to modify their automated correspondence and other
processes. This would result in the use of more paper at a time
when institutions are trying to reduce their carbon footprint.
Discussion: While a change in the number and type of
verifiable items will require some work by financial aid offices,
we believe that there should not necessarily be an increase in
paper use and that once systems are automated, any additional
administrative burden should be minimized. In fact, the use of
the IRS Data Retrieval Process will reduce the amount of
FAFSA information that institutions are required to verify and
decrease the documentation an institution must collect and
maintain. We believe the benefits to institutions and to
students as a result of this process justify any extra work that
institutions and students will experience in the short term.
As explained earlier in this preamble, we are delaying the
effective date for the changes to subpart E of part 668 until
July 1, 2012, the 2012-13 award year. This will allow more time
for institutions to prepare.
Changes: None.
Comment: Various commenters observed that because the
items for verification will be unpredictable, institutions will
not be able to inform applicants and parents before receiving
the ISIR what documentation will be required for verification.
Commenters requested that the Department provide the
expected date for publishing the set of verifiable items in the
Federal Register in advance so that institutions have time to
implement any changes in the items to be verified.
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Commenters requested advance notice as late as midDecember to as early as 5 or 6 months prior to the beginning of
the application cycle each January. Commenters stated that
institutions will have difficulties setting up complicated
systems and training aid administrators and other staff to
comply with the changes reflected in the new approach to
verification, especially given limited resources on so many
campuses. One commenter asked the Department to set a
maximum number of items that can be selected for verification
each year. Some commenters suggested having multi-year sets
of verification items, rather than different ones each year, to
expedite the verification process and to allow institutions time
to plan. One commenter asked that each year the Department
obtain public comment on the selection criteria the
Department will use to select items for verification. One
commenter asked how institutions would verify applicants'
FAFSAs consistently for the overlap of two processing years.
Another commenter asked that the new regulations be delayed
until the IRS Data Retrieval Process is fully implemented,
while another commenter asked for a safe harbor period
during crossover periods when institutions can use the old
verification criteria, or adopt early the new criteria.
Discussion: While institutions will need to wait for the receipt
of the ISIR before requesting specific verification
documentation from applicants, we do not envision that this
will substantially delay the time required for applicants to
complete verification. During the early years of
implementation of the targeted approach to verification, there
will be stability in the FAFSA information the Secretary selects
from year to year. For example, we would retain the five items
included in the current regulations and supplement them as
needed. However, it is unlikely that an applicant would have to
verify all five data elements.
We will publish in the Federal Register the set of potential
verification items the Department intends to verify for an
upcoming award year four to six months prior to the start of
the application processing year (January 1, 2012 for the 201213 award year) to give institutions time to modify their systems.
The maximum number of items that could be selected for
verification in any given year is the entire list of items we plan
to publish in the Federal Register notice for that year.
Because the selection of verification items for a particular
award year will be based upon a sophisticated statistical
analysis of prior year and other relevant data, we do not
anticipate the Federal Register notice providing multi-year
selection criteria, nor, for the same reason, do we intend to
solicit public comments on the verification items we select.
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To verify an applicant's FAFSA information that overlaps two
processing years, the institution must determine which award
year's EFC will be used and apply the verification criteria
established for that award year.
Changes: None.
Comment: Various commenters expressed concern that the
new approach for targeting items for verification will unfairly
affect traditionally black, community, and career colleges. One
commenter requested that we not use the verification process
to target low-income demographic groups and that we
consider some kind of relief for these groups regarding
discrepancies in information under § 668.16(f). Another
commenter questioned whether the new approach for
targeting items for verification could be seen as a means of
profiling applicants.
Discussion: Historically the Department has used verification
to focus on those FAFSAs that are likely to include errors that
will result in incorrect awards. It is not our intent to single out
any demographic population or a particular type of institution;
rather, our goal is to continue to select for verification FAFSA
information that most likely needs to be corrected.
As stated earlier, § 668.16(f) requires an institution to resolve
discrepancies in the information it receives from different
sources and these regulations under subpart E will not change
this requirement.
Changes: None.
Comment: One commenter asked if verification should be
required when a student appeals for a professional judgment
change to the cost of attendance.
Discussion: We do not plan to add to the list of verification
exclusions in § 668.54(b) students who request a professional
judgment change.
Changes: None.
Comment: Several commenters stated that an exclusion from
verification could be granted when the student or parent used
the IRS Data Retrieval Process to supply income and tax data
on the FAFSA.
Discussion: Section 668.57(a)(2) of the new regulations
codifies our determination that in instances when an applicant
or parent is required to have his or her AGI, taxes paid, or
income earned from work verified, the institution may
consider as acceptable documentation the information
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reported by the student on the FAFSA and reported to the
institution on the ISIR if the Secretary has identified those
items as having come from the IRS and as having not been
changed. The Secretary will so indicate by a flag on the ISIR
that the information came directly from the IRS and was not
changed. There will be separate flags for the student's
information and, if applicable, for the parents' information.
Changes: None.
Comment: One commenter expressed concern that students
will be confused and will miss the verification information on
their SAR. The commenter stated that the verification
worksheet will not work anymore because not all items will be
used for each student and asked if institutions will need to
develop their own interchangeable forms that will list only
those items an applicant or parent must verify.
Discussion: Institutions have always been able and will
continue to be able to develop and use their own verification
worksheets as long as it captures the essential verification
items. Institutions could create a single form with all the
verification criteria for the coming award year and select for
each student the pertinent items, or they could modify their
form so that each student receives an individualized request
for documentation. We will work with the community to
determine if there still is a need for a Department-developed
verification worksheet, and, if so, how it should be formatted.
Changes: None.
Comment: One organization requested that we create unique
codes on the ISIR that correspond with each verification item
so that institutions can automate their correspondence with
applicants and other processes. Another commenter suggested
that comments included on the SAR should be expanded to
assist the applicant in sending the documentation to verify the
specific items selected for verification to the institution he or
she is seeking to attend.
Discussion: As suggested by the commenters, we will include
on each applicant's ISIR item specific flags that will indicate
which items need to be verified. We will also provide
notification to the applicant on the Student Aid Report (SAR)
of the need to have information verified.
Changes: None.
Comment: One commenter asked that the Department be
responsible for completing verification and that the
Department report to institutions when an applicant's aid can
be disbursed.
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Discussion: The commenter's request has been suggested
before, and we have determined that most institutions are not
interested in the Department performing verification and
would, notwithstanding the workload, prefer to work with
students directly.
Changes: None.
Acceptable
Documentation (§
668.57(a)(2), (a)(4)
(ii)(A), (a)(5), (a)(7),
and (d))
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Comment: One commenter suggested that, for applicants and
parents who have not filed their taxes prior to filling out the
FAFSA and who indicate that they will be filing, the CPS
should automatically draw down the IRS data and send a
reprocessed ISIR, once the applicant files the required tax
returns. A commenter noted that the IRS Data Retrieval
Process would not benefit applicants and their families who
complete the FAFSA (using estimated income) prior to
completing their Federal income tax return in order to meet
various State aid deadlines. One commenter asked whether
data retrieved from the IRS can be used to make corrections to
a FAFSA if the IRS Data Retrieval Process was not used to
complete the original FAFSA. In this situation, the commenter
asked whether the corrected data would be considered
verified.
Discussion: Under our current agreement with the IRS, only
the tax filer, at the time he or she is completing the FAFSA or,
starting in 2011-12, at the time he or she is making corrections,
can request that IRS tax information be displayed and only the
tax filer can choose to have that information imported into the
applicant's FAFSA for initial filings or into the CPS record for
corrections. However, working with the IRS we have been able
to mitigate (although not eliminate) the inherent calendar
conflicts between the beginning of a FAFSA processing year in
January, the many State and institutional deadlines occurring
as early as February, and the IRS tax return filing timelines.
Beginning with the 2011-12 processing year, the IRS plans to
provide applicants and their families with FAFSA on the Web
access to tax return information within approximately 10 days
of the return's filing date if the return was filed electronically
and within two weeks if a paper return was filed. Also,
beginning with the 2011-12 FAFSA processing year, applicants
and parents will be able to access IRS tax return information
using the FAFSA COTW process. Thus, many applicants, who,
because of their original FAFSA filing date (or for any reason),
did not use the IRS Data Retrieval Process when they
originally completed the FAFSA will be able to use the process
to “correct” the original FAFSA information. Like applicants
who use the IRS Data Retrieval Process when originally
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completing the FAFSA, if applicants and parents use the
FAFSA COTW process to import IRS data on the FAFSA, the
institution may consider that data as acceptable
documentation in accordance with § 668.57(a)(2) if that data
was not changed. As mentioned earlier, an applicant's ISIR
will indicate that the information came directly from the IRS
and was not changed.
Changes: None.
Comment: Several commenters supported the IRS Data
Retrieval Process, which will allow applicants and their
families to import data obtained from the IRS to populate an
applicant's online FAFSA. Many commenters agreed that this
process will reduce an institution's burden and help expedite
the financial aid process by not requiring verification of IRS
imported data; however, one commenter argued that it would
be more appropriate to eliminate FAFSAs populated with IRS
data through the IRS Data Retrieval Process entirely from
verification.
Discussion: The Department appreciates the commenters'
support. We do not agree that individuals who retrieve income
and tax data from the IRS should be exempt from the
verification process because not all FAFSA information can be
imported from the IRS database and an applicant's FAFSA
may be selected for verification as a result of a data item that
cannot be retrieved from the IRS. However, as discussed
earlier in this preamble, an institution may consider as
acceptable documentation IRS retrieved information if the
Secretary has identified those items as having come from the
IRS and not having been changed. We are exploring a process
that would automatically exclude from verification FAFSA
items that came from the IRS and were not changed.
Changes: Section 668.57(a)(2) has been revised to clarify that
an institution may use IRS transferred data as acceptable
documentation for verification purposes if it is limited to the
IRS data that was transferred for the specific award year, and
the Secretary has identified the data as having been obtained
from the IRS and not having been changed.
Comment: One commenter questioned whether applicants
should be allowed to use data from the second processing tax
year because that data may not accurately reflect a student's or
parent's current income. The commenter asserted that the use
of these data may cause confusion when completing the
FAFSA and that this, in turn, will increase burden on
institutions, which will be responsible for responding to
increased requests for professional judgment reviews.
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Another commenter pointed out that using data from the
second processing tax year would not benefit some California
Community Colleges that have a high population of families
who have experienced job losses.
Discussion: Section 480(a) of the HEA gives the Secretary the
option of using income and other data from the second
preceding tax year to calculate an applicant's EFC. While the
Department does not plan to exercise this option at this time,
we believe it is appropriate to include this provision in the
regulations to allow for this flexibility in the future.
We are revising § 668.57(a)(1)(i), (a)(1)(ii), (a)(1)(iii) to make
conforming changes consistent with other paragraphs under
this section that clarify the specific year that the
documentation provided for under this section must be
submitted to the institution.
Changes: Section 668.57 has been revised in paragraphs (a)(1)
(i), (a)(1)(ii), (a)(1)(iii), and (a)(2) to add the phrase “for the
specified year” as defined under § 668.52.
Comment: We received a number of comments expressing
concern regarding the operational aspect of the IRS Data
Retrieval Process. For instance, a few commenters were
unclear if an applicant, whose marital status has changed since
filing an income tax return, could use the IRS Data Retrieval
Process to import only his or her data from an income tax
return filed jointly. Another commenter asked if the
appropriate fields from a married couple's separately filed tax
return would be added together before the data are imported
into an online FAFSA.
Discussion: For the reasons noted by the commenters, the IRS
Data Retrieval Process has not and will not be offered to an
applicant (or parent) whose marital status changed after the
end of the tax year. Also, because the current configuration of
the IRS Data Retrieval Process cannot access both tax returns
when a married applicant or the married parents of a
dependent student filed separately (IRS Filing Status of
“Married Filing Separately), our FAFSA on the Web
instructions advise such tax filers not to use the IRS Data
Retrieval Process. Similarly the IRS Data Retrieval Process
cannot extract the income of one individual that filed jointly.
We are working with the IRS to find a resolution to this issue.
In the meantime, if an institution is aware that such
individuals did use the IRS Data Retrieval Process the
institution must collect tax return information from the other
spouse.
Changes: None.
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Comment: One commenter noted that most Pell-eligible
applicants would not benefit from the IRS Data Retrieval
Process since they are not required to file a Federal tax return
because they do not earn enough. Therefore, this commenter
argued that these applicants and the institutions that serve
them would not experience the reduction in burden the IRS
Data Retrieval Process is expected to provide.
Discussion: The commenter is correct.
Changes: None.
Comment: One commenter requested guidance on the level of
knowledge FAAs are expected to have regarding tax filing
requirements. Specifically, the commenter expressed concern
that FAAs may not have the knowledge necessary to ensure
that applicants are filing their tax returns under the correct tax
filing status (i.e., single, married filing jointly, married filing
separately, and head of household).
Discussion: We do not expect FAAs to be experts in IRS and
tax filing requirements. However, FAAs are
expected to have
a basic understanding of relevant tax issues that can
considerably affect an applicant's eligibility. We expect FAAs
to be able to ascertain whether an applicant or his or her
family members identified on the applicant's FAFSA were
required to file a tax return, what the correct filing status for
the applicant should be, and that an individual cannot be
claimed as an exemption by more than one person.
Changes: None.
Comment: One commenter asked for clarification on whether
institutions have the authority to require an individual who is
required to file a U.S. tax return but who has been granted a
filing extension by the IRS to submit tax documents before
proceeding with verification. Another commenter asked why
the Department would not require the actual tax return filed
with the IRS to be used to complete verification for a student
or parent that files a tax extension. This commenter stated that
a student should not receive any aid until verification is
completed using the actual tax return (not the documentation
provided under § 668.57(a)(4)(ii)). Another commenter
supported the requirement that an applicant who is granted an
extension to file his or her income tax return must submit a
copy of the return that was filed, and the institution must reverify the AGI and taxes paid by the applicant and his or her
spouse or parents.
Discussion: Section 668.57(a)(4)(ii)(A) provides that an
institution must accept a copy of IRS Form 4868, “Application
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for Automatic Extension of Time to File U.S. Individual
Income Tax Return,” that was filed with the IRS or a copy of
the IRS's approval for an extension beyond the automatic sixmonth extension as acceptable documentation to verify an
applicant's FAFSA information for an applicant that has been
granted a tax filing extension. An institution may request a
copy of the tax return once filed, but it may not delay verifying
an applicant's FAFSA information until the tax return is
received if the applicant provides the documentation approved
by the Secretary under § 668.57.
The Department does not require an applicant that has been
granted a tax extension to submit the actual tax return filed
with the IRS because of the extended period of time that may
elapse before the applicant actually files the return. This would
delay the applicant's aid, which we believe would be
inappropriate. We believe the income information collected on
IRS Form 4868 and IRS Form W-2 should be sufficient
documentation to verify the AGI, income earned from work, or
U.S. taxes paid if those items are selected for verification.
However, the regulations do provide that the institution may
require the applicant to submit the actual tax return that was
filed with the IRS. If the institution receives a copy of the
return, it must reverify the AGI and taxes paid by the applicant
and his or her spouse or parents.
We believe clarification is needed for the one commenter who
appeared to interpret § 668.57(a)(5) to mean that in all cases
applicants who are granted a tax extension must submit the
actual tax return once it is filed, and that the institution must
reverify the AGI and taxes paid by the applicant and his or her
spouse or parents once it receives the filed return. An
applicant who files an extension is only required to provide a
copy of the tax return that was filed if the institution requires a
copy. Only if the institution requires the applicant to submit
the tax return that was filed would the institution be required
to reverify the AGI and taxes paid by the applicant and his or
her spouse or parents. This differs from what occurs under the
current regulations. Under the current regulations, if an
institution required an applicant who was granted a tax filing
extension to submit the return to the institution once it was
filed, the institution could decide whether or not to reverify the
AGI and taxes paid by the applicant and his or her spouse or
parents.
Changes: None.
Comment: None.
Discussion: We are making a technical change to § 668.57(a)
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(4)(iii)(B) to clarify that an individual who is self-employed or
who has filed an income tax return with a foreign government
must provide a signed statement that certifies the amount of
taxes paid in addition to his or her AGI.
Changes: Section 668.57(a)(4)(iii)(B) has been revised to
provide that an institution must accept a written certification
of the amount of taxes paid for an individual who is selfemployed or has filed an income tax return with a foreign
government.
Comment: One commenter sought clarification on § 668.57(a)
(7), which provides that an institution may accept in lieu of a
copy of an income tax return signed by the filer of the return or
one of the filers of a joint return, a copy of the filer's return
that includes the preparer's Social Security Number, Employer
Identification Number or the Preparer Tax Identification
Number and has been signed by the preparer of the return or
stamped with the name and address of the preparer of the
return. The commenter asked whether it would be acceptable
for the preparer to write or type his or her name on a filer's tax
return. The commenter noted that guidance in the 2010-11
Application and Verification Guide is much broader, as it
allows the preparer to stamp, type, sign, or print his or her
name on a filer's tax return.
Discussion: We agree with the commenter and have revised §
668.57(a)(7) to expand the options a tax preparer has for being
identified on an applicant's tax return to make it consistent
with the guidance provided in the 2010-11 Application and
Verification Guide.
Changes: We have revised § 668.57(a)(7) to provide that in
addition to having the preparer's signature or stamp on a
filer's tax return, the institution may accept a paper return on
which the tax preparer has typed or printed his or her own
name.
Interim
Disbursements (§
668.58(a)(3))
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Comment: Some commenters supported § 668.58(a)(3), which
allows an institution to make an interim disbursement prior to
receiving the reprocessed SAR or ISIR if, after verification, the
institution determines that changes to the applicant's
information will not change the amount the applicant would
receive under a title IV, HEA program and the requirement in
§ 668.59(a) that requires institutions to submit all corrections
to the Department for reprocessing. One commenter did not
support allowing an institution to disburse aid to a student
before the student's corrected FAFSA information has been
submitted and the institution receives a reprocessed SAR or
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ISIR.
Discussion: The Department appreciates the commenters'
support and notes that interim disbursements are optional,
not required.
Changes: None.
Comment: One commenter stated that because all corrections
must be submitted to the Department under § 668.59(a), there
is no need to allow interim disbursements. This commenter
recommended that we remove from the regulations all
provisions related to interim disbursements.
Discussion: We believe it is important to continue to give
institutions the flexibility to determine whether to make
interim disbursements to individual applicants prior to the
completion of verification to alleviate a hardship a student
may experience if there is a delay in receiving his or her
financial aid. And, as noted earlier, interim disbursements are
optional, not required.
Changes: None.
Comment: One commenter indicated that there is a problem
with the cross-references in proposed § 668.58. The same
commenter also expressed concern that this provision does not
make clear how interim disbursements for the FWS Program
are treated if the student after working is determined to have
an overpayment.
Discussion: We agree with the commenter that there are
problems with the cross-references for interim disbursements
in proposed § 668.58. Specifically, we believe that in §
668.58(a)(1) and (a)(3)(i), we need to clarify that corrections
to the student's FAFSA information must be made in
accordance with § 668.59(a). In addition, in proposed §
668.58(b) we had an erroneous cross-reference for the interim
disbursements made under the FWS Program. Proposed §
668.58(b) also did not cross-reference each type of interim
disbursement that is allowed under certain conditions, either
before verification is completed or after verification is
completed but before the institution has received the valid
SAR or valid ISIR reflecting the corrections. For clarity, we
believe it is appropriate to revise § 668.58(b) so that it
addresses each type of interim disbursement. Further, we
believe that specific cross-references to § 668.61 need to be
added to § 668.58(b) to clarify how institutions must handle
any overpayments that occur because of an interim
disbursement such as under the FWS Program.
Changes: We have revised § 668.58(a)(1) and (a)(3)(i) by
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clarifying that corrections to a student's FAFSA information
must be made in accordance with § 668.59(a). In addition, we
have revised § 668.58(b) to correctly and completely crossreference each type of interim disbursement that is allowed.
Further, we have revised § 668.58(b) to explain, with more
specificity, how institutions must handle the recovery of each
type of overpayment due to an interim disbursement,
including those made for the FWS Program. We also added
specific cross-references to § 668.61 in § 668.58(b) to provide
clarity to institutions on handling the recovery of any
overpayments that may occur because of an interim
disbursement.
Consequences of a
Change in an
Applicant's FAFSA
Information (§
668.59)
Back to Top
Comment: A number of commenters agreed with the proposal
to remove the $400 tolerance reflected in current § 668.59(a)
and, instead, to require all changes to an applicant's FAFSA
information be reported to the Department for reprocessing to
ensure a student's award is based on accurate information.
Several other commenters objected to the proposal to remove
the dollar tolerance because they believed it would increase
administrative burden, particularly for larger institutions, and
would delay payments to students. One commenter noted that
the current tolerance allows FAAs to use their own judgment
to determine when it was necessary to reprocess corrections
that have minimal impact on student eligibility.
One commenter noted that removing the $400 tolerance will
not be a problem for institutions but, like many other
commenters, opposed requiring all changes to an applicant's
FAFSA information to be submitted to the Department for
reprocessing. The commenter expressed concern about this
requirement, especially when the student's eligibility either
would not be affected or where there were minor errors, i.e.,
an AGI was off by $1. One commenter recommended that the
Department consider providing institutions with some
administrative relief in this area, given that institutions will
need to implement several other changes as a result of the
issuance of these verification regulations. Many commenters
recommended that the Department retain the current $400
tolerance or allow for a reasonable tolerance of a modest sum
to allow for minor errors made by applicants and their
families.
Discussion: We appreciate the concerns raised by commenters
and acknowledge the burden associated with having to submit
all changes to an applicant's FAFSA information to the
Department for reprocessing. While our goal is to obtain the
most accurate data available to help in our efforts to identify
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error-prone applications, we agree that the regulations should
provide a means for dealing with minor errors in financial
information reported on an applicant's FAFSA information
without requiring that these minor changes be submitted to
the Department for reprocessing. While we do not agree that it
is appropriate to retain the $400 tolerance from current §
668.59(a), we are revising § 668.59 to address minor errors in
financial information so that institutions need not submit
changes resulting from these types of errors to the Department
for reprocessing. It is important to note, however, that
institutions will still be required to submit all errors in
nonfinancial information to the Department for reprocessing.
Specifically, we have revised § 668.59(a) to require institutions
to submit, for reprocessing, any change to an individual data
element on an applicant's FAFSA that is $25 or more. For
example if the difference reported for AGI is $24, and taxes
paid is $20, the institution would not be required to submit
changes to the Department for reprocessing. However, if the
difference for AGI is $25, and $20 for taxes paid, the
institution would be required to update all changes, not just
the change that exceeded the tolerance.
We also made conforming changes in § 668.164(g)(2)(i) to
reflect that any dependent student, whose parent is applying
for a Direct PLUS Loan must complete a FAFSA in accordance
with section 483 of the HEA in order to obtain a SAR or ISIR
with an official EFC to meet the conditions for a late
disbursement.
In addition we have amended § 668.164(g)(4)(iv) to reflect the
changes that were made under § 668.59(a) that require all
changes to an applicant's FAFSA information be submitted to
the CPS System for correction, except financial data that is less
than $25. Therefore, an institution may not make a late
disbursement of any title IV, HEA assistance until it obtains a
valid SAR or valid ISIR.
Changes: We have revised § 668.59(a) to provide that if an
applicant's FAFSA information changes as a result of
verification, the applicant or the institution must submit to the
Secretary any change to a nondollar item on the FAFSA and
any change to a dollar item on the FAFSA if the change to that
dollar item is $25 or more.
We have revised § 668.164(g)(2)(i) to require an applicant
whose parent is applying for a Direct PLUS loan to have a SAR
or ISIR with an official EFC to meet the conditions for a late
disbursement.
We have also revised § 668.164(g)(4)(iv) to provide that an
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institution may not make a late disbursement of any title IV,
HEA program assistance unless it receives a valid SAR or valid
ISIR for the student by the deadline date established by the
Secretary in a Federal Register notice.
Comment: One commenter stated that it is not opposed to
requiring that institutions submit all corrections to CPS but
expressed concern with the increased number of applicants
selected for verification when there is a change to a school
code or address.
Discussion: It is true that, in a limited number of instances,
verification could be triggered when an applicant makes a
correction to his or her address or to a school code. This is
because the
statistical analysis that determines whether an
applicant's record or a particular item should be verified due
to the likelihood of error includes factors beyond those that are
used to calculate the EFC. We do not believe that the number
of these instances will be significant.
Changes: None.
Comment: One commenter indicated that the proposed
regulations are confusing with respect to the handling of
overpayments due to interim disbursements made after an
applicant had been selected for verification, and the handling
of overpayments due to disbursements made before an
applicant was selected for verification.
Discussion: We agree with the commenter that proposed §
668.59(b), (c), and (d) may be confusing because these
paragraphs do not clearly state how institutions must handle
an overpayment that is the result of interim disbursements
made after the applicant is selected for verification. Further,
proposed § 668.59(b), (c), and (d) may also be confusing
because these paragraphs do not clearly state how institutions
must handle an overpayment that is the result of a
disbursement that is made before the applicant is selected for
verification but that is later discovered to be an overpayment.
While proposed § 668.59(b), (c), and (d) was intended to
describe how to handle an overpayment in both of these
situations if the applicant is receiving aid under the subsidized
student financial assistance programs, we believe that further
changes are needed so that this section clearly states that an
institution must comply with both the procedures in § 668.61
for an interim disbursement that is determined later to be an
overpayment, and the appropriate overpayment requirements
in the applicable program regulations for overpayments
discovered during verification that were due to disbursements
made prior to a student being selected for verification.
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Changes: We have revised § 668.59(b), which covers the
consequences of a change in an applicant's FAFSA information
as the result of verification for the Federal Pell Grant Program,
to provide that for purposes of the Federal Pell Grant Program
the institution must follow the procedures in § 668.61 for
handling overpayments due to interim disbursements, and the
procedures in § 690.79 for overpayments that are not the
result of interim disbursements.
We have also revised § 668.59(c), which covers the
consequences of a change in an applicant's FAFSA information
as the result of verification for the subsidized student financial
assistance programs, excluding the Federal Pell Grant
Program. Section 668.59(c) also covers the Direct Subsidized
Loan Program that was handled originally in proposed §
668.59(d). As revised, § 668.59(c) now provides that the
institution must follow the procedures in § 668.61 for handling
overpayments due to interim disbursements, including for the
FWS Program. Further, § 668.59(c) now provides that the
institution must follow the procedures in § 673.5(f) for
handling overpayments that are not the result of interim
disbursements under the Federal Perkins Loan or FSEOG
programs. Finally, we have revised § 668.59(c) to also provide
that the institution must follow the procedures in § 685.303(e)
for handling overpayments that are not the result of interim
disbursements under the Direct Subsidized Loan Program.
The content in § 668.59(d) has been incorporated into
paragraph § 668.59(c).
Deadlines for
Submitting
Documentation and
the Consequences of
Failing To Provide
Documentation (§
668.60(c)(1))
Back to Top
Comment: Two commenters concurred with the provision
under proposed § 668.60(c)(1) that allows a student who
completes verification while the student is no longer enrolled
to be paid based on the valid SAR or valid ISIR. These
commenters stated that this approach was preferable to
current § 668.60(c)(1), which provides that the student is paid
based on the higher of the two EFCs if the student submits a
valid SAR or valid ISIR while the student is no longer enrolled.
Under that approach, the student would receive the lesser
amount of a Federal Pell Grant.
Discussion: We appreciate the commenters' support.
Changes: None.
Comment: One commenter encouraged the Department to
allow institutions to implement § 668.60(c)(1) prior to the
2011-12 award year.
Discussion: While we appreciate the commenter's desire to
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implement this provision prior to the 2011-12 award year, we
believe that allowing early implementation would interfere
with policies already in place for the 2010-11 award year, and
how that may impact aid already disbursed, i.e., how to
account for aid disbursed for a summer term that was assigned
to the prior award year. As noted earlier in this preamble, the
changes to subpart E of part 668, including § 668.60, will
become effective on July 1, 2012, so that it will be
implemented beginning with the 2012-13 award year and
forward.
Changes: None.
Recovery of Funds (§
668.61)
Back to Top
Comment: One commenter supported the proposed changes to
§ 668.61. Another commenter noted that § 668.61 should only
address recovery of funds in the event of overpayments
resulting from interim disbursements—not overpayments that
are not the result of interim disbursements. This commenter
indicated that this section also contains erroneous crossreferences. In addition, this commenter stated that this section
should provide information on how to treat overpayments
made under the FWS Program as interim disbursements
because the student must be paid for all hours worked.
Discussion: Section 668.61 is about handling the recovery of
overpayments due to interim disbursements. The recovery of
overpayments that are not the result of interim disbursements,
including overpayments that result from disbursements made
before an applicant was selected for verification and later after
selection for verification the applicant's SAR and ISIR must be
corrected, are addressed by the appropriate overpayment
requirements in the applicable program regulations. We agree
with the commenter that some of the cross-references in
proposed § 668.61 need to be corrected.
We also agree with the commenter that it would be helpful for §
668.61 to provide details on how to handle the recovery of
overpayments that occur from interim disbursements for
students employed under the FWS Program. Under §
668.58(a)(2)(ii), an institution is allowed to employ an
applicant under the FWS Program for the first 60 consecutive
days after the student's enrollment in that award year prior to
verification, if the institution does not have reason to believe
that an applicant's FAFSA information is inaccurate. If an
FWS overpayment occurs due to this interim disbursement,
the institution must follow the procedures in § 668.61(b). We
have revised § 668.61(b) to clarify that the institution must
attempt to adjust the applicant's other financial aid to
eliminate the overpayment due to an interim disbursement
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under the FWS Program. This revised § 668.61(b) provides
that, if the institution is unable to eliminate the overpayment
by adjusting the applicant's other financial aid, the institution
must reimburse the FWS Program account by making
restitution from its own funds. The applicant must still be paid
for all work performed under the Federal labor laws.
Because
the applicant was employed, the applicant must be placed on
the institution's own payroll account and all required employer
contributions for social security, workers' compensation, or
any other welfare or insurance program, must still be paid by
the institution because this applicant was an employee.
In addition, the institution is allowed under § 668.58(a)(3) to
employ a student under the FWS Program for the first 60
consecutive days prior to receiving the corrected valid SAR or
valid ISIR if, after verification, it determines that an
applicant's information will not change the amount that the
applicant would receive under that program. In § 668.61(c),
we require that if an FWS overpayment occurs because the
institution does not receive the valid SAR or valid ISIR
reflecting corrections within the established deadline dates,
the institution must reimburse the FWS Program account by
making restitution from its own funds. In § 668.61(c), we
clarify that the student must still be paid for all work
performed under the institution's own payroll account and the
institution must still handle all employer requirements.
Changes: We have revised § 668.61, including the section
heading, to clarify that this section is about handling
overpayments due to interim disbursements made under §
668.58. We have also corrected the cross-references in this
section. In addition, we have revised § 668.61(b) to provide
specific procedures for recovering funds from any FWS
overpayment that results from an interim disbursement made
before verification is completed. We have revised § 668.61(c)
that describes the procedures for handling overpayments due
to an allowable interim disbursement of subsidized student
financial assistance, including any disbursement from FWS
employment, before the institution receives the valid SAR or
valid ISIR reflecting the corrections. Section 668.61(c) now
makes it clear that the applicant must still be paid for all work
performed under the institution's own payroll account.
Misrepresentation
(Subpart F—§§
668.71 Through
668.75)
Back to Top
General
Comment: A significant number of commenters generally or
fundamentally supported the proposed regulations in subpart
F of part 668. Several commenters stated that the proposed
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regulations on misrepresentation reflect an excellent, muchneeded improvement over current regulatory language and
that they will significantly enhance the Department's ability to
address deceptive practices that compromise the ability of
students to make informed choices about institutions and the
expenditure of their resources on higher education. One
commenter agreed, in particular, with proposed §§ 668.72 and
668.73, which ensure that all students have access and
transparent information about their educational program and
its cost. This commenter noted that accurate disclosures are
needed in order to protect students, especially in light of the
many documented instances in which students have had their
expectations regarding postsecondary education outcomes
(e.g., completed degrees, good jobs and high salaries) not met
with success but with failure and mountains of debt instead.
One commenter stated that the proposed regulations on
misrepresentation provide additional protections against
misleading and overly aggressive advertising and marketing
tactics. Another commenter strongly supported the proposals
and stated that integrity in how institutions present
themselves is key to ensuring students are not victims of false
promises or misunderstanding when making a decision about
higher education. Finally, we received many comments that
supported the Department's mission of helping students make
sound decisions and maintaining the integrity of the title IV,
HEA programs but expressed concern about some of the
specific language.
Discussion: We appreciate the commenters' support. We
address the comments and concerns on specific language in
the relevant sections that follow.
Changes: None.
Comment: Many commenters strenuously opposed the
proposed revisions to the misrepresentation regulations in
subpart F of part 668. Some commenters argued that, because
misrepresentation is an issue more appropriately addressed by
the Federal Trade Commission (FTC), the Department should
have adopted in these regulations the language from the FTC
guidelines so that those guidelines would be applicable to all
institutions participating in the title IV, HEA programs. These
commenters noted that for-profit institutions are already
subject to the FTC guidelines and that the results of that
guidance have served their students well and that other sectors
of higher education should be subject to the FTC guidelines as
well.
Several commenters stated that students would be confused by
the proposed regulations dealing with misrepresentation.
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Specifically, the commenters expressed concern that because
institutions disclose information to many parties, including
accrediting agencies, the Department, current and prospective
students, and the general public, information required to be
disclosed under the title IV, HEA program regulations is
complex and not always easy to understand. Therefore, the
commenters argued that students will not be able to make
informed decisions about which institution to attend because,
under the title IV, HEA program regulations, they will be
provided different statistics and will have difficulty
understanding them.
One commenter expressed concern that while the education
community is in need of clear guidance on ethical practices
and the proposed regulations are well-intended, they are too
vague and subjective. A few commenters urged the
Department not to adopt the proposed regulations as final
unless they are significantly clarified.
Finally, one group of commenters stated that the proposed
changes to subpart F of part 668 are unfair to for-profit
schools. Some commenters appeared to believe that the
revisions reflected in proposed subpart F of part 668 would
only apply to for-profit schools.
Discussion: During the negotiations that were held during the
months of November 2009 through January 2010, we
discussed whether to adopt the FTC guidelines in our
misrepresentation regulations. Some non-Federal negotiators
strongly opposed adopting the FTC guidelines in the
Department's regulations because doing so, they argued,
would be duplicative and heavy-handed.
The FTC only has jurisdiction over for-profit entities, and those
entities are already subject to the FTC guidelines. The FTC
guidelines do not apply to degree-granting institutions, and we
believe it would not be appropriate to adopt the FTC
guidelines wholesale. Instead, we have reviewed the guidelines
carefully and incorporated only those that we determined are
appropriate for inclusion in our regulations (i.e., those that we
believe should be applicable to all eligible institutions
participating in the title IV, HEA programs).
With regard to the commenters who expressed concern for
students being confused by these regulations, we note that the
proposed regulations apply to institutions participating in the
title IV, HEA programs and not to students. Because students
are not the intended audience for these regulations, we do not
believe that students will be
confused by the regulations. If
students have questions about the regulations, they have a
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variety of sources to assist them in understanding them,
including by contacting the Department with their questions.
We disagree with the commenters who opined that the
proposed regulations are too vague and subjective. Section 487
of the HEA provides that institutions participating in the title
IV, HEA programs shall not engage in substantial
misrepresentation of the nature of the institution's educational
program, its financial charges, or the employability of its
graduates. The regulations in subpart F of part 668 set forth
the types of activities that constitute misrepresentation by an
institution and describe the actions that the Secretary may
take if the Secretary determines that an institution has
engaged in substantial misrepresentation. The proposed
changes to the regulations strengthen the Department's
regulatory enforcement authority against institutions that
engage in substantial misrepresentation and clarify what
constitutes misrepresentation.
The commenters who stated that the proposed regulations are
unfair because they only apply to for-profit institutions are
incorrect. Subpart F of part 668 applies to all institutions that
participate in the title IV, HEA programs.
Changes: None.
Comment: Some commenters argued that the proposed
regulations are legally deficient on their face, redundant, and
provide no insight or guidance on conduct that may constitute
“substantial misrepresentation.” They stated that the proposed
regulations do not contain any standards of intent, harm, or
materiality. In addition, some commenters stated that the
regulations are missing a quantitative element because they do
not identify what exactly would trigger penalties (e.g., a single
complaint, a pattern of misrepresentation, a dollar amount of
title IV, HEA aid). These commenters stated that a degree of
materiality of misrepresentation should be taken into account
when determining whether to impose a sanction on an
institution.
Discussion: We disagree with the commenters who opined that
the Department does not have the legal authority to regulate in
this area. Current subpart F of part 668 has been in place for
over 25 years. The proposed changes strengthen the
Department's regulatory enforcement authority over
institutions that engage in substantial misrepresentation and
further clarify what constitutes misrepresentation.
The U.S. Government Accountability Office (GAO) was recently
asked to conduct undercover testing to determine whether forprofit colleges' representatives engaged in fraudulent,
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deceptive, or otherwise questionable marketing practices. The
undercover tests at 15 for-profit institutions found that four
institutions encouraged fraudulent practices and that all 15
made deceptive or otherwise questionable statements to GAO's
undercover applicants. Institutional personnel engaged in
deceptive practices, including by encouraging applicants to
falsify their FAFSA information, by exaggerating applicants'
potential salary after graduation, and by failing to provide
clear information about the institution's program duration,
costs, and graduation rate. In some instances, the undercover
applicants received accurate and helpful information from
institutional personnel, such as not to borrow more money
than necessary.
The information uncovered by the GAO during its investigation
reinforces the Department's decision to amend the
misrepresentation regulations in subpart F.
We disagree with commenters who claim the regulations are
legally deficient because they fail to establish the need for
specific intent as an element of misrepresentation or do not
define a requisite degree of harm before the Department may
initiate an enforcement action.
The Department has always possessed the legal authority to
initiate a sanction under part 668, subpart G for any violation
of the title IV, HEA program regulations. However, the
Department has also always operated within a rule of
reasonableness and has not pursued sanctions without
evaluating the available evidence in extenuation and
mitigation as well as in aggravation.
The Department intends to continue to properly consider the
circumstance surrounding any misrepresentation before
determining an appropriate response. Depending on the facts
presented, an appropriate response could run the gamut from
no action at all to termination of an institution's title IV, HEA
eligibility depending upon all of the facts that are present.
We disagree with the commenters who stated that the
proposed regulations are redundant. Although the FTC
publishes guidelines for consumers to use to avoid deceptive
advertising, promotional, marketing, and sales practices by
vocational training providers, the FTC guidelines are
considered administrative interpretations of the statutes that
the FTC is charged with implementing as opposed to
implementing the statutory requirement in section 487 of the
HEA, which the Department is charged with implementing.
We disagree with the commenters who stated that the
proposed regulations do not provide guidance on what
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constitutes “substantial misrepresentation.” The proposed
regulations define “substantial misrepresentation” as “any
misrepresentation on which the person to whom it was made
could reasonably be expected to rely, or has reasonably relied,
to that person's detriment.”
In determining whether an institution has engaged in
substantial misrepresentation and whether to impose
penalties, the Department uses a rule of reasonableness and
considers various factors.
Changes: None.
Comment: Some commenters suggested that we adopt more
concrete and narrowly defined terms in subpart F of part 668
to address abuses while protecting legitimate institutions and
programs from baseless charges. These commenters stated
that the proposed regulations on misrepresentation contain a
number of vague and broad phrases that leave the door wide
open for interpretation by States, accrediting agencies, and the
Department. These commenters expressed concern that the
lack of specificity in the regulations will fuel the potential for
frivolous lawsuits brought as class actions against institutions.
One commenter opined that the proposed regulations would
function as a “perpetual employment act for lawyers” because,
under the regulations, routine marketing claims would become
a potential source of lawsuits and claims for years.
Some commenters also expressed concern about allegations of
misrepresentation from disgruntled students and employees
or former employees and as a result of journalists
misreporting facts. These commenters argued that it is not
appropriate for the actions of a single individual or a single
incident, whether malicious or unintended in nature, to
dramatically affect an institution.
Discussion: We disagree with the commenters who stated that
the proposed regulations are too broad and open for
interpretation. We proposed specific changes to the current
regulations to clarify the types of false, erroneous, or
misleading statements about an institution's educational
program, the cost of the program, financial aid available, and
the employability of its graduates that would be prohibited as
misrepresentations under subpart F of part 668.
We understand that some commenters have concerns about
baseless charges and frivolous lawsuits that may be brought by
students and employees including by dissatisfied students and
disgruntled employees as well as fears that “routine marketing
claims” would lead to lawsuits. We do not believe that the
proposed regulations will increase litigation by students and
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employees against the institution. These regulations do not
provide an additional avenue for litigation for students,
employees and other members of the public. Instead, the
regulations specify the conditions under which the
Department may determine that an institution has engaged in
substantial misrepresentation and the enforcement actions
that the Department may choose to pursue. As the Department
does in evaluating any regulatory violation, in determining
whether an institution has engaged in substantial
misrepresentation and the appropriate enforcement action to
take, the Department will consider the magnitude of the
violation and whether there was a single, isolated occurrence.
Changes: None.
Comment: Many commenters expressed concern that the
proposed changes would eliminate due process protections for
institutions in the case of substantial misrepresentation. The
commenters requested that we retain the procedures from
current § 668.75, arguing that the removal of these procedures
conflicts with the HEA and exceeds the Department's statutory
authority to regulate in this area.
Several commenters also expressed concern about the
proposed removal of current § 668.75 because that section
required the Department to review complaints and to dispose
of them informally if the complaints were determined to be
minor and could be readily corrected. The commenters argued
that the proposed regulations would eliminate this sensible
approach in exchange for using other procedures. These
commenters recommended that we amend § 668.71(a) to
include an option for the Department to allow an institution to
correct minor, inadvertent, and readily correctable
misrepresentations and to make appropriate restitution. They
noted that these types of misrepresentations are bound to
occur given the amount of information institutions must
report and that simple human error should not constitute
misrepresentation. Other commenters expressed concern that,
under the proposed regulations, simple mistakes could trigger
sanctions even if an institution has no history of
misrepresentation problems.
Discussion: The Department is removing the provisions in §
668.75 because they are formulaic and have been proven
unnecessary. The Departments takes its enforcement
responsibilities seriously, and its history demonstrates that it
does not overreact to single, isolated transgressions. We
intend to enforce the misrepresentation regulations with the
same degree of fairness that we enforce all other title IV, HEA
program requirements. To the extent the Department chooses
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to initiate an action based upon a violation of the
misrepresentation regulations, nothing in the proposed
regulations diminishes the procedural rights that an
institution otherwise possesses to respond to that action.
Changes: None.
Comment: Some commenters stated that enforcement by the
Department is not necessary and is not the best way to allocate
the Department's resources because State agencies, accrediting
agencies and the FTC already enforce laws prohibiting
misrepresentation. For example, some commenters noted that
accrediting agencies have standards on institutional integrity
and review the ways in which each institution represents itself
as part of the accrediting process. The accrediting agencies
perform regular reviews of all advertising and promotional
material and publish specific guidelines for institutions
regarding acceptable statements by staff. The commenters
recommended that the Department continue to rely on this
process, rather than adopting the proposed regulations, which
they argue, will result in an unnecessary duplication of
enforcement efforts. Another commenter asked us to clarify
whether the Department—and not State authorizingagencies—
is responsible for monitoring compliance with the
misrepresentation regulations.
While a number of commenters argued that it is not
appropriate for the Department to take enforcement actions to
prevent misrepresentation, other commenters stated that in
cases of true misrepresentation strong enforcement steps
would go a long way in eliminating fraud and abuse and
limiting the need for other measures to combat abuse that
arises in the absence of such enforcement.
Discussion: We disagree with the commenters who stated that
the Department should not be responsible for enforcement of
these misrepresentation regulations because others, including
State agencies, accrediting agencies, and the FTC are already
enforcing laws against misrepresentation. The Department is
responsible for ensuring that institutions participating in the
title IV, HEA programs comply with section 487 of the HEA,
which prohibits institutions from engaging in substantial
misrepresentation of the nature of the institution's educational
program, its financial charges, or the employability of its
graduates. We acknowledge that other agencies and entities
also enforce various laws and standards that guard against
misrepresentation and are pleased that we have partners in
ensuring that institutions do not make false, erroneous, or
misleading statements to students, prospective students, and
members of the public. We agree with the commenters who
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supported strong enforcement in this area. We believe that
strengthening the misrepresentation regulations and
enforcement of these regulations is critical to maintaining the
integrity of the title IV, HEA programs.
Changes: None.
Comment: Many commenters argued that we should revise the
regulations to link enforcement to situations in which the
institution or its employees are making a conscious decision to
mislead the consumer. The commenters suggested that the
definition of misrepresentation be amended to include an
element of intent to deceive; under this definition, institutions
would face sanctions only if the Department determined that
the misleading statement was made with the intent to deceive.
Discussion: In determining whether an institution has engaged
in substantial misrepresentation and the appropriate sanctions
to impose if substantial misrepresentation has occurred, the
Department considers a variety of factors, including whether
the misrepresentation was intentional or inadvertent.
Changes: None.
Comment: Some commenters expressed concern that they will
be unable to comply with the misrepresentation regulations
because they are required to comply with so many regulations
that inadvertent misrepresentations are bound to occur.
Discussion: As previously discussed, before initiating any
action, the Department carefully evaluates all of the
circumstances surrounding an alleged misrepresentation.
However, the Department rejects the notion that institutions
are incapable of complying with multiple title IV, HEA
program regulations, while at the same time ensuring that they
do not make misrepresentations, inadvertent or otherwise.
Changes: None.
Comment: Some commenters expressed concern with the
effect these proposed misrepresentation regulations could
have on students. They argued that the regulations would
conflict with State laws and create confusion in an area long
regulated by the States. For example, given that students file
complaints with the State, the commenters stated that an
additional Federal remedy would be duplicative and would
create uncertainty for students.
Other commenters expressed concern about institutions that
require students to sign arbitration and confidentiality
agreements as part of their enrollment contracts. These
agreements serve to limit access to qualified legal counsel for
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students who may want to pursue a misrepresentation claim.
Some commenters stated that the regulations should not be
interpreted to create an express or implied private right of
action against an institution for misrepresentation.
Discussion: We disagree with the commenters who stated that
students will be confused by the misrepresentation regulations
because they otherwise typically pursue claims of
misrepresentation under State law. Nothing in the proposed
regulations alters a student's ability to pursue claims of
misrepresentation pursuant to State law and nothing in the
proposed regulations creates a new Federal private right of
action. The regulations are intended to make sure that
institutions are on notice that the Department believes that
misrepresentations constitute a serious violation of the
institutions' fiduciary duty and that the Department will
carefully and fairly evaluate claims of misrepresentation
before determining an appropriate course of action.
Changes: None.
Scope and Special
Definitions (§
668.71)
Back to Top
Comment: Many commenters expressed concern about the
expansion of the misrepresentation regulations to cover false
or misleading statements made by representatives of the
institution or any ineligible institution, organization or person
with whom the institution has an agreement. The commenters
believed that this change will result in holding institutions
accountable for what is said, may be said, or inadvertently is
said, by individuals or organizations that may have no official
connection to an institution, and that institutions cannot
monitor inadvertent and unofficial comments. Commenters
argued that the proposals would expose good institutions to
sanctions based on actions beyond their control. Many
commenters sought clarification about which representatives
of the institution are covered by the regulations. For example,
commenters pointed to statements that may be made by
students through the use of social media. One commenter
suggested we modify the definition of misrepresentation to
clarify that institutions are responsible for statements made by
representatives or entities compensated by the institution.
Another commenter recommended that we include only
individuals under the direct control of the institution,
including spokespersons and enrollment management
companies.
We received another suggestion to limit covered agreements to
those relating to marketing or admissions. Many commenters
expressed concern that, without this change, the proposed
regulations would apply to the hundreds of contracts a large
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institution may have with various vendors and service
providers. They suggested that the institution only be
responsible for communications from and statements by
individuals or entities authorized to speak for the institution or
who have representative authority to respond to the subject in
question.
Commenters were particularly concerned about the penalties
that could result from misinformation provided by an entity
other than the institution. The commenters argued that the
institution should not be subjected to undue penalties if the
institution took steps to monitor and mitigate such possible
misrepresentations, and in fact, took action upon identifying
any incidences. For example, institutions provide information
to companies that compile college rankings that are often
derided as inaccurate, incomplete or false. Commenters
believed that any penalties should be limited to statements
related to the relationship between the institution and the
entity.
Discussion: As noted elsewhere in this preamble, the
Department enforces its regulations, including those in
subpart F of part 668 within a rule of reasonableness. We
strongly believe that the concerns voiced by many commenters
have ignored this fact. We do not expect, for example, to find
actionable violations in the comments made by students and
routine vendors. However, the Department acknowledges that
the language in § 668.71 may be unnecessarily broad. For this
reason, we agree to limit the reach of the ban on making
substantial misrepresentations to statements made by any
ineligible institution, organization, or person with whom the
eligible institution has an agreement to provide educational
programs or those that provide marketing, advertising,
recruiting, or admissions services. We have done this by
narrowing the language in § 668.71(b) and the definition of the
term misrepresentation. As a result, statements made by
students through social media outlets would not be covered by
these misrepresentation regulations. Also, statements made by
entities that have agreements with the institution to provide
services, such as food service, other than educational
programs, marketing, advertising, recruiting, or admissions
services would not be covered by these misrepresentation
regulations.
Changes: We have revised § 668.71(b) and the definition of the
term misrepresentation in § 668.71(c) to clarify that the ban
on misrepresentations for which an institution is responsible
only extends to false, erroneous, or misleading statements
about the institution that are made by an ineligible institution,
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organization, or persons with whom the institution has an
agreement to provide educational programs or to provide
marketing, advertising, recruiting, or admissions services.
Comment: Some commenters noted a need for the regulations
to clearly differentiate between “misrepresentation” and
“substantial misrepresentation.” Other commenters
questioned how we will determine what constitutes
“substantial misrepresentation.” These commenters asked
what the standards are for determining what constitutes harm,
materiality, or intent to misrepresent. Another commenter
suggested that we revise the definition of substantial
misrepresentation to include misrepresentations that are
disseminated—not only those that are “made”.
Discussion: The Department is comfortable with its ability to
make the distinction between a misrepresentation and a
substantial misrepresentation. We believe that the regulatory
definitions we are establishing are clear and can easily be used
to evaluate alleged violations of the regulations. Moreover, as
previously stated, we routinely evaluate the seriousness of title
IV, HEA program violations before determining what, if any,
action is appropriate. There is nothing in the proposed
misrepresentation regulations that will alter the manner in
which the Department reviews any violation of part 668,
subpart F before deciding how it should respond.
Changes: None.
Comment: Some commenters supported the proposed
definition of misrepresentation in § 668.71(c), which, as
applied in these regulations, prohibits making false,
erroneous, or misleading statements directly or indirectly to
students, prospective students, or any member of the public,
an accrediting agency, a State agency or the Secretary. They
stated that these changes provide much needed updates to the
current regulations and that the remedies give the Department
needed flexibility. The commenters noted that the Department
should not tolerate institutions that knowingly misrepresent
facts and provide misinformation on purpose to students, their
families and the public, and that we should hold institutions
accountable that encourage students to enroll but fail to
deliver on statements regarding accreditation and
employability.
Other commenters expressed concern about broadening the list
of entities to which an institution may not make a false,
erroneous, or misleading statement to include accrediting
agencies, State agencies or any member of the public. These
commenters remarked that the effect of this regulatory change
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is that the list now includes anyone. The commenters argued
that the determination of whether an institution has made
misleading statements to an accrediting agency or State
agency should be made by that agency, not the Department,
and that the agency should take appropriate action. One
commenter suggested that the list of entities should also
include parents who may be signing or cosigning loans.
Discussion: The Department believes that in its stewardship of
the title IV, HEA programs, it is essential to monitor the
claims made by institutions not only to students and
prospective students, but also those made to the Department's
partners who help maintain the integrity of these programs.
While it is likely that other oversight agencies will respond
appropriately to any substantial misrepresentations that are
made to them, only the Department has the overall
responsibility for preserving the propriety of the
administration of the title IV, HEA programs.
In addition, because parents are also members of the public,
and most, if not all, statements made to them will also be
made to students or prospective students, the Department
does not believe that further enumeration to include parents is
necessary.
Changes: None.
Comment: Some commenters noted that the term “misleading
statement” is not defined by the FTC, and opined that, because
the term's definition merely reiterates what has always been
required for a finding of a substantial misrepresentation, it is
unnecessary for the Department to define the term in its
regulations. Some commenters suggested that, instead, the
Department follow the FTC's practice of acknowledging that a
finding of misrepresentation is a fact-specific inquiry based on
a flexible standard.
Many commenters appeared to be particularly concerned about
the use of the phrase “capacity, likelihood, or tendency to
deceive or confuse” in the description of a “misleading
statement”. Some commenters stated that they do not believe
that an enforceable or defensible basis for misrepresentation is
created by including the likelihood of any form of
communication to confuse or “have the capacity” to confuse a
student or potential student. One commenter suggested we
clarify that in order to constitute misrepresentation, the
statement must have the “capacity or tendency” to deceive or
confuse and be “likely” to deceive or confuse. The commenter
cited examples of statements frequently made in marketing
materials by institutions, such as “there is a place for everyone
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at XYZ.” Other commenters noted that institutions provide
information on a variety of complex issues that students and
others may find confusing. In particular, certain terms of art
such as “cost of attendance” and “graduation rate” may not be
familiar to the general public and may be confusing to them.
Another commenter requested that we clarify that a
misrepresentation is not made if confusion results from the
accurate reporting of disclosures required under various laws.
These commenters expressed concern that attempts to comply
with recently promulgated regulations on college cost,
transparency, and outcomes measures may result in confusion
and lead to reported complaints of misrepresentation.
Several commenters argued that the Department needs to
address the issue of misrepresentation through omissions of
important information. One commenter suggested that we add
language in the description of the term misleading statement
to include an omission, if in the absence of an affirmative
disclosure is likely to result in a person assuming something
that is incorrect.
One commenter stated that oral statements should not be
included in the definition of misrepresentation. The
commenter questioned how the Department would know that
an oral misleading statement was made.
Many commenters expressed concern that the proposed
misrepresentation regulations will restrict their capability to
use the Internet for fear of misrepresentation. These
commenters noted that their top lead source is the Internet
and that Internet marketing is the bloodline of all institutions.
The commenters also pointed out that Internet marketing has
issues relating to domain name ownership, name confusion,
and pirating, and that, when the Department enforces these
regulations, it needs to be careful in ensuring that it has the
correct institution.
Discussion: The Department believes that it is appropriate to
define the term misrepresentation in its regulations in order to
distinguish misrepresentation from substantial
misrepresentation. As discussed elsewhere in this preamble,
the Department agrees that determining whether a
misrepresentation has been made should be accomplished
through a fact-specific inquiry and that enforcement actions
should only be brought when reasonable.
With regard to the comments who stated that the “capacity,
likelihood, or tendency to deceive or confuse” language will be
confusing, we have no reason to believe that this language will
have any such effect. Moreover, we do not believe that it is
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necessary to revise the regulations to state that a misleading
statement must have both the capacity or tendency and
likelihood to deceive because we believe that a statement that
has any of the characteristics of the capacity, likelihood, or
tendency to deceive or confuse is misleading.
By adopting these proposed regulations, the Department is not
seeking to create extraneous bases upon which it can initiate
enforcement actions. Rather, we want to ensure that the
regulations help, rather than hinder, our ability to protect
students, prospective students, and others from misleading
statements made about an eligible institution, the nature of its
educational program, its financial charges, or the
employability of its graduates. The Department believes it can
be trusted to properly evaluate whether a claim is confusing to
a degree that it becomes actionable. It is also important to
remember that it is only substantial misrepresentations that
rise to the level where the Department may contemplate
action.
As far as the failure of the proposed regulations to address
affirmative omissions, the Department believes that the
purpose of these regulations is to make sure that all
statements an institution makes are truthful. Separately, the
Department requires an
institution to make a number of
disclosures to students and to the extent that any of these
disclosures are inaccurate and constitute substantial
misrepresentation, they are actionable. The Department
believes that the totality of its regulations provides a sufficient
basis to protect against the making of substantial
misrepresentations without creating another category of
misrepresentations that are more logically covered within the
context of disclosures.
In addition, we disagree with the commenter who argued that
oral statements should not be included in the definition of the
term misrepresentation. We have seen and heard clear and
unambiguous examples of oral statements that we view as
misrepresentations in the GAO's video of its undercover
testing.
With respect to the commenters who expressed concern about
how these regulations may affect an institution's ability to use
the Internet for marketing purposes, we note that it should not
matter where a misrepresentation takes place. What is
important is to curb the practice of misleading students
regarding an eligible institution, including about the nature of
its educational program, its financial charges, or the
employability of its graduates. We strongly believe that
institutions should be able to find a way to comply with these
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regulations when using the Internet for marketing.
Finally, we understand the many complexities of domain name
ownership, trademark infringement and the like and will
ensure that we are targeting the correct entities in any
enforcement action we take under these regulations.
Changes: None.
Comment: Several commenters objected to including
testimonials and endorsements in the definition of
misrepresentation, because doing so holds institutions
responsible for unsolicited testimonials or endorsements of
any kind. The commenters noted that testimonials are widely
used as the most relevant form of marketing. One commenter
suggested that we modify the regulations to refer to
testimonials that the institution “requested” a student to make
“as part of the student's program” as opposed to “required” the
student to make “to participate in a program.” Another
commenter believed we should expand the definition of the
term misrepresentation to include endorsements or
testimonials for which students are given incentives or
rewards.
Discussion: The Department disagrees that changes to the
definition of misrepresentation are needed. First, with respect
to the commenters who stated that the definition is too broad,
we note that the thrust of the definition is that the statement
must be false, erroneous, or misleading. The inclusion within
the definition of certain student endorsements or testimonials
(i.e., those that are given under duress or are required for
participation in a program) establishes the circumstances
under which endorsements or testimonials are necessarily
considered to be false, erroneous, or misleading. We believe
that including these types of endorsements and testimonials in
the definition of misrepresentation is appropriate because
endorsements or testimonials provided under these
circumstances are suspect, at best.
Second, we do not believe it is necessary to expand the
definition of misrepresentation to include endorsements or
testimonials for which students are given incentives or
rewards. We do not believe that an endorsement or testimonial
for which a student was given a token reward such as a mug or
t-shirt should automatically be considered false, erroneous, or
misleading.
Changes: None.
Nature of
Comment: One commenter supported the proposed changes to
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Educational
Program (§ 668.72)
Back to Top
§ 668.72 stating that the changes will reduce the motivation
for institutions to use aggressive and misleading recruitment
tactics to increase enrollment. The commenter noted that the
requirements in this section align with their association's
principles of good practice under which members represent
and promote their schools, institutions or services by
providing precise information about their academic major and
degree programs.
Discussion: The Department appreciates this support.
Changes: None.
Comment: One commenter stated that § 668.72 was inherently
unclear and asked for additional clarification without
providing any specifics.
Discussion: The Department disagrees with this commenter
and believes that the language in this section is clear.
Moreover, because only false, erroneous, or misleading
statements that constitute substantial misrepresentations are
potentially actionable, institutions are on notice as to what
they need to do to assure themselves of compliance.
Changes: None.
Comment: Some commenters recommended that we add
language to this section to address specific concerns about
clinical experience. One commenter argued that institutions
should be required to inform students of any clinical
experience the student needs to obtain a required license or
certification, whether the institution or the student secures the
appropriate clinical placement, and how the clinical
experience relates to the ability to obtain employment. The
commenter argued that the failure to inform a student of this
information should constitute misrepresentation.
Discussion: We believe that the language in § 668.72
sufficiently covers false, erroneous, or misleading statements
made by institutions concerning their educational programs.
We further note that information such as that suggested by the
commenter is more appropriately addressed in the student
consumer information disclosures contained in subpart D of
part 668 and note that institutions are required to disclose
information about the academic program of the institution,
which would include information about any required clinical
experience.
Changes: None.
Comment: One commenter suggested that we add language to
§ 668.72 to specifically address misrepresentation related to
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whether course credits earned at the institution are
transferable toward a substantially similar degree. This
commenter noted that, in some cases, courses may be accepted
but not count toward a degree at the new institution.
Discussion: We believe that the language in § 668.72(b)(1),
which prohibits false, erroneous, or misleading statements
about whether a student may transfer course credits earned at
the institution to any other institution, is sufficient and
provides more protection for students than the commenter's
suggestion to limit the coverage to statements related to
whether course credits are transferable toward a substantially
similar degree.
Changes: None.
Comment: A few commenters suggested that we expand §
668.72(c)(2) to include “States in which the program is
offered” rather than merely “the State in which the institution
is located” so that the requirement reaches students who are
enrolled through distance learning. One commenter noted that
institutions that offer courses online should have additional
responsibilities to students who take these courses. The
commenter also asserted that these institutions should know
and communicate to students what the State's requirements
are to be employed
in that job and whether successful
completion of the program will qualify them for such a job.
Another commenter stated that an institution should know
State licensing requirements in all the States in which it is
providing the program and further opined that if the
institution does not know the requirements, it could limit
enrollment to students residing in the States in which it does
know.
Discussion: The Department agrees with the commenters who
believe institutions should be responsible for making
statements that are not false, erroneous, or misleading in
States in which the institution's educational programs are
offered and not only in the State where the institution is
located.
Changes: We have revised § 668.72(c) to prohibit false,
erroneous, or misleading statements concerning whether
completion of an educational program qualifies a student for
licensure or employment in the States in which the educational
program is offered.
Comment: One commenter suggested that we add “including
the recognized occupations for which the program prepares
students” at the end of § 668.72(g) to address the proposed
requirements in § 668.6(b)(1) under which an institution must
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disclose on its Web site the occupations the program prepares
students to enter and that we add a new paragraph to address
misrepresentation about the kinds of disclosures that will be
required under proposed § 668.6.
Discussion: We disagree with the commenter's suggestion to
add language in § 668.72 to address the proposed regulations
in § 668.6. The language in § 668.72(g) prohibits false,
erroneous, or misleading statements concerning the
availability, frequency, and appropriateness of its courses and
programs to the employment objectives that it states its
programs are designed to meet. We believe that this language
is sufficient to guard against misrepresentation in the
disclosures required under § 668.6. For additional information
on those requirements, please see the section on Gainful
Employment (§ 668.6) earlier in the preamble to these final
regulations.
Changes: None.
Comment: Some commenters recommended that we add
language to this section to address specific concerns about
accreditation. One commenter suggested that the regulations
be modified to require an institution to explicitly disclose a
lack of specialized program or institutional accreditation if
such accreditation is associated with the ability to apply to take
or to take, the examination required for a local, State, or
Federal license, or a non-governmental certification generally
required as a precondition for employment or to perform
certain functions in the State in which the institution is
located. Some commenters suggested that misrepresentation
related to requirements that are generally needed to be
employed in the fields for which the training is provided be
expanded to include withheld information. The commenters
cited the testimony of Yasmine Issa who testified before the
Senate Health, Education, Labor, and Pensions Committee on
June 24, 2010. Ms. Issa testified that important information
about the value of the educational credential she was pursuing
and future employability was withheld. In particular, the
program in which she was enrolled lacked specialized
accreditation and, as a result, she was unable to sit for a
licensing exam. The commenters argued that omission of
important information should constitute misrepresentation if
such omission is likely to lead someone to make incorrect
assumptions as happened with Ms. Issa.
Discussion: The Department agrees with the commenters who
requested that we expand these regulations to prohibit the
withholding of information related to requirements that are
generally needed to be employed in the fields for which the
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training is provided. To address circumstances such as the
ones experienced by Ms. Issa, the Department has inserted the
words “or requires specialized accreditation” in § 668.72(n).
As amended, this provision now provides that
misrepresentation concerning the nature of an eligible
institution's educational program includes any failure by an
eligible institution to disclose the fact that a degree has not
been authorized by the appropriate State educational agency
or that it requires specialized accreditation in any advertising
or promotional materials that reference such degree.
Changes: We have revised § 668.72(n) to include a failure to
disclose that the degree requires specialized accreditation as
misrepresentation.
Employability of
Graduates (§
668.74)
Back to Top
Comment: Some commenters raised concerns about
misrepresentation related to the institution's knowledge about
the current or likely future employment conditions,
compensation or opportunities in the occupation for which
students are being prepared. Commenters argued that
predictions about future employment or compensation should
not be deemed misrepresentations unless such predictions are
based on statements of fact which at the time they were made
are objectively false or themselves misleading. The
commenters requested confirmation that general statements
of opinion about the benefits of enrolling in or completing a
program would not be treated as misrepresentation about the
future. Other commenters sought clarification that any
information provided by an institution that is directly
attributable to a State or the Federal government or any direct
link to a governmental Web site such as the O*NET Web site
would not be considered misrepresentation if the data and
projections from the government or on the Web site are
incorrect, confusing, or do not come true.
Discussion: As noted elsewhere in this preamble, the
regulations in subpart F of part 668 only address false,
erroneous, or misleading statements. Moreover, in enforcing
this subpart, the Department intends to continue to carefully
evaluate all of the surrounding circumstances before reaching
any conclusions regarding the occurrence of a violation and
the appropriate response. Predictions that are not based on
false or misleading information, general statements and
opinions, and information provided by State and Federal
governments would not be the basis for a misrepresentation
claim.
Changes: None.
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Ability To Benefit (§
668.32(e) and
Subpart J)
Back to Top
Student Eligibility—General (§ 668.32(e))
Comment: Most commenters supported the Department's
implementation of section 484(d)(4) of the HEA, which was
added in 2008. This statutory change provided that a student
shall be determined by an institution of higher education as
having the ability to benefit from the education or training
offered by the institution of higher education upon satisfactory
completion of six credit hours, or the equivalent coursework
that are applicable toward a degree or certificate offered by the
institution. Several commenters expressed appreciation for the
implementation of this new option of establishing an ability to
benefit. Several of the commenters supported the equivalency
of the six credit hours to six semester, six trimester, six quarter
hours or 225 clock hours. One commenter expressly supported
the continued individual institutional determination to accept
any of the ability-to-benefit (ATB) options available in current
§ 668.32(e). One commenter recommended that the
Department monitor the application of this ATB option.
Discussion: We appreciate the support for these changes. With
regard to the suggestion that the Department monitor the use
of this eligibility option, we plan in 2011-2012 to implement a
variety of changes to the data that institutions will provide to
the Department that will help us determine when title IV, HEA
program assistance is awarded to students who establish their
title IV, HEA eligibility on the basis of either successfully
completing six credit hours (or its equivalent) that are
applicable toward a degree or certificate program offered at
that institution, or when the student successfully passes an
approved ATB test. We believe that this data will help us better
understand the frequency that these options are employed and
can lead to further study on the effectiveness of these
alternatives to a high school diploma or its recognized
equivalent.
Changes: None.
Comment: Some commenters offered conditional support for
the regulatory change reflected in § 668.32(e)(5), but
expressed some concerns. For example, one commenter
expressed disagreement about the equivalency of six credit
hours to six semester, six trimester, six quarter hours or 225
clock hours. In addition, several commenters did not agree
with the application of 225 clock hours stating that this
approach would not benefit students at clock hour institutions.
Finally, a few commenters suggested that a conversion rate of
6 credit hours to 180 clock hours would be more reasonable.
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Discussion: As discussed during the negotiated rulemaking
sessions and in the preamble to the NPRM, the statute is silent
on equivalency. The Department believes that it is a
reasonable interpretation to use the successful completion of 6
semester, 6 trimester, 6 quarter or 225 clock hours for
purposes of equivalency because these all would be equal to
completion of one quarter of an academic year. For this
reason, we are adopting as final the changes we proposed in §
668.32(e).
Changes: None.
Comment: A few commenters asked about the transferability of
the successful completion of six credits (or its equivalent)
among title IV, HEA eligible institutions. One commenter
expressed concern that it appeared that the courses where the
six credits were initially earned could not be college
preparatory coursework, because they are not applicable to an
eligible program. Therefore, the commenter argued, §
668.32(e)(5) would not benefit those students for whom ATB
would be most helpful, students who may need preparatory
coursework.
Discussion: Section 484(d)(4) of the HEA specifies that a
student has the ability to benefit from the education or
training offered by the institution of higher education if the
student completes six credit hours or the equivalent
coursework that are applicable toward a degree or certificate
offered by the institution of higher education. When a student
who earns six or more credits (or their equivalent) applicable
toward a degree or certificate offered by that institution of
higher education subsequently transfers to another institution,
if those credits are applicable toward the degree or certificate
offered by the subsequent institution, the previously-earned
credits meet the requirements of section 484(d) of the HEA.
However, we point out that the earning of credit hours based
upon testing out is not comparable to taking and successfully
completing six credit hours (or its equivalent) and, therefore,
would not satisfy this ATB option.
If the courses that a student enrolls in are considered
preparatory in nature, an institution must first determine
whether these preparatory courses are a part of the student's
program. To the extent that the preparatory courses are a part
of the student's eligible program, the successful completion of
six credits in these preparatory courses would meet this ATB
standard. However, if the institution determines that these
preparatory courses are not part of the eligible program, the
successful completion of the six credits would not meet this
ATB standard. It may be important to note that generally
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institutions develop their admissions policies in accordance
with State licensing and accrediting requirements and, as a
result, some institutional admissions requirements may
require that all students have a high school diploma. In those
situations, because all of the students would be required to
have a high school diploma, the recognized equivalent of a
high school diploma option and the ATB options in section
484(d) of the HEA would be inapplicable. However, for
institutions that admit students either with the recognized
equivalent of a high school diploma or under one of the
optional ATB standards for students who do not have a high
school diploma, those institutions cannot fail to accept, for
title IV, HEA student eligibility purposes, the following—
A student's passing of an approved ATB test;
A determination that a student has the ability to benefit
from the education or training in accordance with an
approved State process;
A student's successful completion of a secondary school
education in a home school setting that is treated as a
home school or private school under State law; or
The satisfactory completion of six credit hours (or the
equivalent coursework), that are applicable toward a
degree or certificate at that institution.
As such, the new ATB option added in section 484(d)(4) of the
HEA, and reflected in § 668.32(e)(5), is not the only
opportunity for a student to establish that he or she has the
ability to benefit from the education or training offered by the
institution.
Changes: None.
Comment: One commenter expressed support for the inclusion
of language in the preamble to the NPRM that indicated that
the six credits or its equivalent used to establish ATB eligibility
should be applicable to an eligible program offered at that
school and suggested it should be included in the regulatory
language. Another commenter expressed concern about the
inclusion of this language in the preamble, opining that it went
beyond the statutory language and intent. This commenter
recommended that the Department consider removing such
language in the final regulations.
Discussion: We recognize that the statute does not require that
the coursework completed for purposes of this ATB option be
applicable to an eligible program, but we remind institutions
that this ATB option is designed to allow an otherwise
ineligible student to obtain title IV, HEA program assistance
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while working to obtain a certificate or degree. Therefore, we
expect that the coursework be applicable to an eligible
program. We also acknowledge that students may change
programs throughout their postsecondary career. For this
reason, these regulations do not require that the student
successfully complete six credits or their equivalent that are
applicable to the specific degree or certificate program in
which the student is enrolled. Instead, § 668.32(e)(5) requires
only that the six credits be applicable to a degree or certificate
program at the institution where the six credits are earned.
Changes: None.
Comment: Several commenters expressed opposition to the
new § 668.32(e)(5). One commenter argued that the ATB
options under current § 668.32(e)(2) and (e)(3) provide a
better method of evaluating a student's ability to benefit and
that the new option is not needed. One commenter stated that
new
§ 668.32(e)(5) would cause greater financial hardship
for students because it would require students to pay for these
six credits without the benefit of title IV, HEA program
assistance and that this, in turn, may lead to some students
turning to high cost private financing. One commenter
expressed disappointment that the Department did not seize
the opportunity to fully re-evaluate the ATB regulations and
make more broad and sweeping changes to the standards.
Finally, some commenters expressed concern that § 668.32(e)
(5) may penalize students who are very able to successfully
perform class work and demonstrate learned skills, but who
have difficulty taking tests and therefore may be unable to
successfully complete the requisite six credit hours (or its
equivalent), due to their inability to do well on written tests.
Discussion: Section 668.32(e)(5) incorporates the language
from section 484(d)(4) of the HEA. The Department does not
have the authority to not recognize this statutorily mandated
ATB option. Moreover, we recognize that this new standard for
establishing the ability to benefit for students who do not have
a high school diploma or its recognized equivalent may not be
appropriate for all students. However, we do not view this as a
problem, because § 668.32(e)(5) supplements—rather than
replaces—the current standards for establishing the ability to
benefit under § 668.32(e)(2) and (e)(3).
Changes: None.
Comment: Most of the commenters who objected to §
668.32(e)(5) objected to this provision at least in part because
the Department has stated that title IV, HEA funds may not be
used to pay for any portion of the payment period in which
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those credits or equivalent were earned.
Discussion: The underlying student eligibility issue here is that
a student without a high school diploma or its equivalent
cannot be eligible for title IV, HEA program assistance, except
under the four circumstances described in section 484(d) of
the HEA. The payment period during which a student
successfully earns the six credits (or its equivalent) under
section 484(d)(4) of the HEA and § 668.32(e)(5) is a period
when the student has yet to meet this statutory requirement or
standard. We recognize that this inability to “go back” and
establish eligibility may be fiscally problematic for some
students or institutions, but we continue to believe that until a
student's eligibility is established, the student is ineligible for
title IV, HEA funds. That said, in cases where a student is
enrolled in a program that has several modules within a
payment period that are independently completed and graded
prior to the end of that payment period, there could be a
situation where a student successfully completes a module and
earns six or more credits (or the equivalent) prior to the end of
the payment period. In this scenario, an institution could
make a determination of the cost of attendance for the
remaining modules in the payment period, and award and
disburse title IV, HEA funds for those remaining credits, based
upon the limited cost of attendance in the payment period
after the student has successfully completed the initial six
credits.
Changes: None.
Comment: One commenter stated that he would encourage
other institutions to establish admissions policies to prohibit
the use of the earned credit ATB option reflected in §
668.32(e)(5) because of the unique complications created with
this provision and State licensing boards. Specifically, the
commenter expressed concern that students who do not
complete the six credit hours (or their equivalent) under this
option may not be able to obtain title IV, HEA program
assistance to pay for their coursework.
Discussion: As noted earlier in this preamble, we recognize
that the ATB option reflected in section 484(d)(4) of the HEA
and § 668.32(e)(5) may not meet the needs of all students, or
all institutions, and is simply one method by which a student
can show that he or she has the ability to benefit from a degree
or certificate program of study and, therefore, is eligible to
receive title IV, HEA program assistance.
Changes: None.
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Subpart J—Approval
of Independently
Administered Tests;
Specification of
Passing Score;
Approval of State
Process
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Special Definitions
(§ 668.142)
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Comment: In response to the Department's request in the
NPRM for feedback on the appropriateness of permitting
specified test administrators in the assessment center to train
other individuals at that assessment center to administer ATB
tests, several commenters suggested that it would not be
advisable or appropriate for senior test administrators in an
assessment center to perform the required training of other
individuals at the assessment center for the administration of
approved ATB tests.
Discussion: The Department agrees that, consistent with the
definition of the term test administrator, an individual must
be certified by the test publisher or State, as applicable, to
administer tests under subpart J of part 668 in accordance
with the instructions provided by the test publisher or State.
The only practical way for a test publisher or State to make a
determination of whether an individual has the necessary
training required in order to certify the individual as a test
administrator is to provide the training that will insure that
test administrators are cognizant of the test publisher's or
State's written requirements. To emphasize and add clarity
that the test administrator is required to be certified by the test
publisher or State, as applicable, when a test is given at an
assessment center by a test administrator who is an employee
of the center, we have modified § 668.151(b)(1) by adding the
word certified prior to the reference to test administrator.
Changes: We have amended § 668.151(b)(1) by adding the
word “certified” prior to the reference to test administrator.
Comment: One commenter objected to the increased burden
associated with the proposed requirement that test
administrators at assessment centers be certified by the test
publisher or State, as applicable.
Discussion: During the negotiations, the Department was told
about the high incidence of staff turnover at assessment
centers. One test publisher participating in the negotiations
expressed concern that new staff have been trained to
administer the approved ATB tests by other members of the
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assessment center staff and, as a result, were providing ATB
tests without being properly certified by the test publisher or
State. We agree that in order to meet the new definition of the
term test administrator in § 668.142 and to meet the
increased standards of training, knowledge, skills and
integrity, that it is vital for all test administrators to be
certified in order to administer an approved ATB test
consistent with the requirements of subpart J of part 668 and
the written instructions of the test provider. Moreover, we
believe that the increase in burden falls mainly upon the test
publisher or the State, rather than the institution.
Changes: None.
Comment: One commenter suggested that we clarify the
definition of the term independent test administrator by
modifying it to clarify that an independent test administrator
cannot have any current or prior financial interest in the
institution, but that he or she may earn fees for properly
administering an approved ATB test at that institution.
Another commenter suggested that the definition of the term
test administrator be expanded to include test proctors.
Discussion: Section 668.142, in pertinent part, defines an
independent test administrator as a test administrator who
administers tests at a location other than an assessment center
and who has no current or prior financial or ownership
interest in the institution, its affiliates, or its parent
corporation, other than the fees earned for administering
approved ATB tests through an agreement with the test
publisher or State, and has no controlling interest in any other
institution and has no controlling interest in any other
institution. We agree that independent test administrators
may obtain a fee for the administration of ATB tests generally
through a written contract between the test publisher or State
and the test administrator. In order to clarify this single type
of allowable financial interest, we have made a change to the
language in this definition.
On the matter of expanding the definition of the term test
administrator to include test proctors, we disagree with this
suggestion. The reason we disagree with the commenter's
suggestion is that subpart J of part 668 specifically restricts
the administration of ATB tests to test administrators certified
by the test publisher or State to administer their tests, as
defined in the agreement between the Secretary and the test
publisher or State, as applicable. We believe it would be
confusing to add test proctors to the definition of a test
administrator because only certified test administrators can
administer ATB tests for title IV, HEA program purposes. We
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believe certification is an appropriate requirement because it
insures that the approved tests are administered by trained,
skilled, and knowledgeable professions.
Changes: We have amended the definition of the term
independent test administrator by clarifying that an
independent test administrator must have no current or prior
financial or ownership interest in the institution, its affiliates,
or its parent corporation, other than the fees earned through
the agreement an independent test administrator has with the
test publisher or State to administer the test.
Application for Test
Approval (§
668.144)
Comment: One commenter strongly supported the proposed
Back to Top
group to be a contemporary sample that is representative of
change in the language regarding the norming group in §§
668.144(c)(11)(iv)(B) and 668.146(c)(4)(ii) that requires the
the population of persons who have earned a high school
diploma in the United States.
Discussion: The statute provides that a student who does not
have a high school diploma or its equivalent can become
eligible for title IV, HEA program assistance if the student
takes an independently administered examination and
achieves the score specified by the Secretary that demonstrates
that the student has the ability to benefit from the training
being offered. As an alternative to obtaining a high school
diploma, it is appropriate that the normative group used to
establish the relative placement of the test-taker's results
should be comprised of U.S. high school graduates rather than
a group of persons who are beyond the usual age of
compulsory school attendance in the United States. However,
we take this opportunity to remind institutions that a
fundamental component of the definition of the term
institution of higher education requires that an eligible and
participating institution may admit as regular students only
persons who have a high school diploma (or have the
recognized equivalent) or are beyond the age of compulsory
school attendance. Therefore, it is clear that for the purpose of
establishing title IV, HEA program eligibility, approved ATB
tests may only be provided to students who are beyond the age
of compulsory school attendance.
Changes: None.
Comment: Several commenters supported the proposal to
include in the test publisher's or State's screening of potential
test administrators, their evaluation of a test administrator's
integrity. In response to our request in the NPRM for feedback
about how a test publisher or a State will determine—in
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accordance with §§ 668.144(c)(16)(i) and 668.144(d)(7)(i)—
that a test administrator has the integrity necessary to
administer tests, we received a number of suggestions. These
included the following—
Requiring a prospective test administrator to sign, under
penalty of perjury, an application indicating whether he
or she had ever been convicted of fraud, breach of
fiduciary responsibilities, or other illegal conduct
involving title IV, HEA programs;
Including a question on the test administrator's
application asking whether the applicant has ever been
convicted of a crime and, if the answer to this question is
“yes”, requiring the applicant to provide additional
details;
Including a question on the test administer application
asking whether the applicant has ever worked at an
institution of higher education, and if the answer to this
question is “yes”, requiring the applicant to provide
additional details; and
Requiring test publishers and States to perform
fingerprinting and background checks, including a check
for being included in any lawsuit, as well as, checking for
arrests and convictions, for each test administer.
Discussion: We appreciate the commenters' suggestions
regarding ways test publishers and States can evaluate
whether a test administrator has the integrity necessary to
administer ATB tests. While test publishers and States can
adopt any of the methods proposed by the commenters, we do
not believe it is appropriate to require all test publishers and
States to use those methods to evaluate test administrator
integrity. Rather, we believe § 668.144, as proposed, will
provide test publishers and States with the flexibility they need
to determine that the test administrator will have the
necessary training, knowledge, skills and integrity to test
students in accordance with subpart J of part 668 and the
requirements of the test administration technical manual.
Under § 668.144, test publishers and States are required to
disclose how they will go about making these determinations.
When evaluating the information provided by test publishers
and States, we will be looking at their processes and to what
extent information collected by the test publisher or State
supports their determination of whether a prospective test
administrator can demonstrate his or her training, knowledge,
skills and integrity. In addition, we will compare the
requirements in the test administration technical manual to
the other provisions in § 668.144 that require test
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administrators to have both the ability and facilities to keep
the ATB tests secure against disclosure or release and how
those issues are explained to prospective test administrators,
how any monitoring may be achieved to insure that the tests
are being protected.
Changes: None.
Comment: One commenter recommended that test publishers
and States should not be required to disclose any proprietary
information, such as test anomaly analysis, to the Department
due to the proprietary nature of the study techniques. The
commenter stated that, if the Department decides that test
publishers and States must provide their test anomaly study
procedures, the Department should provide assurances that
the information will be kept confidential.
Discussion: It is important that test publishers and States
provide the
Department with their test anomaly analysis
because the Department needs to understand the specific test
anomaly analysis methodology employed by each test
publisher or State, as applicable, to insure that they have
established a robust process and procedures to identify
potential test anomalies, methods to investigate test
anomalies, due process in the investigation of these anomalies,
as well as, the types of corrective action plans and the means of
implementation of the corrective action plans, up to and
including the decertification of test administrators. Because
the Department agrees that test anomaly analyses may be
proprietary, the Department will not release this information
to the public and will otherwise treat the information as
confidential.
Changes: None.
Comment: One commenter suggested that the Department
define the term “test irregularities” and explain the distinction
between test irregularities and test score irregularities.
Discussion: An ATB test irregularity occurs when the ATB test
is administered in a manner that does not conform to the
established rules for test administration. An ATB test score
irregularity is one type of ATB test irregularity. For example,
improper seating that would allow test-takers to be so close to
one another that each test-taker could observe the test answer
sheets or test answers on another test-taker's computer screen
is an example of an ATB test score irregularity. We agree with
the commenter that a clear understanding of proper test
administration is needed to prevent test irregularities. For this
reason, we have added a definition of the term ATB test
irregularity to § 668.142. In addition, test publishers and
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States include instructions to the ATB test administrator in
their test administration manuals. Section § 668.144(c)(12)
requires test publishers to include in their applications the
manual they provide to test administrators. We believe it is
appropriate to also require States to include their test manuals
in their applications. Accordingly, we have added a new §
668.144(d)(11) to require States to include, as part of its
submission to the Secretary, the State's manual for test
administration.
Additionally, we have determined that in proposed §
668.144(c)(10), regarding test-taking time determinations, our
reference to § 668.146(b)(2) was imprecise. Section 668.146(b)
(2) relates only to sampling the major content domains, not to
sampling the major content domains with regard to test-taking
time. Therefore, we have revised this paragraph to refer to §
668.146(b)(3), which includes as a requirement for test
approval, the appropriate test-taking time to permit adequate
sampling of the major content domains. We have also added a
provision to specify that a test publisher may include with its
application a description of the manner in which test-taking
time was determined in relation to the other requirements in §
668.146(b) to provide the flexibility for test publishers to
include a more comprehensive description of the way in which
test-taking time was determined.
Changes: In § 668.142, we have defined an ATB test
irregularity as an irregularity that results from an ATB test
being administered in a manner that does not conform to the
established rules for test administration consistent with the
provisions of subpart J and the test administrator's manual.
We also have added new § 668.144(d)(12) to include a
requirement that a State, in its submission of an ATB test for
approval, must include a manual provided to test
administrators containing the procedures and instructions for
test security and administration.
In § 668.144(c)(10), we have made a technical correction to
specifically reference § 668.146(b)(3) rather than § 668.146(b)
(2) and added a provision to specify that a test publisher may
include with its application a description of the manner in
which test-taking time was determined in relation to the other
requirements in § 668.146(b).
Test Approval
Procedures (§
668.145)
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Comment: One commenter requested that the Department
provide examples of a substantial change that would cause the
Department to revoke its approval consistent with proposed §
668.145(d)(1).
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Discussion: Section 668.144 lists the components of an
application that test publishers and States must submit for the
Secretary's approval of an ATB test as an alternative to having
a high school diploma or its recognized equivalent. The list of
required items for submission includes a summary of the
precise editions, forms, levels, and sub-tests for which
approval is being sought. In addition, we require that a
minimum of two or more secure, equated, alternate forms of
the test must be submitted. Moreover, the regulations require
that if a test is being submitted as a revision of a previously
approved test, the test publisher or State, as applicable, must
also submit an analysis of the revisions, including the reasons
for the revisions, the implications of the revisions for the
comparability of scores on the currently approved test to
scores on the revised test, and the data from validity studies of
the revised test undertaken subsequent to the revisions. Taken
together, the regulations require the test publisher and the
State to submit their tests, including all forms or editions of
those tests, for approval. If the approved tests are revised, we
have addressed how revised tests along with the supportive
data must be submitted for approval under §§ 668.144(c)(9)
and (d)(12).
Examples of substantive changes are (1) when a previously
approved ATB test in a pencil and paper format is converted to
a computerized test, and (2) when a previously approved ATB
test in a pencil and paper format is converted to a voice
recorded format. In each of these examples, the test publisher
or State is required to submit the list of required submissions
above.
An example of a non-substantive change is a correction of a
typographical error. We will not require analysis of and
submission for approval for non-substantive changes;
however, it is important to note that if these changes are
documented and shared with the Secretary, we would be able
to address inquiries or comments from the public regarding
these changes. Recognizing that we cannot provide an
exhaustive list that would cover every situation, we encourage
test developers to contact us if they have questions about
changes to an approved test and whether the proposed
changes would be considered substantive or non-substantive.
Changes: None.
Criteria for
Approving Tests (§
668.146)
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Comment: One commenter noted that the 1985 American
Psychological Association (APA) edition of the Standards for
Educational and Psychological Testing (Standards) addressed
test construction in terms of meeting “primary, secondary and
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conditional” standards. The commenter pointed out that the
1999 revised edition of the Standards no longer makes these
distinctions and instead requires test developers and users to
consider all the standards before operational use and does not
continue the practice of designating levels of importance. As a
result, the commenter suggested that we remove the reference
to the words “meeting all primary and applicable conditional
and secondary standards for test construction” in proposed in
§ 668.146(b)(6) because they are confusing. The commenter
suggested—as an alternative—that we adopt language that the
Department used in 34 CFR 462.13(c)(1) (i.e.,“The
test must
meet all applicable and feasible standards for test construction
and validity provided in the 1999 edition of the Standards for
Educational and Psychological Testing”).
Discussion: As discussed in the 1999 edition of the Standards,
each standard should be considered to determine its
applicability to the test being constructed. There may be
reasons why a particular standard cannot be adopted; for
example, if the test in question is relatively new, it may not be
possible to have sufficient data for a complete analysis. As a
result of the information in the 1999 edition of the Standards,
we have made a change to the proposed language in §
668.146(b)(6) to reflect that tests must meet all applicable
standards. However, we do not believe that we should include
all “feasible” standards in the regulatory language. We believe
that where a standard is not feasible, it would also not be
applicable, as provided in the example, thus the inclusion of
the word “feasible” is duplicative.
Changes: We have revised § 668.146(b)(6) by eliminating
outdated references to primary, secondary and conditional
standards to make the provision consistent with the language
used in the most recent edition of the Standards.
Additional Criteria
for the Approval of
Certain Tests (§
668.148)
Back to Top
Comment: One commenter indicated that their program of
instruction is taught in Spanish to non-English speakers with
an English as a Second Language (ESL) component. The
commenter asked the Department for guidance for
populations where there is no approved ATB test in the native
language of the students.
Discussion: Under § 668.148, if a program is taught in a
foreign language, a test in that foreign language would need to
satisfy the conditions for approval under §§ 668.146 and
668.148. Absent an approved ATB test, students without a
high school diploma or its equivalent could meet the
alternative under proposed § 668.32(e)(5), whereby a student
has been determined to have the ability to benefit from the
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education or training offered by the institution based upon the
satisfactory completion of 6 semester hours, 6 quarter hours,
or 225 clock hours that are applicable toward a degree or
certificate offered by that institution where the hours were
earned. If no test is reasonably available for students whose
native language is not English and who are not fluent in
English, institutions will no longer be able to use any test that
has not been previously rejected for approval by the Secretary.
We proposed this regulatory change because we recognized
that, in the last 15 years, no ATB test in a foreign language has
been submitted for approval. Therefore, under the current
ATB regulations, any test in a foreign language became an
approved ATB test regardless of whether it measured basic
verbal and quantitative skills and general learned abilities,
whether the passing scores related to the passing scores of
other recent high school graduates, or whether these tests were
developed in accordance with the APA standards. We believe
that the removal of this overly broad exception from the
current regulations will improve compliance and works in
concert with the change reflected in § 668.32(e)(5), which
allows for an exception where ability to benefit can be
measured against a standard (the successful earning of six
credits toward a degree or certificate program at that
institution).
Changes: None.
Agreement Between
the Secretary and a
Test Publisher or a
State (§ 668.150)
Back to Top
Comment: Under proposed § 668.150(b)(3)(ii), the agreement
between the Secretary and a test publisher or a State requires
that certified test administrators have the ability and facilities
to keep ATB tests secure. One commenter stated that it does
not favor storage of ATB tests anywhere other than at the
institution. Another commenter offered to work with the
Department and other test publishers to develop guidelines
that will improve ATB test security.
Discussion: While ATB tests can be used for more than title IV,
student eligibility determination purposes (such as for other
assessment purposes), institutions, assessment center staff, as
well as, independent test administrators will continue to have
access to these tests. Given this reality, we acknowledge that
securing tests and preventing test disclosure or release is
difficult. We established the requirement in § 668.150(b)(3)(ii)
in order to balance the need for legitimate access and security.
We appreciate the commenter's offer to work with the
Department and other test publishers to develop guidelines to
improve test security.
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Changes: None.
Comment: One commenter supported the requirement in
proposed § 668.150(b)(3)(iii) that only allows test
administrators to be certified when they have not been
decertified within the last three years by any test publisher.
This commenter inquired how, other than through selfreporting, a test publisher or State would have the information
necessary to meet this requirement. The commenter also
asked if we intend to develop, implement, and maintain a
database of decertified test administrators.
Discussion: Under proposed § 668.144(c)(16) and (d)(7), a test
publisher and a State, respectively, must describe its test
administrator certification process. The Department plans to
evaluate each of the test publisher's or State's certification
plans to determine how they will obtain the information about
test administrator decertifications by other test publishers or
States. Under proposed § 668.150(b)(2), each test
administrator will be required to provide to the publisher or
State, as appropriate, a certification statement to indicate that
the test administrator is not currently decertified and that the
test administrator will notify the test publisher or State
immediately if any other test publisher or State decertifies the
test administrator. At this time, the Department does not plan
to establish a list of all decertified test administrators.
Changes: None.
Comment: One commenter indicated that proposed §
668.150(b)(4), which provides that test administrators must
be decertified under certain circumstances, will require States
and test publishers to take great care when analyzing the facts
prior to decertifying any test administrator. Section
668.150(b)(4) states that the agreement between the Secretary
and a test publisher or a State must require the decertification
of a test administrator who (a) Fails to administer the test in
accordance with the test publisher's or State's requirements,
(b) has not kept the test secure, (c) has compromised the
integrity of the testing process, or (d) violated the test
administration requirements in § 668.151.
One commenter also expressed concern that proposed §
668.150(b)(4) seems to remove the test publisher's or State's
discretion about how to address certain violations of test
administration rules. That commenter asked whether other
corrective action is still a possible outcome, or whether
decertification for any violation of the regulations or the test
publisher's or State's test administration requirements is the
only permissible outcome.
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Discussion: We understand the comment regarding
decertification of test administrators and that test publishers
and States will need to take care when carrying out their
obligations under these regulations. For example, we expect
that a test publisher or State would provide an administrator
an opportunity to respond to any finding
warranting
decertification, including any finding based on inferences from
the analysis required under § 668.151(b)(13). Regarding the
inquiry whether § 668.151(b)(4) removes discretion and
requires decertification without the possibility of other
corrective action, we note that States and publishers are
required to establish appropriate test instructions that ensure
the integrity of the test and compliance with the requirements
of the regulations. Having established the appropriate
instructions, we do expect States and test publishers to
decertify test administrators that fail to follow the test
instructions or for any of the other reasons specified in §
668.151(b)(4). For example, we expect a test publisher or State
to decertify a test administrator whenever it finds that a
certified test administrator—
Alters or falsifies answers or scores;
Provides a test-taker with answers to the ATB test in
order to improve the test-taker's score; or
Allows a test-taker—other than a test-taker who is a
person with a documented disability—extra time beyond
the approved amount time as provided by the test
publisher or State.
In situations where there is no evidence or basis to conclude
that one or more of the four reasons specified in § 668.151(b)
(4) has occurred, but there are other irregularities of another or
lesser nature, we would expect test publishers and States to
take the appropriate corrective action to protect the proper
administration of its ATB test.
Changes: None.
Comment: Several commenters expressed concern about §
668.150(b)(5), which requires the test publisher or State to
reevaluate the qualifications of a test administrator who has
been decertified by another test publisher or State, even when
the test publisher or State lacks any evidence of its own that
the test administrator has performed in a manner inconsistent
with the requirements in subpart J of part 668 or as required
in the test administration manual.
Discussion: Under § 668.150(b)(2), a test administrator is
required to certify that he or she is not currently decertified
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and, in the event he or she subsequently is decertified, that he
or she will immediately notify all other test publishers and
States who have provided their certification. To the extent that
a test administrator, who is certified by test publishers A, B,
and C, as well as States 1 and 2, is decertified by State 1, the
test administrator is required to immediately notify the other
testing organizations and make them aware that the test
administrator has been decertified by State 1. Upon receipt of
such notification, under § 668.150(b)(5), each of the other test
publishers and the other State will reevaluate the
qualifications of that test administrator. While the other
testing organizations may not know the factual basis for the
decertification by State 1, § 668.150(b)(5) requires the other
testing organizations to examine this test administrator's
work. Based upon the testing organization's analysis,
additional professional scrutiny, and the facts as a result of
their reevaluation, the other testing organizations must make a
determination of whether to continue the test administrator's
certification or to decertify the test administrator for cause.
The fact that a test administrator has been decertified by one
testing entity is sufficient cause to require that all other test
publishers or States be alerted both to the fact that there was a
problem of sufficient magnitude to require decertification by
the other test publisher or State, and that they need to make
an additional review and subsequent determination of whether
testing problems could be occurring with the administration of
their ATB test.
Changes: None.
Comment: One commenter recommended that we modify
proposed § 668.150(b)(5) to provide that test publishers and
States are not liable for damages in the event a test
administrator is decertified wrongly. This commenter
indicated that proposed § 668.150(b)(6), which requires that
the test publisher or State notify the Secretary and institutions
immediately after decertifying a test administrator, is overly
broad and that test publishers and States should be able to end
their relationship with a test administrator for any reason.
Discussion: We cannot indemnify test publishers or States for
actions that a former employee may take against a test
publisher or State. This is one of the reasons it is so important
to strengthen these regulations including by requiring that, as
a part of the test developer's (a test publisher or a State)
submission, it describe in detail the test administrator
certification process—specifically how the test developer will
determine that the test administrator will have the training,
knowledge, skills and integrity to administer the test
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consistent with the regulations and the requirements as
established by the test publisher or the State. Because the
current regulations already require the decertification of test
administrators who fail to give the test in accordance with the
test publisher's instructions, who fail to secure the tests, who
compromise the test, or who violate the provisions of § 668.151
(Administration of tests), we do not anticipate that the
changes to subpart J of part 668 reflected in these final
regulations will cause an increase in legal actions brought by
former test administrators. However, we do expect that these
regulations will cause test publishers and States to strengthen
their procedures and training to ensure that only properly
trained test administrators will be certified by test publishers
and States.
Notification of the Secretary and institutions when a test
administrator is decertified is required for a variety of
compliance and other issues. The Secretary needs to know to
what extent a test publisher or State has a problem causing the
decertification of test administrators. Recent GAO and OIG
reports have reported a variety of compliance concerns around
ATB testing. The Secretary has a responsibility to protect
students, prospective students, institutions and taxpayers.
Through these requirements, one new compliance metric will
be the number of decertifications by test publishers or States,
which the Secretary will monitor. Notification of any
decertification by a test publisher or State to the institution is
required due to the fact that institutions depend on the test
publisher or State to provide certified test administrators and,
therefore, are completely reliant upon test publishers and
States to notify the institution of when a test administrator is
no longer certified and must not be administering tests to
students for title IV, HEA student eligibility determination
purposes.
Changes: None.
Comment: One commenter suggested that when a test
publisher or State suspends a test administrator while it
conducts an investigation into a possible violation of its
requirements or the regulations, the test publisher or State
should not have to immediately report the suspension to the
Secretary and the institution. The commenter also suggested
that there should be a time limit after which notification by the
test publisher or State to the Secretary and the institutions
would not be required.
Discussion: Proposed § 668.150(b)(6) requires the immediate
notification of the Secretary and all institutions where the test
administrator administered tests upon decertification. We
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assume that in cases of suspected test administrator violations,
a suspension period will occur while fact-finding, analysis, and
ultimately a determination will be made to either continue the
test
administrator's certification or to decertify the test
administrator. The notification requirement reflected in §
668.150(b)(6) only applies immediately after a test
administrator is decertified—not during the suspension
period. Notification of the Secretary or others of a test
administrator's suspended status is voluntary, but is an action
that the Department supports.
The commenter suggested that this notification requirement be
waived after a certain appropriate period of time. We do not
agree. Consistent with the provisions of §§ 682.402(e) and
685.212(e), students may have their loan debt obligations
discharged under a false certification discharge if the school
certified the student's eligibility for a FFEL or a William D.
Ford Federal Direct Loan on the basis of ability to benefit from
its training and the student did not meet the applicable
requirements of subpart J of part 668. Because these loans
generally have a 10-year repayment schedule (and may have
repayment plans under which repayment schedules can be
extended to 25 or more years), we do not agree to limit the
requirement to notify to the Secretary and institutions.
Changes: None.
Comment: One commenter strongly supported proposed §
668.150(b)(7), which requires that all test results administered
by a test administrator who the test publisher or State
decertifies be reviewed and that a determination be made
about which tests were improperly administered. Upon a
determination of which tests had been improperly
administered, the test publisher or State must then
immediately notify the affected institutions, affected students
and affected prospective students. This commenter suggested
that we revise this provision to require that the test publisher
or State notify all students tested by the decertified test
administrator.
Another commenter suggested that we add a time limit to §
668.150(b)(7)(i) so that test publishers and States that
decertify a test administrator are only required to review tests
administered by the decertified administrator during a
specified period of time.
Discussion: Under proposed § 668.150(b)(7)(ii), when a
determination of improper test administration is made, the
test publisher or State must provide notification to all affected
institutions and students or prospective students. Under §
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668.150(b)(7)(iii), the test publisher or State must also provide
a report to the Secretary on the results of the review of the
decertified test administrator's previously administered tests
that may have been improperly administered. When a
determination is made that tests were improperly
administered, the affected entities would include institutions,
students, and prospective students affected by those tests that
were improperly administered. Under § 668.150(b)(7),
notifications to those affected entities are required. We believe
that these notification and reporting requirements are
adequate to inform all affected parties, including students and
prospective students. We do not believe it is necessary to
notify a student who took a test administered by a test
administrator who was subsequently decertified when there is
no evidence that the particular test the student took was
improperly administered.
Under proposed § 668.150(b)(7), if a test administrator was
certified over a long number of years, test publishers and
States potentially would be required to review many years'
worth of previously administered ATB tests because, as
proposed, this regulatory requirement included no limit on
how far back test publishers and States would need to go when
reviewing tests previously administered by a decertified test
administrator. We believe that the burden on test publishers
and States associated with such an extensive review should be
balanced against the significant student loan debt that
students tested by the decertified test administrator may have
incurred. For this reason, we are modifying the language in
proposed § 668.150(b)(7)(i) to limit the period of the review to
the five-year period prior the date of decertification. We
believe that a five-year period is reasonable for the following
reasons. First, we are decreasing the period of time for test
publishers and States to conduct their test data anomaly
studies from 3 years to 18 months. These studies, which are
designed, in part, to analyze if there are ATB test irregularities,
will be conducted more frequently and can be used to identify
possible instances of improper test administration. Second, we
believe that a longer review period will increase the likelihood
that the student notification efforts of test publishers and
States (in the event that their review reveals that previously
administered tests were improperly administered) will be
ineffective, in part, due to the low probability that the student
address information that a test publisher or State obtains
when the student takes the test will remain accurate over this
period of the review. Finally, we strongly recommend that test
publishers and States consider additional disclosures to
students asking that they update their address information
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with test publishers and States over time, in order for test
publishers and States to provide students and prospective
students with potential future notifications that could reduce
their future title IV, student loan indebtedness.
Changes: We have revised § 668.150(b)(7)(i) to indicate that
the period of the review of all the test results of the tests
administered by a decertified test administrator is 5 years
preceding the date of decertification.
Comment: One commenter, who expressed support for the
proposed change reflected in § 668.150(b)(13) decreasing the
timeframe from 3 years to 18 months for test publishers and
States to analyze ATB test scores to determine whether the test
scores and data produce any irregular patterns, suggested that
that the Department also consider a separate metric for test
administrators who administer large numbers of ATB test
within an 18 month period.
Discussion: We appreciate the recommendation and
acknowledge that test publishers and States are free to adopt
such a suggestion for test administrators who are providing
large numbers of ATB test administrations in a short period of
time. As some test publishers have pointed out, test publishers
have everything to gain from ensuring that their ATB tests are
properly administered in accordance with the regulations and
their test administration manual. To the extent that there are
high volume test administrators, test publishers and States can
best protect their tests by developing processes to help them to
determine early whether these high volume test administrators
are in compliance.
Changes: None.
Comment: One commenter suggested that the Department
consider a modification to the language in § 668.150(b)(13) to
change the emphasis from an analysis of the test scores to an
analysis of the test data.
Discussion: The purpose of proposed § 668.150(b)(13) (in
concert with proposed §§ 668.144(c)(17) and (d)(8), which
require test publishers and States, as applicable, to explain
their methodology for identifying test irregularities) is to
require test publishers and States to collect and analyze test
data, to determine whether the test scores and data produce
any irregular patterns that raise an inference that the tests
were not being properly administered, and to provide the
Secretary with a copy of the test anomaly analysis. We
acknowledge that this type of analysis is broader than just
examining the test outcomes, i.e. the test scores. Because this
type of item analysis, which can yield statistical irregularities,
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goes beyond test score results, we have modified the proposed
language accordingly.
Changes: We have modified § 668.150(b)(13) so that it refers
to “test data of students who take the test” and not to “test
scores of students who take the test” to determine whether the
test data (rather than “the test scores and data”) produce any
irregular pattern that raises an inference that the tests were
not being properly administered.
Comment: One commenter suggested that the Department
modify proposed § 668.150(b)(14) to require that any request
for information by the Secretary or other listed agencies and
entities be in writing.
Discussion: Nothing in the regulations would prevent the test
publisher or State from asking the entities listed in §
668.150(b)(14) to request the information in writing, and from
implementing other safeguards to protect the security and
confidentiality of the data.
Changes: None.
Comment: One commenter stated that § 668.150(b)(16), as
proposed, is ambiguous. The commenter suggested that we
delete the word “other,” as it modifies “criminal misconduct,”
from this section.
Discussion: Upon further review, we have determined that
alternative language that specifically provides for both civil
and criminal fraud would clarify what we mean in this
regulatory provision. The purpose of § 668.150(b)(16) is to
require test publishers and States to immediately report any
credible information indicating that a test administrator or
institution may have engaged in fraud or other criminal
misconduct. We intend for test publishers and States to report
suspected fraud or misconduct without requiring them to
ascertain whether the conduct constitutes civil fraud, criminal
fraud or “other criminal misconduct.”
Changes: We have revised § 668.150(b)(16) to require that the
agreement between a test publisher or a State, as applicable,
and the Secretary must provide that the test publisher or the
State, as applicable, must immediately contact the Office of the
Inspector General of the Department of Education if the test
publisher or the State finds any credible information
indicating that a test administrator or institution has engaged
in civil or criminal fraud or other misconduct.
Comment: One commenter expressed general support for
proposed § 668.150(b)(17), which requires test administrators
who provide an ATB test to an individual with a disability who
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requires an accommodation, to report to the test publisher or
State both the disability and the accommodation. However,
the commenter recommended that the Department provide
clarification on how test publishers and States can exchange
this information in a manner that would be compliant with the
Health Insurance Portability and Accountability Act (HIPAA).
Additionally, the commenter requested an explanation of the
Department's position on distinguishing between an
accommodation provided for an individual with a temporary
impairment and an accommodation required by a person with
a permanent or long-term disability.
Discussion: HIPAA is administered by the U.S. Department of
Health and Human Services and the Department of Education
does not provide guidance on how entities should comply with
another agency's requirements. However, it is our expectation
that test administrators, test publishers and States will
implement the requirement reflected in § 668.150(b)(17)
consistent with all other applicable Federal statutes and their
implementing regulations.
With regard to the comment requesting an explanation of the
Department's position on the differences between
accommodations for test-takers with temporary impairments
and accommodations for test-takers with permanent or longterm disabilities, we note that the regulations do not
distinguish between types of accommodations. However, we
acknowledge that test-takers may require accommodations for
either temporary impairments or for individuals with
disabilities. [1]
The following two examples are provided:
Example 1 (Temporary Impairment). If an approved ATB test
is provided via paper and pencil and the test-taker, who is
normally right-handed, has a broken right hand and, as a
result, must write with his or her left hand, the test
administrator must provide the test-taker an accommodation
in accordance with the test publisher or State's technical
manual for test administration. So, in this case, if the technical
manual indicates that under a temporary impairment, such as,
but not limited to, a broken writing hand, the test
administrator should allow the test-taker an additional “X”
minutes to complete the test, the test administrator must allow
the test-taker with the broken writing hand an extra “X”
minutes to complete the test.
Example 2 (Disability). If an approved ATB test is provided via
paper and pencil and the test-taker is an individual with a
disability, such as blindness. To the extent that the test
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publisher or State has addressed in the technical manual
consistent with the requirements of § 668.144(c)(11)(vii) and
provided additional guidance on the interpretation of scores
resulting from any modifications of the test for individuals
with disabilities, for example, the use of a previously approved
audio recorded version would be permissible. In this example,
there may or may not be scoring implications, however, an
appropriate accommodation as provided in the technical
manual is allowable as approved under this subpart.
Absent any instructions in the technical manual about
accommodations for individuals with disabilities or
individuals with temporary impairments, the test
administrator does not have the authority to create or provide
an accommodation other than what is provided in § 668.149.
Historically, test publishers have addressed types of
accommodations available to test administrators in their test
administration technical manual, which the test publisher or
State provides to the Secretary as part of its test submission.
Once the test is approved by the Secretary, the
accommodations indicated in the test administration technical
manual are the approved accommodations for the test. In
addition, subsequent to the Secretary's initial approval of an
ATB test, some test publishers, consistent with the provisions
of § 668.144(c)(9), have developed large-print versions, braille
versions, and audio-recorded versions of their previouslyapproved tests and submitted the alternative versions along
with the requisite analysis of the revisions for their
comparability of scores to the previously approved test, as well
as the data on the validity studies of the revised or alternative
version of the previously approved test. Once approved, and as
published in the Federal Register, these alternative versions
of the previously approved test would provide for certain
accommodations that may be required by individuals with
disabilities.
Changes: None.
Administration of
Tests (§ 668.151)
Back to Top
Comment: One commenter provided a number of suggestions
regarding test administration security, including requiring that
(1) test publishers contact the Department when tests are
being used for ATB and non-ATB purposes, (2) different
versions of the test be used for different purposes so that one
version is used exclusively for ATB purposes, (3) ATB tests
only be shipped to test administrators and not to institutions,
and (4) ATB tests be locked in an area that cannot be accessed
by non-certified test administrators.
Discussion: Many ATB tests that have been submitted to the
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Secretary and subsequently approved for title IV, HEA student
eligibility purposes are also used for general academic
placement purposes not related to ATB. Regarding the
suggestion that test administrators report to the Department
when a test is used for ATB purposes, beginning with the 20112012 award year, we will begin collecting information on the
use of an ATB test for each student who receives title IV, HEA
funds; therefore test administrators will not have to provide
the information to us. In terms of requiring that approved ATB
tests must be used exclusively for this single purpose, that
would require a statutory change. While it has been suggested
that we revise the regulations to allow ATB tests only be
shipped to test administrators and not to institutions, we
believe that this is not feasible given that ATB tests are used
both for title IV, HEA eligibility and non-title IV purposes,
such as for course placement purposes. Finally, while it may be
possible that at the discretion of the institution's assessment
center (or as a result of an agreement between the test
publisher or State and the institution) that ATB tests be locked
in an area only accessible by certified test administrators, this
may be impractical since these tests are used for non-title IV
eligibility purposes.
Changes: None.
Comment: A commenter indicated that for computer-based
tests, institutions maintain the associated system components
on their computers, so test administrators (particularly
independent test administrators) cannot be held responsible
for maintaining the security of these types of tests, other than
during the test administration.
For paper-and-pencil tests, the commenter expressed strong
concerns regarding independent test administrators being
held responsible for storing test materials. The commenter
stated that independent test administrators often do not have
access to secure storage, other than at the campuses where
they administer the test. Use of their home or automobile for
storage and transportation to test sites is clearly unacceptable
for security. Institutions typically have a secure location (a
locked facility to which only the test administrator and
possibly a select few individuals have a key) where materials
can be stored. In addition, many institutions use the same test
forms for ATB purposes and other purposes, and thus would
already have copies of the test forms in storage at the
institution. The commenter argued that maintaining test
forms at the institution while emphasizing the chain of
custody, under written agreements, will better contribute to
the goal of keeping test forms secure.
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Discussion: We disagree. Proposed § 668.144(c)(16) and (d)(7)
require test publishers and States, respectively, to ensure not
only that the test administrator has the training, knowledge,
skill and integrity to test students in accordance with the
requirements of this subpart, and the requirements of the test
administration technical manual, but also, that the test
administrator has the ability and facilities to keep the ATB
tests secure against disclosure or release. We believe that these
requirements are reasonable, and prudent, and will help
ensure the integrity of ATB tests. While at this time, we are not
prescribing how test publishers or States must make these
determinations about their test administrators, we expect that
they will base their determinations on the measures taken by
the test administrator to protect the security of the tests. For
example, one could envision a test administrator satisfying
this requirement by having a secure safe in the assessment
center where only certified test administrators had the key or
combination to obtain the tests. In the case of an independent
test administrator, one could envision the test administrator
satisfying the requirement by maintaining the tests in a
mobile, portable safe or some other secure device. As these
examples illustrate, test publishers and States will be required
to distinguish between secure and non-secure methods of
storing ATB tests that limit access and protect against
unintended release or disclosure if these tests are going to
continue to be used for ATB purposes, otherwise the Secretary
will consider that the test is improperly administered.
Changes: None.
Administration of
Tests for Individuals
Whose Native
Language Is Not
English or for
Individuals With
Disabilities (§
668.153)
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Comment: One commenter noted that if a non-English
speaking student is in a program of study which is taught in
the student's native language and the program also has an ESL
component or that at least a portion of the program will be
taught in English, there are two aspects that need to be tested,
the student's reading, verbal and quantitative skills in their
own native language, as well as, their knowledge of English in
order to understand the portion of the program taught in
English. The commenter expressed concern regarding the
timing of these tests.
Discussion: We appreciate this comment because it highlights
the need to address a situation not covered by the proposed
regulations. Under proposed § 668.153(a)(1), we require
institutions to use an ATB test in the student's native language
when the student's native language is other than English and
the student will be enrolled in a program that is taught in the
student's native language. Paragraphs (a)(2) and (a)(3) of
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proposed § 668.153 address situations where individuals who
are not native speakers of English and who are not fluent in
English are enrolled (or plan to enroll) in a program (a) that is
taught in English with an ESL component and (b) that is
taught in English without an ESL component, respectively.
The proposed regulations do not address what happens in the
case of a non-English speaker who is enrolled or plans on
enrolling in a program that will be taught in his or her native
language that includes an ESL component or a portion of the
program will be taught in English. In situations such as these,
we believe that institutions should require the student to take
an English proficiency assessment approved under §
668.148(b) prior to when the English or ESL portion of the
program commences.
Changes: We have added a new paragraph (a)(5) to § 668.153
to provide that if the individual is a non-native speaker of
English who is enrolled or plans to enroll in a program that
will be taught in his or her native language and the program
includes an ESL component or a portion of the program will be
taught in English, the individual must take a test approved
under §§ 668.146 and 668.148(a)(1) in the student's native
language. This new paragraph also provides that prior to the
beginning of the ESL component or when the English portion
of the program
commences, the individual must take an
English proficiency test approved under § 668.148(b).
Comment: One commenter suggested that most test
administrators do not have the training or experience to
determine appropriate accommodations for students with
disabilities, and thus are not qualified to identify or provide an
appropriate accommodation. This commenter argued that test
publishers and States should not be held accountable for
training test administrators in the intricacies of laws regarding
the rights of persons with disabilities. The commenter stated
that, to protect the privacy of the examinee, the test
administrator should not need to know the specifics of the
disability. This commenter argued that the test administrator
only needs to know what the accommodation is. For this
reason, the commenter recommended that the test
administrator only be required to verify that the institution
has provided the appropriate documentation of the student's
disability, as described in § 668.153(b)(4). It was the
commenter's view that the responsibility for determining the
appropriate accommodation for the student's disability lies
with the institution's staff.
Discussion: We agree that test administrators may not have
extensive training or experience to determine whether or not a
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requested accommodation is appropriate. However, each test
must be administered in accordance with the test publisher's
or State's technical manual. Consistent with proposed §
668.144(c)(11)(vii) and (d)(11)(vii), the technical manual must
include additional guidance on the interpretation of scores
resulting from any modifications of the test for individuals
with disabilities. We expect that a test publisher or State will
provide examples in the technical manual of the types of both
allowable and non-allowable accommodations associated with
a range of temporary impairments and for individuals with
disabilities in order to insure that the test administrator has
the necessary protocols to follow to ensure the validity of the
test administration process, while allowing for a range of
specialized needs to be met. While these examples of allowable
and non-allowable accommodations cannot be exhaustive, we
will expect them to be expansive so that test administrators
have clear examples of how the approved tests can and cannot
be used for individuals with temporary impairments and for
individuals with disabilities. These protocols may include, for
example, the use, when appropriate, of alternative tests (e.g.,
approved audio-recorded ATB tests for individuals who are
blind) and providing a test-taker whose vision is impaired (as
documented by a physician) additional time to complete an
approved large print version of an ATB test. To make this
expectation clearer, we will revise § 668.144(c)(11)(vii) and (d)
(11)(vii) to require a test's technical manual to include
additional guidance on the types of accommodations that are
allowable for individuals with temporary impairments or
individuals with disabilities and the interpretation of scores
resulting from any modifications of the test for individuals
with temporary impairments or individuals with disabilities.
Changes: We have modified § 668.144(c)(11)(vii)and (d)(11)
(vii) to require the test manual to include, in addition to
guidance on the interpretation of scores resulting from
modification of the test for individuals with temporary
impairments or individuals with disabilities, guidance on the
types of accommodations that are allowable.
Disbursements (§§
668.164(i),
685.102(b),
685.301(e),
686.2(b), and
686.37(b))
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Provisions for Books and Supplies (§ 668.164(i))
Comment: Several commenters agreed with the proposal in §
668.164(i) to require an institution to provide, under certain
conditions, a way for a Federal Pell Grant eligible student to
obtain or purchase required books and supplies by the seventh
day of a payment period.
Various commenters noted the academic importance of
enabling students to have early access to their books and
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supplies. However, some of these commenters argued that
bookstore vouchers were not the most affordable option for
students, noting that under current guidance an institution
that issues vouchers in lieu of cash must demonstrate it
provides students “a real and reasonable opportunity” to
obtain materials from other vendors.
Two commenters requested that the regulations also apply to
students who are eligible for the Iraq and Afghanistan Service
Grants.
Various commenters believed the proposed regulations would
be administratively difficult and burdensome to carry out. One
of the commenters stated that institutions with nonterm
programs would have special administrative problems meeting
the proposed regulations because of different start dates and
different payment period completion rates for students.
Another commenter requested the Department to delay
implementing the regulations so that institutions have
sufficient time to make needed software and procedural
changes. One commenter believed that the student should be
required to initiate a request to obtain or purchase books and
supplies instead of requiring an institution to perform this
process for all Federal Pell Grant eligible students.
Discussion: Because we have identified situations where lowcost institutions delay disbursing funds for an extended time,
or make partial disbursements to cover costs for only tuition
and fees, the Department believes that these provisions are
essential in enabling needy students to purchase books and
supplies at the beginning of the term or enrollment period.
Moreover, we find it troubling that disbursement delays at
some institutions may force very needy students to take out
private loans to pay for books and supplies that would
otherwise be paid by Federal Pell Grant funds.
We believe that the regulations in § 668.164(i) provide an
appropriate balance between the need for Federal Pell Grant
eligible students to be able to purchase or obtain books and
supplies early in the payment period and the administrative
needs of institutions. For example, an institution may issue a
bookstore voucher, make a cash disbursement, issue a storedvalue card, or otherwise extend credit to students to make
needed purchases. The institution has the flexibility to choose
one or more of these methods or a similar method based on its
administrative needs and constraints or an evaluation of the
costs and benefits of implementing one or more of these
methods.
With regard to the request to expand the scope of the
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regulations to include recipients of Iraq and Afghanistan
Service Grants, we believe that students who are not eligible
for a Federal Pell Grant should have sufficient resources, as
indicated by their higher expected family contributions, to
purchase books and supplies. We note however, that nothing
in these regulations prevents an institution from making credit
balance funds available early in the payment period to any
student.
In response to concerns about administrative issues for
nonterm programs, we note that for purposes of the Federal
Pell Grant Program an institution is already responsible for
knowing when a student has either completed a payment
period or started a payment period. These regulations fall
within that framework.
Concerning the request for a delay in implementing these
regulations, we believe that an institution has ample time to
make any administrative and software changes required since
the regulations are not effective until the 2011-2012 award
year.
Changes: None.
Comment: Some commenters questioned whether the
anticipated credit balance for a student under the proposed
regulations is calculated based only on Federal Pell Grant
funds; all title IV, HEA program funds; or all financial aid
funds.
In determining whether an institution could disburse title IV,
HEA program funds to an eligible student 10 days before the
beginning of a payment period, several commenters requested
the Department to clarify how an institution treats a student
who (1) Is selected for verification, (2) is subject to the 30 day
delayed disbursement provisions for first-time, first-year
undergraduate borrowers, (3) is attending a term-based
program with minisessions, (4) has a “C” code on the SAR or
ISIR, or (5) has other unresolved eligibility issues.
Some commenters requested that the regulations provide that
an institution is only required to provide a student with the
funds or bookstore vouchers for books and supplies after the
student has attended at least one day of class.
One commenter noted that under Federal law a bank must
have a customer identification program to help the
government fight the funding of terrorism. Under that
program, a bank must verify the identity of any person who
opens an account and have procedures in place to resolve
conflicting identity data. The commenter was concerned that
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for institutions using bank-issued stored-value cards or
prepaid debit cards to deliver funds for books and supplies,
any delays by the bank in resolving the conflicts would delay
the delivery of funds to students. Consequently, the
commenter requested that the regulations allow for this type
of delay.
One commenter asked how the proposed regulations would
apply under a consortium agreement between two eligible
institutions if the student is enrolled in a course at the host
institution with the class starting prior to the payment period
at the home institution and the home institution is processing
and paying the title IV, HEA program assistance. Another
commenter asked what action would be required by an
institution if it includes books and supplies in the tuition and
provides all of those materials to the student when he or she
starts class.
Discussion: With regard to which aid funds are used to
determine whether a credit balance would be created 10 days
before the beginning of a payment period, an institution must
consider all the title IV, HEA program funds that a student is
eligible to receive at that time. The institution does not have to
consider aid from any other sources.
To be eligible, the student must meet all the eligibility
requirements in subpart C of 34 CFR part 668 at least 10 days
before the start of the student's payment period. A student
who has not completed the verification process, has an
unresolved “C” code on the SAR and ISIR, or has unresolved
conflicting information is not covered by the regulations if
those issues have not been resolved at least 10 days before the
start of the student's payment period. With regard to the 30day delayed disbursement provisions for Stafford Loans, the
institution would not consider the amount of the loan
disbursement in determining the credit balance because the
institution may not disburse that loan 10 days before the start
of that student's payment period. Also, the institution would
not consider title IV, HEA program assistance that has not yet
been awarded to a student at least 10 days before the start of
classes because the student missed a financial aid deadline
date.
The amount that the institution must provide to a qualifying
student to obtain or purchase books and supplies is the lesser
of the presumed credit balance or the amount needed by the
student as determined by the institution. In determining the
amount needed, an institution may use the actual costs of
books and supplies or the allowance for those materials used
in the student's cost of attendance for the payment period.
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Since an institution has until the seventh day of a student's
payment period to provide the way for the student to obtain or
purchase the books and supplies, the institution may
determine whether the student has attended classes if it has,
or chooses to implement, a process for taking or monitoring
attendance. However, by the seventh day of the payment
period, that student must be able to obtain books and supplies
unless the institution knows that the student is not attending.
When an institution uses a bank-issued stored-value or prepaid
debit card that is supported by a federally insured bank
account to deliver funds for books and supplies, a student
must have access to the funds via the card by the seventh day
of his or her payment period. If a bank delays issuing a storedvalue or prepaid debit card to the student because it must
resolve conflicting identity data under Federal law, the
Department will not hold the institution accountable as long as
the institution exercises reasonable care and diligence in
providing in a timely manner any identity information about
the student to the bank. Likewise, the institution is not
responsible if the student provides inaccurate information or
delays in responding to a request from the bank to resolve any
discrepancies.
Under a consortium agreement between two eligible
institutions, if a student is enrolled in a course at the host
institution and classes start before the payment period begins
at the home institution that is paying the title IV, HEA
program assistance, the regulations require that the student
obtain the books and supplies by the seventh day of the start of
the payment period of the home institution. If the host
institution is paying the title IV, HEA program assistance, the
student must be able to obtain the books and supplies by the
seventh day of the start of the payment period of the host
institution.
An institution that includes the costs of books and supplies in
the tuition charged and provides all of those materials to the
student at the start of his or her classes meets the
requirements of these regulations.
Changes: None.
Comment: Several commenters were concerned over who
would be liable for advancing funds to a student for books and
supplies if the student fails to start all of his or her classes.
Some commenters indicated that the potential debt owed to an
institution by students under the proposed regulations is not
in the best interest of the student. A few commenters noted
that the use of bookstore vouchers as the way for a student to
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obtain books and supplies appears to increase the amount of
unearned title IV funds that the institution must return when a
student withdraws.
Discussion: These regulations do not change the provisions
under 34 CFR 668.21 concerning the treatment of title IV
grant and loan funds if the recipient does not begin attendance
at the institution. In the case where the institution has credited
the student's account at the institution or disbursed directly to
the student any Federal Pell Grant, FSEOG, Federal Perkins
Loan, TEACH Grant, ACG, or National SMART Grant program
funds and the student fails to begin attendance in a payment
period, the institution must return all of those program funds
to the respective program.
In addition, an institution must return any Direct Loan funds
that were credited to the student's account at the institution
for the payment period or period of enrollment. For any Direct
Loan funds disbursed directly to a student, the institution
must notify the Department of the loan funds that are
outstanding, so that the Department can issue a 30-day
demand letter to the student under 34 CFR 685.211. If the
institution knew prior to disbursing any of the Direct Loan
funds directly to the student that he or she would not begin
attendance, the institution must also return those Direct Loan
funds. This would apply when, for example, a student had
previously notified the institution that he or she would not be
attending or the institution had expelled the student before
disbursing the Direct Loan directly to the student.
When an institution is responsible for returning title IV, HEA
program funds for a student who failed to begin attendance at
the institution it must return those funds as soon as possible,
but no later than 30 days after the date that the institution
becomes aware that the student will not or has not begun
attendance. The funds that are required to be returned by the
institution are not a student title IV, HEA liability and will not
affect the student's title IV, HEA eligibility. However,
institutional charges not paid by financial assistance are a
student liability owed to the institution and subject to its own
collection process.
The new requirement also does not change the regulations in
34 CFR 668.22 on handling the Return of Title IV Aid when a
student began attendance but withdraws from the payment
period or period of enrollment. If the institution provides a
bookstore voucher for a student to obtain or purchase books
and supplies, those expenses for the required course materials
are considered institutional charges because the student does
not have a real and reasonable opportunity to purchase the
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materials from any other place except the institution. The
institution must include the charges for books and supplies
from a bookstore voucher as institutional charges in
determining the portion of unearned title IV, HEA program
assistance that the institution is responsible for returning.
However, an institution does not have to select the bookstore
voucher as the way to meet the new requirement, it is just one
option.
Changes: None.
Comment: One commenter opined that students who are not
Pell Grant eligible would be unfairly responsible for obtaining
funds to purchase books while others at the same institution
would be confused about who should or should not receive the
means to obtain or purchase books and supplies at the
beginning of the term or enrollment period. A few commenters
suggested or asked whether a student could opt out of the way
offered by an institution to obtain or purchase books and
supplies.
Some commenters asked if the proposed regulations were in
conflict with the current Cash Management regulations in §§
668.164 and 668.165. A few commenters requested
clarification on how student authorizations applied to the new
requirements. Some commenters suggested that an institution
should not be required to obtain a student's authorization to
credit his or her account at the institution with title IV, HEA
program funds for books and supplies, while other
commenters recommended that an institution should be able
to require the student's authorization before advancing funds
for books and supplies.
Discussion: Under § 668.16(h), an institution is required to
provide adequate financial aid counseling to eligible students
who apply for title IV, HEA program assistance and under §
668.42, an institution is required to provide consumer
information to enrolled and prospective students that, among
other things, describe the method by which aid is determined
and disbursed, delivered, or applied to a student's account and
the frequency of those disbursements. Further under §
668.165(a)(1), before an institution disburses title IV, HEA
funds it must notify a student how and when those funds will
be disbursed. Based on these requirements, an institution
must describe in its financial aid information and its
notifications provided to students receiving title IV, HEA
funds the way under § 668.164(i) that it provides for Federal
Pell Grant eligible students to obtain or purchase required
books and supplies by the seventh day of a payment period
under certain conditions. The information must indicate
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whether the institution would enter a charge on the student's
account at the institution for books and supplies or pay funds
to the student directly. Institutions also routinely counsel
students about the variations in the amounts of Federal
student aid or other resources that are available to them based
upon their need and expected family contribution. We believe
that this counseling process will mitigate any confusion by
explaining to a student who qualifies for funds advanced to
purchase books and supplies, how the process is handled at
the institution, and how a student may opt-out of the process.
Regardless of the way an institution provides for a student to
obtain books and supplies, the student may opt out. For
instance, if an institution provides a bookstore voucher, the
student may opt out by not using the voucher. If the institution
uses another way, such as a bank-issued stored-value or
prepaid debit card, it must have a policy under which the
student may opt out. For example, a student might have to
notify the institution by a certain date so that the institution
does not unnecessarily issue a check to the student or transfer
funds to the student's bank account. In any case, if the student
opts out, the institution may, but is not required to, offer the
student another way to purchase books and supplies so long as
it does not otherwise delay providing funds to the student as a
credit balance. We are amending the regulations to clarify that
a student may opt out of the way that an institution provides
for a student to obtain books and supplies.
In addition, to facilitate advancing funds or credit by the
seventh day of classes of a payment period under this
provision, the Department considers that a student authorizes
the use of title IV, HEA funds at the time the student uses the
method provided by the institution to purchase books and
supplies. This means that an institution does not need to
obtain a written authorization under §§ 668.164(d)(1)(iv) and
668.165(b) from the student to credit a student's account at
the institution for the books and supplies that may be provided
only under § 668.164(i). We are amending the regulations to
indicate that an institution does not need to obtain a written
authorization from a student to credit the student's account at
the institution for books and supplies provided under §
668.164(i).
Changes: Section 668.164(i) has been revised to specify that an
institution must have a policy under which a Federal Pell
Grant eligible student may opt out of the way the institution
provides for the student to purchase books and supplies by the
seventh day of classes of a payment period. In addition, §
668.164(i) has been revised to specify that if the Federal Pell
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Grant eligible student uses the method provided by the
institution to purchase books and supplies, the student is
considered to have authorized the use of title IV, HEA funds
and the institution does not need to obtain a written
authorization under §§ 668.164(d)(1)(iv) and 668.165(b) for
this purpose only.
Reporting
Disbursements,
Adjustments, and
Cancellations (§§
685.102(b),
685.301(e),
686.2(b), and
686.37(b))
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Comment: A few commenters supported the proposed
regulations to adopt the Federal Pell Grant reporting
requirements for the TEACH Grant and Direct Loan programs
and to add the Federal Pell Grant definition of the term
Payment Data to the two other programs.
Discussion: We believe that harmonizing the reporting
requirements for the Federal Pell Grant, TEACH Grant, and
Direct Loan programs in accordance with procedures
established by the Secretary through publication in the
Federal Register will make it easier for institutions to
administer the programs. In addition, this flexibility to adjust
the reporting requirements for all three programs through
publication in the Federal Register will enable the Secretary
to make changes in the future that take advantage of new
technology and improved business processes.
Changes: None.
Executive Order
12866
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Regulatory Impact Analysis
Under Executive Order 12866, the Secretary must determine
whether the regulatory action is “significant” and therefore
subject to the requirements of the Executive Order and subject
to review by the OMB. Section 3(f) of Executive Order 12866
defines a “significant regulatory action” as an action likely to
result in a rule that may (1) Have an annual effect on the
economy of $100 million or more, or adversely affect a sector
of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local or tribal
governments or communities in a material way (also referred
to as an “economically significant” rule); (2) create serious
inconsistency or otherwise interfere with an action taken or
planned by another agency; (3) materially alter the budgetary
impacts of entitlement grants, user fees, or loan programs or
the rights and obligations of recipients thereof; or (4) raise
novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in the
Executive order.
Pursuant to the terms of the Executive order, we have
determined this proposed regulatory action will have an
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annual effect on the economy of more than $100 million.
Therefore, this action is “economically significant” and subject
to OMB review under section 3(f)(1) of Executive Order 12866.
Notwithstanding this determination, we have assessed the
potential costs and benefits—both quantitative and qualitative
—of this regulatory action. The agency believes that the
benefits justify the costs.
A detailed analysis, including the Department's Regulatory
Flexibility Act certification, is found in Appendix A to these
final regulations.
Paperwork
Reduction Act of
1995
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Sections 668.6, 668.8, 668.16, 668.22, 668.34, 668.43, 668.55,
668.56, 668.57, 668.59, 668.144, 668.150, 668.151, 668.152,
and 668.164 contain information collection requirements.
Under the Paperwork Reduction Act of 1995 (44 U.S.C.
3507(d)), the Department has submitted a copy of these
sections to OMB for its review.
Section 668.6—Gainful Employment
The final regulations will impose new requirements on certain
programs that by law must, for purposes of the title IV, HEA
programs, prepare students for gainful employment in a
recognized occupation. For public and private nonprofit
institutions, a program that does not lead to a degree will be
subject to the eligibility requirement that the program lead to
gainful employment in a recognized occupation, while a
program leading to a degree, including a two-academic-year
program fully transferrable to a baccalaureate degree, will not
be subject to this eligibility requirement. For proprietary
institutions, all eligible degree and non-degree programs will
be required to lead to gainful employment in a recognized
occupation, except for a liberal arts baccalaureate program
under section 102(b)(1)(A)(ii) of the HEA.
An institution will be required under final § 668.6(a) to report
for each student, who during an award year, began attending
or completed a program under § 668.8(c)(3) or (d),
information that includes, at a minimum, information needed
to identify the student and the location of the institution the
student attended, the CIP code of the program, the date the
student completed the program, the amounts the student
received from private educational loans and the amount from
institutional financing plans that the student owes the
institution after completing the program, and whether the
student matriculated to a higher credentialed program at the
institution or another institution. We estimate that it will take
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the affected 1,950 proprietary institutions, on average, 12
hours to develop the processes necessary to implement the
requirements in § 668.6(a) for students who, during the award
year, began attending or completed a program under §
668.6(c)(3) or (d). These processes include ones to record
student identifier information, to record the CIP codes
associated with these programs, to record completion dates, to
determine and record the amounts the student received from
private educational loans and the amount from institutional
financing plans that the student owes the institution after
completing the program, and to record data on students who
matriculate to higher credentialed programs at the same or at
another institution. Therefore, burden will increase for these
affected proprietary institutions by 23,400 hours.
We estimate that it will take the affected 1,736 private not-forprofit institutions, on average, 12 hours to develop the
processes necessary to implement the requirements in §
668.6(a) for students who, during the award year, began
attending or completed a program under § 668.6. These
processes include ones to record student identifier
information, to record the CIP codes associated with these
programs, to record completion dates, to determine and
record the amounts the student received from private
educational loans and the amount from institutional financing
plans that the student owes the institution after completing
the program, and to record data on students who matriculate
to higher credentialed programs at the same or at another
institution. Therefore, burden will increase for these affected
private not-for-profit institutions by 20,832 hours.
We estimate that it will take the affected 1,915 public
institutions, on average, 12 hours to develop the processes
necessary to implement the requirements in § 668.6(a) for
students who, during the award year, began attending or
completed a program under § 668.6. These processes include
ones to record student identifier information, to record the
CIP codes associated with these programs, to record
completion dates, to determine and record the amounts the
student received from private educational loans and the
amount from institutional financing plans that the student
owes the institution after completing the program, and to
record data on students who matriculate to higher
credentialed programs at the same or at another institution.
Therefore, burden will increase for these affected public
institutions by 22,980 hours. Collectively, we estimate that
burden for institutions to meet these process development
requirements in accordance with procedures established by
the Secretary will increase burden by
67,212 hours in OMB
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Control Number 1845-NEW1.
We estimate that annually there will be 3,499,998 students
who will begin attendance in occupational programs that train
students for gainful employment in a recognized occupation.
We estimate that 1,996,593 of the 3,499,998 students will
attend a proprietary institution. Therefore, with regard to
proprietary institutions, the total number of affected students
is estimated to be 5,989,779 students (1,996,593 times 3) for
the initial reporting period that will cover the 2006-2007
award year, the 2007-2008 award year and the 2008-2009
award year. We estimate that the reporting of student
identifier information, the location of the institution the
student attended, and the CIP codes for each beginning
student (i.e., a student who during the award year began
attending a program under § 668.8(c)(3) or (d)) will average
.03 hours (2 minutes) per student or 179,693 hours of
increased burden.
We estimate that 161,308 of the 3,499,998 students will attend
a private not-for-profit institution. Therefore, with regard to
not-for-profit institutions, the total number of affected
students is estimated to be 483,924 students (161,308 times 3)
for the initial reporting period that will cover the 2006-2007
award year, the 2007-2008 award year and the 2008-2009
award year. We estimate that the reporting of student
identifier information, the location of the institution the
student attended, and the CIP codes for each beginning
student will average .03 hours (2 minutes) per student or
14,518 hours of increased burden.
We estimate that 1,342,097 of the 3,499,998 students will
attend a public institution. Therefore, with regard to public
institutions, the total number of affected students is estimated
to be 4,026,291 students (1,342,097 times 3) for the initial
reporting period that will cover the 2006-2007 award year, the
2007-2008 award year and the 2008-2009 award year. We
estimate that the reporting of student identifier information,
the location of the institution the student attended, and the
CIP codes for each beginning student will average .03 hours (2
minutes) per student or 120,789 hours of increased burden.
Collectively, we estimate that burden for institutions to meet
these reporting requirements for a student who during the
award year began attending a program under § 668.8(c)(3) or
(d) will increase burden by 315,000 hours in OMB Control
Number 1845-NEW1.
We estimate that annually there will be 567,334 students who
will complete their occupational programs that train students
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for gainful employment in a recognized occupation. We
estimate that 325,416 of the 567,334 students will attend a
proprietary institution. Therefore, with regard to proprietary
institutions, the total number of affected students is estimated
to be 976,248 students (325,416 times 3) for the initial
reporting period that will cover the 2006-2007 award year, the
2007-2008 award year and the 2008-2009 award year. We
estimate that the reporting of student identifier information,
the location of the institution the student attended, the CIP
codes for each graduate, the date of completion, the amounts
the students received from private education loans and the
amount from institutional financing plans that the student
owes the institution after completing the program, and
whether the student matriculated to a higher credentialed
program at the same or another institution will average .08
hours (5 minutes) per student or 78,100 hours of increased
burden.
We estimate that 33,627 of the 567,334 students will attend a
private not-for-profit institution. Therefore, with regard to
not-for-profit institutions, the total number of affected
students is estimated to be 100,881 students (33,627 times 3)
for the initial reporting period that will cover the 2006-2007
award year, the 2007-2008 award year and the 2008-2009
award year. We estimate that the reporting of student
identifier information, the location of the institution the
student attended, the CIP codes for each graduate, the date of
completion, the amounts the student received from private
education loans and the amount from institutional financing
plans that the student owes the institution after completing
the program, and whether the student matriculated to a higher
credentialed program at the same or another institution will
average .08 hours (5 minutes) per student or 8,070 hours of
increased burden.
We estimate that 208,291 of the 567,334 students will attend a
public institution. Therefore, with regard to public
institutions, the total number of affected students is estimated
to be 624,873 students (208,291 times 3) for the initial
reporting period that will cover the 2006-2007 award year, the
2007-2008 award year and the 2008-2009 award year. We
estimate that the reporting of student identifier information,
the location of the institution the student attended, the CIP
codes for each graduate, the date of completion, the amounts
the student received from private education loans and the
amount from institutional financing plans that the student
owes the institution after completing the program, and
whether the student matriculated to a higher credentialed
program at the same or another institution will average .08
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hours (5 minutes) per student or 49,990 hours of increased
burden.
Additionally, later in the initial year of reporting, institutions
will have to report information on students who began
attendance during the 2009-2010 award year. We estimate
that annually there will be 3,499,998 students who will begin
attendance in occupational programs that train students for
gainful employment in a recognized occupation. As established
above, we estimate that 1,996,593 of the 3,499,998 students
will begin occupational programs at proprietary institutions
during the 2009-2010 award year. We estimate that the
reporting of student identifier information, the location of the
institution the student attended, and the CIP codes for each
beginning student (i.e., a student who during the award year
began attending a program under § 668.8(c)(3) or (d)) will
average .03 hours (2 minutes) per student or 59,898 hours of
increased burden.
We estimate that 161,308 of the 3,499,998 students will attend
a private not-for-profit institution. We estimate that the
reporting of student identifier information, the location of the
institution the student attended, and the CIP codes for each
beginning student will average .03 hours (2 minutes) per
student or 4,839 hours of increased burden.
We estimate that 1,342,097 of the 3,499,998 students will
attend a public institution. We estimate that the reporting of
student identifier information, the location of the institution
the student attended, and the CIP codes for each beginning
student will average .03 hours (2 minutes) per student or
40,263 hours of increased burden.
Similarly, we estimate that annually there will be 567,334
students who will complete their occupational programs that
train students for gainful employment in a recognized
occupation during the 2009-2010 award year. We estimate
that 325,416 of the 567,334 students will complete their
program at a proprietary institution during the 2009-2010
award year. We estimate that the reporting of student
identifier information, the location of the institution the
student attended, the CIP codes for each graduate, the date of
completion, the amounts the students received from private
education loans
and the amount from institutional financing
plans that the student owes the institution after completing
the program, and whether the student matriculated to a higher
credentialed program at the same or another institution will
average .08 hours (5 minutes) per student or 26,033 hours of
increased burden for the 2009-2010 award year.
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We estimate that 33,627 of the 567,334 students will complete
their program at a private not-for-profit institution. We
estimate that the reporting of student identifier information,
the location of the institution the student attended, the CIP
codes for each graduate, the date of completion, the amounts
the student received from private education loans and the
amount from institutional financing plans that the student
owes the institution after completing the program, and
whether the student matriculated to a higher credentialed
program at the same or another institution will average .08
hours (5 minutes) per student or 2,690 hours of increased
burden during the 2009-2010 award year.
We estimate that 208,291 of the 567,334 students will complete
their program at a public institution during the 2009-2010
award year. We estimate that the reporting of student
identifier information, the location of the institution the
student attended, the CIP codes for each graduate, the date of
completion, the amounts the student received from private
education loans and the amount from institutional financing
plans that the student owes the institution after completing
the program, and whether the student matriculated to a higher
credentialed program at the same or another institution will
average .08 hours (5 minutes) per student or 16,663 hours of
increased burden for the 2009-2010 award year.
Collectively, we estimate that burden for institutions to meet
these reporting requirements for students who begin
attendance or complete their occupational programs that train
students for gainful employment in a recognized occupation
will increase burden by 658,758 hours in OMB Control
Number 1845-NEW1.
Finally, under § 668.6(b) an institution will be required to
disclose to each prospective student information about (1) The
occupations (by names and Standard Occupational Code
(SOC) codes) that its programs prepare students to enter,
along with links to occupational profiles on O*NET or its
successor site, or if the number of occupations related to the
program on O*Net is more than ten (10), the institution may
provide Web links to a representative sample of SOC codes for
which its graduates typically find employment within a few
years after completing their program; (2) the on-time
graduation rate for students entering the program; (3) the
total amount of tuition and fees it charges a student for
completing the program within normal time as defined in §
668.41(a), the typical costs for books and supplies, and the
cost of room and board, if applicable. The institution may
include information on other costs, such as transportation and
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living expenses, but it must provide a Web link, or access, to
the program cost information the institution makes available
under § 668.43(a); (4) beginning on July 1, 2011, the
placement rate for students completing the program, as
determined under the institution's accrediting agency or State
requirements, until a new placement rate methodology is
developed by the National Center for Education Statistics
(NCES) and reported to the institution; and (5) the median
loan debt incurred by students who completed the program as
provided by the Secretary, as well as any other information the
Secretary provided to the institution about that program. The
institution must identify separately the median loan debt from
title IV, HEA programs and the median loan debt from private
educational loans and institutional financing plans.
We estimate that of the 5,601 institutions with these
occupational programs that 1,950, or 35%, are proprietary
institutions. We estimate that of the 5,601 with these
occupational programs that 1,736, or 31%, are private not-forprofit institutions. We estimate that of the 5,601 with these
occupational programs that 1,915, or 34%, are public
institutions. Because under the revised disclosure
requirements, institutions may use a representative sample of
SOC codes and use placement rate data already required by
their accrediting agency or State, or data that will be provided
by the Department, we estimate that on average, it will take 1.5
hours for an institution to obtain the required disclosure
information from O*Net and its own programmatic cost
information and to provide that information on its Web site
and in its promotional materials. Therefore, we estimate that
burden for 1,950 proprietary institutions will increase by 2,925
hours. We estimate that burden for 1,736 private not-for-profit
institutions will increase by 2,604 hours. We estimate that
burden for 1,915 public institutions will increase by 2,873
hours.
Collectively, we estimate that burden for institutions to meet
these disclosure requirements for prospective students will
increase burden by 8,402 hours in OMB Control Number
1845-NEW1.
We estimate the total burden under this section to increase by
677,160 hours in OMB Control Number 1845-NEW1.
Section 668.8—Eligible Program
Under S668.8(l)(1), we will revise the method of converting
clock hours to credit hours to use a ratio of the minimum clock
hours in an academic year to the minimum credit hours in an
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academic year, i.e., 900 clock hours to 24 semester or
trimester hours or 36 quarter hours. Thus, a semester or
trimester hour will be based on at least 37.5 clock hours, and a
quarter hour will be based on at least 25 clock hours. Section
668.8(l)(2) will create an exception to the conversion ratio in §
668.8(l)(1) if neither an institution's designated accrediting
agency nor the relevant State licensing authority for
participation in the title IV, HEA programs determines there
are any deficiencies in the institution's policies, procedures,
and practices for establishing the credit hours that the
institution awards for programs and courses, as defined in §
600.2. Under the exception provided by § 668.8(l)(2), an
institution will be permitted to combine students' work outside
of class with the clock-hours of instruction in order to meet or
exceed the numeric requirements established in § 668.8(l)(1).
However, under § 668.8(l)(2), the institution will need to use
at least 30 clock hours for a semester or trimester hour or 20
clock hours for a quarter hour.
In determining whether there is outside work that a student
must perform, the analysis will need to take into account
differences in coursework and educational activities within the
program. Some portions of a program may require student
work outside of class that justifies the application of § 668.8(l)
(2). In addition, the application of § 668.8(l)(2) could vary
within a program depending on variances in required student
work outside of class for different portions of the program.
Other portions of the program may not have outside work, and
§ 668.8(l)(1) will need to be applied. Of course, an institution
applying only § 668.8(l)(1) to a program eligible for conversion
from clock hours to credit hours, without an analysis of the
program's coursework, will be considered compliant with the
requirements of § 668.8(l).
Section 668.8(k)(1)(ii) will modify a provision in current
regulations to provide that a program is not subject to the
conversion formula in § 668.8(l) where each course within the
program is acceptable for full credit toward a degree that is
offered by the institution and that this degree requires at least
two academic years of study. Additionally, under § 668.8(k)(1)
(ii), the institution will be required to demonstrate that
students enroll in, and graduate from, the degree program.
Section 668.8(k)(2)(i) will provide that a program is
considered to be a clock-hour program if the program must be
measured in clock hours to receive Federal or State approval
or licensure, or if completing clock hours is a requirement for
graduates to apply for licensure or the authorization to
practice the occupation that the student is intending to pursue.
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Under § 668.8(k)(2)(ii) and (iii), the program will also be
considered to be offered in clock hours if the credit hours
awarded for the program are not in compliance with the
definition of a credit hour in § 600.2, or if the institution does
not provide the clock hours that are the basis for the credit
hours awarded for the program or each course in the program
and, except as provided in current § 668.4(e), requires
attendance in the clock hours that are the basis for the credit
hours awarded. The final regulations on which tentative
agreement was reached will not include the provision in §
668.8(k)(2)(iii) that, except as provided in current § 668.4(e),
an institution must require attendance in the clock hours that
are the basis for the credit hours awarded.
Section 668.8(k)(3) will provide that § 668.8(k)(2)(i) will not
apply if a limited portion of the program includes a practicum,
internship, or clinical experience component that must include
a minimum number of clock hours due to a State or Federal
approval or licensure requirement.
We estimate that on average, for each affected program it will
take .5 hours (30 minutes) for an institution to make the
determination of whether the program is an affected program,
to evaluate the amount of outside student work that should be
included as final and to perform the clock hour to credit hour
conversion. We further estimate that of the 4,587 institutions
of higher education with less than 2-year programs, that on
average, each institution has approximately 8 non-degree
programs of study for a total of 36,696 affected programs. We
estimate that there are 16,513 affected programs at proprietary
institutions times .5 hours (30 minutes) which will increase
burden by 8,257 hours. We estimate that there are 1,835
affected programs at private non-profit institutions times .5
hours (30 minutes) which will increase burden by 918 hours.
We estimate that there are 18,348 affected programs at public
institutions times .5 hours (30 minutes) which will increase
burden by 9,174 hours.
Collectively, the final regulatory changes reflected in § 668.8
will increase burden by 18,349 hours in OMB Control Number
1845-0022.
Section 668.16—Standards of Administrative Capability
Under the final regulations, the elements of the institution's
satisfactory academic progress plan have been moved from
current § 668.16(e) to § 668.34. We also have updated these
provisions. As a result, the estimated burden upon institutions
associated with measuring academic progress currently in
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OMB Control Number 1845-0022 of 21,000 hours will be
administratively removed from this collection and transferred
to OMB Control Number 1845-NEW2.
Under § 668.16(p), an institution will be required to develop
and follow procedures to evaluate the validity of a student's
high school completion if the institution or the Secretary has
reason to believe that the high school diploma is not valid or
was not obtained from an entity that provides secondary
school education. The burden associated with this requirement
will be mitigated by the fact that many institutions already
have processes in place to collect high school diplomas and
make determinations about their validity.
We estimate that burden will increase for each institution by
3.5 hours for the development of a high school diploma
validity process. We estimate that 2,086 proprietary
institutions will on average take 3.5 hours to develop the final
procedures to evaluate the validity of high school completions,
which will increase burden by 7,301 hours. We estimate that
1,731 private non-profit institutions will on average take 3.5
hours to develop the final procedures to evaluate the validity of
high school completion, which will increase burden by 6,059
hours. We estimate that 1,892 public institutions will on
average take 3.5 hours to develop the final procedures to
evaluate the validity of high school completion, which will
increase burden by 6,622 hours.
Additionally, we estimate that the validity of approximately
4,000 high school diplomas per year will be questioned and
that these diplomas will require additional verification, which
we estimate will take .5 hours (30 minutes) per questionable
diploma. We estimate that proprietary institutions will have
2,000 questionable diplomas, which will result in an estimated
1,000 hours of increased burden (2000 diplomas multiplied
by .5 hours). We estimate that private non-profit institutions
will have 600 questionable diplomas, which will result in an
estimated 300 hours of increased burden (600 diplomas
multiplied by .5 hours). We estimate that public institutions
will have 1,400 questionable, which will result in an estimated
700 hours of increased burden (1400 diplomas multiplied by
.5 hours).
Collectively, the final regulatory changes reflected in § 668.16
will increase burden by 21,982 hours in OMB Control Number
1845-0022.
Section 668.22—Treatment of Title IV, HEA Program
Funds When a Student Withdraws
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The changes to § 668.22(a)(2) clarify when a student is
considered to have withdrawn from a payment period or
period of enrollment. In the case of a program that is
measured in credit hours, the student will be considered to
have withdrawn if he or she does not complete all the days in
the payment period or period of enrollment that the student
was scheduled to complete prior to withdrawing. In the case of
a program that is measured in clock hours, the student will be
considered to have withdrawn if he or she does not complete
all of the clock hours in the payment period or period of
enrollment that the student was scheduled to complete prior to
withdrawing.
Section 668.22(f)(2)(i) clarifies that, for credit hour programs,
in calculating the percentage of the payment period or period
of enrollment completed, it is necessary to take into account
the total number of calendar days that the student was
scheduled to complete prior to withdrawing without regard to
any course completed by the student that is less than the
length of the term.
These final regulations will affect all programs with courses
that are less than the length of a term, including, for example,
a semester-based program that has a summer nonstandard
term with two consecutive six-week sessions within the term.
We estimate that approximately 425,075 students in termbased programs with modules or compressed courses will
withdraw prior to completing more than 60 percent of their
program of study. We estimate that on average, the burden per
individual student who withdraws prior to the 60 percent
point of their term-based program to be .75 hours (45
minutes)
per affected individual which will increase burden
for the estimated 425,075 students by 318,806 hours in OMB
Control Number 1845-0022. Of these 425,075 withdrawals, we
estimate that 50 percent of the withdrawals (212,538) will
occur at proprietary institutions and will increase burden by 1
hour per withdrawal increasing burden by 212,538 hours. We
estimate that 10 percent of the withdrawals (42,508) will occur
at private non-profit institutions and will increase burden by 1
hour per withdrawal increasing burden by 42,508 hours. We
estimate that 40 percent of the withdrawals (170,029) will
occur at public institutions and will increase burden by 1 hour
per withdrawal increasing burden by 170,029 hours.
Collectively, we estimate that burden will increase by 743,881
hours in OMB Control Number 1845-0022, of which 318,806
hours is for individuals and 425,075 hours is for institutions.
Section 668.34—Satisfactory Progress
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The final regulations restructure the satisfactory academic
progress requirements. Section 668.16(e) (Standards of
administrative capability) has been revised to include only the
requirement that an institution establish, publish and apply
satisfactory academic progress standards that meet the
requirements of § 668.34. The remainder of current §
668.16(e) has been moved to § 668.34 such that it, alone,
describes all of the required elements of a satisfactory
academic progress policy, as well as how an institution will
implement such a policy. The references in § 668.32(e) have
been updated to conform the section with the final changes we
have made to §§ 668.16(e) and 668.32.
Section 668.34(a) specifies the elements an institution's
satisfactory academic policy must contain to be considered a
reasonable policy. Under these regulations, institutions will
continue to have flexibility in establishing their own policies;
institutions that choose to measure satisfactory academic
progress more frequently than at the minimum required
intervals will have additional flexibility (see § 668.34(a)(3)).
All of the policy elements in the current regulations under §§
668.16(e) and 668.34 are combined in § 668.34. In addition, §
668.34(a)(5) makes explicit the requirement that institutions
specify the pace at which a student must progress through his
or her educational program to ensure that the student will
complete the program within the maximum timeframe, and
provide for measurement of a student's pace at each
evaluation. Under § 668.34(a)(6), institutional policies will
need to describe how a student's GPA and pace of completion
are affected by transfers of credit from other institutions. This
provision will also require institutions to count credit hours
from another institution that are accepted toward a student's
educational program as both attempted and completed hours.
Section 668.34(a)(7) provides that, except as permitted in §
668.34(c) and (d), the policy requires that, at the time of each
evaluation, if the student is not making satisfactory academic
progress, the student is no longer eligible to receive the title
IV, HEA assistance.
Section 668.34(a)(8) requires institutions that use “financial
aid warning” and “financial aid probation” statuses (concepts
that are defined in § 668.34(b)) in connection with satisfactory
academic progress evaluations to describe these statuses and
how they are used in their satisfactory academic progress
policies. Section 668.34(a)(8)(i) specifies that a student on
financial aid warning may continue to receive assistance under
the title IV, HEA programs for one payment period despite a
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determination that the student is not making satisfactory
academic progress. Financial aid warning status may be
assigned without an appeal or other action by the student.
Section 668.34(a)(8)(ii) makes clear that an institution with a
satisfactory academic progress policy that includes the use of
the financial aid probation status could require that a student
on financial aid probation fulfill specific terms and conditions,
such as taking a reduced course load or enrolling in specific
courses.
Section 668.34(a)(9) will require an institution that permits a
student to appeal a determination that the student is not
making satisfactory academic progress to describe the appeal
process in its policy. The policy will need to contain specified
elements. Section 668.34(a)(9)(i) will require an institution to
describe how a student may re-establish his or her eligibility to
receive assistance under the title IV, HEA programs.
Under § 668.34(a)(9)(ii), a student will be permitted to file an
appeal based on the death of a relative, an injury or illness of
the student, or other special circumstances. Under § 668.34(a)
(9)(iii), a student will be required to submit, as part of the
appeal, information regarding why the student failed to make
satisfactory academic progress, and what has changed in the
student's situation that will allow the student to demonstrate
satisfactory academic progress at the next evaluation.
Section 668.34(a)(10) will require the satisfactory academic
progress policy of an institution that does not permit students
to appeal a determination that they are not making satisfactory
academic progress, to describe how a student may regain
eligibility for assistance under the title IV, HEA programs.
Section 668.34(a)(11) will require that an institution's policy
provide for notification to students of the results of an
evaluation that impacts the student's eligibility for title IV,
HEA program funds.
We estimate that, on average, institutions will take 3 hours per
institution to review the final regulations in § 668.34(a) and
implement any changes to their satisfactory academic policies
to insure compliance. We estimate that 2,086 proprietary
institutions will take 3 hours per institution to review and
implement the final regulations, which will result in an
estimated increase of 6,258 hours in burden. We estimate that
1,731 private non-profit institutions will take 3 hours per
institution to review and implement the final regulations,
which will result in an estimated increase of 5,193 hours in
burden. We estimate that 1,892 public institutions will take 3
hours per institution to review and implement the final
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regulations, which will result in an estimated increase of 5,676
hours in burden.
Collectively, the final regulatory changes reflected in §
668.34(a) will increase burden by 17,127 hours.
Section 668.34(c) and (d) will specify that an institution's
policy may provide for disbursement of title IV, HEA program
funds to a student who has not met an institution's satisfactory
academic standards in certain circumstances. Of the 17 million
applicants in 2008-2009, we estimate that 90 percent (or
15,300,000 individuals) will begin attendance. We estimate
that of the 15,300,000 individuals that begin attendance, that
90 percent (or 13,770,000 individuals) will persist at least
through the end of the initial payment period and, therefore,
will be subject to the institutions' satisfactory academic
progress consistent with the provisions of § 668.34. We
estimate that 38 percent of participating institutions will
evaluate their students at the end of each payment period
under § 668.34(c); therefore we expect 5,232,600 individuals
to be evaluated more than annually (13,770,000 individuals
multiplied 38 percent). We estimate that 62 percent of
participating institutions will evaluate their students once per
academic year under § 668.34(d); therefore, we expect
8,537,400 individuals to be evaluated annually (13,770,000
individuals multiplied by 62 percent).
Section 668.34(c) will permit an institution that measures
satisfactory academic progress at the end of each payment
period to have a policy that will permit a student who is not
making satisfactory academic progress to be placed
automatically on financial aid warning, a newly defined term.
We estimate that, as a result of this requirement, the burden
associated with an academic progress measurement at the end
of each payment period, and when required, the development
of an academic plan for the student, will increase. We estimate
that 1,936,062 individuals at proprietary institutions will
require an academic review more than once per academic year
(proprietary institutions, which comprise 37 percent of the
total number of institutions of higher education, multiplied by
5,232,600 individuals). Given this number of individuals
(1,936,062) and an average of 2 reviews per academic year
under this requirement, we expect these institutions to
conduct 3,872,124 satisfactory academic progress reviews.
Because these academic progress reviews are generally highly
automated, we estimate that, on average, each review will take
.02 hours (1.2 minutes) and will increase burden by 77,442
hours.
We estimate that 1,569,780 individuals at private non-profit
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institutions will require an academic review (private nonprofit institutions, which comprise 30 percent of the total
number of institutions of higher education, multiplied by
5,232,600 individuals). Given this number of individuals
(1,569,780) and an average of 2 reviews per academic year
under this requirement, we expect these institutions to
conduct 3,139,560 satisfactory academic progress reviews.
Because these academic progress reviews are generally highly
automated, we estimate that, on average, each review will take
.02 hours (1.2 minutes) and will increase burden by 62,791
hours.
We estimate that 1,726,758 individuals at public institutions
will require an academic review (public institutions, which
comprise 33 percent of the total number of institutions of
higher education, multiplied by 5,232,600 individuals). Given
this number of individuals (1,726,758) and an average of 2
reviews per academic year under this requirement, we expect
these institutions to conduct 3,453,516 satisfactory academic
progress reviews. Because these academic progress reviews are
generally highly automated, we estimate that, on average, each
review will take .02 hours (1.2 minutes) and will increase
burden by 69,070 hours.
Collectively, we estimate that the burden for institutions under
this requirement will increase by 209,303 hours, in OMB
Control Number 1845-NEW2.
As a result of the final satisfactory academic progress reviews
conducted by institutions, we estimate that 7 percent of the
5,232,600 enrolled students (at institutions that review
academic progress more often than annually) or 366,282 will
not successfully achieve satisfactory academic progress. For
these students, institutions will need to work with each
student to develop an academic plan and this will increase
burden for the individual and the institutions. We estimate
that under § 668.34(c), that 366,282 students will, on average,
take .17 hours (10 minutes) to establish an academic plan for
an increase of 62,268 burden hours and re-evaluate the plan a
second time within the academic year for an additional
increase of 62,268 burden hours (2 times per academic year),
increasing burden to individuals by a total of 124,536 hours.
We estimate that 1,936,062 individuals at proprietary
institutions will require the development of an academic plan
as a result of not progressing academically (proprietary
institutions, which comprise 37 percent of the total number of
institutions of higher education, multiplied by 5,232,600
individuals). Given this number of individuals (1,936,062)
multiplied by 7 percent (which is our estimate for those who
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will not academically progress), we expect that 135,524
individuals will need to work with their institutions to develop
an academic plan. We estimate that each academic plan will
take, on average, .25 hours (15 minutes) of staff time at two
times within the academic year, increasing burden by 67,762
hours.
We estimate that 1,569,780 individuals at private non-profit
institutions will require the development of an academic plan
as a result of not progressing academically (private non-profit
institutions, which comprise 30 percent of the total number of
institutions of higher education, multiplied by 5,232,600
individuals). Given this number of individuals (1,569,780)
multiplied by 7 percent (which is our estimate for those who
will not academically progress), we expect that 109,885
individuals will need to work with their institutions to develop
an academic plan. We estimate that each academic plan will
take, on average, .25 hours (15 minutes) of staff time at two
times within the academic year, increasing burden by 54,943
hours.
We estimate that 1,726,758 individuals at public institutions
will require the development of an academic plan as a result of
not progressing academically (public institutions, which
comprise 33 percent of the total number of institutions of
higher education, multiplied by 5,232,600 individuals). Given
this number of individuals (1,726,758) multiplied by 7 percent
(which is our estimate for those who will not academically
progress), we expect that 120,873 individuals will need to work
with their institutions to develop an academic plan. We
estimate that each academic plan will take, on average, .25
hours (15 minutes) of staff time at two times within the
academic year, increasing burden by 60,437 hours.
Collectively, therefore, we estimate that the burden for
institutions will increase by 183,142 hours, in OMB Control
Number 1845-NEW2.
Under § 668.34(d), at an institution that measures satisfactory
academic progress annually, or less frequently than at the end
of each payment period, a student who has been determined
not to be making satisfactory academic progress will be able to
receive title IV, HEA program funds only after filing an appeal
and meeting one of two conditions: (1) The institution has
determined that the student should be able to meet
satisfactory progress standards after the subsequent payment
period, or (2) the institution develops an academic plan with
the student that, if followed, will ensure that the student is
able to meet the institution's satisfactory academic progress
standards by a specific point in time.
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Because the final regulations will transfer the elements of an
institution's satisfactory academic policy from § 668.16(e) to §
668.34, we are transferring the current burden estimate of
21,000 hours from the current OMB Control Number 18450022 to OMB Control Number 1845-NEW2.
We estimate that 3,158,838 individuals at proprietary
institutions (proprietary institutions, which comprise 37
percent of the total number of institutions of higher education,
multiplied by 8,537,400 individuals) will require an academic
review. Because the academic progress reviews are generally
highly automated, we estimate that, on average, each review
will take .02 hours (1.2 minutes) and will increase burden by
63,177 hours. We estimate that 2,561,220 individuals
at
private non-profit institutions will require an academic review
(private non-profit institutions, which comprise 30 percent of
the total number of institutions of higher education, multiplied
by 8,537,400 individuals). Because the academic progress
reviews are generally highly automated, we estimate that, on
average, each review will take .02 hours (1.2 minutes) and will
increase burden by 51,224 hours.
We estimate that 2,817,342 individuals at public institutions
will require an academic review (public institutions, which
comprise 33 percent of the total number of institutions of
higher education, multiplied by 8,537,400 individuals).
Because the academic progress reviews are generally highly
automated, we estimate that, on average, each review will take
.02 hours (1.2 minutes) and will increase burden by 56,347
hours.
Collectively, we estimate that the burden for institutions will
increase by 170,748 hours, in OMB Control Number 1845NEW2.
As a result of the final satisfactory academic progress reviews
conducted by the institutions, we estimate that 7 percent of the
8,537,400 enrolled students (at institutions that review
academic progress annually) or 597,618 will not successfully
achieve satisfactory academic progress. For these students,
institutions will need to work with each student to develop an
academic plan and this will increase burden for the individual
and the institutions. We estimate that under § 668.34(d),
597,618 students will, on average, take .17 hours (10 minutes)
to establish an academic plan, increasing burden to individuals
by 101,595 hours.
We estimate that 3,158,838 individuals at proprietary
institutions will require the development of an academic plan
as a result of not progressing academically (proprietary
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institutions, which comprise 37 percent of the total number of
institutions of higher education, multiplied by 8,537,400
individuals). Given this number of individuals (3,158,838)
multiplied by 7 percent (which is our estimate for those who
will not academically progress), we expect 221,119 individuals
will need to work with their institutions to develop an
academic plan. We estimate that each academic plan will take,
on average, .25 hours (15 minutes) of staff time, increasing
burden by 55,280 hours.
We estimate that 2,561,220 individuals at private non-profit
institutions will require the development of an academic plan
as a result of not progressing academically (private non-profit
institutions, which comprise 30 percent of the total number of
institutions of higher education, multiplied by 8,537,400
individuals). Given this number of individuals (2,561,220)
multiplied by 7 percent (which is our estimate for those who
will not academically progress), we expect 179,285 individuals
will need to work with their institutions to develop an
academic plan. We estimate that each academic plan will take,
on average, .25 hours (15 minutes) of staff time, increasing
burden by 44,821 hours.
We estimate that 2,817,342 individuals at public institutions
will require the development of an academic plan as a result of
not progressing academically (public institutions, which
comprise 33 percent of the total number of institutions of
higher education, multiplied by 8,537,400 individuals). Given
this number of individuals (2,817,342) multiplied by 7 percent
(our estimate for those who will not academically progress),
we expect 197,214 individuals will need to work with their
institutions to develop an academic plan. We estimate that
each academic plan will take, on average, .25 hours (15
minutes) of staff time, increasing burden by 49,304 hours.
Collectively, we estimate that the burden for institutions will
increase by 149,405 hours, in OMB Control Number 1845NEW2.
In total, the final regulatory changes reflected in § 668.34 will
increase burden by a total of 955,856 hours in OMB Control
Number 1845-NEW2; however, when the 21,000 hours of
burden currently in OMB 1845-0022 are administratively
transferred from OMB 1845-0022 to OMB 1845-NEW2, the
grand total of burden hours under this section will increase to
976,856 in OMB 1845-NEW2.
Section 668.43—Institutional Information
The Department has amended current § 668.5(a) by revising
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and redesignating paragraph (a) as paragraph (a)(1) and
adding a new paragraph (a)(2). Section 668.5(a)(1) is based on
the language that is in current § 668.5(a), but has been
modified to make it consistent with the definition of an
“educational program” in 34 CFR 600.2.
Section 668.5(a)(2) specifies that if a written arrangement is
between two or more eligible institutions that are owned or
controlled by the same individual, partnership, or corporation,
the institution that grants the degree or certificate must
provide more than 50 percent of the educational program.
These clarifications are also intended to ensure that the
institution enrolling the student has all necessary approvals to
offer an educational program in the format in which it is being
provided, such as through distance education when the other
institution is providing instruction under a written agreement
using that method of delivery.
Section 668.5(c)(1) includes an expanded list of conditions that
will preclude an arrangement between an eligible institution
and an ineligible institution.
Sections 668.5(e) and 668.43 will require an institution that
enters into a written arrangement to provide a description of
the arrangement to enrolled and prospective students.
We estimate that 104 proprietary institutions will enter into an
average of 1 written arrangement per institution and that, on
average, the burden associated with the information
collections about written agreements and its disclosure
required under § 668.5(e) and 668.43 will take .5 hours (30
minutes) per arrangement, increasing burden by 52 hours.
We estimate that 1,731 private non-profit institutions will enter
into an average of 50 written arrangements per institution and
that, on average, the burden associated with the final
collection of information about written agreements and its
disclosure will take .5 hours (30 minutes) per arrangement,
increasing burden by 43,275 hours.
We estimate that 1,892 public institutions will enter into an
average of 25 written arrangements per institution and that,
on average, the burden associated with the final collection of
information about written agreements and its disclosure will
take .5 hours (30 minutes) per arrangement, increasing
burden by 23,650 hours.
Collectively, we estimate that burden will increase for
institutions in their reporting of the details of written
agreements by 66,977 hours in OMB Control Number 18450022.
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Currently, the Department requires that an institution must
make available for review to any enrolled or prospective
student upon request, a copy of the documents describing the
institution's accreditation and its State, Federal, or tribal
approval or licensing. The Department requires in § 668.43(b)
that the institution must also provide its students or
prospective students with contact information for filing
complaints with its accreditor and State approval or licensing
entity.
We estimate that 1,919 (or 92 percent of all 2,086 proprietary
institutions) will have to begin providing contact information
for filing complaints with accreditors, approval or licensing
agencies. We estimate that the other 8 percent of proprietary
institutions are
already providing this information. We
estimate that on average, this disclosure will take .17 hours (10
minutes) per disclosure and that it will, therefore, increase
burden to proprietary institutions by 326 hours.
We estimate that 1,593 (or 92 percent of all 1,731 private nonprofit institutions) will have to begin providing contact
information for filing complaints with accreditors, approval or
licensing agencies. We estimate that the other 8 percent of
private non-profit institutions are already providing this
information. We estimate that on average, this disclosure will
take .17 hours (10 minutes) per disclosure and that it will,
therefore, increase burden to private non-profit institutions by
271 hours.
We estimate that 1,740 (or 92 percent of all 1,892 public
institutions) will have to begin providing contact information
for filing complaints with accreditors, approval or licensing
agencies. We estimate that the other 8 percent of public
institutions are already providing this information. We
estimate that on average, this disclosure will take .17 hours (10
minutes) per disclosure and that it will, therefore, increase
burden to proprietary institutions by 296 hours.
Collectively, we estimate that burden will increase for
institutions in their reporting of the contact information for
filing complaints to accreditors and approval or licensing
agencies by 893 hours in OMB Control Number 1845-0022.
In total, the final regulatory changes reflected in § 668.43 will
increase burden by 67,870 hours in OMB Control Number
1845-0022.
Section 668.55—Updating Information
Section 668.55 will require an applicant to update all
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applicable changes in dependency status that occur
throughout the award year, including changes in the
applicant's household size and the number of those household
members attending postsecondary educational institutions.
We estimate that 1,530,000 individuals will update their
household size or the number of household members
attending postsecondary educational institutions and that, on
average, reporting will take .08 hours (5 minutes) per
individual, increasing burden by 122,400 hours.
We estimate that proprietary institutions will receive updated
household size or the updated number of household members
attending postsecondary educational institutions from
566,100 applicants. We estimate that each updated record will
take .17 hours (10 minutes) to review, which will increase
burden by 96,237 hours.
We estimate that private non-profit institutions will receive
updated household size or the updated number of household
members attending postsecondary educational institutions
from 459,000 applicants. We estimate that each updated
record will take .17 hours (10 minutes) to review, which will
increase burden by 78,030 hours.
We estimate that public institutions will receive updated
household size or the updated number of household members
attending postsecondary educational institutions from
504,900 applicants. We estimate that each updated record will
take .17 hours (10 minutes) to review, which will increase
burden by 85,833 hours.
Collectively, we estimate that burden will increase for
individuals and institutions as a result of being required to
report updated household size and the updated number of
household members attending postsecondary educational
institutions by 382,500 hours in OMB Control Number 18450041, of which 122,400 hours is for individuals and 260,100
hours is for institutions.
This section also requires individuals to make changes to their
FAFSA information if their marital status changes, but only at
the discretion of the financial aid administrator because such
an update is necessary to address an inequity or to reflect
more accurately the applicant's ability to pay. As a result, we
estimate that of the 170,000 individuals that will have a
change of marital status, we expect that this discretion will be
applied in only ten percent of the cases, therefore, ten percent
of the 170,000 estimated cases is 17,000 cases that on average
the reporting will take .08 hours (5 minutes) per individual,
increasing burden by 1,360 hours.
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We estimate that proprietary institutions will receive updated
marital status information from 6,290 applicants. We estimate
that each updated record will take .17 hours (10 minutes) to
review, which will increase burden by 1,069 hours.
We estimate that private non-profit institutions will receive
updated marital status information from 5,100 applicants. We
estimate that each updated record will take .17 hours (10
minutes) to review, which will increase burden by 867 hours.
We estimate that public institutions will receive updated
marital status information from 5,610 applicants. We estimate
that each updated record will take .17 hours (10 minutes) to
review, which will increase burden by 954 hours.
Collectively, we estimate that burden will increase for
individuals and institutions in their reporting updated marital
status information by 4,250 hours in OMB Control Number
1845-0041.
Section 668.55 will also include a number of other changes to
remove language that implements the marital status exception
in the current regulations, including removing current §
668.55(a)(3) and revising § 668.55(b).
In total, the final regulatory changes reflected in § 668.55 will
increase burden by 386,750 hours in OMB Control Number
1845-0041.
Section 668.56—Information To Be Verified
The Department will eliminate from the regulations the five
items that an institution currently is required to verify for all
applicants selected for verification. Instead, pursuant to §
668.56(a), for each award year, the Secretary will specify in a
Federal Register notice the FAFSA information and
documentation that an institution and an applicant may be
required to verify. The Department will then specify on an
individual student's SAR and ISIR what information must be
verified for that applicant.
Currently, under OMB Control Number 1845-0041, there are
1,022,384 hours of burden associated with the verification
regulations of which 1,010,072 hours of burden are a result of
the data gathering and submission by each individual
applicant selected for verification. This estimate was based
upon the number of applicants in the 2002-2003 award year.
Since then, the number of applicants has grown significantly to
17.4 million applicants for the 2008-2009 award year, of
which we project 5.1 million individual applicants to be
selected for verification.
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The projected number of items to be verified under the final
regulations is expected to be reduced from the current five
required data elements to an average of three items per
individual. This projected reduction in items to be verified will
result in a reduction of burden per individual applicant. Also,
as a result of collecting information to verify applicant data on
this smaller average number of data elements (three items
instead of five items), the average amount of time for the
individual applicant to review verification form instructions,
gather the data, respond on a form and submit a form and the
supporting data will decrease from the current average of .20
hours (12 minutes) per individual to .12 hours (7
minutes),
thus further reducing burden on the individual applicant.
For example, when we consider the estimated 5.1 million 20082009 applicants selected for verification at an average of .20
hours (12 minutes) to collect and submit information,
including supporting documentation for the five required data
elements (which is the estimated amount of time that is
associated with the requirements in current § 668.56(a)), the
requirements in that section yields a total burden of 1,020,000
hours added to OMB Control Number 1845-0041. However,
under § 668.56(b), where the number of verification data
elements will be reduced to an average of three, the estimated
5.1 million individuals selected for verification multiplied by
the reduced average of .12 minutes (7 minutes) yields an
increase of 612,000 hours in burden. Therefore, we will expect
the burden to be 408,000 hours less than under the current
regulations.
As a result, for OMB reporting purposes, we estimate that the
individuals, as a group, will have an increase in burden by
612,000 hours in OMB Control Number 1845-0041 (rather
than 1,020,000 hours).
Section 668.57—Acceptable Documentation
We have made a number of technical and conforming changes
throughout § 668.57. We also have made the following
substantive changes described in this section.
Section 668.57(a)(2) will allow an institution to accept, in lieu
of an income tax return or an IRS form that lists tax account
information, the electronic importation of data obtained from
the IRS into an applicant's online FAFSA.
We also have amended § 668.57(a)(4)(ii)(A) to accurately
reflect that, upon application, the IRS grants a six-month
extension beyond the April 15 deadline rather than the fourmonth extension currently stated in the regulations.
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Under § 668.57(a)(5), an institution may require an applicant
who has been granted an extension to file his or her income
tax return to provide a copy of that tax return once it has been
filed. If the institution requires the applicant to submit the tax
return, it will need to re-verify the AGI and taxes paid of the
applicant and his or her spouse or parents when the institution
receives the return.
Section 668.57(a)(7) clarifies that an applicant's income tax
return that is signed by the preparer or stamped with the
preparer's name and address must also include the preparer's
Social Security number, Employer Identification Number or
the Preparer Tax Identification Number.
Section 668.57(b) and (c) remain substantively unchanged.
We have deleted current § 668.57(d) regarding acceptable
documentation for untaxed income and benefits and replaced
it with a new § 668.57(d). This new section provides that, if an
applicant is selected to verify other information specified in an
annual Federal Register notice, the applicant must provide
the documentation specified for that information in the
Federal Register notice.
Currently under OMB Control Number 1845-0041, there are
1,022,384 hours of burden associated with the verification
regulations, of which 12,312 hours are attributable to
institutions of higher education to establish their verification
policies and procedures. Under § 668.57, we estimate that, on
average, institutions will take .12 hours (7 minutes) per
applicant selected for verification to review and take
appropriate action based upon the information provided by
the applicant, which in some cases may mean correcting
applicant data or having the applicant correct his or her data.
Under current § 668.57, when we consider the significant
increase to 17.4 million applicants in the 2008-2009 award
year, of which 5.1 million will be selected for verification at an
average of .20 hours (12 minutes) per verification response
received from applicants by the institutions for review, the
total increase in burden will be 1,020,000 additional hours.
However, under § 668.57, both the average number of items to
be verified will be reduced from five items to three items, as
well as the average amount of time to review will decrease
from .20 hours (12 minutes) to .12 hours (7 minutes).
Therefore, the burden to institutions will be 612,000 burden
hours (that is, 5.1 million multiplied by .12 hours (7 minutes))
—rather than 1,020,000 burden hours (i.e., 5.1 million
applicants multiplied by .20 hours (12 minutes)). Thus, as
compared to the burden under the current regulations, using
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the number of applicants from 2008-2009—17.4 million—
there will be 408,000 fewer burden hours for institutions.
We estimate 226,440 hours of increased burden for proprietary
institutions (2,086 proprietary institutions of the total 5,709
affected institutions or 37 percent multiplied by 5,100,000
applicants equals 1,887,000 applicants multiplied by .12 hours
(7 minutes)).
We estimate 183,600 hours of increased burden for private
non-profit institutions (1,731 private non-profit institutions of
the total 5,709 affected institutions or 30 percent multiplied by
5,100,000 applicants equals 1,530,000 applicants multiplied
by .12 hours (7 minutes)).
We estimate 201,960 hours of increased burden for public
institutions (1,892 public institutions of the total 5,709
affected institution or 33 percent multiplied by 5,100,000
applicants multiplied by .12 hours (7 minutes)).
As a result, for OMB reporting purposes, collectively there will
be a projected increase of 612,000 hours of burden for
institutions in OMB Control Number 1845-0041.
Section 668.59—Consequences of a Change in FAFSA
Information
We have amended § 668.59 by removing all allowable
tolerances and requiring instead that an institution submit to
the Department all applicable changes to an applicant's FAFSA
information resulting from verification for those applicants
receiving assistance under any of the subsidized student
financial assistance programs (see§ 668.59(a)).
Under § 668.59(b), for the Federal Pell Grant program, once
the applicant provides the institution with the corrected SAR
or ISIR, the institution will be required to recalculate the
applicant's Federal Pell Grant and disburse any additional
funds, if additional funds are payable. If the applicant's
Federal Pell Grant will be reduced as a result of verification,
the institution will be required to eliminate any overpayment
by adjusting subsequent disbursements or reimbursing the
program account by requiring the applicant to return the
overpayment or making restitution from its own funds (see §
668.59(b)(2)(ii)).
Section 668.59(c) provides that, for the subsidized student
financial assistance programs, excluding the Federal Pell
Grant Program, if an applicant's FAFSA information changes
as a result of verification, the institution must recalculate the
applicant's EFC and adjust the applicant's financial aid
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package on the basis of the EFC on the corrected SAR or ISIR.
With the exception of minor technical edits, § 668.59(d), which
describes the consequences of a change in an applicant's
FAFSA information, remains substantively the same as current
§ 668.59(d).
Finally, we have removed current § 668.59(e), the provision
that requires an institution to refer to the Department
unresolved disputes over the accuracy
of information
provided by the applicant if the applicant received funds on
the basis of that information.
Both individuals (students) and institutions will be making
corrections to FAFSA information as a result of the verification
process. We estimate that 30 percent of the 17,000,000
applicants or 5,100,000 individuals (students) will be selected
for verification. Of those 5,100,000 individuals, students will
submit, on average, 1.4 changes in FAFSA information as a
result of verification for 7,140,000 changes, which will take an
average of .12 hours (7 minutes) per change, increasing burden
to individuals by 856,800 hours.
We estimate that institutions will need to submit 10,200,000
changes in FAFSA information as a result of verification (that
is, 5,100,000 individuals selected for verification multiplied by
2.0 changes, which is what we estimate will be the average per
individual).
Of the estimated total 10,200,000 changes, we estimate that
3,774,000 changes to FAFSA information as a result of
verification will occur at proprietary institutions, which will
take an average of .12 hours (7 minutes) per change, increasing
burden by 452,880 hours.
Of the estimated total 10,200,000 changes, we estimate that
3,060,000 changes to FAFSA information as a result of
verification will occur at private non-profit institutions, which
will take an average of .12 hours (7 minutes) per change,
increasing burden by 367,200 hours.
Of the estimated total 10,200,000 changes, we estimate that
3,366,000 changes to FAFSA information as a result of
verification will occur at public institutions, which will take an
average of .12 hours (7 minutes) per change, increasing burden
by 403,920 hours.
Collectively, therefore, the final regulatory changes reflected in
§ 668.59 will increase for individuals and institutions by
2,080,800 hours in OMB Control Number 1845-0041.
Section 668.144—Application for Test Approval
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We have clarified and expanded the requirements in current §§
668.143 and 668.144. In addition, we have consolidated all of
the requirements for test approval in one section, § 668.144.
Paragraphs (a) and (b) of § 668.144 describe the general
requirement for test publishers and States to submit to the
Secretary any test they wish to have approved under subpart J
of part 668. Paragraph (c) of § 668.144 describes the
information that a test publisher must include with its
application for approval of a test. Paragraph (d) of § 668.144
describes the information a State must include with its
application when it submits a test to the Secretary for
approval.
Section 668.144(c)(16) will require test publishers to include in
their applications a description of their test administrator
certification process. Under § 668.144(c)(17), we will require
test publishers to include in their applications, a description of
the test anomaly analysis the test publisher will conduct and
submit to the Secretary.
Finally, § 668.144(c)(18) will require test publishers to include
in their applications a description of the types of
accommodations available for individuals with disabilities,
including a description of the process used to identify and
report when accommodations for individuals with disabilities
were provided.
We have added § 668.144(d) to describe what States must
include in their test submissions to the Secretary. While this
provision replaces the content in current § 668.143, its
language has been revised to be parallel, where appropriate, to
the test publisher submission requirements in current §
668.144. In addition to making these requirements parallel, §
668.144(d) also includes the new requirements to be added to
the test publisher submissions.A description of those new
provisions follows:
Both test publishers and States will be required to submit a
description of their test administrator certification process
that indicates how the test publisher or State, as applicable,
will determine that a test administrator has the necessary
training, knowledge, skills and integrity to test students in
accordance with requirements and how the test publisher or
the State will determine that the test administrator has the
ability and facilities to keep its test secure against disclosure or
release (see § 668.144(c)(16) (test publishers) and §
668.144(d)(7) (States)).
We estimate that a test publisher and State will, on average,
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take 2.5 hours to develop its process to establish that a test
administrator has the necessary training, knowledge, skills
and integrity to administer ability-to-benefit (ATB) tests and
then to report that process to the Secretary.
We estimate that the burden associated with the currently
approved eight (8) ATB tests will increase for the test
publishers and States by 20 hours.
The regulations will require both test publishers and States to
submit a description of the test anomaly analysis they will
conduct. This description must include a description of how
they will identify potential test irregularities and make a
determination that test irregularities have occurred; an
explanation of corrective action to be taken in the event of test
irregularities; and information on when and how the
Secretary, test administrator, and institutions will be notified
if a test administrator is decertified (see § 668.144(c)(17) (test
publishers) and § 668.144(d)(8) (States)).
We estimate that each test publisher and State will, on average,
take 75 hours to develop its test anomaly process, to establish
its test anomaly analysis (where it explains its test irregularity
detection process including its decertification of test
administrator process) and to establish its reporting process to
the Secretary. We estimate that the burden associated with the
currently approved eight (8) ATB tests will increase for the test
publishers and States by 600 hours.
Under § 668.144(c)(18) and (d)(9) respectively, both test
publishers and States will be required to describe the types of
accommodations available for individuals with disabilities,
and the process for a test administrator to identify and report
to the test publisher when accommodations for individuals
with disabilities were provided. We estimate that test
publishers and States will, on average, take 1 hour to develop
and describe to the Secretary the types of accommodations
available to individuals with disabilities, to describe the
process the test administrator will use to support the
identification of the disability and to develop the process to
report when accommodations will be used.
We estimate that the burden associated with the currently
approved eight (8) ATB tests will increase for the current test
publishers by 8 hours.
Collectively, the final regulatory changes in § 668.144 will
increase burden for test publishers and States by 628 hours in
OMB 1845-0049.
Section 668.150—Agreement Between the Secretary and
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a Test-Publisher or a State
Section 668.150 provides that States, as well as test publishers,
must enter into agreements with the Secretary in order to have
their tests approved.
We also have revised this section to require both test
publishers and States to comply with a number of new
requirements that will be added to the agreement with the
Secretary.
These requirements will include:
Requiring the test administrators that they certify to provide
them with certain information about whether they have been
decertified (see § 668.150(b)(2)).
We estimate that 3,774
individuals (test administrators) will take, on average, .17
hours (10 minutes) to access, read, complete and submit the
written certification to a test publisher or State, which will
increase burden by 642 hours.
We estimate that it will take each test publisher or State 1 hour
per test submission to develop its process to obtain a
certification statement from each prospective test
administrator, which will increase burden by 8 hours.
We estimate that the review of the submitted written
certifications by the test publishers or States for the 3,774 test
administrators will take, on average, .08 hours (5 minutes) per
certification form, which will increase burden by 302 hours.
With regard to the requirement to immediately notify the test
administrator, the Secretary, and institutions when the test
administrator is decertified (see § 668.150(b)(6)), we estimate
that 1 percent of the 3,774 test administrators will be
decertified. We estimate that it will take test publishers and
States, on average, 1 hour per decertification to provide all of
the final notifications, which will increase burden for test
publishers and States by 38 hours.
With regard to the requirement to review test results of tests
administered by a decertified test administrator and
immediately to notify affected institutions and students (see §
668.150(b)(7)), we estimate that burden will increase. We
estimate that 481,763 ATB tests will be taken for title IV, HEA
purposes annually. Of the annual total of ATB tests provided,
we estimate that 1 percent will be improperly administered
and that 4,818 individuals will be contacted, which will take,
on average, .25 hours (15 minutes) per individual. As a result,
we estimate that burden will increase to test publishers and
States by 1,205 hours.
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In addition, we estimate that it will take test publishers and
States, on average, 5 hours per ATB test submitted, to develop
the process to determine when ATB tests have been
improperly administered, which for 8 approved ATB tests will
increase burden by 40 hours.
We estimate that test publishers and States will, on average,
take .33 hours (20 minutes) for each of the 4,818 estimated
improperly administered ATB tests to make the final
notifications to institutions, students and prospective
students, which will increase burden by 1,590 hours.
We estimate that 38 test administrators (1 percent of the 3,774
test administrators) will be decertified. Of the 38 decertified
test administrators, we estimate that 1 previously de-certified
test administrator (2 percent of 38 test administrators) will be
re-certified after a three-year period and, therefore, reported
to the Secretary. We estimate the burden for test publishers
and States for this reporting will be 1 hour. We project that it
will be very rare that a decertified test administrator will seek
re-certification after the three-year decertification period.
Under § 668.150(b)(13), test publishers and States must
provide copies of test anomaly analysis every 18 months
instead of every 3 years. We estimate that it will take a test
publisher or State, on average, 75 hours to conduct its test
anomaly analysis and report the results to the Secretary every
18 months. We estimate the burden on test publishers and
States for the submission of the 8 test anomaly analysis every
18 months will be 600 hours.
Under § 668.150(b)(15), test publishers and States will be
required to report to the Secretary any credible information
indicating that a test has been compromised (see § 668.150(b)
(15)). We estimate that 481,763 ATB tests for title IV, HEA
purposes will be given on an annual basis. Of that total
number ATB tests given, we estimate that 482 ATB tests will
be compromised. On average, we estimate that test publishers
and States will take 1 hour per test to collect the credible
information to make the determination that a test will be
compromised and report it to the Secretary. We estimate that
burden will increase by 482 hours.
Section 668.150(b)(16) will require test publishers and States
to report to the Office of Inspector General of the Department
of Education any credible information indicating that a test
administrator or institution may have engaged in civil or
criminal fraud or other misconduct. We estimate that 481,763
ATB tests for title IV, HEA purposes will be given on an annual
basis. Of that total number ATB tests given, we estimate that
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482 ATB tests will be compromised. On average, we estimate
that test publishers or States will take 1 hour per test to collect
the credible information to make the determination that a test
administrator or institution may have engaged in fraud or
other misconduct and report it to the U.S. Department of
Education's Office of the Inspector General. We estimate that,
as a result of this requirement, burden will increase by 482
hours.
Section 668.150(b)(17) requires a test administrator who
provides a test to an individual with a disability who requires
an accommodation in the test's administration to report to the
test publisher or the State the nature of the disability and the
accommodations that were provided. Census data indicate that
12 percent of the U.S. population is severely disabled. We
estimate that 12 percent of the ATB test population (481,763
ATB test takers) or 57,812 of the ATB test takers will be
individuals with disabilities that will need accommodations for
an ATB test. We estimate that it will take .08 hours (5
minutes) to report the nature of the disability and any
accommodation that the test administrator made for the test
taker, increasing burden by 4,625 hours.
We estimate that, on average, test publishers and States will
take 2 hours per ATB test to develop the process for having
test administrators report the nature of the test taker's
disability and any accommodations provided. We expect this
to result in an increase burden for test publishers and States
by 16 hours (2 hours multiplied by 8 ATB tests).
Collectively, the final changes reflected in § 668.150 will
increase burden by 10,031 hours in OMB Control Number
1845-0049.
Section 668.151—Administration of Tests
Section 668.151(g)(4) will require institutions to keep a record
of each individual who took an ATB test and the name and
address of the test administrator who administered the test
and any identifier assigned to the test administrator by the test
publisher or the State.
We estimate that 481,763 ATB tests for title IV, HEA purposes
will be given on an annual basis. We estimate that proprietary
institutions will give 173,445 tests (36 percent of those ATB
tests) and that, on average, the amount of time to record the
test takers' name and address as well as the test
administrators' identifiers will be .08 hours (5 minutes) per
test, increasing burden for proprietary institutions by 13,876
hours.
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We estimate that private non-profit institutions will give
149,347 tests (31 percent of the total annual ATB tests given)
and that, on average, the amount of time to record the test
takers' name and address, as well as the test administrators'
identifiers will be .08 hours (5 minutes) per test, increasing
burden for private non-profit institutions by 11,948 hours.
We estimate that public institutions will give 158,962 tests (33
percent of the total annual ATB tests given) and that, on
average, the amount of time to record the test takers' name
and address as well as the test administrators' identifiers
will
be .08 hours (5 minutes) per test, increasing burden for public
institutions by 12,717 hours.
If the individual who took the test has a disability and is unable
to be evaluated by the use of an approved ATB test, or the
individual requested or required a testing accommodation, the
institution will be required, under § 668.151(g)(5), to maintain
documentation of the individual's disability and of the testing
arrangements provided. Census data indicate that 12 percent
of the U.S. population is severely disabled. We estimate that 12
percent of the ATB test population (481,763 ATB test takers)
or 57,812 of the ATB test takers will be individuals with
disabilities that will need accommodations for the ATB test.
We estimate that it will take .08 hours (5 minutes) to collect
and maintain documentation of the individual's disability and
of the testing accommodations provided to the test taker.
We estimate that proprietary institutions will give 20,812 tests
(36 of the total annual ATB tests given), resulting in an
increase in burden for proprietary institutions by 1,665 hours
(20,812 tests multiplied by .08 hours).
We estimate that private non-profit institutions will give 17,922
tests (31 percent of the total annual ATB tests given), resulting
in an increase in burden for private non-profit institutions by
1,434 hours (17,922 tests multiplied by .08 hours).
We estimate that public institutions will give 19,078 tests (33
percent of the total annual ATB tests given), resulting in an
increase in burden for public institutions by 1,526 hours
(19,078 tests multiplied by .08 hours).
Collectively, the final regulatory changes reflected in § 668.151
will increase burden by 43,166 hours in OMB Control Number
1845-0049.
Section 668.152—Administration of Tests by
Assessment Centers
Section 668.152(a) clarifies that assessment centers are also
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required to comply with the provisions of § 688.153
(Administration of tests for individuals whose native language
is not English or for individuals with disabilities), if applicable.
Under § 668.152(b)(2), assessment centers that score tests will
be required to provide copies of completed tests or lists of testtakers' scores to the test publisher or the State, as applicable,
on a weekly basis. Under § 668.152(b)(2)(i) and (b)(2)(ii),
copies of completed tests or reports listing test-takers' scores
will be required to include the name and address of the test
administrator who administered the test and any identifier
assigned to the test administrator by the test publisher or the
State.
We estimate that of the 3,774 ATB test administrators
approximately one-third (.3328 times 3,774) or 1,256 of the
ATB test administrators are at test assessment centers. Of the
1,256 test assessment centers, we estimate that 18 percent or
226 test assessment centers are at private non-profit
institutions and 82 percent or 1,030 test assessment centers
are at public institutions. We estimate that 92 percent of the
ATB tests provided at test assessment centers are scored by the
test administrators. Therefore, under the regulations, the
institution will be required to maintain the scored ATB tests,
to collect and submit copies of the completed ATB tests or a
listing to the test publisher or State on a weekly basis, while
the other 8 percent will not be impacted by these regulations.
We estimate that, on average, it will take .08 hours (5 minutes)
per week for the test assessment center (institution) to collect
and submit the final information.
For the 226 test assessment centers at private non-profit
institutions, we expect 940 hours of increased annual burden
(226 test assessment centers multiplied by .08 hours (5
minutes) and then multiplied by 52 weeks in a year).
For the 1,030 test assessment centers at public institutions, we
expect 4,285 hours of increased annual burden (1,030 test
assessment centers multiplied by.08 hours (5 minutes) and
then multiplied by 52 weeks in a year).
Collectively, the final regulatory changes reflected in § 668.152
will increase burden by 5,225 hours in OMB Control Number
1845-0049.
Section 668.164—Disbursing Funds
Under § 668.164(i), an institution will provide a way for a
Federal Pell Grant eligible student to obtain or purchase
required books and supplies by the seventh day of a payment
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period under certain conditions. An institution will have to
comply with this requirement only if, 10 days before the
beginning of the payment period, the institution could
disburse the title IV, HEA program funds for which the
student is eligible, and presuming that those funds were
disbursed, the student will have a title IV, HEA credit balance
under § 668.164(e). The amount the institution will provide to
the student for books and supplies will be the lesser of the
presumed credit balance or the amount needed by the student,
as determined by the institution. In determining the amount
needed by the student, the institution could use the actual
costs of books and supplies or the allowance for books and
supplies used in the student's cost of attendance for the
payment period.
We estimate that of the 6,321,678 Federal Pell Grant recipients
in the 2008-2009 award year, that approximately 30 percent
or 1,896,503 will have or did have a title IV, HEA credit
balance. Of that number of Federal Pell Grant recipients, we
estimate that 25 percent or 474,126 Federal Pell Grant
recipients will have a presumed credit balance 10 days prior to
the beginning of the payment period, and as final, that the
institution will have to provide a way for those recipients to
either obtain or purchase their books and supplies within 7
days of the beginning of the payment period.
We estimate that the 2,063 proprietary institutions
participating in the Federal Pell Grant program will take, on
average 3 hours per institution to analyze and make
programming change needed to identify these recipients with
presumed credit balances, increasing burden by 6,189 hours.
Additionally, we estimate that proprietary institutions will be
required to disburse the presumed credit balance to 38 percent
of the 474,126 at proprietary institutions (180,168 recipients),
which on average, will take .08 hours (5 minutes) per
recipient, increasing burden by 14,413 hours.
We estimate that the 1,523 private non-profit institutions
participating in the Federal Pell Grant program will take, on
average, 3 hours per institution to analyze and make
programming change needed to identify these recipients with
presumed credit balances, increasing burden by 4,569 hours.
Additionally, we estimate that private non-profit institutions
will be required to disburse the presumed credit balance to 28
percent of the 474,126 at proprietary institutions (132,755
recipients) which on average, will take .08 hours (5 minutes)
per recipient, increasing burden by 10,620 hours.
We estimate that the 1,883 public institutions participating in
the Federal Pell Grant program will take, on average 3 hours
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per institution to analyze and make programming change
needed to identify these recipients with presumed credit
balances, increasing burden by 5,649 hours. Additionally, we
estimate that proprietary institutions will be required to
disburse the presumed credit balance to 34 percent of the
474,126 at proprietary institutions (161,203 recipients) which
on average, will take .08 hours (5 minutes) per recipient,
increasing burden by 12,896 hours.
Collectively, the final regulatory changes reflected in § 668.164
will increase burden by 54,336 hours in OMB Control Number
1845-NEW3.
Collection of Information Back to Top
Regulatory
Information collection
Collection
This regulatory section will require
OMB 1845-
institutions to report for each student
NEW1. This
who during an award year began
will be a new
Section
668.6
attending or completed a program that
collection.
prepares a student for gainful
Separate 60-
employment information needed to
day and 30-day
identify the student and the location of
Federal
the institution the student attended, the
Register
CIP code for the program, the date the
notices were
student completed the program, the
published to
amounts the student received from
solicit
private educational loans and the
comment. The
amount from institutional financing plans
burden will
that the student owes the institution after
increase by
completing the program, and whether
677,160
the student matriculated to a higher
hours.
credentialed program at the same
institution or another institution.
Institutions will have to disclose
information to prospective students
Intergovernmental
Review
These programs are not subject to Executive Order 12372 and
the regulations in 34 CFR part 79.
Back to Top
Assessment of
Educational Impact
Back to Top
In accordance with section 411 of the General Education
Provisions Act, 20 U.S.C. 1221e-4, and based on our own
review, we have determined that these final regulations do not
require transmission of information that any other agency or
authority of the United States gathers or makes available.
Electronic Access to
This Document
You can view this document, as well as all other documents of
this Department published in the Federal Register, in text
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Back to Top
or Adobe Portable Document Format (PDF) on the Internet at
the following site: http://www.ed.gov/news/fedregister. To
use PDF, you must
have Adobe Acrobat Reader, which is
available free at this site.
Note:
The official version of this document is the document
published in the Federal Register. Free Internet access
to the official edition of the Federal Register and the
Code of Federal Regulations is available on GPO Access
at: http://www.gpoaccess.gov/nara/index/html.
(Catalog of Federal Domestic Assistance: 84.007 FSEOG;
84.032 Federal Family Education Loan Program; 84.033
Federal Work-Study Program; 84.037 Federal Perkins Loan
Program; 84.063 Federal Pell Grant Program; 84.069 LEAP;
84.268 William D. Ford Federal Direct Loan Program; 84.376
ACG/SMART; 84.379 TEACH Grant Program)
List of Subjects
34 CFR Part 600
Back to Top
Colleges and universities
Foreign relations
Grant programs-education
Loan programs-education
Reporting and recordkeeping requirements
Selective Service System
Student aid
Vocational education
34 CFR Part 602
Colleges and universities
Reporting and recordkeeping requirements
34 CFR Part 603
Colleges and universities
Vocational education
34 CFR Part 668
Administrative practice and procedure
Aliens
Colleges and universities
Consumer protection
Grant programs-education
Incorporation by reference
Loan programs-education
Reporting and recordkeeping requirements
Selective Service System
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Student aid
Vocational education
34 CFR Part 682
Administrative practice and procedure
Colleges and universities
Loan programs-education
Reporting and recordkeeping requirements
Student aid
Vocational education
34 CFR Part 685
Administrative practice and procedure
Colleges and universities
Loan programs-education
Reporting and recordkeeping requirements
Student aid
Vocational education
34 CFR Part 686
Administrative practice and procedure
Colleges and universities
Education
Elementary and secondary education
Grant programs-education
Reporting and recordkeeping requirements
Student aid
34 CFR Part 690
Colleges and universities
Education of disadvantaged
Grant programs-education
Reporting and recordkeeping requirements
Student aid
34 CFR Part 691
Colleges and universities
Elementary and secondary education
Grant programs-education
Student aid
Dated: October 18, 2010.
Arne Duncan,
Secretary of Education.
begin regulatory text
For the reasons discussed in the preamble, the Secretary amends parts
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600, 602, 603, 668, 682, 685, 686, 690, and 691 of title 34 of the Code of
Federal Regulations as follows:
PART 600—INSTITUTIONAL ELIGIBILITY UNDER THE
HIGHER EDUCATION ACT OF 1965, AS AMENDED
Back to Top
1.
The authority citation for part 600 continues to read as follows:
Authority:
20 U.S.C. 1001, 1002, 1003, 1088, 1091, 1094, 1099b, and 1099c, unless
otherwise noted.
2.
Section 600.2 is amended by:
A. Adding, in alphabetical order, the definition of a Credit hour.
B. Revising the definition of Recognized occupation.
The addition and revision read as follows:
§ 600.2 Definitions.
*****
Credit hour: Except as provided in 34 CFR 668.8(k) and (l), a credit hour is an
amount of work represented in intended learning outcomes and verified by
evidence of student achievement that is an institutionally established
equivalency that reasonably approximates not less than—
(1) One hour of classroom or direct faculty instruction and a minimum of two
hours of out of class student work each week for approximately fifteen weeks
for one semester or trimester hour of credit, or ten to twelve weeks for one
quarter hour of credit, or the equivalent amount of work over a different
amount of time; or
(2) At least an equivalent amount of work as required in paragraph (1) of this
definition for other academic activities as established by the institution
including laboratory work, internships, practica, studio work, and other
academic work leading to the award of credit hours.
*****
Recognized occupation: An occupation that is—
(1) Identified by a Standard Occupational Classification (SOC) code
established by the Office of Management and Budget or an Occupational
Information Network O*NET-SOC code established by the Department of
Labor and available at http://online.onetcenter.org or its successor site; or
(2) Determined by the Secretary in consultation with the Secretary of Labor to
be a recognized occupation.
*****
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3.
Section 600.4 is amended by:
A. In paragraph (a)(3), adding the words, “in accordance with § 600.9”
immediately after the word “located”.
B. Revising paragraph (a)(4)(i)(C).
The revision reads as follows:
§ 600.4 Institution of higher education.
(a) * * *
(4) * * *
(i) * * *
(C) That is at least a one academic year training program that leads to a
certificate, or other nondegree recognized credential, and prepares students
for gainful employment in a recognized occupation; and
*****
§ 600.5 [Amended]
4.
Section 600.5(a)(4) is amended by adding the words, “in
accordance with § 600.9” immediately after the word
“located”.
§ 600.6 [Amended]
5.
Section 600.6(a)(3) is amended by adding the words, “in
accordance with § 600.9” immediately after the word
“located”.
6.
Section 600.9 is added to subpart A to read as follows:
§ 600.9 State authorization.
(a)(1) An institution described under §§ 600.4, 600.5, and 600.6 is legally
authorized by a State if the State has a process to review and appropriately act
on complaints concerning the institution including enforcing applicable State
laws, and the institution meets the provisions of paragraphs (a)(1)(i), (a)(1)
(ii), or (b) of this section.
(i)(A) The institution is established by name as an educational institution by a
State through a charter, statute, constitutional provision, or other action
issued by an appropriate State agency or State entity and is authorized to
operate educational programs beyond secondary education, including
programs leading to a degree or certificate.
(B) The institution complies with any applicable State approval or licensure
requirements, except that the State may exempt the institution from any State
approval or licensure requirements based on the institution's accreditation by
one or more accrediting agencies recognized by the Secretary or based upon
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the institution being in operation for at least 20 years.
(ii) If an institution is established by a State on the basis of an authorization to
conduct business in the State or to operate as a nonprofit charitable
organization, but not established by name as an educational institution under
paragraph (a)(1)(i) of this section, the institution—
(A) By name, must be approved or licensed by the State to offer programs
beyond secondary education, including programs leading to a degree or
certificate; and
(B) May not be exempt from the State's approval or licensure requirements
based on accreditation, years in operation, or other comparable exemption.
(2) The Secretary considers an institution to meet the provisions of paragraph
(a)(1) of this section if the institution is authorized by name to offer
educational programs beyond secondary education by—
(i) The Federal Government; or
(ii) As defined in 25 U.S.C. 1802(2), an Indian tribe, provided that the
institution is located on tribal lands and the tribal government has a process
to review and appropriately act on complaints concerning an institution and
enforces applicable tribal requirements or laws.
(b)(1) Notwithstanding paragraph (a)(1)(i) and (ii) of this section, an
institution is considered to be legally authorized to operate educational
programs beyond secondary education if it is exempt from State authorization
as a religious institution under the State constitution or by State law.
(2) For purposes of paragraph (b)(1) of this section, a religious institution is an
institution that—
(i) Is owned, controlled, operated, and maintained by a religious organization
lawfully operating as a nonprofit religious corporation; and
(ii) Awards only religious degrees or certificates including, but not limited to, a
certificate of Talmudic studies, an associate of Biblical studies, a bachelor of
religious studies, a master of divinity, or a doctor of divinity.
(c) If an institution is offering postsecondary education through distance or
correspondence education to students in a State in which it is not physically
located or in which it is otherwise subject to State jurisdiction as determined
by the State, the institution must meet any State requirements for it to be
legally offering postsecondary distance or correspondence education in that
State. An institution must be able to document to the Secretary the State's
approval upon request.
(Authority: 20 U.S.C. 1001 and 1002)
PART 602—THE SECRETARY'S RECOGNITION OF
ACCREDITING AGENCIES
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7.
The authority citation for part 602 continues to read as follows:
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Authority:
20 U.S.C. 1099b, unless otherwise noted.
8.
Section 602.24 is amended by adding a new paragraph (f) to
read as follows:
§ 602.24 Additional procedures certain institutional accreditors must
have.
*****
(f) Credit-hour policies. The accrediting agency, as part of its review of an
institution for initial accreditation or preaccreditation or renewal of
accreditation, must conduct an effective review and evaluation of the
reliability and accuracy of the institution's assignment of credit hours.
(1) The accrediting agency meets this requirement if—
(i) It reviews the institution's—
(A) Policies and procedures for determining the credit hours, as defined in 34
CFR 600.2, that the institution awards for courses and programs; and
(B) The application of the institution's policies and procedures to its programs
and coursework; and
(ii) Makes a reasonable determination of whether the institution's assignment
of credit hours conforms to commonly accepted practice in higher education.
(2) In reviewing and evaluating an institution's policies and procedures for
determining credit hour assignments, an accrediting agency may use
sampling or other methods in the evaluation, sufficient to comply with
paragraph (f)(1)(i)(B) of this section.
(3) The accrediting agency must take such actions that it deems appropriate to
address any deficiencies that it identifies at an institution as part of its reviews
and evaluations under paragraph (f)(1)(i) and (ii) of this section, as it does in
relation to other deficiencies it may identify, subject to the requirements of
this part.
(4) If, following the institutional review process under this paragraph (f), the
agency finds systemic noncompliance with the agency's policies or significant
noncompliance regarding one or more programs at the institution, the agency
must promptly notify the Secretary.
*****
PART 603—SECRETARY'S RECOGNITION
PROCEDURES FOR STATE AGENCIES
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9.
The authority citation for part 603 is revised to read as follows:
Authority:
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20 U.S.C. 1001, 1002, 1094(c)(4); 38 U.S.C. 3675, unless otherwise noted.
10.Section 603.24 is amended by redesignating paragraph (c) as
paragraph (d), adding a new paragraph (c), and revising the
authority citation after redesignated paragraph (d) to read as
follows:
§ 603.24 Criteria for State agencies.
*****
(c) Credit-hour policies. The State agency, as part of its review of an institution
for initial approval or renewal of approval, must conduct an effective review
and evaluation of the reliability and accuracy of the institution's assignment of
credit hours.
(1) The State agency meets this requirement if—
(i) It reviews the institution's—
(A) Policies and procedures for determining the credit hours, as defined in 34
CFR 600.2, that the institution awards for courses and programs; and
(B) The application of the institution's policies and procedures to its programs
and coursework; and
(ii) Makes a reasonable determination of whether the institution's assignment
of credit hours conforms to commonly accepted practice in higher education.
(2) In reviewing and evaluating an institution's policies and procedures for
determining credit hour assignments, a State agency may use sampling or
other methods in the evaluation, sufficient to comply with paragraph (c)(1)(i)
(B) of this section.
(3) The State agency must take such actions that it deems appropriate to
address any deficiencies that it identifies at an institution as part of its reviews
and evaluations under paragraph (c)(1)(i) and (ii) of this section, as it does in
relation to other deficiencies it may identify, subject to the requirements of
this part.
(4) If, following the institutional review process under this paragraph (c), the
agency finds systemic noncompliance with the agency's policies or significant
noncompliance regarding one or more programs at the institution, the agency
must promptly notify the Secretary.
*****
(Authority: 20 U.S.C. 1094(c)(4))
PART 668—STUDENT ASSISTANCE GENERAL
PROVISIONS
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11. The authority citation for part 668 continues to read as follows:
Authority:
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20 U.S.C. 1001, 1002, 1003, 1070g, 1085, 1088, 1091, 1092, 1094, 1099c, and
1099c-1, unless otherwise noted.
12.Section 668.2 is amended by:
A. In paragraph (a), adding, in alphabetical order, the term “Credit
hour”.
B. In paragraph (b), in the definition of Full-time student, adding the
words, “including for a term-based program, repeating any coursework
previously taken in the program but not including either more than one
repetition of a previously passed course, or any repetition of a previously
passed course due to the student failing other coursework” immediately
before the period in the second sentence.
C. In paragraph (b), adding, in alphabetical order, definitions of “Free
application for Federal student aid (FAFSA)”, “Institutional student
information record (ISIR)”, and “Student aid report (SAR)”.
D. In paragraph (b), revising the definitions for “Valid Institutional
Student Information Record (valid ISIR)” and “Valid Student Aid Report
(valid SAR)”.
The additions and revisions read as follows:
§ 668.2 General definitions.
*****
(b) * * *
Free application for Federal student aid (FAFSA): The student aid application
provided for under section 483 of the HEA, which is used to determine an
applicant's eligibility for the title IV, HEA programs.
*****
Institutional student information record (ISIR): An electronic record that the
Secretary transmits to an institution that includes an applicant's—
(1) FAFSA information; and
(2) EFC.
*****
Student aid report (SAR): A report provided to an applicant by the Secretary
showing his or her FAFSA information and the amount of his or her EFC.
*****
Valid institutional student information record (valid ISIR): An ISIR on which
all the information reported on a student's FAFSA is accurate and complete as
of the date the application is signed.
Valid student aid report (valid SAR): A student aid report on which all of the
information reported on a student's FAFSA is accurate and complete as of the
date the application is signed.
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*****
13.Section 668.5 is amended by:
A. Revising paragraph (a).
B. Revising paragraph (c)(1).
C. In paragraph (c)(2), adding the words “offered by the institution that
grants the degree or certificate” after the word “program”.
D. In paragraph (c)(3)(i), removing the words “not more than” and
adding the words “or less” after the word “percent”.
E. In paragraph (c)(3)(ii)(A), removing the words “not more” and adding,
in their place, the word “less”.
F. Adding new paragraph (e).
The addition and revisions read as follows:
§ 668.5 Written arrangements to provide educational programs.
(a) Written arrangements between eligible institutions. (1) Except as provided
in paragraph (a)(2) of this section, if an eligible institution enters into a
written arrangement with another eligible institution, or with a consortium of
eligible institutions, under which the other eligible institution or consortium
provides part of the educational program to students enrolled in the first
institution, the Secretary considers that educational program to be an eligible
program if the educational program offered by the institution that grants the
degree or certificate otherwise satisfies the requirements of § 668.8.
(2) If the written arrangement is between two or more eligible institutions that
are owned or controlled by the same individual, partnership, or corporation,
the Secretary considers the educational program to be an eligible program if—
(i) The educational program offered by the institution that grants the degree or
certificate otherwise satisfies the requirements of § 668.8; and
(ii) The institution that grants the degree or certificate provides more than 50
percent of the educational program.
*****
(c) * * *
(1) The ineligible institution or organization has not—
(i) Had its eligibility to participate in the title IV, HEA programs terminated by
the Secretary;
(ii) Voluntarily withdrawn from participation in the title IV, HEA programs
under a termination, show-cause, suspension, or similar type proceeding
initiated by the institution's State licensing agency, accrediting agency,
guarantor, or by the Secretary;
(iii) Had its certification to participate in the title IV, HEA programs revoked
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by the Secretary;
(iv) Had its application for re-certification to participate in the title IV, HEA
programs denied by the Secretary; or
(v) Had its application for certification to participate in the title IV, HEA
programs denied by the Secretary;
*****
(e) Information made available to students. If an institution enters into a
written arrangement described in paragraph (a), (b), or (c) of this section, the
institution must provide the information described in § 668.43(a)(12) to
enrolled and prospective students.
*****
14.Section 668.6 is added to subpart A to read as follows:
§ 668.6 Reporting and disclosure requirements for programs that
prepare students for gainful employment in a recognized occupation.
(a) Reporting requirements. (1) In accordance with procedures established by
the Secretary an institution must report information that includes—
(i) For each student who enrolled in a program under § 668.8(c)(3) or (d)
during an award year—
(A) Information needed to identify the student and the institution the student
attended;
(B) If the student began attending a program during the award year, the name
and the Classification of Instructional Program (CIP) code of that program;
and
(C) If the student completed a program during the award year—
(1) The name and CIP code of that program, and the date the student
completed the program;
(2) The amounts the student received from private education loans and the
amount from institutional financing plans that the student owes the
institution upon completing the program; and
(3) Whether the student matriculated to a higher credentialed program at the
institution or if available, evidence that the student transferred to a higher
credentialed program at another institution; and
(ii) For each program, by name and CIP code, offered by the institution under
§ 668.8(c)(3) or (d), the total number of students that are enrolled in the
program at the end of each award year and identifying information for those
students.
(2)(i) An institution must report the information required under paragraph (a)
(1) of this section—
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(A) No later than October 1, 2011 for information from the 2006-07 award
year to the extent that the information is available;
(B) No later than October 1, 2011 for information from the 2007-08 through
2009-10 award years; and
(C) No earlier than September 30, but no later than the date established by the
Secretary through a notice published in the Federal Register, for
information from the most recently completed award year.
(ii) For any award year, if an institution is unable to provide all or some of the
information required under paragraph (a)(1) of this section, the institution
must provide an explanation of why the missing information is not available.
(b) Disclosures. (1) For each program offered by an institution under this
section, the institution must provide prospective students with—
(i) The occupations (by names and SOC codes) that the program prepares
students to enter, along with links to occupational profiles on O*NET or its
successor site. If the number of occupations related to the program, as
identified by entering the program's full six digit CIP code on the O*NET
crosswalk at http://online.onetcenter.org/crosswalk/ is more than ten, the
institution may provide Web links to a representative sample of the identified
occupations (by name and SOC code) for which its graduates typically find
employment within a few years after completing the program;
(ii) The on-time graduation rate for students completing the program, as
provided under paragraph (c) of this section;
(iii) The tuition and fees it charges a student for completing the program
within normal time as defined in § 668.41(a), the typical costs for books and
supplies (unless those costs are included as part of tuition and fees), and the
cost of room and board, if applicable. The institution may include information
on other costs, such as transportation and living expenses, but it must provide
a Web link, or access, to the program cost information the institutions makes
available under § 668.43(a);
(iv) The placement rate for students completing the program, as determined
under a methodology developed by the National Center for Education
Statistics (NCES) when that rate is available. In the meantime, beginning on
July 1, 2011, if the institution is required by its accrediting agency or State to
calculate a placement rate on a program basis, it must disclose the rate under
this section and identify the accrediting agency or State agency under whose
requirements the rate was calculated. If the accrediting agency or State
requires an institution to calculate a placement rate at the institutional level
or other than a program basis, the institution must use the accrediting agency
or State methodology to calculate a placement rate for the program and
disclose that rate; and
(v) The median loan debt incurred by students who completed the program as
provided by the Secretary, as well as any other information the Secretary
provided to the institution about that program. The institution must identify
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separately the median loan debt from title IV, HEA program loans, and the
median loan debt from private educational loans and institutional financing
plans.
(2) For each program, the institution must—
(i) Include the information required under paragraph (b)(1) of this section in
promotional materials it makes available to prospective students and post this
information on its Web site;
(ii) Prominently provide the information required under paragraph (b)(1) of
this section in a simple and meaningful manner on the home page of its
program Web site, and provide a prominent and direct link on any other Web
page containing general, academic, or admissions information about the
program, to the single Web page that contains all the required information;
(iii) Display the information required under paragraph (b)(1) of this section on
the institution's Web site in an open format that can be retrieved,
downloaded, indexed, and searched by commonly used Web search
applications. An open format is one that is platform-independent, is machinereadable, and is made available to the public without restrictions that would
impede the reuse of that information; and
(iv) Use the disclosure form issued by the Secretary to provide the information
in paragraph (b)(1), and other information, when that form is available.
(c) On-time completion rate. An institution calculates an on-time completion
rate for each program subject to this section by—
(1) Determining the number of students who completed the program during
the most recently completed award year;
(2) Determining the number of students in paragraph (c)(1) of this section who
completed the program within normal time, as defined under § 668.41(a),
regardless of whether the students transferred into the program or changed
programs at the institution. For example, the normal time to complete an
associate degree is two years and this timeframe applies to all students in the
program. If a student transfers into the program, regardless of the number of
credits the institution accepts from the student's attendance at the prior
institution, those transfer credits have no bearing on the two-year timeframe.
The student would still have two years to complete from the date he or she
began attending the two-year program. To be counted as completing on time,
a student who changes programs at the institution and begins attending the
two-year program must complete within the two-year timeframe beginning
from the date the student began attending the prior program; and
(3) Dividing the number of students who completed the program within
normal time, as determined under paragraph (c)(2) of this section, by the
total number of students who completed the program, as determined under
paragraph (c)(1) of this section, and multiplying the result by 100.
(Approved by the Office of Management and Budget under control number
1845-NEW1)
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(Authority: 20 U.S.C 1001(b), 1002(b) and (c))
15. Section 668.8 is amended by:
A. Revising paragraph (c)(3).
B. In paragraph (d)(2)(iii), adding the words, “as provided under §
668.6” immediately after the word “occupation.”
C. In paragraph (d)(3)(iii), adding the words, “as provided under §
668.6” immediately after the word “occupation.”
D. Revising paragraphs (k) and (l).
The revisions read as follows:
§ 668.8 Eligible program.
*****
(c) * * *
(3) Be at least a one-academic-year training program that leads to a certificate,
or other nondegree recognized credential, and prepares students for gainful
employment in a recognized occupation.
*****
(k) Undergraduate educational program in credit hours. (1) Except as
provided in paragraph (k)(2) of this section, if an institution offers an
undergraduate educational program in credit hours, the institution must use
the formula contained in paragraph (l) of this section to determine whether
that program satisfies the requirements contained in paragraph (c)(3) or (d)
of this section, and the number of credit hours in that educational program for
purposes of the title IV, HEA programs, unless—
(i) The program is at least two academic years in length and provides an
associate degree, a bachelor's degree, a professional degree, or an equivalent
degree as determined by the Secretary; or
(ii) Each course within the program is acceptable for full credit toward that
institution's associate degree, bachelor's degree, professional degree, or
equivalent degree as determined by the Secretary provided that—
(A) The institution's degree requires at least two academic years of study; and
(B) The institution demonstrates that students enroll in, and graduate from,
the degree program.
(2) A program is considered to be a clock-hour program for purposes of the
title IV, HEA programs if—
(i) Except as provided in paragraph (k)(3) of this section, a program is
required to measure student progress in clock hours when—
(A) Receiving Federal or State approval or licensure to offer the program; or
(B) Completing clock hours is a requirement for graduates to apply for
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licensure or the authorization to practice the occupation that the student is
intending to pursue;
(ii) The credit hours awarded for the program are not in compliance with the
definition of a credit hour in 34 CFR 600.2; or
(iii) The institution does not provide the clock hours that are the basis for the
credit hours awarded for the program or each course in the program and,
except as provided in § 668.4(e), requires attendance in the clock hours that
are the basis for the credit hours awarded.
(3) The requirements of paragraph (k)(2)(i) of this section do not apply to a
program if there is a State or Federal approval or licensure requirement that a
limited component of the program must include a practicum, internship, or
clinical experience component of the program that must include a minimum
number of clock hours.
(l) Formula. (1) Except as provided in paragraph (l)(2) of this section, for
purposes of determining whether a program described in paragraph (k) of this
section satisfies the requirements contained in paragraph (c)(3) or (d) of this
section, and of determining the number of credit hours in that educational
program with regard to the title IV, HEA programs—
(i) A semester hour must include at least 37.5 clock hours of instruction;
(ii) A trimester hour must include at least 37.5 clock hours of instruction; and
(iii) A quarter hour must include at least 25 clock hours of instruction.
(2) The institution's conversions to establish a minimum number of clock
hours of instruction per credit may be less than those specified in paragraph
(l)(1) of this section, if the institution's designated accrediting agency, or
recognized State agency for the approval of public postsecondary vocational
institutions, for participation in the title IV, HEA programs has identified any
deficiencies with the institution's policies and procedures, or their
implementation, for determining the credit hours, as defined in 34 CFR
600.2, that the institution awards for programs and courses, in accordance
with 34 CFR 602.24(f), or, if applicable, 34 CFR 603.24(c), so long as—
(i) The institution's student work outside of class combined with the clockhours of instruction meet or exceed the numeric requirements in paragraph (l)
(1) of this section; and
(ii)(A) A semester hour must include at least 30 clock hours of instruction;
(B) A trimester hour must include at least 30 clock hours of instruction; and
(C) A quarter hour must include at least 20 hours of instruction.
*****
16.Section 668.14 is amended by revising paragraph (b)(22) to
read as follows:
§ 668.14 Program participation agreement.
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*****
(b) * * *
(22)(i) It will not provide any commission, bonus, or other incentive payment
based in any part, directly or indirectly, upon success in securing enrollments
or the award of financial aid, to any person or entity who is engaged in any
student recruitment or admission activity, or in making decisions regarding
the award of title IV, HEA program funds.
(A) The restrictions in paragraph (b)(22) of this section do not apply to the
recruitment of foreign students residing in foreign countries who are not
eligible to receive Federal student assistance.
(B) For the purpose of paragraph (b)(22) of this section, an employee who
receives multiple adjustments to compensation in a calendar year and is
engaged in any student enrollment or admission activity or in making
decisions regarding the award of title IV, HEA program funds is considered to
have received such adjustments based upon success in securing enrollments
or the award of financial aid if those adjustments create compensation that is
based in any part, directly or indirectly, upon success in securing enrollments
or the award of financial aid.
(ii) Notwithstanding paragraph (b)(22)(i) of this section, eligible institutions,
organizations that are contractors to eligible institutions, and other entities
may make—
(A) Merit-based adjustments to employee compensation provided that such
adjustments are not based in any part, directly or indirectly, upon success in
securing enrollments or the award of financial aid; and
(B) Profit-sharing payments so long as such payments are not provided to any
person who is engaged in student recruitment or admission activity or in
making decisions regarding the award of title IV, HEA program funds.
(iii) As used in paragraph (b)(22) of this section,
(A) Commission, bonus, or other incentive payment means a sum of money or
something of value, other than a fixed salary or wages, paid to or given to a
person or an entity for services rendered.
(B) Securing enrollments or the award of financial aid means activities that a
person or entity engages in at any point in time through completion of an
educational program for the purpose of the admission or matriculation of
students for any period of time or the award of financial aid to students.
(1) These activities include contact in any form with a prospective student,
such as, but not limited to—contact through preadmission or advising
activities, scheduling an appointment to visit the enrollment office or any
other office of the institution, attendance at such an appointment, or
involvement in a prospective student's signing of an enrollment agreement or
financial aid application.
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(2) These activities do not include making a payment to a third party for the
provision of student contact information for prospective students provided
that such payment is not based on—
(i) Any additional conduct or action by the third party or the prospective
students, such as participation in preadmission or advising activities,
scheduling an appointment to visit the enrollment office or any other office of
the institution or attendance at such an appointment, or the signing, or being
involved in the signing, of a prospective student's enrollment agreement or
financial aid application; or
(ii) The number of students (calculated at any point in time of an educational
program) who apply for
enrollment, are awarded financial aid, or are
enrolled for any period of time, including through completion of an
educational program.
(C) Entity or person engaged in any student recruitment or admission
activity or in making decisions about the award of financial aid means—
(1) With respect to an entity engaged in any student recruitment or admission
activity or in making decisions about the award of financial aid, any
institution or organization that undertakes the recruiting or the admitting of
students or that makes decisions about and awards title IV, HEA program
funds; and
(2) With respect to a person engaged in any student recruitment or admission
activity or in making decisions about the award of financial aid, any employee
who undertakes recruiting or admitting of students or who makes decisions
about and awards title IV, HEA program funds, and any higher level employee
with responsibility for recruitment or admission of students, or making
decisions about awarding title IV, HEA program funds.
(D) Enrollment means the admission or matriculation of a student into an
eligible institution.
*****
17. Section 668.16 is amended by:
A. Revising paragraph (e).
B. In paragraph (n) introductory text, removing the word “and” that
appears after the punctuation“;”.
C. In paragraph (o)(2), removing the punctuation “.” and adding, in its
place, the punctuation and word “; and”.
D. Adding paragraph (p).
E. Revising the OMB control number at the end of the section.
The revisions and addition read as follows:
§ 668.16 Standards of administrative capability.
*****
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(e) For purposes of determining student eligibility for assistance under a title
IV, HEA program, establishes, publishes, and applies reasonable standards
for measuring whether an otherwise eligible student is maintaining
satisfactory academic progress in his or her educational program. The
Secretary considers an institution's standards to be reasonable if the
standards are in accordance with the provisions specified in § 668.34.
*****
(p) Develops and follows procedures to evaluate the validity of a student's high
school completion if the institution or the Secretary has reason to believe that
the high school diploma is not valid or was not obtained from an entity that
provides secondary school education.
(Approved by the Office of Management and Budget under control number
1845-0022)
*****
18.Section 668.22 is amended by:
A. Redesignating paragraphs (a)(2) through (a)(5) as paragraphs (a)(3)
through (a)(6), respectively.
B. Adding new paragraph (a)(2).
C. In newly redesignated paragraph (a)(5), removing the citation “(a)(5)”
and adding, in its place, the citation “(a)(6)”.
D. In newly redesignated paragraph (a)(6)(ii)(A)(2), removing the
citation “(a)(5)(iii)” and adding, in its place, the citation “(a)(6)(iii)”.
E. In newly redesignated paragraph (a)(6)(ii)(B)(2), removing the
citation “(a)(5)(iii)” and adding, in its place, the citation “(a)(6)(iii)”.
F. In newly redesignated paragraph (a)(6)(ii)(B)(3), removing the
citation “(a)(5)(iii)” and adding, in its place, the citation “(a)(6)(iii)”.
G. In newly redesignated paragraph (a)(6)(iii)(A)(1), removing the
citation “(a)(5)(ii)(A)(2)” and adding, in its place, the citation “(a)(6)(ii)
(A)(2)”.
H. In newly redesignated paragraph (a)(6)(iii)(A)(5), removing the
citation “(a)(5)(iii)(C)” and adding, in its place, the citation “(a)(6)(iii)
(C)”.
I. In newly redesignated paragraph (a)(6)(iii)(B), removing the citation
“(a)(5)(iii)(A)” and adding, in its place, the citation “(a)(6)(iii)(A)”.
J. In newly redesignated paragraph (a)(6)(iv), removing the citation “(a)
(5)(iii)” and adding, in its place, the citation “(a)(6)(iii)”.
K. Revising paragraph (b)(3).
L. Removing paragraph (c)(3)(ii) and redesignating paragraph (c)(3)(i)
as paragraph (c)(3).
M. Revising paragraph (f)(2).
N. In the introductory text of paragraph (j)(2), removing the first word
“An” and adding, in its place, the words “For an institution that is not
required to take attendance, an”.
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O. In paragraph (l)(3), adding the words “for an institution that is not
required to take attendance” after the words “date of the institution's
determination that the student withdrew”.
P. Adding paragraphs (l)(6), (l)(7), and (l)(8).
The additions and revisions read as follows:
§ 668.22 Treatment of title IV funds when a student withdraws.
*****
(a) * * *
(2)(i) Except as provided in paragraphs (a)(2)(ii) and (a)(2)(iii) of this section,
a student is considered to have withdrawn from a payment period or period of
enrollment if—
(A) In the case of a program that is measured in credit hours, the student does
not complete all the days in the payment period or period of enrollment that
the student was scheduled to complete;
(B) In the case of a program that is measured in clock hours, the student does
not complete all of the clock hours and weeks of instructional time in the
payment period or period of enrollment that the student was scheduled to
complete; or
(C) For a student in a nonterm or nonstandard-term program, the student is
not scheduled to begin another course within a payment period or period of
enrollment for more than 45 calendar days after the end of the module the
student ceased attending, unless the student is on an approved leave of
absence, as defined in paragraph (d) of this section.
(ii)(A) Notwithstanding paragraph (a)(2)(i)(A) and (a)(2)(i)(B) of this section,
for a payment period or period of enrollment in which courses in the program
are offered in modules—
(1) A student is not considered to have withdrawn if the institution obtains
written confirmation from the student at the time that would have been a
withdrawal of the date that he or she will attend a module that begins later in
the same payment period or period of enrollment; and
(2) For nonterm and nonstandard-term programs, that module begins no later
than 45 calendar days after the end of the module the student ceased
attending.
(B) If an institution has obtained the written confirmation of future attendance
in accordance with paragraph (a)(2)(ii)(A) of this section—
(1) A student may change the date of return to a module that begins later in the
same payment period or period of enrollment, provided that the student does
so in writing prior to the return date that he or she had previously confirmed;
and
(2) For nonterm and nonstandard-term programs, the later module that he or
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she will attend begins no later than 45 calendar days after the end of module
the student ceased attending.
(C) If an institution obtains written confirmation of future attendance in
accordance with paragraph (a)(2)(ii)(A) and, if applicable, (a)(2)(ii)(B) of this
section, but the student does not return as scheduled—
(1) The student is considered to have withdrawn from the payment period or
period of enrollment; and
(2) The student's withdrawal date and the total number of calendar days in the
payment period or period of enrollment would be the withdrawal date and
total number of calendar days that would have applied if the student had not
provided written confirmation of a future date of attendance in accordance
with paragraph (a)(2)(ii)(A) of this section.
(iii)(A) If a student withdraws from a term-based credit-hour program offered
in modules during a payment period or period of enrollment and reenters the
same program prior to the end of the period, subject to conditions established
by the Secretary, the student is eligible to receive any title IV, HEA program
funds for which he or she was eligible prior to withdrawal, including funds
that were returned by the institution or student under the provisions of this
section, provided the student's enrollment status continues to support the full
amount of those funds.
(B) In accordance with § 668.4(f), if a student withdraws from a clock-hour or
nonterm credit hour program during a payment period or period of
enrollment and then reenters the same program within 180 calendar days, the
student remains in that same period when he or she returns and, subject to
conditions established by the Secretary, is eligible to receive any title IV, HEA
program funds for which he or she was eligible prior to withdrawal, including
funds that were returned by the institution or student under the provisions of
this section.
*****
(b) * * *
(3)(i) An institution is required to take attendance if—
(A) An outside entity (such as the institution's accrediting agency or a State
agency) has a requirement that the institution take attendance;
(B) The institution itself has a requirement that its instructors take
attendance; or
(C) The institution or an outside entity has a requirement that can only be met
by taking attendance or a comparable process, including, but not limited to,
requiring that students in a program demonstrate attendance in the classes of
that program, or a portion of that program.
(ii) If, in accordance with paragraph (b)(3)(i) of this section, an institution is
required to take attendance or requires that attendance be taken for only
some students, the institution must use its attendance records to determine a
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withdrawal date in accordance with paragraph (b)(1) of this section for those
students.
(iii)(A) If, in accordance with paragraph (b)(3)(i) of this section, an institution
is required to take attendance, or requires that attendance be taken, for a
limited period, the institution must use its attendance records to determine a
withdrawal date in accordance with paragraph (b)(3)(i) of this section for that
limited period.
(B) A student in attendance the last time attendance is required to be taken
during the limited period identified in paragraph (b)(3)(iii)(A) of this section
who subsequently stops attending during the payment period will be treated
as a student for whom the institution was not required to take attendance.
(iv) If an institution is required to take attendance or requires that attendance
be taken, on only one specified day to meet a census reporting requirement,
the institution is not considered to take attendance.
*****
(f) * * *
(2)(i) The total number of calendar days in a payment period or period of
enrollment includes all days within the period that the student was scheduled
to complete, except that scheduled breaks of at least five consecutive days are
excluded from the total number of calendar days in a payment period or
period of enrollment and the number of calendar days completed in that
period.
(ii) The total number of calendar days in a payment period or period of
enrollment does not include—
(A) Days in which the student was on an approved leave of absence; or
(B) For a payment period or period of enrollment in which any courses in the
program are offered in modules, any scheduled breaks of at least five
consecutive days when the student is not scheduled to attend a module or
other course offered during that period of time.
*****
(l) * * *
(6) A program is “offered in modules” if a course or courses in the program do
not span the entire length of the payment period or period of enrollment.
(7)(i) “Academic attendance” and “attendance at an academically-related
activity”—
(A) Include, but are not limited to—
(1) Physically attending a class where there is an opportunity for direct
interaction between the instructor and students;
(2) Submitting an academic assignment;
(3) Taking an exam, an interactive tutorial, or computer-assisted instruction;
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(4) Attending a study group that is assigned by the institution;
(5) Participating in an online discussion about academic matters; and
(6) Initiating contact with a faculty member to ask a question about the
academic subject studied in the course; and
(B) Do not include activities where a student may be present, but not
academically engaged, such as—
(1) Living in institutional housing;
(2) Participating in the institution's meal plan;
(3) Logging into an online class without active participation; or
(4) Participating in academic counseling or advisement.
(ii) A determination of “academic attendance” or “attendance at an
academically-related activity” must be made by the institution; a student's
certification of attendance that is not supported by institutional
documentation is not acceptable.
(8) A program is a nonstandard-term program if the program is a term-based
program that does not qualify under 34 CFR 690.63(a)(1) or (a)(2) to
calculate Federal Pell Grant payments under 34 CFR 690.63(b) or (c).
*****
19.Section 668.25 is amended by:
A. In paragraph (c)(2)(v), removing the word “and”.
B. In paragraph (c)(2)(vi), adding the word “and” after the punctuation
“;”.
C. Adding paragraph (c)(2)(vii).
The addition reads as follows:
§ 668.25 Contracts between an institution and a third party servicer.
*****
(c) * * *
(2) * * *
(vii) Payment of any commission, bonus, or other incentive payment based in
any part, directly or indirectly, upon success in securing enrollments or the
award of financial aid to any person or entity engaged in any student
recruitment or admission activity or in making decisions regarding the award
of title IV, HEA program funds.
*****
20.Section 668.32 is amended by:
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A. In paragraph (e)(3), removing the word “or” that appears after the
punctuation “;”.
B. In paragraph (e)(4)(ii), removing the punctuation “.” and adding, in its
place, the punctuation and word “; or”.
C. Adding new paragraph (e)(5).
D. Revising paragraph (f).
The addition and revision read as follows:
§ 668.32 Student eligibility—general.
*****
(e) * * *
(5) Has been determined by the institution to have the ability to benefit from
the education or training offered by the institution based on the satisfactory
completion of 6 semester hours, 6 trimester hours, 6 quarter hours, or 225
clock hours that are applicable toward a degree or certificate offered by the
institution.
(f) Maintains satisfactory academic progress in his or her course of study
according to the institution's published standards of satisfactory academic
progress that meet the requirements of § 668.34.
*****
21.Section 668.34 is revised to read as follows:
§ 668.34 Satisfactory academic progress.
(a) Satisfactory academic progress policy. An institution must establish a
reasonable satisfactory academic progress policy for determining whether an
otherwise eligible student is making satisfactory academic progress in his or
her educational program and may receive assistance under the title IV, HEA
programs. The Secretary considers the institution's policy to be reasonable if—
(1) The policy is at least as strict as the policy the institution applies to a
student who is not receiving assistance under the title IV, HEA programs;
(2) The policy provides for consistent application of standards to all students
within categories of students, e.g., full-time, part-time, undergraduate, and
graduate students, and educational programs established by the institution;
(3) The policy provides that a student's academic progress is evaluated—
(i) At the end of each payment period if the educational program is either one
academic year in length or shorter than an academic year; or
(ii) For all other educational programs, at the end of each payment period or at
least annually to correspond with the end of a payment period;
(4)(i) The policy specifies the grade point average (GPA) that a student must
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achieve at each evaluation, or if a GPA is not an appropriate qualitative
measure, a comparable assessment measured against a norm; and
(ii) If a student is enrolled in an educational program of more than two
academic years, the policy specifies that at the end of the second academic
year, the student must have a GPA of at least a “C” or its equivalent, or have
academic standing consistent with the institution's requirements for
graduation;
(5)(i) The policy specifies the pace at which a student must progress through
his or her educational program to ensure that the student will complete the
program within the maximum timeframe, as defined in paragraph (b) of this
section, and provides for measurement of the student's progress at each
evaluation; and
(ii) An institution calculates the pace at which the student is progressing by
dividing the cumulative number of hours the student has successfully
completed by the cumulative number of hours the student has attempted. In
making this calculation, the institution is not required to include remedial
courses;
(6) The policy describes how a student's GPA and pace of completion are
affected by course incompletes, withdrawals, or repetitions, or transfers of
credit from other institutions. Credit hours from another institution that are
accepted toward the student's educational program must count as both
attempted and completed hours;
(7) Except as provided in paragraphs (c) and (d) of this section, the policy
provides that, at the time of each evaluation, a student who has not achieved
the required GPA, or who is not successfully completing his or her educational
program at the required pace, is no longer eligible to receive assistance under
the title IV, HEA programs;
(8) If the institution places students on financial aid warning, or on financial
aid probation, as defined in paragraph (b) of this section, the policy describes
these statuses and that—
(i) A student on financial aid warning may continue to receive assistance
under the title IV, HEA programs for one payment period despite a
determination that the student is not making satisfactory academic progress.
Financial aid warning status may be assigned without an appeal or other
action by the student; and
(ii) A student on financial aid probation may receive title IV, HEA program
funds for one payment period. While a student is on financial aid probation,
the institution may require the student to fulfill specific terms and conditions
such as taking a reduced course load or enrolling in specific courses. At the
end of one payment period on financial aid probation, the student must meet
the institution's satisfactory academic progress standards or meet the
requirements of the academic plan developed by the institution and the
student to qualify for further title IV, HEA program funds;
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(9) If the institution permits a student to appeal a determination by the
institution that he or she is not making satisfactory academic progress, the
policy describes—
(i) How the student may reestablish his or her eligibility to receive assistance
under the title IV, HEA programs;
(ii) The basis on which a student may file an appeal: The death of a relative, an
injury or illness of the student, or other special circumstances; and
(iii) Information the student must submit regarding why the student failed to
make satisfactory academic progress, and what has changed in the student's
situation that will allow the student to demonstrate satisfactory academic
progress at the next evaluation;
(10) If the institution does not permit a student to appeal a determination by
the institution that he or she is not making satisfactory academic progress, the
policy must describe how the student may reestablish his or her eligibility to
receive assistance under the title IV, HEA programs; and
(11) The policy provides for notification to students of the results of an
evaluation that impacts the student's eligibility for title IV, HEA program
funds.
(b) Definitions. The following definitions apply to the terms used in this
section:
Appeal. Appeal means a process by which a student who is not meeting the
institution's satisfactory academic progress standards petitions the institution
for reconsideration of the student's eligibility for title IV, HEA program
assistance.
Financial aid probation. Financial aid probation means a status assigned by
an institution to a student who fails to make satisfactory academic progress
and who has appealed and has had eligibility for aid reinstated.
Financial aid warning. Financial aid warning means a status assigned to a
student who fails to make satisfactory academic progress at an institution that
evaluates academic progress at the end of each payment period.
Maximum timeframe. Maximum timeframe means—
(1) For an undergraduate program measured in credit hours, a period that is
no longer than 150 percent of the published length of the educational
program, as measured in credit hours;
(2) For an undergraduate program measured in clock hours, a period that is
no longer than 150 percent of the published length of the educational
program, as measured by the cumulative number of clock hours the student is
required to complete and expressed in calendar time; and
(3) For a graduate program, a period defined by the institution that is based on
the length of the educational program.
(c) Institutions that evaluate satisfactory academic progress at the end of
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each payment period. (1) An institution that evaluates satisfactory academic
progress at the end of each payment period and determines that a student is
not making progress under its policy may nevertheless disburse title IV, HEA
program funds to the student under the provisions of paragraph (c)(2), (c)(3),
or (c)(4) of this section.
(2) For the payment period following the payment period in which the student
did not make satisfactory academic progress, the institution may—
(i) Place the student on financial aid warning, and disburse title IV, HEA
program funds to the student; or
(ii) Place a student directly on financial aid probation, following the
procedures outlined in paragraph (d)(2) of this section and disburse title IV,
HEA program funds to the student.
(3) For the payment period following a payment period during which a student
was on financial aid warning, the institution may place the student on
financial aid probation, and disburse title IV, HEA program funds to the
student if—
(i) The institution evaluates the student's progress and determines that
student did not make satisfactory academic progress during the payment
period the student was on financial aid warning;
(ii) The student appeals the determination; and
(iii)(A) The institution determines that the student should be able to meet the
institution's satisfactory academic progress standards by the end of the
subsequent payment period; or
(B) The institution develops an academic plan for the student that, if followed,
will ensure that the student is able to meet the institution's satisfactory
academic progress standards by a specific point in time.
(4) A student on financial aid probation for a payment period may not receive
title IV, HEA program funds for the subsequent payment period unless the
student makes satisfactory academic progress or the institution determines
that the student met the requirements specified by the institution in the
academic plan for the student.
(d) Institutions that evaluate satisfactory academic progress annually or less
frequently than at the end of each payment period. (1) An institution that
evaluates satisfactory academic progress annually or less frequently than at
the end of each payment period and determines that a student is not making
progress under its policy may nevertheless disburse title IV, HEA program
funds to the student under the provisions of paragraph (d)(2) or (d)(3) of this
section.
(2) The institution may place the student on financial aid probation and may
disburse title IV, HEA program funds to the student for the subsequent
payment period if—
(i) The institution evaluates the student and determines that the student is not
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making satisfactory academic progress;
(ii) The student appeals the determination; and
(iii)(A) The institution determines that the student should be able to be make
satisfactory academic progress during the subsequent payment period and
meet the institution's satisfactory academic progress standards at the end of
that payment period; or
(B) The institution develops an academic plan for the student that, if followed,
will ensure that the student is able to meet the institution's satisfactory
academic progress standards by a specific point in time.
(3) A student on financial aid probation for a payment period may not receive
title IV, HEA program funds for the subsequent payment period unless the
student makes satisfactory academic progress or the institution determines
that the student met the requirements specified by the institution in the
academic plan for the student.
(Authority: 20 U.S.C. 1091(d))
22.Section 668.43 is amended by:
A. In paragraph (a)(10)(ii), removing the word “and” that appears after
the punctuation “;”.
B. In paragraph (a)(11)(ii), removing the punctuation “.” and adding, in
its place, the punctuation and word “; and”.
C. Adding paragraph (a)(12).
D. Revising paragraph (b).
The addition and revision read as follows:
§ 668.43 Institutional information.
(a) * * *
(12) A description of written arrangements the institution has entered into in
accordance with § 668.5, including, but not limited to, information on—
(i) The portion of the educational program that the institution that grants the
degree or certificate is not providing;
(ii) The name and location of the other institutions or organizations that are
providing the portion of the educational program that the institution that
grants the degree or certificate is not providing;
(iii) The method of delivery of the portion of the educational program that the
institution that grants the degree or certificate is not providing; and
(iv) Estimated additional costs students may incur as the result of enrolling in
an educational program that is provided, in part, under the written
arrangement.
(b) The institution must make available for review to any enrolled or
prospective student upon request, a copy of the documents describing the
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institution's accreditation and its State, Federal, or tribal approval or
licensing. The institution must also provide its students or prospective
students with contact information for filing complaints with its accreditor and
with its State approval or licensing entity and any other relevant State official
or agency that would appropriately handle a student's complaint.
*****
23.Subpart E of part 668 is revised to read as follows:
Sec.
668.51 General.
668.52 Definitions.
668.53 Policies and procedures.
668.54 Selection of an applicant's FAFSA information for verification.
668.55 Updating information.
668.56 Information to be verified.
668.57 Acceptable documentation.
668.58 Interim disbursements.
668.59 Consequences of a change in an applicant's FAFSA information.
668.60 Deadlines for submitting documentation and the consequences of failing to
provide documentation.
668.61 Recovery of funds from interim disbursements.
Subpart E—Verification and Updating of Student Aid
Application Information
Back to Top
§ 668.51 General.
(a) Scope and purpose. The regulations in this subpart govern the verification
by institutions of information submitted by applicants for student financial
assistance under the subsidized student financial assistance programs.
(b) Applicant responsibility. If the Secretary or the institution requests
documents or information from an applicant under this subpart, the applicant
must provide the specified documents or information.
(c) Foreign schools. The Secretary exempts from the provisions of this subpart
participating institutions that are not located in a State.
(Authority: 20 U.S.C. 1094)
§ 668.52 Definitions.
The following definitions apply to this subpart:
Specified year: (1) The calendar year preceding the first calendar year of an
award year, i.e., the base year; or
(2) The year preceding the year described in paragraph (1) of this definition.
Subsidized student financial assistance programs: Title IV, HEA programs
for which eligibility is determined on the basis of an applicant's EFC. These
programs include the Federal Pell Grant, Federal Supplemental Educational
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Opportunity Grant (FSEOG), Federal Work-Study (FWS), Federal Perkins
Loan, and Direct Subsidized Loan programs.
Unsubsidized student financial assistance programs: Title IV, HEA programs
for which eligibility is not based on an applicant's EFC. These programs
include the Teacher Education Assistance for College and Higher Education
(TEACH) Grant, Direct Unsubsidized Loan, and Direct PLUS Loan programs.
(Authority: 20 U.S.C. 1094)
§ 668.53 Policies and procedures.
(a) An institution must establish and use written policies and procedures for
verifying an applicant's FAFSA information in accordance with the provisions
of this subpart. These policies and procedures must include—
(1) The time period within which an applicant must provide any
documentation requested by the institution in accordance with § 668.57;
(2) The consequences of an applicant's failure to provide the requested
documentation within the specified time period;
(3) The method by which the institution notifies an applicant of the results of
its verification if, as a result of verification, the applicant's EFC changes and
results in a change in the amount of the applicant's assistance under the title
IV, HEA programs;
(4) The procedures the institution will follow itself or the procedures the
institution will require an applicant to follow to correct FAFSA information
determined to be in error; and
(5) The procedures for making referrals under § 668.16(g).
(b) An institution's procedures must provide that it will furnish, in a timely
manner, to each applicant whose FAFSA information is selected for
verification a clear explanation of—
(1) The documentation needed to satisfy the verification requirements; and
(2) The applicant's responsibilities with respect to the verification of FAFSA
information, including the deadlines for completing any actions required
under this subpart and the consequences of failing to complete any required
action.
(c) An institution's procedures must provide that an applicant whose FAFSA
information is selected for verification is required to complete verification
before the institution exercises any authority under section 479A(a) of the
HEA to make changes to the applicant's cost of attendance or to the values of
the data items required to calculate the EFC.
(Approved by the Office of Management and Budget under control number
1845-0041)
(Authority: 20 U.S.C. 1094)
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§ 668.54 Selection of an applicant's FAFSA information for verification.
(a) General requirements. (1) Except as provided in paragraph (b) of this
section, an institution must require an applicant whose FAFSA information is
selected for verification by the Secretary, to verify the information specified by
the Secretary pursuant to § 668.56.
(2) If an institution has reason to believe that an applicant's FAFSA
information is inaccurate, it must verify the accuracy of that information.
(3) An institution may require an applicant to verify any FAFSA information
that it specifies.
(4) If an applicant is selected to verify FAFSA information under paragraph (a)
(1) of this section, the institution must require the applicant to verify the
information as specified in § 668.56 if the applicant is selected for a
subsequent verification of FAFSA information, except that the applicant is not
required to provide documentation for the FAFSA information previously
verified for the applicable award year to the extent that the FAFSA
information previously verified remains unchanged.
(b) Exclusions from verification. (1) An institution need not verify an
applicant's FAFSA information if—
(i) The applicant dies;
(ii) The applicant does not receive assistance under the title IV, HEA programs
for reasons other than failure to verify FAFSA information;
(iii) The applicant is eligible to receive only unsubsidized student financial
assistance; or
(iv) The applicant who transfers to the institution, had previously completed
verification at the institution from which he or she transferred, and applies for
assistance based on the same FAFSA information used at the previous
institution, if the current institution obtains a letter from the previous
institution—
(A) Stating that it has verified the applicant's information; and
(B) Providing the transaction number of the applicable valid ISIR.
(2) Unless the institution has reason to believe that the information reported
by a dependent student is incorrect, it need not verify the applicant's parents'
FAFSA information if—
(i) The parents are residing in a country other than the United States and
cannot be contacted by normal means of communication;
(ii) The parents cannot be located because their contact information is
unknown and cannot be obtained by the applicant; or
(iii) Both of the applicant's parents are mentally incapacitated.
(3) Unless the institution has reason to believe that the information reported
by an independent student is incorrect, it need not verify the applicant's
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spouse's information if—
(i) The spouse is deceased;
(ii) The spouse is mentally incapacitated;
(iii) The spouse is residing in a country other than the United States and
cannot be contacted by normal means of communication; or
(iv) The spouse cannot be located because his or her contact information is
unknown and cannot be obtained by the applicant.
(Approved by the Office of Management and Budget under control number
1845-0041)
(Authority: 20 U.S.C. 1091, 1094)
§ 668.55 Updating information.
(a) If an applicant's dependency status changes at any time during the award
year, the applicant must update FAFSA information, except when the update
is due to a change in his or her marital status.
(b)(1) An applicant who is selected for verification of the number of persons in
his or her household (household size) or the number of those in the household
who are attending postsecondary institutions (number in college) must
update those items to be correct as of the date of verification, except when the
update is due to a change in his or her marital status.
(2) Notwithstanding paragraph (b)(1) of this section, an applicant is not
required to provide documentation of household size or number in college
during a subsequent verification of either item if the information has not
changed.
(c) An institution may require an applicant to update FAFSA information
under paragraph (a) or (b) of this section for a change in the applicant's
marital status if the institution determines the
update is necessary to
address an inequity or to reflect more accurately the applicant's ability to pay.
(Approved by the Office of Management and Budget under control number
1845-0041)
(Authority: 20 U.S.C. 1094)
§ 668.56 Information to be verified.
(a) For each award year the Secretary publishes in the Federal Register
notice the FAFSA information that an institution and an applicant may be
required to verify.
(b) For each applicant whose FAFSA information is selected for verification by
the Secretary, the Secretary specifies the specific information under
paragraph (a) of this section that the applicant must verify.
(Approved by the Office of Management and Budget under control number
1845-0041)
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(Authority: 20 U.S.C. 1094, 1095)
§ 668.57 Acceptable documentation.
If an applicant is selected to verify any of the following information, an
institution must obtain the specified documentation.
(a) Adjusted Gross Income (AGI), income earned from work, or U.S. income
tax paid. (1) Except as provided in paragraphs (a)(2), (a)(3), and (a)(4) of this
section, an institution must require an applicant selected for verification of
AGI, income earned from work or U.S. income tax paid to submit to it—
(i) A copy of the income tax return or an Internal Revenue Service (IRS) form
that lists tax account information of the applicant, his or her spouse, or his or
her parents, as applicable for the specified year. The copy of the return must
include the signature (which need not be an original) of the filer of the return
or of one of the filers of a joint return;
(ii) For a dependent student, a copy of each IRS Form W-2 for the specified
year received by the parent whose income is being taken into account if—
(A) The parents filed a joint return; and
(B) The parents are divorced or separated or one of the parents has died; and
(iii) For an independent student, a copy of each IRS Form W-2 for the
specified year he or she received if the independent student—
(A) Filed a joint return; and
(B) Is a widow or widower, or is divorced or separated.
(2) An institution may accept, in lieu of an income tax return or an IRS form
that lists tax account information, the information reported for an item on the
applicant's FAFSA for the specified year if the Secretary has identified that
item as having been obtained from the IRS and not having been changed.
(3) An institution must accept, in lieu of an income tax return or an IRS form
that lists tax account information, the documentation set forth in paragraph
(a)(4) of this section if the individual for the specified year—
(i) Has not filed and, under IRS rules, or other applicable government agency
rules, is not required to file an income tax return;
(ii) Is required to file a U.S. tax return and has been granted a filing extension
by the IRS; or
(iii) Has requested a copy of the tax return or an IRS form that lists tax
account information, and the IRS or a government of a U.S. territory or
commonwealth or a foreign central government cannot locate the return or
provide an IRS form that lists tax account information.
(4) An institution must accept—
(i) For an individual described in paragraph (a)(3)(i) of this section, a
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statement signed by that individual certifying that he or she has not filed and
is not required to file an income tax return for the specified year and certifying
for that year that individual's—
(A) Sources of income earned from work as stated on the FAFSA; and
(B) Amounts of income from each source. In lieu of a certification of these
amounts of income, the applicant may provide a copy of his or her IRS Form
W-2 for each source listed under paragraph (a)(4)(i)(A) of this section;
(ii) For an individual described in paragraph (a)(3)(ii) of this section—
(A) A copy of the IRS Form 4868, “Application for Automatic Extension of
Time to File U.S. Individual Income Tax Return,” that the individual filed with
the IRS for the specified year, or a copy of the IRS's approval of an extension
beyond the automatic six-month extension if the individual requested an
additional extension of the filing time; and
(B) A copy of each IRS Form W-2 that the individual received for the specified
year, or for a self-employed individual, a statement signed by the individual
certifying the amount of the AGI for the specified year; and
(iii) For an individual described in paragraph (a)(3)(iii) of this section—
(A) A copy of each IRS Form W-2 that the individual received for the specified
year; or
(B) For an individual who is self-employed or has filed an income tax return
with a government of a U. S. territory or commonwealth, or a foreign central
government, a statement signed by the individual certifying the amount of
AGI and taxes paid for the specified year.
(5) An institution may require an individual described in paragraph (a)(3)(ii)
of this section to provide to it a copy of his or her completed and signed
income tax return when filed. If an institution receives the copy of the return,
it must reverify the AGI and taxes paid by the applicant and his or her spouse
or parents.
(6) If an individual who is required to submit an IRS Form W-2, under
paragraph (a) of this section, is unable to obtain one in a timely manner, the
institution may permit that individual to set forth, in a statement signed by
the individual, the amount of income earned from work, the source of that
income, and the reason that the IRS Form W-2 is not available in a timely
manner.
(7) For the purpose of this section, an institution may accept in lieu of a copy
of an income tax return signed by the filer of the return or one of the filers of a
joint return, a copy of the filer's return that includes the preparer's Social
Security Number, Employer Identification Number or the Preparer Tax
Identification Number and has been signed, stamped, typed, or printed with
the name and address of the preparer of the return.
(b) Number of family members in household. An institution must require an
applicant selected for verification of the number of family members in the
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household to submit to it a statement signed by both the applicant and one of
the applicant's parents if the applicant is a dependent student, or only the
applicant if the applicant is an independent student, listing the name and age
of each family member in the household and the relationship of that
household member to the applicant.
(c) Number of family household members enrolled in eligible postsecondary
institutions. (1) An institution must require an applicant selected for
verification of the number of household members in the applicant's family
enrolled on at least a half-time basis in eligible postsecondary institutions to
submit a statement signed by both the applicant and one of the applicant's
parents, if the applicant is a dependent student, or by only the applicant if the
applicant is an independent student, listing—
(i) The name of each family member who is or will be attending an eligible
postsecondary educational institution as at least a half-time student in the
award year;
(ii) The age of each student; and
(iii) The name of the institution that each student is or will be attending.
(2) If the institution has reason to believe that an applicant's FAFSA
information or the statement provided under paragraph (c)(1) of this section
regarding the number of family household members enrolled in eligible
postsecondary institutions is inaccurate, the institution must obtain a
statement from each institution named by the applicant in response to the
requirement of paragraph (c)(1)(iii) of this section that the household member
in question is or will be attending the institution on at least a half-time basis,
unless—
(i) The institution the student is attending determines that such a statement is
not available because the household member in question has not yet
registered at the institution he or she plans to attend; or
(ii) The institution has information indicating that the student will be
attending the same institution as the applicant.
(d) Other information. If an applicant is selected to verify other information
specified in the annual Federal Register notice, the applicant must provide
the documentation specified for that information in the Federal Register
notice.
(Approved by the Office of Management and Budget under control number
1845-0041)
(Authority: 20 U.S.C. 1094)
§ 668.58 Interim disbursements.
(a)(1) If an institution has reason to believe that an applicant's FAFSA
information is inaccurate, until the information is verified and any corrections
are made in accordance with § 668.59(a), the institution may not—
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(i) Disburse any Federal Pell Grant, FSEOG, or Federal Perkins Loan Program
funds to the applicant;
(ii) Employ or allow an employer to employ the applicant in its FWS Program;
or
(iii) Originate a Direct Subsidized Loan, or disburse any such loan proceeds for
any previously certified originated Direct Subsidized Loan to the applicant.
(2) If an institution does not have reason to believe that an applicant's FAFSA
information is inaccurate prior to verification, the institution may—
(i)(A) Withhold payment of Federal Pell Grant, Federal Perkins Loan, or
FSEOG Program funds for the applicant; or
(B) Make one disbursement from each of the Federal Pell Grant, Federal
Perkins Loan, or FSEOG Program funds for the applicant's first payment
period of the award year;
(ii) Employ or allow an employer to employ that applicant, once he or she is an
eligible student, under the FWS Program for the first 60 consecutive days
after the student's enrollment in that award year; or
(iii)(A) Withhold origination of the applicant's Direct Subsidized Loan; or
(B) Originate the Direct Subsidized Loan provided that the institution does not
disburse Subsidized Stafford Loan or Direct Subsidized Loan proceeds.
(3) If, after verification, an institution determines that changes to an
applicant's information will not change the amount the applicant would
receive under a title IV, HEA program, the institution—
(i) Must ensure corrections are made in accordance with § 668.59(a); and
(ii) May prior to receiving the corrected valid SAR or valid ISIR—
(A) Make one disbursement from each of the Federal Pell Grant, Federal
Perkins Loan, or FSEOG Program funds for the applicant's first payment
period of the award year;
(B) Employ or allow an employer to employ the applicant, once he or she is an
eligible student, under the FWS Program for the first 60 consecutive days
after the student's enrollment in that award year; or
(C) Originate the Direct Subsidized Loan and disburse the Subsidized Stafford
Loan or Direct Subsidized Loan proceeds for the applicant.
(b) If an institution chooses to make a disbursement under—
(1) Paragraph (a)(2)(i)(B) of this section, it—
(i) Is liable for any overpayment discovered as a result of verification to the
extent that the overpayment is not recovered through reducing subsequent
disbursements in the award year or from the student; and
(ii) Must recover the overpayment in accordance with § 668.61(a);
(2) Paragraph (a)(2)(ii) of this section, it—
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(i) Is liable for any overpayment discovered as a result of verification to the
extent that the overpayment is not eliminated by adjusting other financial
assistance; and
(ii) Must recover the overpayment in accordance with § 668.61(b); or
(3) Paragraph (a)(3) of this section, it—
(i) Is liable for any subsidized student financial assistance disbursed if it does
not receive the valid SAR or valid ISIR reflecting corrections within the
deadlines established under § 668.60; and
(ii) Must recover the funds in accordance with § 668.61(c).
(Authority: 20 U.S.C. 1094)
§ 668.59 Consequences of a change in an applicant's FAFSA information.
(a) For the subsidized student financial assistance programs, if an applicant's
FAFSA information changes as a result of verification, the applicant or the
institution must submit to the Secretary any changes to—
(1) A nondollar item; or
(2) A single dollar item of $25 or more.
(b) For the Federal Pell Grant Program, if an applicant's FAFSA information
changes as a result of verification, an institution must—
(1) Recalculate the applicant's Federal Pell Grant on the basis of the EFC on
the corrected valid SAR or valid ISIR; and
(2)(i) Disburse any additional funds under that award only if the institution
receives a corrected valid SAR or valid ISIR for the applicant and only to the
extent that additional funds are payable based on the recalculation;
(ii) Comply with the procedures specified in § 668.61 for an interim
disbursement if, as a result of verification, the Federal Pell Grant award is
reduced; or—
(iii) Comply with the procedures specified in 34 CFR 690.79 for an
overpayment that is not an interim disbursement if, as a result of verification,
the Federal Pell Grant award is reduced.
(c) For the subsidized student financial assistance programs, excluding the
Federal Pell Grant Program, if an applicant's FAFSA information changes as a
result of verification, the institution must—
(1) Adjust the applicant's financial aid package on the basis of the EFC on the
corrected valid SAR or valid ISIR; and
(2)(i) Comply with the procedures specified in § 668.61 for an interim
disbursement if, as a result of verification, the financial aid package must be
reduced;
(ii) Comply with the procedures specified in 34 CFR 673.5(f) for a Federal
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Perkins loan or an FSEOG overpayment that is not the result of an interim
disbursement if, as a result of verification, the financial aid package must be
reduced; and
(iii) Comply with the procedures specified in 34 CFR 685.303(e) for Direct
Subsidized Loan excess loan proceeds that are not the result of an interim
disbursement if, as a result of verification, the financial aid package must be
reduced.
(Approved by the Office of Management and Budget under control number
1845-0041)
(Authority: 20 U.S.C. 1094)
§ 668.60 Deadlines for submitting documentation and the consequences
of failing to provide documentation.
(a) An institution must require an applicant selected for verification to submit
to it, within the period of time it or the Secretary specifies, the documentation
set forth in § 668.57 that is requested by the institution.
(b) For purposes of the subsidized student financial assistance programs,
excluding the Federal Pell Grant Program—
(1) If an applicant fails to provide the requested documentation within a
reasonable time period established by the institution—
(i) The institution may not—
(A) Disburse any additional Federal Perkins Loan or FSEOG Program funds to
the applicant;
(B) Employ, continue to employ or allow an employer to employ the applicant
under FWS; or
(C) Originate the applicant's Direct Subsidized Loan or disburse any additional
Direct Subsidized Loan proceeds for the applicant; and
(ii) The applicant must repay to the institution any Federal Perkins Loan or
FSEOG received for that award year;
(2) If the applicant provides the requested documentation after the time
period established by the institution, the institution may, at its option,
disburse aid to the applicant notwithstanding paragraph (b)(1) of this section;
and
(3) If an institution has received proceeds for a Direct Subsidized Loan on
behalf of an applicant, the institution must return all or a portion of those
funds as provided under § 668.166(b) if the applicant does not complete
verification within the time period specified.
(c) For purposes of the Federal Pell Grant Program—
(1) An applicant may submit a valid SAR to the institution or the institution
may receive a valid ISIR after the applicable deadline specified in 34 CFR
690.61 but within an established additional time period set by the Secretary
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through publication of a notice in the Federal Register; and
(2) If the applicant does not provide to the institution the requested
documentation and, if necessary, a valid SAR or the institution does not
receive a valid ISIR, within the additional time period referenced in paragraph
(c)(1) of this section, the applicant—
(i) Forfeits the Federal Pell Grant for the award year; and
(ii) Must return any Federal Pell Grant payments previously received for that
award year.
(d) The Secretary may determine not to process FAFSA information of an
applicant who has been requested to provide documentation until the
applicant provides the documentation or the Secretary decides that there is no
longer a need for the documentation.
(e) If an applicant selected for verification for an award year dies before the
deadline for completing verification without completing that process, the
institution may not—
(1) Make any further disbursements on behalf of that applicant;
(2) Originate that applicant's Direct Subsidized Loan, or disburse that
applicant's Direct Subsidized Loan proceeds; or
(3) Consider any funds it disbursed to that applicant under § 668.58(a)(2) as
an overpayment.
(Authority: 20 U.S.C. 1094)
§ 668.61 Recovery of funds from interim disbursements.
(a) If an institution discovers, as a result of verification, that an applicant
received under § 668.58(a)(2)(i)(B) more financial aid than the applicant was
eligible to receive, the institution must eliminate the Federal Pell Grant,
Federal Perkins Loan, or FSEOG overpayment by—
(1) Adjusting subsequent disbursements in the award year in which the
overpayment occurred; or
(2) Reimbursing the appropriate program account by—
(i) Requiring the applicant to return the overpayment to the institution if the
institution cannot correct the overpayment under paragraph (a)(1) of this
section; or
(ii) Making restitution from its own funds, by the earlier of the following dates,
if the applicant does not return the overpayment:
(A) Sixty days after the applicant's last day of attendance.
(B) The last day of the award year in which the institution disbursed Federal
Pell Grant, Federal Perkins Loan, or FSEOG Program funds to the applicant.
(b) If an institution discovers, as a result of verification, that an applicant
received under § 668.58(a)(2)(ii) more financial aid than the applicant was
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eligible to receive, the institution must eliminate the FWS overpayment by—
(1) Adjusting the applicant's other financial aid; or
(2) Reimbursing the FWS program account by making restitution from its own
funds, if the institution cannot correct the overpayment under paragraph (b)
(1) of this section. The applicant must still be paid for all work performed
under the institution's own payroll account.
(c) If an institution disbursed subsidized student financial assistance to an
applicant under § 668.58(a)(3), and did not receive the valid SAR or valid
ISIR reflecting corrections within the deadlines established under § 668.60,
the institution must reimburse the appropriate program account by making
restitution from its own funds. The applicant must still be paid for all work
performed under the institution's own payroll account.
(Approved by the Office of Management and Budget under control number
1845-0041)
(Authority: 20 U.S.C. 1094)
24.Subpart F of part 668 is revised to read as follows:
Sec.
668.71 Scope and special definitions.
668.72 Nature of educational program.
668.73 Nature of financial charges.
668.74 Employability of graduates.
668.75 Relationship with the Department of Education.
Subpart F—Misrepresentation
Back to Top
§ 668.71 Scope and special definitions.
(a) If the Secretary determines that an eligible institution has engaged in
substantial misrepresentation, the Secretary may—
(1) Revoke the eligible institution's program participation agreement;
(2) Impose limitations on the institution's participation in the title IV, HEA
programs;
(3) Deny participation applications made on behalf of the institution; or
(4) Initiate a proceeding against the eligible institution under subpart G of this
part.
(b) This subpart establishes the types of activities that constitute substantial
misrepresentation by an eligible institution. An eligible institution is deemed
to have engaged in substantial misrepresentation when the institution itself,
one of its representatives, or any ineligible institution, organization, or person
with whom the eligible institution has an agreement to provide educational
programs, marketing, advertising, recruiting or admissions services, makes a
substantial misrepresentation regarding the eligible institution, including
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about the nature of its educational program, its financial charges, or the
employability of its graduates. Substantial misrepresentations are prohibited
in all forms, including those made in any advertising, promotional materials,
or in the marketing or sale of courses or programs of instruction offered by
the institution.
(c) The following definitions apply to this subpart:
Misrepresentation: Any false, erroneous or misleading statement an eligible
institution, one of its representatives, or any ineligible institution,
organization, or person with whom the eligible institution has an agreement
to provide educational programs, or to provide marketing, advertising,
recruiting or admissions services makes directly or indirectly to a student,
prospective student or any member of the public, or to an accrediting agency,
to a State agency, or to the Secretary. A misleading statement includes any
statement that has the likelihood or tendency to deceive or confuse. A
statement is any communication made in writing, visually, orally, or through
other means. Misrepresentation includes the dissemination of a student
endorsement or testimonial that a student gives either under duress or
because the institution required the student to make such an endorsement or
testimonial to participate in a program.
Prospective student: Any individual who has contacted an eligible institution
for the purpose of requesting information about enrolling at the institution or
who has been contacted directly by the institution or indirectly through
advertising about enrolling at the institution.
Substantial misrepresentation: Any misrepresentation on which the person to
whom it was made could reasonably be expected to rely, or has reasonably
relied, to that person's detriment.
(Authority: 20 U.S.C. 1094)
§ 668.72 Nature of educational program.
Misrepresentation concerning the nature of an eligible institution's
educational program includes, but is not limited to, false, erroneous or
misleading statements concerning—
(a) The particular type(s), specific source(s), nature and extent of its
institutional, programmatic, or specialized accreditation;
(b)(1) Whether a student may transfer course credits earned at the institution
to any other institution;
(2) Conditions under which the institution will accept transfer credits earned
at another institution;
(c) Whether successful completion of a course of instruction qualifies a student
—
(1) For acceptance to a labor union or similar organization; or
(2) To receive, to apply to take or to take the examination required to receive, a
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local, State, or Federal license, or a nongovernmental certification required as
a precondition for employment, or to perform certain functions in the States
in which the educational program is offered, or to meet additional conditions
that the institution knows or reasonably should know are generally needed to
secure employment in a recognized occupation for which the program is
represented to prepare students;
(d) The requirements for successfully completing the course of study or
program and the circumstances that would constitute grounds for terminating
the student's enrollment;
(e) Whether its courses are recommended or have been the subject of
unsolicited testimonials or endorsements by—
(1) Vocational counselors, high schools, colleges, educational organizations,
employment agencies, members of a particular industry, students, former
students, or others; or
(2) Governmental officials for governmental employment;
(f) Its size, location, facilities, or equipment;
(g) The availability, frequency, and appropriateness of its courses and
programs to the employment objectives that it states its programs are
designed to meet;
(h) The nature, age, and availability of its training devices or equipment and
their appropriateness to the employment objectives that it states its programs
and courses are designed to meet;
(i) The number, availability, and qualifications, including the training and
experience, of its faculty and other personnel;
(j) The availability of part-time employment or other forms of financial
assistance;
(k) The nature and availability of any tutorial or specialized instruction,
guidance and counseling, or other supplementary assistance it will provide its
students before, during or after the completion of a course;
(l) The nature or extent of any prerequisites established for enrollment in any
course;
(m) The subject matter, content of the course of study, or any other fact
related to the degree, diploma, certificate of completion, or any similar
document that the student is to be, or is, awarded upon completion of the
course of study;
(n) Whether the academic, professional, or occupational degree that the
institution will confer upon completion of the course of study has been
authorized by the appropriate State educational agency. This type of
misrepresentation includes, in the case of a degree that has not been
authorized by the appropriate State educational agency or that requires
specialized accreditation, any failure by an eligible institution to disclose these
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facts in any advertising or promotional materials that reference such degree;
or
(o) Any matters required to be disclosed to prospective students under §§
668.42 and 668.43 of this part.
(Authority: 20 U.S.C. 1094)
§ 668.73 Nature of financial charges.
Misrepresentation concerning the nature of an eligible institution's financial
charges includes, but is not limited to, false, erroneous, or misleading
statements concerning—
(a) Offers of scholarships to pay all or part of a course charge;
(b) Whether a particular charge is the customary charge at the institution for a
course;
(c) The cost of the program and the institution's refund policy if the student
does not complete the program;
(d) The availability or nature of any financial assistance offered to students,
including a student's responsibility to repay any loans, regardless of whether
the student is successful in completing the program and obtaining
employment; or
(e) The student's right to reject any particular type of financial aid or other
assistance, or whether the student must apply for a particular type of financial
aid, such as financing offered by the institution.
(Authority: 20 U.S.C. 1094)
§ 668.74 Employability of graduates.
Misrepresentation regarding the employability of an eligible institution's
graduates includes, but is not limited to, false, erroneous, or misleading
statements concerning—
(a) The institution's relationship with any organization, employment agency,
or other agency providing authorized training leading directly to employment;
(b) The institution's plans to maintain a placement service for graduates or
otherwise assist its graduates to obtain employment;
(c) The institution's knowledge about the current or likely future conditions,
compensation, or employment opportunities in the industry or occupation for
which the students are being prepared;
(d) Whether employment is being offered by the institution or that a talent
hunt or contest is being conducted, including, but not limited to, through the
use of phrases such as “Men/women wanted to train for * * *,” “Help
Wanted,” “Employment,” or “Business Opportunities”;
(e) Government job market statistics in relation to the potential placement of
its graduates; or
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(f) Other requirements that are generally needed to be employed in the fields
for which the training is provided, such as requirements related to
commercial driving licenses or permits to carry firearms, and failing to
disclose factors that would prevent an applicant from qualifying for such
requirements, such as prior criminal records or preexisting medical
conditions.
(Authority: 20 U.S.C. 1094)
§ 668.75 Relationship with the Department of Education.
An eligible institution, its representatives, or any ineligible institution,
organization, or person with whom the eligible institution has an agreement
may not describe the eligible institution's participation in the title IV, HEA
programs in a manner that suggests approval or endorsement by the U.S.
Department of Education of the quality of its educational programs.
(Authority: 20 U.S.C. 1094)
25.Subpart J of part 668 is revised to read as follows:
Sec.
668.141 Scope.
668.142 Special definitions.
668.143 [Reserved]
668.144 Application for test approval.
668.145 Test approval procedures.
668.146 Criteria for approving tests.
668.147 Passing scores.
668.148 Additional criteria for the approval of certain tests.
668.149 Special provisions for the approval of assessment procedures for individuals
with disabilities.
668.150 Agreement between the Secretary and a test publisher or a State.
668.151 Administration of tests.
668.152 Administration of tests by assessment centers.
668.153 Administration of tests for individuals whose native language is not English or
for individuals with disabilities.
668.154 Institutional accountability.
668.155 [Reserved]
668.156 Approved State process.
Subpart J—Approval of Independently Administered
Tests; Specification of Passing Score; Approval of State
Process
Back to Top
§ 668.141 Scope.
(a) This subpart sets forth the provisions under which a student who has
neither a high school diploma nor its recognized equivalent may become
eligible to receive title IV, HEA program funds by—
(1) Achieving a passing score, specified by the Secretary, on an independently
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administered test approved by the Secretary under this subpart; or
(2) Being enrolled in an eligible institution that participates in a State process
approved by the Secretary under this subpart.
(b) Under this subpart, the Secretary sets forth—
(1) The procedures and criteria the Secretary uses to approve tests;
(2) The basis on which the Secretary specifies a passing score on each
approved test;
(3) The procedures and conditions under which the Secretary determines that
an approved test is independently administered;
(4) The information that a test publisher or a State must submit, as part of its
test submission, to explain the methodology it will use for the test anomaly
studies as described in § 668.144(c)(17) and (d)(8), as appropriate;
(5) The requirements that a test publisher or a State, as appropriate—
(i) Have a process to identify and follow up on test score irregularities;
(ii) Take corrective action—up to and including decertification of test
administrators—if the test publisher or the State determines that test score
irregularities have occurred; and
(iii) Report to the Secretary the names of any test administrators it decertifies
and any other action taken as a result of test score analyses; and
(6) The procedures and conditions under which the Secretary determines that
a State process demonstrates that students in the process have the ability to
benefit from the education and training being offered to them.
(Authority: 20 U.S.C. 1091(d))
§ 668.142 Special definitions.
The following definitions apply to this subpart:
Assessment center: A facility that—
(1) Is located at an eligible institution that provides two-year or four-year
degrees or is a postsecondary vocational institution;
(2) Is responsible for gathering and evaluating information about individual
students for multiple purposes, including appropriate course placement;
(3) Is independent of the admissions and financial aid processes at the
institution at which it is located;
(4) Is staffed by professionally trained personnel;
(5) Uses test administrators to administer tests approved by the Secretary
under this subpart; and
(6) Does not have as its primary purpose the administration of ability to
benefit tests.
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ATB test irregularity: An irregularity that results from an ATB test being
administered in a manner that does not conform to the established rules for
test administration consistent with the provisions of subpart J of part 668 and
the test administrator's manual.
Computer-based test: A test taken by a student on a computer and scored by a
computer.
General learned abilities: Cognitive operations, such as deductive reasoning,
reading comprehension, or translation from graphic to numerical
representation, that may be learned in both school and non-school
environments.
Independent test administrator: A test administrator who administers tests at
a location other than an assessment center and who—
(1) Has no current or prior financial or ownership interest in the institution, its
affiliates, or its parent corporation, other than the fees earned for
administering approved ATB tests through an agreement with the test
publisher or State and has no controlling interest in any other institution;
(2) Is not a current or former employee of or consultant to the institution, its
affiliates, or its parent corporation, a person in control of another institution,
or a member of the family of any of these individuals;
(3) Is not a current or former member of the board of directors, a current or
former employee of or a consultant to a member of the board of directors,
chief executive officer, chief financial officer of the institution, its affiliates, or
its parent corporation or of any other institution, or a member of the family of
any of these individuals; and
(4) Is not a current or former student of the institution.
Individual with a disability: A person who has a physical or mental
impairment which substantially limits one or more major life activities, has a
record of such an impairment, or is regarded as having such an impairment.
Non-native speaker of English: A person whose first language is not English
and who is not fluent in English.
Secondary school level: As applied to “content,” “curricula,” or “basic verbal
and quantitative skills,” the basic knowledge or skills generally learned in the
9th through 12th grades in United States secondary schools.
Test: A standardized test, assessment or instrument that has formal protocols
on how it is to be administered in order to be valid. These protocols include,
for example, the use of parallel, equated forms; testing conditions; time
allowed
for the test; and standardized scoring. Tests are not limited to
traditional paper and pencil (or computer-administered) instruments for
which forms are constructed prior to administration to examinees. Tests may
also include adaptive instruments that use computerized algorithms for
selecting and administering items in real time; however, for such instruments,
the size of the item pool and the method of item selection must ensure
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negligible overlap in items across retests.
Test administrator: An individual who is certified by the test publisher (or the
State, in the case of an approved State test or assessment) to administer tests
approved under this subpart in accordance with the instructions provided by
the test publisher or the State, as applicable, which includes protecting the
test and the test results from improper disclosure or release, and who is not
compensated on the basis of test outcomes.
Test item: A question on a test.
Test publisher: An individual, organization, or agency that owns a registered
copyright of a test, or has been authorized by the copyright holder to
represent the copyright holder's interests regarding the test.
(Authority: 20 U.S.C. 1091(d))
§ 668.143 [Reserved]
§ 668.144 Application for test approval.
(a) The Secretary only reviews tests under this subpart that are submitted by
the publisher of that test or by a State.
(b) A test publisher or a State that wishes to have its test approved by the
Secretary under this subpart must submit an application to the Secretary at
such time and in such manner as the Secretary may prescribe. The application
must contain all the information necessary for the Secretary to approve the
test under this subpart, including but not limited to, the information
contained in paragraph (c) or (d) of this section, as applicable.
(c) A test publisher must include with its application—
(1) A summary of the precise editions, forms, levels, and (if applicable) subtests for which approval is being sought;
(2) The name, address, telephone number, and e-mail address of a contact
person to whom the Secretary may address inquiries;
(3) Each edition, form, level, and sub-test of the test for which the test
publisher requests approval;
(4) The distribution of test scores for each edition, form, level, or sub-test for
which approval is sought, that allows the Secretary to prescribe the passing
score for each test in accordance with § 668.147;
(5) Documentation of test development, including a history of the test's use;
(6) Norming data and other evidence used in determining the distribution of
test scores;
(7) Material that defines the content domains addressed by the test;
(8) Documentation of periodic reviews of the content and specifications of the
test to ensure that the test reflects secondary school level verbal and
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quantitative skills;
(9) If a test being submitted is a revision of the most recent edition approved
by the Secretary, an analysis of the revisions, including the reasons for the
revisions, the implications of the revisions for the comparability of scores on
the current test to scores on the previous test, and data from validity studies
of the test undertaken subsequent to the revisions;
(10) A description of the manner in which test-taking time was determined in
relation to the content representativeness requirements in § 668.146(b)(3)
and an analysis of the effects of time on performance. This description may
also include the manner in which test-taking time was determined in relation
to the other requirements in § 668.146(b);
(11) A technical manual that includes—
(i) An explanation of the methodology and procedures for measuring the
reliability of the test;
(ii) Evidence that different forms of the test, including, if applicable, short
forms, are comparable in reliability;
(iii) Other evidence demonstrating that the test permits consistent assessment
of individual skill and ability;
(iv) Evidence that the test was normed using—
(A) Groups that were of sufficient size to produce defensible standard errors of
the mean and were not disproportionately composed of any race or gender;
and
(B) A contemporary sample that is representative of the population of persons
who have earned a high school diploma in the United States;
(v) Documentation of the level of difficulty of the test;
(vi) Unambiguous scales and scale values so that standard errors of
measurement can be used to determine statistically significant differences in
performance; and
(vii) Additional guidance on the interpretation of scores resulting from any
modifications of the test for individuals with temporary impairments,
individuals with disabilities and guidance on the types of accommodations
that are allowable;
(12) The manual provided to test administrators containing procedures and
instructions for test security and administration, and the forwarding of tests
to the test publisher;
(13) An analysis of the item-content of each edition, form, level, and (if
applicable) sub-test to demonstrate compliance with the required secondary
school level criterion specified in § 668.146(b);
(14) A description of retesting procedures and the analysis upon which the
criteria for retesting are based;
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(15) Other evidence establishing the test's compliance with the criteria for
approval of tests as provided in § 668.146;
(16) A description of its test administrator certification process that provides—
(i) How the test publisher will determine that the test administrator has the
necessary training, knowledge, skill, and integrity to test students in
accordance with this subpart and the test publisher's requirements; and
(ii) How the test publisher will determine that the test administrator has the
ability and facilities to keep its test secure against disclosure or release;
(17) A description of the test anomaly analysis the test publisher will conduct
and submit to the Secretary that includes—
(i) An explanation of how the test publisher will identify potential test
irregularities and make a determination that test irregularities have occurred;
(ii) An explanation of the process and procedures for corrective action (up to
and including decertification of a certified test administrator) when the test
publisher determines that test irregularities have occurred; and
(iii) Information on when and how the test publisher will notify a test
administrator, the Secretary, and the institutions for which the test
administrator had previously provided testing services for that test publisher,
that the test administrator has been decertified; and
(18)(i) An explanation of any accessible technologies that are available to
accommodate individuals with disabilities, and
(ii) A description of the process for a test administrator to identify and report
to the test publisher when accommodations for individuals with disabilities
were provided, for scoring and norming purposes.
(d) A State must include with its application—
(1) The information necessary for the Secretary to determine that the test the
State uses measures a student's skills and abilities for the purpose of
determining whether the student has the skills and abilities the State expects
of a high school graduate in that State;
(2) The passing scores on that test;
(3) Any guidance on the interpretation of scores resulting from any
modifications of the test for individuals with disabilities;
(4) A statement regarding how the test will be kept secure;
(5) A description of retesting procedures and the analysis upon which the
criteria for retesting are based;
(6) Other evidence establishing the test's compliance with the criteria for
approval of tests as provided in § 668.146;
(7) A description of its test administrator certification process that provides—
(i) How the State will determine that the test administrator has the necessary
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training, knowledge, skill, and integrity to test students in accordance with the
State's requirements; and
(ii) How the State will determine that the test administrator has the ability and
facilities to keep its test secure against disclosure or release;
(8) A description of the test anomaly analysis that the State will conduct and
submit to the Secretary that includes—
(i) An explanation of how the State will identify potential test irregularities and
make a determination that test irregularities have occurred;
(ii) An explanation of the process and procedures for corrective action (up to
and including decertification of a test administrator) when the State
determines that test irregularities have occurred; and
(iii) Information on when and how the State will notify a test administrator,
the Secretary, and the institutions for which the test administrator had
previously provided testing services for that State, that the test administrator
has been decertified;
(9)(i) An explanation of any accessible technologies that are available to
accommodate individuals with disabilities; and
(ii) A description of the process for a test administrator to identify and report
to the test publisher when accommodations for individuals with disabilities
were provided, for scoring and norming purposes; and
(10) The name, address, telephone number, and e-mail address of a contact
person to whom the Secretary may address inquiries.
(11) A technical manual that includes—
(i) An explanation of the methodology and procedures for measuring the
reliability of the test;
(ii) Evidence that different forms of the test, including, if applicable, short
forms, are comparable in reliability;
(iii) Other evidence demonstrating that the test permits consistent assessment
of individual skill and ability;
(iv) Evidence that the test was normed using—
(A) Groups that were of sufficient size to produce defensible standard errors of
the mean and were not disproportionately composed of any race or gender;
and
(B) A contemporary sample that is representative of the population of persons
who have earned a high school diploma in the United States;
(v) Documentation of the level of difficulty of the test;
(vi) Unambiguous scales and scale values so that standard errors of
measurement can be used to determine statistically significant differences in
performance; and
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(vii) Additional guidance on the interpretation of scores resulting from any
modifications of the test for individuals with temporary impairments,
individuals with disabilities and guidance on the types of accommodations
that are allowable;
(12) the manual provided to test administrators containing procedures and
instructions for test security and administration, and the forwarding of tests
to the State.
(Approved by the Office of Management and Budget under control number
1845-0049)
(Authority: 20 U.S.C. 1091(d))
§ 668.145 Test approval procedures.
(a)(1) When the Secretary receives a complete application from a test
publisher or a State, the Secretary selects one or more experts in the field of
educational testing and assessment, who possess appropriate advanced
degrees and experience in test development or psychometric research, to
determine whether the test meets the requirements for test approval
contained in §§ 668.146, 668.147, 668.148, or 668.149, as appropriate, and to
advise the Secretary of their determinations.
(2) If the test involves a language other than English, the Secretary selects at
least one individual who is fluent in the language in which the test is written
to collaborate with the testing expert or experts described in paragraph (a)(1)
of this section and to advise the Secretary on whether the test meets the
additional criteria, provisions, and conditions for test approval contained in
§§ 668.148 and 668.149.
(3) For test batteries that contain multiple sub-tests measuring content
domains other than verbal and quantitative domains, the Secretary reviews
only those sub-tests covering the verbal and quantitative domains.
(b)(1) If the Secretary determines that a test satisfies the criteria and
requirements for test approval, the Secretary notifies the test publisher or the
State, as applicable, of the Secretary's decision, and publishes the name of the
test and the passing scores in the Federal Register.
(2) If the Secretary determines that a test does not satisfy the criteria and
requirements for test approval, the Secretary notifies the test publisher or the
State, as applicable, of the Secretary's decision, and the reasons why the test
did not meet those criteria and requirements.
(3) If the Secretary determines that a test does not satisfy the criteria and
requirements for test approval, the test publisher or the State that submitted
the test for approval may request that the Secretary reevaluate the Secretary's
decision. Such a request must be accompanied by—
(i) Documentation and information that address the reasons for the nonapproval of the test; and
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(ii) An analysis of why the information and documentation submitted meet the
criteria and requirements for test approval notwithstanding the Secretary's
earlier decision to the contrary.
(c)(1) The Secretary approves a test for a period not to exceed five years from
the date the notice of approval of the test is published in the Federal
Register.
(2) The Secretary extends the approval period of a test to include the period of
review if the test publisher or the State, as applicable, re-submits the test for
review and approval under § 668.144 at least six months before the date on
which the test approval is scheduled to expire.
(d)(1) The Secretary's approval of a test may be revoked if the Secretary
determines that the test publisher or the State violated any terms of the
agreement described in § 668.150, that the information the test publisher or
the State submitted as a basis for approval of the test was inaccurate, or that
the test publisher or the State substantially changed the test and did not
resubmit the test, as revised, for approval.
(2) If the Secretary revokes approval of a previously approved test, the
Secretary publishes a notice of that revocation in the Federal Register. The
revocation becomes effective—
(i) One hundred and twenty days from the date the notice of revocation is
published in the Federal Register; or
(ii) An earlier date specified by the Secretary in a notice published in the
Federal Register.
(Approved by the Office of Management and Budget under control number
1845-0049)
(Authority: 20 U.S.C. 1091(d))
§ 668.146 Criteria for approving tests.
(a) Except as provided in § 668.148, the Secretary approves a test under this
subpart if—
(1) The test meets the criteria set forth in paragraph (b) of this section;
(2) The test publisher or the State satisfies the requirements set forth in
paragraph (c) of this section; and
(3) The Secretary makes a determination that the information the test
publisher or State submitted in accordance with § 668.144(c)(17) or (d)(8), as
applicable, provides adequate assurance that the test publisher or State will
conduct rigorous test anomaly analyses and take appropriate action if test
administrators do not comply with testing procedures.
(b) To be approved under this subpart, a test must—
(1) Assess secondary school level basic verbal and quantitative skills and
general learned abilities;
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(2) Sample the major content domains of secondary school level verbal and
quantitative skills with sufficient numbers of questions to—
(i) Adequately represent each domain; and
(ii) Permit meaningful analyses of item-level performance by students who are
representative of the contemporary population beyond the age of compulsory
school attendance and have earned a high school diploma;
(3) Require appropriate test-taking time to permit adequate sampling of the
major content domains described in paragraph (b)(2) of this section;
(4) Have all forms (including short forms) comparable in reliability;
(5) Have, in the case of a test that is revised, new scales, scale values, and
scores that are demonstrably comparable to the old scales, scale values, and
scores;
(6) Meet all standards for test construction provided in the 1999 edition of the
Standards for Educational and Psychological Testing, prepared by a joint
committee of the American Educational Research Association, the American
Psychological Association, and the National Council on Measurement in
Education incorporated by reference in this section. Incorporation by
reference of this document has been approved by the Director of the Office of
the Federal Register pursuant to the Director's authority under 5 U.S.C.
552(a) and 1 CFR part 51. The incorporated document is on file at the
Department of Education, Federal Student Aid, room 113E2, 830 First Street,
NE., Washington, DC 20002, phone (202) 377-4026, and at the National
Archives and Records Administration (NARA). For information on the
availability of this material at NARA, call 1-866-272-6272, or go to: http://w
ww.archives.gov/federal_register/code_of_federal_regulations/ibr_locatio
ns.html. The document also may be obtained from the American Educational
Research Association at: http://www.aera.net; and
(7) Have the test publisher's or the State's guidelines for retesting, including
time between test-taking, be based on empirical analyses that are part of the
studies of test reliability.
(c) In order for a test to be approved under this subpart, a test publisher or a
State must—
(1) Include in the test booklet or package—
(i) Clear, specific, and complete instructions for test administration, including
information for test takers on the purpose, timing, and scoring of the test; and
(ii) Sample questions representative of the content and average difficulty of
the test;
(2) Have two or more secure, equated, alternate forms of the test;
(3) Except as provided in §§ 668.148 and 668.149, provide tables of
distributions of test scores which clearly indicate the mean score and standard
deviation for high school graduates who have taken the test within three years
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prior to the date that the test is submitted to the Secretary for approval under
§ 668.144;
(4) Norm the test with—
(i) Groups that are of sufficient size to produce defensible standard errors of
the mean and are not disproportionately composed of any race or gender; and
(ii) A contemporary sample that is representative of the population of persons
who have earned a high school diploma in the United States; and
(5) If test batteries include sub-tests assessing different verbal and/or
quantitative skills, a distribution of test scores as described in paragraph (c)
(3) of this section that allows the Secretary to prescribe either—
(i) A passing score for each sub-test; or
(ii) One composite passing score for verbal skills and one composite passing
score for quantitative skills.
(Approved by the Office of Management and Budget under control number
1845-0049)
(Authority: 20 U.S.C. 1091(d))
§ 668.147 Passing scores.
Except as provided in §§ 668.144(d), 668.148, and 668.149, to demonstrate
that a test taker has the ability to benefit from the education and training
offered by the institution, the Secretary specifies that the passing score on
each approved test is one standard deviation below the mean score of a
sample of individuals who have taken the test within the three years before
the test is submitted to the Secretary for approval. The sample must be
representative of the population of high school graduates in the United States.
(Authority: 20 U.S.C. 1091(d))
§ 668.148 Additional criteria for the approval of certain tests.
(a) In addition to satisfying the criteria in § 668.146, to be approved by the
Secretary, a test must meet the following criteria, if applicable:
(1) In the case of a test developed for a non-native speaker of English who is
enrolled in a program that is taught in his or her native language, the test
must be—
(i) Linguistically accurate and culturally sensitive to the population for which
the test is designed, regardless of the language in which the test is written;
(ii) Supported by documentation detailing the development of normative data;
(iii) If translated from an English version, supported by documentation of
procedures to determine its reliability and validity with reference to the
population for which the translated test was designed;
(iv) Developed in accordance with guidelines provided in the 1999 edition of
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the “Testing Individuals of Diverse Linguistic Backgrounds” section of the
Standards for Educational and Psychological Testing prepared by a joint
committee of the American Educational Research Association, the American
Psychological Association, and the National Council on Measurement in
Education incorporated by reference in this section. Incorporation by
reference of this document has been approved by the Director of the Office of
the Federal Register pursuant to the Director's authority under 5 U.S.C.
552(a) and 1 CFR part 51. The incorporated document is on file at the
Department of Education, Federal Student Aid, room 113E2, 830 First Street,
NE., Washington, DC 20002, phone (202) 377-4026, and at the National
Archives
and Records Administration (NARA). For information on the
availability of this material at NARA, call 1-866-272-6272, or go to: http://w
ww.archives.gov/federal_register/code_of_federal_regulations/ibr_locatio
ns.html. The document also may be obtained from the American Educational
Research Association at: http://www.aera.net; and
(v)(A) If the test is in Spanish, accompanied by a distribution of test scores
that clearly indicates the mean score and standard deviation for Spanishspeaking students with high school diplomas who have taken the test within
five years before the date on which the test is submitted to the Secretary for
approval.
(B) If the test is in a language other than Spanish, accompanied by a
recommendation for a provisional passing score based upon performance of a
sample of test takers representative of non-English speaking individuals who
speak a language other than Spanish and who have a high school diploma.
The sample upon which the recommended provisional passing score is based
must be large enough to produce stable norms.
(2) In the case of a test that is modified for use for individuals with disabilities,
the test publisher or State must—
(i) Follow guidelines provided in the “Testing Individuals with Disabilities”
section of the Standards for Educational and Psychological Testing; and
(ii) Provide documentation of the appropriateness and feasibility of the
modifications relevant to test performance.
(3) In the case of a computer-based test, the test publisher or State, as
applicable, must—
(i) Provide documentation to the Secretary that the test complies with the
basic principles of test construction and standards of reliability and validity as
promulgated in the Standards for Educational and Psychological Testing;
(ii) Provide test administrators with instructions for familiarizing test takers
with computer hardware prior to test-taking; and
(iii) Provide two or more parallel, equated forms of the test, or, if parallel
forms are generated from an item pool, provide documentation of the
methods of item selection for alternate forms.
(b) If a test is designed solely to measure the English language competence of
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non-native speakers of English—
(1) The test must meet the criteria set forth in § 668.146(b)(6), (c)(1), (c)(2),
and (c)(4); and
(2) The test publisher must recommend a passing score based on the mean
score of test takers beyond the age of compulsory school attendance who
completed U.S. high school equivalency programs, formal training programs,
or bilingual vocational programs.
(Approved by the Office of Management and Budget under control number
1845-0049)
(Authority: 20 U.S.C. 1091(d))
§ 668.149 Special provisions for the approval of assessment procedures
for individuals with disabilities.
If no test is reasonably available for individuals with disabilities so that no test
can be approved under §§ 668.146 or 668.148 for these individuals, the
following procedures apply:
(a) The Secretary considers a modified test or testing procedure, or instrument
that has been scientifically developed specifically for the purpose of evaluating
the ability to benefit from postsecondary training or education of individuals
with disabilities to be an approved test for purposes of this subpart provided
that the testing procedure or instrument measures both basic verbal and
quantitative skills at the secondary school level.
(b) The Secretary considers the passing scores for these testing procedures or
instruments to be those recommended by the test publisher or State, as
applicable.
(c) The test publisher or State, as applicable, must—
(1) Maintain appropriate documentation, including a description of the
procedures or instruments, their content domains, technical properties, and
scoring procedures; and
(2) Require the test administrator to—
(i) Use the procedures or instruments in accordance with instructions
provided by the test publisher or State, as applicable; and
(ii) Use the passing scores recommended by the test publisher or State, as
applicable.
(Approved by the Office of Management and Budget under control number
1845-0049)
(Authority: 20 U.S.C. 1091(d))
§ 668.150 Agreement between the Secretary and a test publisher or a
State.
(a) If the Secretary approves a test under this subpart, the test publisher or the
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State that submitted the test must enter into an agreement with the Secretary
that contains the provisions set forth in paragraph (b) of this section before an
institution may use the test to determine a student's eligibility for title IV,
HEA program funds.
(b) The agreement between a test publisher or a State, as applicable, and the
Secretary provides that the test publisher or the State, as applicable, must—
(1) Allow only test administrators that it certifies to give its test;
(2) Require each test administrator it certifies to—
(i) Provide the test publisher or the State, as applicable, with a certification
statement that indicates he or she is not currently decertified; and
(ii) Notify the test publisher or the State, as applicable, immediately if any
other test publisher or State decertifies the test administrator;
(3) Only certify test administrators who—
(i) Have the necessary training, knowledge, and skill to test students in
accordance with the test publisher's or the State's testing requirements;
(ii) Have the ability and facilities to keep its test secure against disclosure or
release; and
(iii) Have not been decertified within the last three years by any test publisher
or State;
(4) Decertify a test administrator for a period of three years if the test
publisher or the State finds that the test administrator—
(i) Has failed to give its test in accordance with the test publisher's or the
State's instructions;
(ii) Has not kept the test secure;
(iii) Has compromised the integrity of the testing process; or
(iv) Has given the test in violation of the provisions contained in § 668.151;
(5) Reevaluate the qualifications of a test administrator who has been
decertified by another test publisher or State and determine whether to
continue the test administrator's certification or to decertify the test
administrator;
(6) Immediately notify the test administrator, the Secretary, and the
institutions where the test administrator previously administered approved
tests when the test publisher or the State decertifies a test administrator;
(7)(i) Review the test results of the tests administered by a decertified test
administrator and determine which tests may have been improperly
administered during the five (5) year period preceding the date of
decertification;
(ii) Immediately notify the affected institutions and students or prospective
students; and
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(iii) Provide a report to the Secretary on the results of the review and the
notifications provided to institutions and students or prospective students;
(8) Report to the Secretary if the test publisher or the State certifies a
previously decertified test administrator after the three year period specified
in paragraph (b)(4) of this section;
(9) Score a test answer sheet that it receives from a test administrator;
(10) If a computer-based test is used, provide the test administrator with
software that will—
(i) Immediately generate a score report for each test taker;
(ii) Allow the test administrator to send to the test publisher or the State, as
applicable, a record of the test taker's performance on each test item and the
test taker's test scores using a data transfer method that is encrypted and
secure; and
(iii) Prohibit any changes in test taker responses or test scores;
(11) Promptly send to the student and the institution the student indicated he
or she is attending or scheduled to attend a notice stating the student's score
for the test and whether or not the student passed the test;
(12) Keep each test answer sheet or electronic record forwarded for scoring
and all other documents forwarded by the test administrator with regard to
the test for a period of three years from the date the analysis of the tests
results, described in paragraph (b)(13) of this section, was sent to the
Secretary;
(13) Analyze the test scores of students who take the test to determine whether
the test scores and data produce any irregular pattern that raises an inference
that the tests were not being properly administered, and provide the Secretary
with a copy of this analysis within 18 months after the test was approved and
every 18 months thereafter during the period of test approval;
(14) Upon request, give the Secretary, a State agency, an accrediting agency,
and law enforcement agencies access to test records or other documents
related to an audit, investigation, or program review of an institution, the test
publisher, or a test administrator;
(15) Immediately report to the Secretary if the test publisher or the State finds
any credible information indicating that a test has been compromised;
(16) Immediately report to the Office of Inspector General of the Department
of Education for investigation if the test publisher or the State finds any
credible information indicating that a test administrator or institution may
have engaged in civil or criminal fraud, or other misconduct; and
(17) Require a test administrator who provides a test to an individual with a
disability who requires an accommodation in the test's administration to
report to the test publisher or the State within the time period specified in §
668.151(b)(2) or § 668.152(b)(2), as applicable, the nature of the disability
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and the accommodations that were provided.
(c)(1) The Secretary may terminate an agreement with a test publisher or a
State, as applicable, if the test publisher or the State fails to carry out the
terms of the agreement described in paragraph (b) of this section.
(2) Before terminating the agreement, the Secretary gives the test publisher or
the State, as applicable, the opportunity to show that it has not failed to carry
out the terms of its agreement.
(3) If the Secretary terminates an agreement with a test publisher or a State
under this section, the Secretary publishes a notice in the Federal Register
specifying when institutions may no longer use the test publisher's or the
State's test(s) for purposes of determining a student's eligibility for title IV,
HEA program funds.
(Approved by the Office of Management and Budget under control number
1845-0049)
(Authority: 20 U.S.C. 1091(d))
§ 668.151 Administration of tests.
(a)(1) To establish a student's eligibility for title IV, HEA program funds under
this subpart, an institution must select a test administrator to give an
approved test.
(2) An institution may use the results of an approved test it received from an
approved test publisher or assessment center to determine a student's
eligibility to receive title IV, HEA program funds if the test was independently
administered and properly administered in accordance with this subpart.
(b) The Secretary considers that a test is independently administered if the test
is—
(1) Given at an assessment center by a certified test administrator who is an
employee of the center; or
(2) Given by an independent test administrator who maintains the test at a
secure location and submits the test for scoring by the test publisher or the
State or, for a computer-based test, a record of the test scores, within two
business days of administering the test.
(c) The Secretary considers that a test is not independently administered if an
institution—
(1) Compromises test security or testing procedures;
(2) Pays a test administrator a bonus, commission, or any other incentive
based upon the test scores or pass rates of its students who take the test; or
(3) Otherwise interferes with the test administrator's independence or test
administration.
(d) The Secretary considers that a test is properly administered if the test
administrator—
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(1) Is certified by the test publisher or the State, as applicable, to give the test
publisher's or the State's test;
(2) Administers the test in accordance with instructions provided by the test
publisher or the State, as applicable, and in a manner that ensures the
integrity and security of the test;
(3) Makes the test available only to a test-taker, and then only during a
regularly scheduled test;
(4) Secures the test against disclosure or release; and
(5) Submits the completed test or, for a computer-based test, a record of test
scores, to the test publisher or the State, as applicable, within the time period
specified in § 668.152(b) or paragraph (b)(2) of this section, as appropriate,
and in accordance with the test publisher's or the State's instructions.
(e) An independent test administrator may not score a test.
(f) An individual who fails to pass a test approved under this subpart may not
retake the same form of the test for the period prescribed by the test publisher
or the State responsible for the test.
(g) An institution must maintain a record for each individual who took a test
under this subpart. The record must include—
(1) The test taken by the individual;
(2) The date of the test;
(3) The individual's scores as reported by the test publisher, an assessment
center, or the State;
(4) The name and address of the test administrator who administered the test
and any identifier assigned to the test administrator by the test publisher or
the State; and
(5) If the individual who took the test is an individual with a disability and was
unable to be evaluated by the use of an approved ATB test or the individual
requested or required testing accommodations, documentation of the
individual's disability and of the testing arrangements provided in accordance
with § 668.153(b).
(Approved by the Office of Management and Budget under control number
1845-0049)
(Authority: 20 U.S.C. 1091(d))
§ 668.152 Administration of tests by assessment centers.
(a) If a test is given by an assessment center, the assessment center must
properly administer the test as described in § 668.151(d), and § 668.153, if
applicable.
(b)(1) Unless an agreement between a test publisher or a State, as applicable,
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and an assessment center indicates otherwise, an assessment center scores
the tests it gives and promptly notifies the institution and the student of the
student's score on the test and whether the student passed the test.
(2) If the assessment center scores the test, it must provide weekly to the test
publisher or the State, as applicable—
(i) All copies of the completed test, including the name and address of the test
administrator who administered the test and any identifier assigned to the
test administrator by the test publisher or the State, as applicable; or
(ii) A report listing all test-takers' scores and institutions to which the scores
were sent and the name and address of the test administrator who
administered the test and any identifier assigned to the test administrator by
the test publisher or the State, as applicable.
(Approved by the Office of Management and Budget under control number
1845-0049)
(Authority: 20 U.S.C. 1091(d))
§ 668.153 Administration of tests for individuals whose native language is
not English or for individuals with disabilities.
(a) Individuals whose native language is not English. For an individual whose
native language is not English and who is not fluent in English, the institution
must use the following tests, as applicable:
(1) If the individual is enrolled or plans to enroll in a program conducted
entirely in his or her native language, the individual must take a test approved
under §§ 668.146 and 668.148(a)(1).
(2) If the individual is enrolled or plans to enroll in a program that is taught in
English with an ESL component, the individual must take an English
language proficiency assessment approved under § 668.148(b) and, before
beginning the portion of the program taught in English, a test approved under
§ 668.146.
(3) If the individual is enrolled or plans to enroll in a program that is taught in
English without an ESL component, or the individual does not enroll in any
ESL component offered, the individual must take a test in English approved
under § 668.146.
(4) If the individual enrolls in an ESL program, the individual must take an
ESL test approved under § 668.148(b).
(5) If the individual enrolls or plans to enroll in a program that is taught in the
student's native language that either has an ESL component or a portion of
the program will be taught in English, the individual must take an English
proficiency test approved under § 668.148(b) prior to beginning the portion of
the program taught in English.
(b) Individuals with disabilities. (1) For an individual with a disability who has
neither a high school diploma nor its equivalent and who is applying for title
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IV, HEA program funds and seeks to show his or her ability to benefit through
the testing procedures in this subpart, an institution must use a test described
in § 668.148(a)(2) or § 668.149(a).
(2) The test must reflect the individual's skills and general learned abilities.
(3) The test administrator must ensure that there is documentation to support
the determination that the individual is an individual with a disability and
requires accommodations—such as extra time or a quiet room—for taking an
approved test, or is unable to be evaluated by the use of an approved ATB test.
(4) Documentation of an individual's disability may be satisfied by—
(i) A written determination, including a diagnosis and information about
testing accommodations, if such accommodation information is available, by a
licensed psychologist or physician; or
(ii) A record of the disability from a local or State educational agency, or other
government agency, such as the Social Security Administration or a vocational
rehabilitation agency, that identifies the individual's disability. This record
may, but is not required to, include a diagnosis and recommended testing
accommodations.
(Approved by the Office of Management and Budget under control number
1845-0049)
(Authority: 20 U.S.C. 1091(d))
§ 668.154 Institutional accountability.
An institution is liable for the title IV, HEA program funds disbursed to a
student whose eligibility is determined under this subpart only if—
(a) The institution used a test that was not administered independently, in
accordance with § 668.151(b);
(b) The institution or an employee of the institution compromised the testing
process in any way; or
(c) The institution is unable to document that the student received a passing
score on an approved test.
(Authority: 20 U.S.C. 1091(d))
§ 668.155 [Reserved]
§ 668.156 Approved State process.
(a)(1) A State that wishes the Secretary to consider its State process as an
alternative to achieving a passing score on an approved, independently
administered test for the purpose of determining a student's eligibility for title
IV, HEA program funds must apply to the Secretary for approval of that
process.
(2) To be an approved State process, the State process does not have to include
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all the institutions located in that State, but must indicate which institutions
are included.
(b) The Secretary approves a State's process if—
(1) The State administering the process can demonstrate that the students it
admits under that process without a high school diploma or its equivalent,
who enroll in participating institutions have a success rate as determined
under paragraph (h) of this section that is within 95 percent of the success
rate of students with high school diplomas; and
(2) The State's process satisfies the requirements contained in paragraphs (c)
and (d) of this section.
(c) A State process must require institutions participating in the process to
provide each student they admit without a high school diploma or its
recognized equivalent with the following services:
(1) Orientation regarding the institution's academic standards and
requirements, and student rights.
(2) Assessment of each student's existing capabilities through means other
than a single standardized test.
(3) Tutoring in basic verbal and quantitative skills, if appropriate.
(4) Assistance in developing educational goals.
(5) Counseling, including counseling regarding the appropriate class level for
that student given the student's individual's capabilities.
(6) Follow-up by teachers and counselors regarding the student's classroom
performance and satisfactory progress toward program completion.
(d) A State process must—
(1) Monitor on an annual basis each participating institution's compliance with
the requirements and standards contained in the State's process;
(2) Require corrective action if an institution is found to be in noncompliance
with the State process requirements; and
(3) Terminate an institution from the State process if the institution refuses or
fails to comply with the State process requirements.
(e)(1) The Secretary responds to a State's request for approval of its State's
process within six months after the Secretary's receipt of that request. If the
Secretary does not respond by the end of six months, the State's process is
deemed to be approved.
(2) An approved State process becomes effective for purposes of
determining
student eligibility for title IV, HEA program funds under this subpart—
(i) On the date the Secretary approves the process; or
(ii) Six months after the date on which the State submits the process to the
Secretary for approval, if the Secretary neither approves nor disapproves the
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process during that six month period.
(f) The Secretary approves a State process for a period not to exceed five years.
(g)(1) The Secretary withdraws approval of a State process if the Secretary
determines that the State process violated any terms of this section or that the
information that the State submitted as a basis for approval of the State
process was inaccurate.
(2) The Secretary provides a State with the opportunity to contest a finding
that the State process violated any terms of this section or that the
information that the State submitted as a basis for approval of the State
process was inaccurate.
(h) The State must calculate the success rates as referenced in paragraph (b) of
this section by—
(1) Determining the number of students with high school diplomas who,
during the applicable award year described in paragraph (i) of this section,
enrolled in participating institutions and—
(i) Successfully completed education or training programs;
(ii) Remained enrolled in education or training programs at the end of that
award year; or
(iii) Successfully transferred to and remained enrolled in another institution at
the end of that award year;
(2) Determining the number of students with high school diplomas who
enrolled in education or training programs in participating institutions during
that award year;
(3) Determining the number of students calculated in paragraph (h)(2) of this
section who remained enrolled after subtracting the number of students who
subsequently withdrew or were expelled from participating institutions and
received a 100 percent refund of their tuition under the institutions' refund
policies;
(4) Dividing the number of students determined in paragraph (h)(1) of this
section by the number of students determined in paragraph (h)(3) of this
section;
(5) Making the calculations described in paragraphs (h)(1) through (h)(4) of
this section for students without a high school diploma or its recognized
equivalent who enrolled in participating institutions.
(i) For purposes of paragraph (h) of this section, the applicable award year is
the latest complete award year for which information is available that
immediately precedes the date on which the State requests the Secretary to
approve its State process, except that the award year selected must be one of
the latest two completed award years preceding that application date.
(Approved by the Office of Management and Budget under control number
1845-0049)
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(Authority: 20 U.S.C. 1091(d))
26.Section 668.164 is amended by:
A. In paragraph (g)(2)(i), removing the words “Except in the case of a
parent PLUS loan, the”, and adding, in their place, the word “The”.
B. In paragraph (g)(4)(iv), removing the words “a Federal Pell Grant, an
ACG, or a National SMART Grant”, and adding, in their place, the words
“any title IV, HEA program assistance”.
C. Adding paragraph (i).
The addition reads as follows:
§ 668.164 Disbursing funds.
*****
(i) Provisions for books and supplies. (1) An institution must provide a way for
a Federal Pell Grant eligible student to obtain or purchase, by the seventh day
of a payment period, the books and supplies required for the payment period
if, 10 days before the beginning of the payment period—
(i) The institution could disburse the title IV, HEA program funds for which
the student is eligible; and
(ii) Presuming the funds were disbursed, the student would have a credit
balance under paragraph (e) of this section.
(2) The amount the institution provides to the Federal Pell Grant eligible
student to obtain or purchase books and supplies is the lesser of the presumed
credit balance under this paragraph or the amount needed by the student, as
determined by the institution.
(3) The institution must have a policy under which a Federal Pell Grant
eligible student may opt out of the way the institution provides for the student
to obtain or purchase books and supplies under this paragraph.
(4) If a Federal Pell Grant eligible student uses the way provided by the
institution to obtain or purchase books and supplies under this paragraph, the
student is considered to have authorized the use of title IV, HEA funds and
the institution does not need to obtain a written authorization under
paragraph (d)(1)(iv) of this section and § 668.165(b) for this purpose.
*****
PART 682—FEDERAL FAMILY EDUCATION LOAN
(FFEL) PROGRAM
Back to Top
27.The authority citation for part 682 is revised to read as follows:
Authority:
20 U.S.C. 1071 to 1087-2, unless otherwise noted.
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§ 682.200 [Amended]
28.Section 682.200(a)(2) is amended by adding, in alphabetical
order, the term “Credit hour”.
PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN
PROGRAM
Back to Top
29.The authority citation for part 685 continues to read as follows:
Authority:
20 U.S.C. 1070g, 1087a, et seq., unless otherwise noted.
30.Section 685.102 is amended by:
A. In paragraph (a)(2), adding, in alphabetical order, the term “Credit
hour”.
B. In paragraph (b), adding, in alphabetical order, the definition of
Payment data to read as follows:
§ 685.102 Definitions.
*****
(b) * * *
Payment data: An electronic record that is provided to the Secretary by an
institution showing student disbursement information.
*****
31.Section 685.301 is amended by revising paragraph (e)(1) to read
as follows:
§ 685.301 Origination of a loan by a Direct Loan Program school.
*****
(e) * * *
(1) The Secretary accepts a student's Payment Data that is submitted in
accordance with procedures established through publication in the Federal
Register, and that contains information the Secretary considers to be
accurate in light of other available information including that previously
provided by the student and the institution.
*****
PART 686—TEACHER EDUCATION ASSISTANCE FOR
COLLEGE AND HIGHER EDUCATION (TEACH) GRANT
PROGRAM
Back to Top
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32.The authority citation for part 686 continues to read as follows:
Authority:
20 U.S.C. 1070g, et seq., unless otherwise noted.
33.Section 686.2 is amended by:
A. In paragraph (a), adding, in alphabetical order, the term “Credit
hour”.
B. In paragraph (d), revising the definition of Payment Data to read as
follows:
§ 686.2 Definitions.
*****
(d) * * *
Payment Data: An electronic record that is provided to the Secretary by an
institution showing student disbursement information.
*****
34.Section 686.37 is amended by revising paragraph (b) to read as
follows:
§ 686.37 Institutional reporting requirements.
*****
(b) The Secretary accepts a student's Payment Data that is submitted in
accordance with procedures established through publication in the Federal
Register, and that contains information the Secretary considers to be
accurate in light of other available information including that previously
provided by the student and the institution.
*****
PART 690—FEDERAL PELL GRANT PROGRAM
Back to Top
35.The authority citation for part 690 continues to read as follows:
Authority:
20 U.S.C. 1070a, 1070g, unless otherwise noted.
§ 690.2 [Amended]
36.Section 690.2 is amended by:
A. In paragraph (a), adding, in alphabetical order, the term “Credit
hour”.
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B. In paragraph (b), adding, in alphabetical order, the terms
“Institutional student information record (ISIR)”, “Student aid report
(SAR)”, “Valid institutional student information record (valid ISIR)”,
and “Valid student aid report (valid SAR)”.
C. In paragraph (c), by removing the definitions for the terms
“Institutional Student Information Record (ISIR)”, “Student Aid Report
(SAR)”, “Valid Institutional Student Information Record (valid ISIR)”,
and “Valid Student Aid Report”.
§ 690.61 [Amended]
37.Section 690.61 is amended by:
A. In the paragraph (b) heading, adding the word “Valid” before the
words “Student Aid Report” and before the words “Institutional Student
Information Record”.
B. In the paragraph (b) introductory text, adding the word “valid” before
the word “SAR”.
PART 691—ACADEMIC COMPETITIVENESS GRANT
(ACG) AND NATIONAL SCIENCE AND MATHEMATICS
ACCESS TO RETAIN TALENT GRANT (NATIONAL
SMART GRANT) PROGRAMS
Back to Top
38.The authority citation for part 691 continues to read as follows:
Authority:
20 U.S.C. 1070a-1, unless otherwise noted.
§ 691.2 [Amended]
39.Section 691.2(a) is amended by adding, in alphabetical order,
the term “Credit hour”.
Note:
The following appendix will not appear in the Code of Federal
Regulations.
Appendix A—Regulatory Impact Analysis
Back to Top
Executive Order 12866
Regulatory Impact Analysis
Under Executive Order 12866, the Secretary must determine whether the
regulatory action is “significant” and therefore subject to the requirements of
the Executive Order and subject to review by the OMB. Section 3(f) of
Executive Order 12866 defines a “significant regulatory action” as an action
likely to result in a rule that may (1) Have an annual effect on the economy of
$100 million or more, or adversely affect a sector of the economy,
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productivity, competition, jobs, the environment, public health or safety, or
State, local, or tribal governments or communities in a material way (also
referred to as an “economically significant” rule); (2) create serious
inconsistency or otherwise interfere with an action taken or planned by
another agency; (3) materially alter the budgetary impacts of entitlement
grants, user fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal mandates,
the President's priorities, or the principles set forth in the Executive order.
Pursuant to the terms of the Executive order, we have determined that this
regulatory action will have an annual effect on the economy of more than
$100 million. Therefore, this action is “economically significant” and subject
to OMB review under section 3(f)(1) of Executive Order 12866.
Notwithstanding this determination, we have assessed the potential costs and
benefits—both quantitative and qualitative—of this regulatory action and have
determined that the benefits justify the costs.
Need for Federal Regulatory Action
Student debt is more prevalent and individual borrowers are incurring more
debt than ever before. Twenty years ago, only one in six full-time freshmen at
four-year public colleges and universities took out a Federal student loan; now
more than half do. Today, nearly two-thirds of all graduating college seniors
carry student loan debt. The availability of Federal student aid allows students
to access post-secondary educational opportunities crucial for obtaining
employment. It is therefore important for the Department to have a strong
regulatory foundation on which to build to protect student aid funds. The
fourteen provisions described in this Regulatory Impact Analysis represent a
broad set of regulations and definitions that strengthen the Federal student
aid programs by protecting students from aggressive and misleading
recruiting practices, providing consumers with better information about the
effectiveness of career college and training programs, and ensuring that only
eligible students or programs receive title IV, HEA aid.
These regulations are needed to implement provisions of the HEA, as
amended by the HEOA, particularly related to (1) Programs that prepare
students for gainful employment, (2) incentive compensation, (3) satisfactory
academic progress policies, and (4) verification of information on student aid
applications. These regulations also would implement changes made by the
HEOA to provisions related to ability to benefit options. A description of the
regulations, the reasons for adopting them, and an analysis of their effects
were presented in the NPRM published on June 18, 2010. The NPRM
included a Regulatory Impact Analysis and this section updates that analysis
and describes changes to the proposed regulations that we considered in
response to comments received and our reasons for adopting or rejecting
them.
Regulatory Alternatives Considered
The Department considered a number of regulatory alternatives as part of the
rulemaking process. These alternatives were described in detail in the
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preamble to the NPRM under both the Regulatory Impact Analysis and the
Reasons sections accompanying the discussion of each proposed regulatory
provision. To the extent that the Department has addressed alternatives in
response to comments received on the NPRM, these are discussed elsewhere
in the preamble to these final regulations under the Analysis of Comments
and Changes section.
As discussed in the Analysis of Comments and Changes section, these final
regulations reflect decisions reached through negotiated rulemaking,
statutory amendments included in the HEOA, and revisions in response to
public comments. In many cases, these revisions were technical in nature and
intended to address drafting issues or provide additional clarity.
While we received many comments relating to the validation of high school
diplomas and written arrangements, for the reasons we describe elsewhere in
this preamble, we did not make any changes to those provisions.
In response to comments related to disbursement of funds to Pell Grant
recipients for books and supplies, § 668.164(i) has been revised to specify that
an institution must have a policy under
which a student may opt out of the
way the institution provides for the student to purchase books and supplies by
the seventh day of classes of a payment period. In addition, § 668.164(i) has
been revised to specify that if a Federal Pell Grant eligible student uses the
method provided by the institution to purchase books and supplies, the
student is considered to have authorized the use of title IV, HEA funds and
the institution does not need to obtain a written authorization under §
668.164(d)(1)(iv) and § 668.165(b) for this purpose only.
We also have updated the definition of full-time student to provide that a
student's enrollment status for a term-based program may include repeating
any coursework previously taken in the program but may not include more
than one repetition of a previously passed course, or any repetition of a
previously passed course due to the student's failing other coursework. The
only change we have made to the satisfactory academic progress provisions
has been to revise § 668.34(a)(3)(ii) to provide that, for programs longer than
an academic year in length, satisfactory academic progress is measured at the
end of each payment period or at least annually to correspond to the end of a
payment period.
As discussed in the Analysis of Comments and Changes, the majority of the
comments related to the Return of Title IV, HEA funds opposed the proposed
changes or requested a delay in the effective date of this provision to allow
further input from the community. Commenters were concerned with the
burden on institutions, the potential harm to students who might withdraw
after one module but return within the same payment period or period of
enrollment, and the targeting of certain programs. In response to these
comments, we revised § 668.22(a)(2) to provide that a student is not
considered to have withdrawn if the student ceased attending the modules he
or she was scheduled to attend, but the institution obtains a written
confirmation from the student at the time of the withdrawal that he or she will
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attend a module that begins later in the same payment period or period of
enrollment. This will provide more flexibility for a student who provides the
authorization. This confirmation must be obtained at the time of withdrawal
even if the student has already registered for subsequent courses. However,
these final regulations provide that, for nonterm and nonstandard-term
programs, a confirmation is valid only if the module the student plans to
attend begins no later than 45 calendar days after the end of the module the
student ceased attending.
Some additional technical and clarifying changes were made, including
revising § 668.22(f)(2)(ii) to clarify that, when determining the percentage of
payment period or period of enrollment completed, the total number of
calendar days in a payment period or period of enrollment does not include,
for a payment period or period of enrollment in which any courses in the
program are offered in modules, any scheduled breaks of at least five
consecutive days when the student is not scheduled to attend a module or
other course offered during that period of time. In response to commenters'
requests, we have included in the Analysis of Comments and Changes
examples of scenarios for return of title IV, HEA program funds.
We received extensive comments on the provisions related to the definition of
a credit hour. Some of these comments supported the Department's efforts
and pointed out that many institutions and others, including States, are
already following the definition or a comparable standard that would require
only a minimal adjustment. As described in the Analysis of Comments and
Changes section, other commenters opposed the definition of a credit hour
and expressed concern that it would stifle innovation, especially in delivery
methods, undermine the American higher education system, emphasize “seattime”, and interfere in a core academic issue. The Department maintains that
the credit-hour definition is intended to provide a minimum, consistent
standard for all institutions in determining the amount of student work
necessary to award credit hours equitably for Federal program purposes. In
response to the discussion of the credit hour provision, we have revised the
definition of credit hour to clarify the basic principles applied in the proposed
definition of a credit hour and have specified further in the definition that it is
the institution's responsibility to determine the appropriate credit hours or
equivalencies. We also have revised the credit-hour definition to clarify that
the amount of work specified is a minimum standard with no requirement for
the standard to be exceeded.
With respect to the provisions relating to misrepresentation, we have revised §
668.72(c) to prohibit false, erroneous, or misleading statements concerning
whether completion of an educational program qualifies a students for
licensure or employment in the States in which the educational program is
offered and not just the State in which the institution is located. Additionally,
we have revised § 668.72(n) to specify that a failure to disclose that the degree
requires specialized accreditation is a misrepresentation. To address concerns
over liability for third-party statements, we agreed to limit the reach of the
ban on making substantial misrepresentations to statements made by any
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ineligible institution, organization, or person with whom the eligible
institution has an agreement to provide educational programs or those that
provide marketing, advertising, recruiting, or admissions services. We revised
the definition of misleading statement in § 668.71(c) to remove the word
“capacity” from the phrase “capacity, likelihood, or tendency to deceive or
confuse.”
We received numerous comments regarding the incentive compensation
provisions in the NPRM. Some of these comments supported the proposed
changes due to the conflict of interest between an enrollment professional's
ethical obligations and financial interest. Other commenters opposed the
changes, questioning the Department's legal authority to regulate, whether
there was sufficient evidence to support the regulations, and the reasoning for
the policy changes. We maintain that the elimination of the 12 “safe harbors”
in § 668.14(b)(22) is needed to ensure program integrity, protect students,
and align institutional practices with the goals intended by Congress. The
Department did make a few clarifying changes. For example, the changes to §
668.14(b) based on comments include: (i) Adding “in any part” to § 668.14(b)
(22) when referring to incentive payments to eliminate confusion that a
portion of an individual's compensation may be based on enrollments or the
award of financial aid; (ii) revising the regulations to provide that an
employee who receives multiple compensation adjustments in a calendar year
and is engaged in any student enrollment or admission activity or in making
decisions regarding the award of title IV, HEA program funds is considered to
have received such adjustments based on securing enrollment or the award of
financial aid if those adjustments create compensation that is based in any
part, directly or indirectly, upon success in securing enrollments or the award
of financial aid; (iii) revising § 668.14(b)(22)(ii) to provide that eligible
institutions, organizations that are contractors to eligible institutions, and
other entities may make merit-based adjustments to employee compensation
provided that such adjustments are not based in any part, directly or
indirectly, upon success in securing enrollments or the award of financial aid;
(iv) confirming that prohibited incentive compensation includes any
commission, bonus, or other incentive payment; (v) providing that profit
sharing and bonuses are not prohibited as long as they are based on an
institutional goal and distributed to all employees who have otherwise
contributed to satisfaction of a particular institutional goal; and (vi) revising
the definition of securing enrollments or the award of financial aid to
provide more detail and to clarify that it includes activities through the
completion of an educational program.
The reporting and disclosure requirements related to gainful employment
have also been updated in response to comments and further evaluation by
the Department. We confirmed that the reporting and disclosure
requirements apply only to programs subject to the gainful employment
regulations and revised § 668.6(a) to require the reporting of CIP code and
other information not only for program completers, but for all students who
attend gainful employment programs. We also removed proposed § 600.4(a)
(4)(iii) and revised § 600.4(a)(4)(i)(c) to clarify the programs subject to the
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regulations. The time period for which information has to be provided has
been changed so that an institution must report the required information for
each student, who during the award year beginning July 1, 2006, and for any
subsequent award year, began attending or completed a program under §
668.8(c)(3) or (d).
In addition to the student identifiers, CIP codes, program completion dates,
and private education loan and institutional financing amounts specified in
the NPRM, institutions will also have to report the name of the program and
whether the student matriculated to a higher credentialed program at the
institution or if available,
evidence that the student transferred to a higher
credentialed program at another institution. To ensure the information is
accessible, § 668.6(b) has been revised to require an institution to provide a
prominent and direct link to information about a program on the home page
of its Web site and on other pages where general, academic, or admissions
information is provided about the program. The information must also be
provided in promotional materials conveyed to prospective students. The
information must be provided in a simple and meaningful manner. The
information to be disclosed includes the on-time graduation rate, the total
amount of tuition and fees the institution charges a student for completing the
program within normal time, the typical costs for books and supplies, unless
included as part of tuition and fees, and the amount of room and board, if
applicable. The institution may include information on other costs, such as
transportation and living expenses, but must provide a Web link or access to
the program cost information it makes available under § 668.43(a). The
Department intends to develop in the future a disclosure form and will be
seeking public comment about the design of the form through the information
collection process under the Paperwork Reduction Act of 1995 (PRA). Until a
form is developed and approved under the PRA process, institutions must
comply with the disclosure requirements independently.
Another area of disclosure is providing students information about potential
occupations by linking to O*Net. Commenters expressed concern that this
would require an unwieldy amount of data for some degree programs and the
resulting information overload would not serve to accurately inform students.
Section 668.6(b) has been revised so that if the number of occupations related
to the program, as identified by entering the program's full six digit CIP code
on the O*NET crosswalk at http://online.onetcenter.org/crosswalk/ is more
than ten, an institution is allowed to provide prospective students with Web
links to a representative sample of the SOCs for which its graduates typically
find employment within a few years after completing the program.
In response to comments that the proposed placement rate was
administratively complex and overly burdensome, we decided to direct the
National Center for Education Statistics (NCES) to develop a placement rate
methodology and the processes necessary for determining and documenting
student employment and reporting placement data to the Department using
IPEDS no later than July 1, 2012. The collaborative process used by NCES and
the opportunity for public comment on the proposed measure will allow for a
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considered review and development of a meaningful placement rate. Section
668.6(b) has been revised to specify that an institution must disclose for each
program the placement rate calculated under a methodology developed by its
accrediting agency, State, or NCES. The institution would have to disclose the
accrediting agency or State-required placement rate beginning on July 1, 2011
and to identify the accrediting agency or State under whose requirements the
rate was calculated. The NCES-developed rate would have to be disclosed
when the rates become available.
To remove uncertainty and to ensure a consistent calculation, we have revised
§ 668.6(b) to specify how an institution calculates an on-time completion rate
for its programs. This is a measure designed to provide students meaningful
information about the extent to which former students completed the
program within the published length. As described elsewhere in this
preamble, the on-time completion rate will be calculated by: (1) Determining
the number of students who completed the program during the most recently
completed calendar year; (2) determining the number of students in step (1)
who completed the program within normal time, regardless of whether the
students transferred into the program or changed programs at the institution;
and (3) dividing the number of students who completed in normal time in
step (2) by the total number of completers in step (1) and multiplying by 100.
We also received comments about the use of median loan debt, the definition
of private loans, and the treatment of debt incurred at prior programs or
institutions. The examples that we provide earlier in this preamble clarify the
treatment of loan debt from prior programs and institutions. In general,
median loan debt for a program at an institution does not include debt
incurred by students in attending a prior institution, unless the prior and
current institutions are under common ownership or control or are otherwise
related entities. In cases where a student changes programs while attending
an institution or matriculates to a higher credentialed program at the
institutions, the Department will associate the total amount of debt incurred
by the student to the program the student completed. In order to perform the
calculation of the median loan debt,§ 668.6(a) has been revised to provide
that an institution must provide information about whether a student
matriculated to a higher credentialed program at the same institution, or, if it
has evidence, that a student transferred to a higher credentialed program at
another institution.
The provisions related to State authorization generated comments from those
who supported the regulations as an effort to address fraud and abuse in
Federal programs through State oversight and from others who believed the
regulations infringed on States' authority and upset the balance of the “Triad”
of oversight by States, accrediting agencies, and the Federal Government. We
clarified that the final regulations do not mandate that a State create any
licensing agency for purposes of Federal program eligibility as an institution
may be legally authorized by the State based on methods such as State
charters, State laws, State constitutional provisions, or articles of
incorporation that authorize an entity to offer educational programs beyond
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secondary education in the State.
We revised § 600.9 to clarify that an institution's legal authority to offer
postsecondary education in a State must be by name and, thus, it must
include the name of the institution being authorized. We have removed
proposed § 600.9(b)(2) regarding adverse actions. In response to concerns
about the effect on distance education and reciprocity arrangements, we
clarified that an institution must meet any State requirements for it to be
legally offering distance or correspondence education in that State and must
be able to document to the Secretary the State's approval upon request. Thus,
a public institution is considered to comply with § 600.9 to the extent it is
operating in its home State, and, if operating in another State, it would be
expected to comply with the requirements, if any, the other State considers
applicable or with any reciprocal agreement that may be applicable. In
making these clarifications, we are not preempting any State laws,
regulations, or other requirements regarding reciprocal agreements, distance
education, or correspondence study.
We also have revised the State authorization provisions in § 600.9 to
distinguish between a legal entity that is established as an educational
institution and one established as a business or nonprofit entity. An
institution authorized as an educational institution may be exempted by name
from any State approval or licensure requirements based on the institution's
accreditation by an accrediting agency recognized by the Secretary or based
on the institution being in operation for at least 20 years. An institution
established as a business or nonprofit charitable organization and not
specifically as an educational institution may not be exempted from the
State's approval or licensure requirements based on accreditation, years in
operation, or other comparable exemption. Chart A illustrates the basic
principles of § 600.9 of these final regulations, with additional examples
discussed in the preamble to these regulations.
Chart A—State Authorization Requirements Back to Top
Legal entity
Entity description
Approval or licensure process
Educational
A public, private nonprofit, or for-profit
The institution must comply
institution
institution established by name by a
with any applicable State
State through a charter, statute, or other
approval or licensure process
action issued by an appropriate State
and be approved or licensed
agency or State entity as an educational
by name, and may be
institution authorized to operate
exempted from such
educational programs beyond
requirement based on its
secondary education, including
accreditation, or being in
programs leading to a degree or
operation at least 20 years, or
certificate
use both criteria.
A for-profit entity established by the
The State must have a State
State on the basis of an authorization or
approval or licensure process,
license to conduct commerce or provide
and the institution must
services
comply with the State
Business
approval or licensure process
and be approved or licensed
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by name.
Charitable
A nonprofit entity established by the
An institution in this category
organization
State on the basis of an authorization or
may not be exempted from
license for the public interest or
State approval or licensure
To maintain the State's role in student consumer protection and handling
student complaints related to State laws, we have revised § 668.43(b) to
provide that an institution must make available to students or prospective
students contact information for not only the State approval or licensing
entities but also any other relevant State official or agency that would
appropriately handle a student's complaint.
Finally, we have clarified the meaning of a religious institution for the
applicability of the religious exemption. We also have expanded § 600.9(b) to
provide that an institution is considered to be legally authorized by the State if
it is exempt from State authorization as a religious institution by State law, in
addition to the provision of the proposed regulations that an institution be
exempt from State authorization as a religious institution under the State's
constitution. We also have included a definition of a religious institution
providing that an institution is considered a religious institution if it is owned,
controlled, operated, and maintained by a religious organization lawfully
operating as a nonprofit religious corporation and awards only religious
degrees or religious certificates including, but not limited to, a certificate of
Talmudic studies, an associate of biblical studies, a bachelor of religious
studies, a master of divinity, or a doctor of divinity.
In response to comments, we confirmed that tribal institutions are not subject
to State oversight or subject to the State process for handling complaints and
revised § 600.9 to clarify the status of tribal institutions. As noted in the
preamble discussion of State Authorization, we have removed proposed §
600.9(b)(2) regarding adverse actions. Further, we are providing that, in §
600.9(a)(2)(ii) of the final regulations, the tribal government must have a
process to review and appropriately act on complaints concerning a tribal
institution and enforce applicable tribal requirements or laws.
Finally, while the Secretary has designated amended § 600.9(a) and (b) as
being effective July 1, 2011, we recognize that a State may be unable to provide
appropriate State authorizations to its institutions by that date. We are
providing that the institutions unable to obtain State authorization in that
State may request a one-year extension of the effective date of these final
regulations to July 1, 2012, and if necessary, an additional one-year extension
of the effective date to July 1, 2013. To receive an extension of the effective
date of amended § 600.9(a) and (b) for institutions in a State, an institution
must obtain from the State an explanation of how a one-year extension will
permit the State to modify its procedures to comply with amended § 600.9.
As discussed in the preamble to these regulations, we made a number of
clarifying changes to the regulations regarding the administration of ability to
benefit tests. We revised the definition of the term independent test
administrator to clarify that an independent test administrator must have no
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current or prior financial or ownership interest in the institution, its affiliates,
or its parent corporation, other than the fees earned through the agreement to
administer the test. In § 668.142, we have defined an ATB test irregularity as
an irregularity that results from an ATB test being administered in a manner
that does not conform to the established regulations for test administration
consistent with the provision of subpart J and the test administrator's
manual. We also added a provision to specify that a test publisher may include
with its application a description of the manner in which test-taking time was
determined in relation to the other requirements in § 668.146(b). We have
revised § 668.150(b)(7)(i) to indicate that the period of review of all test
results of the tests administered by a decertified test administrator is five
years preceding the date of decertification.
In response to a comment regarding testing of non-native speakers of English,
we have revised § 668.153 to provide that if a non-native speaker of English
who is enrolled or plans to enroll in a program that will be taught in his or her
native language with a component or portion in English, the individual must
take a test approved under §§ 668.146 and 668.148(a)(1) in the student's
native language. New § 668.153(a)(5) provides that prior to the beginning of
the English portion of the program, the individual must take an English
proficiency test approved under § 668.148(b). Finally, we have modified §
668.144(c)(11)(vii) to require that the test manual include, in addition to
guidance on the interpretation of scores resulting from modification of the
test for individuals with disabilities, guidance on the types of accommodations
that are allowable. This responds to concerns that test administrators may not
have extensive training or experience to determine if a requested
accommodation is appropriate.
The effect of these changes on the cost estimates prepared for and discussed in
the Regulatory Impact Analysis of the NPRM is discussed in the Costs
section of this Regulatory Impact Analysis.
Benefits
As discussed in the NPRM, benefits provided in these regulations include
updated administrative procedures for the Federal student aid programs; a
definition and process to determine the validity of a student's high school
diploma; enhanced reliability and security of ATB tests; an additional option
for students to prove ability to benefit by successfully completing college
coursework; increased clarity about incentive compensation for employees at
institutions of higher education; reporting of information on program
completers for programs leading to gainful employment, including costs, debt
levels, graduation rates, and placement rates; the establishment of minimum
standards for credit hours; greater transparency for borrowers participating
in the programs offered under written agreements between institutions;
greater detail about misrepresentation in marketing and recruitment
materials; a more structured and
consistent approach to the development
and implementation of satisfactory academic progress policies; updated and
simplified procedures for verifying FAFSA applicant information; updated
regulations related to the return of title IV, HEA funds when a student
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withdraws; harmonization of Direct Loan and Teach Grant disbursement
procedures with other title IV, HEA programs; and revised disbursement
requirements to ensure Federal Pell Grant recipients can access funds in a
timely manner. As noted in the Regulatory Impact Analysis in the NPRM,
these provisions result in no net costs to the Federal Government over 20112015.
Costs
As discussed in the Regulatory Impact Analysis in the NPRM, many of the
provisions implemented through these regulations will require regulated
entities to develop new disclosures and other materials, as well as
accompanying dissemination processes. Other regulations generally will
require discrete changes in specific parameters associated with existing
guidance and regulations—such as changes to title IV, HEA disbursement
procedures, updated processes for verification of FAFSA application
information, clearer standards for the return of title IV, HEA program funds
following a student's withdrawal, and updated definitions and processes for
confirming the validity of a high school diploma—rather than wholly new
requirements. Accordingly, entities wishing to continue to participate in the
title IV, HEA programs have already absorbed many of the administrative
costs related to implementing these regulations. Marginal costs over this
baseline are primarily due to new procedures that, while possibly significant
in some cases, are an unavoidable cost of continued program participation.
In assessing the potential impact of these regulations, the Department
recognizes that certain provisions are likely to increase workload for some
program participants. This additional workload is discussed in more detail
under the Paperwork Reduction Act of 1995 section of this preamble.
Additional workload would normally be expected to result in estimated costs
associated with either the hiring of additional employees or opportunity costs
related to the reassignment of existing staff from other activities. In total,
these changes are estimated to increase burden on entities participating in the
title IV, HEA programs by 6,010,320 hours. Of this increased burden,
3,862,165 hours are associated with institutions and 9,454 hours with ATB
test publishers, States, and ATB test administrators. An additional 2,138,701
hours are associated with borrowers, generally reflecting the time required to
read new disclosures or submit required information.
As detailed in the Paperwork Reduction Act of 1995 section of these final
regulations, the additional paperwork burden is attributable to several
provisions, with the greatest additional burden coming from the revised
FAFSA verification process. Of the 3.9 million hours of additional burden
associated with institutions, 1.8 million relate to FAFSA verification. While
the average number of items to be verified is expected to decrease, the growth
in the number of applicants and the requirement to submit all changes to the
Department is estimated to increase overall burden. Other paperwork burden
increases include the following:
750,725 hours related to academic reviews and development of academic plans under §
668.34;
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425,075 hours related to calculation of unearned amounts when a student withdraws
under § 668.22;
262,990 hours associated with updating marital and dependency status under § 668.55;
376,417 hours annually and an additional 300,773 hours in the initial reporting period
related to the gainful employment reporting and disclosure provisions in § 668.6;
48,391 hours related to ATB test administration and reporting under §§ 668.151 and
668.152;
67,870 hours associated with disclosure of information about an institution's written
agreements in § 668.43;
54,366 hours related to disbursement of funds to Pell Grant recipients for books and
supplies under § 668.164;
21,982 hours related to the development of a high school diploma validation process and
the validation of questionable diplomas under § 668.16; and
18,349 hours related to clock hour to credit hour conversion and the inclusion of outside
work for program eligibility under § 668.8.
For ATB test publishers, States, and administrators, the increased burden of
9,454 hours comes from the reporting, record-keeping, test anomaly analysis,
and other requirements in §§ 668.144, 668.150, and 668.151. The increased
burden on students is concentrated in the FAFSA verification and status
updating processes with 1,604,800 hours under §§ 668.55, 668.56, and
668.59, with additional burden associated with the withdrawal process under
§ 668.22 and satisfactory academic progress policies under § 668.34.
Thus, for the specific information collections listed in the Paperwork
Reduction Act of 1995 section of these final regulations, the total cost
estimates are as follows:
For Information Collection 1845-0041, the total cost will be $72,594,870;
For Information Collection 1845-NEW2, the total cost attributable to these regulatory
changes will be $21,834,272;
For Information Collection 1845-0022, the total cost will be $15,533,671;
For Information Collection 1845-NEW1, the total cost attributable to the regulatory
changes will be $9,543,677 annually with an additional $7,624,784 in the initial reporting
period;
For Information Collection 1845-0049, the total cost will be $1,300,595; and
For Information Collection 1845-NEW3, the total cost attributable to these regulatory
changes will be $1,203,799.
The monetized cost of this additional burden, using wage data developed using
Bureau of Labor Statistics available at http://www.bls.gov/ncs/ect/sp/ecsup
hst.pdf, is $122,010,883, of which $86.7 million is associated with institutions,
$0.21 million with ATB test publishers, States, and administrators, and
$35.07 million with borrowers. For institutions, test publishers, and test
administrators, an hourly rate of $22.14 was used to monetize the burden of
these provisions. This was a blended rate based on wages of $16.79 for office
and administrative staff and $38.20 for managers, assuming that office staff
would perform 75 percent of the work affected by these regulations. For the
gainful employment provision, an hourly rate of $25.35 was used to reflect
increased management time to establish new data collection procedures
associated with that provision. For students, the first quarter 2010 median
weekly earnings for full-time wage and salary workers were used. This was
weighted to reflect the age profile of the student loan portfolio, with half at the
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$457 per week of the 20 to 24 age bracket and half at the $691 per week of the
25 to 34 year old bracket. This resulted in a $16.40 hourly wage rate to use in
monetizing the burden on students.
Because data underlying many of these burden estimates was limited, in the
NPRM, the Department requested comments and supporting information for
use in developing more robust estimates. In particular, we asked institutions
to provide detailed data on actual staffing and system costs associated with
implementing these regulations. In response to comments that the
regulations would be costly, we reviewed the wage rates for more recent
information and the share of work performed by office workers and
management and professional staff. This increased the general wage rate from
$18.63 to $22.14 and the wage rate for gainful employment related matters
from $20.71 to $25.35. The other areas that changed between the NPRM
published on June 18, 2010 and these final regulations related to changes to
the disclosure requirements related to gainful employment that extended the
reporting to students who began or completed programs beginning July 1,
2006, required specified information for all students at a program, and
established a requirement to report on student matriculations to higher
credentialed programs.
Net Budget Impacts
These regulations are estimated to have no net budget impact over FY 20112015. Consistent with the requirements of the Credit Reform Act of 1990,
budget cost estimates for the student loan programs reflect the estimated net
present value of all future non-administrative Federal costs associated with a
cohort of loans. (A cohort reflects all loans originated in a given fiscal year.)
These estimates were developed using the Office of Management and Budget's
Credit Subsidy Calculator. This calculator will also be used for re-estimates of
prior-year costs, which will be performed each year beginning in FY 2009.
The OMB calculator takes projected future cash flows from the Department's
student loan cost estimation model and produces discounted subsidy
rates
reflecting the net present value of all future Federal costs associated with
awards made in a given fiscal year. Values are calculated using a “basket of
zeros” methodology under which each cash flow is discounted using the
interest rate of a zero-coupon Treasury bond with the same maturity as that
cash flow. To ensure comparability across programs, this methodology is
incorporated into the calculator and used governmentwide to develop
estimates of the Federal cost of credit programs. Accordingly, the Department
believes it is the appropriate methodology to use in developing estimates for
these regulations. That said, however, in developing the following Accounting
Statement, the Department consulted with OMB on how to integrate our
discounting methodology with the discounting methodology traditionally
used in developing regulatory impact analyses.
Absent evidence of the impact these regulations would have on student
behavior, budget cost estimates were based on behavior as reflected in various
Department data sets and longitudinal surveys listed under Assumptions,
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Limitations, and Data Sources. Program cost estimates were generated by
running projected cash flows related to each provision through the
Department's student loan cost estimation model. Student loan cost estimates
are developed across five risk categories: Two-year proprietary institutions,
two-year public and private, not-for-profit institutions; freshmen and
sophomores at four-year institutions, juniors and seniors at four-year
institutions, and graduate students. Risk categories have separate
assumptions based on the historical pattern of behavior—for example, the
likelihood of default or the likelihood to use statutory deferment or discharge
benefits—of borrowers in each category.
The Department estimates no budgetary impact for most of these regulations
as there is no data indicating that the provisions will have any impact on the
volume or composition of the title IV, HEA programs.
Assumptions, Limitations, and Data Sources
The impact estimates provided in the preceding section reflect a pre-statutory
baseline in which the HEOA changes implemented in these regulations do not
exist. Costs have been quantified for five years.
In developing these estimates, a wide range of data sources were used,
including data from the National Student Loan Data System; operational and
financial data from Department of Education systems, including especially the
Fiscal Operations Report and Application to Participate (FISAP); and data
from a range of surveys conducted by the National Center for Education
Statistics such as the 2008 National Postsecondary Student Aid Survey, the
1994 National Education Longitudinal Study, and the 1996 Beginning
Postsecondary Student Survey. Data from other sources, such as the U.S.
Census Bureau, were also used. Data on administrative burden at
participating institutions are extremely limited; accordingly, in the NPRM,
the Department expressed interest in receiving comments in this area. No
comments were received.
Elsewhere in this SUPPLEMENTARY INFORMATION section we identify and
explain burdens specifically associated with information collection
requirements. See the heading Paperwork Reduction Act of 1995.
Accounting Statement
As required by OMB Circular A-4 (available at http://www.Whitehouse.gov/o
mb/Circulars/a004/a-4.pdf), in Table 2, we have prepared an accounting
statement showing the classification of the expenditures associated with the
provisions of these regulations. This table provides our best estimate of the
changes in Federal student aid payments as a result of these regulations.
Expenditures are classified as transfers from the Federal Government to
student loan borrowers.
Table 2—Accounting Statement: Classification of Estimated Expenditures Back to Top
Category
Transfers
Annualized Monetized Costs
$126.1. Cost of compliance with paperwork
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requirements.
Annualized Monetized
$0.
Transfers
From Whom To Whom?
Federal Government To Student Loan Borrowers.
[In millions]
Regulatory Flexibility Act Certification
The Secretary certifies that these regulations will not have a significant
economic impact on a substantial number of small entities. These regulations
will affect institutions that participate in title IV, HEA programs, ATB test
publishers, and individual students and loan borrowers. The U.S. Small
Business Administration Size Standards define for-profit institutions as
“small businesses” if they are independently owned and operated and not
dominant in their field of operation with total annual revenue below
$7,000,000, and defines non-profit institutions as small organizations if they
are independently owned and operated and not dominant in their field of
operation, or if they are institutions controlled by governmental entities with
populations below 50,000.
Data from the Integrated Postsecondary Education Data System (IPEDS)
indicate that roughly 4,379 institutions participating in the Federal student
assistance programs meet the definition of “small entities.” The following
table provides the distribution of institutions and students by revenue
category and institutional control.
Revenue
Public
Private NFP
Proprietary
Tribal
category
Number
Number of
Number
Number of
Number
Number of
of
students
of
students
of
students
$0 to
schools
schools
schools
Number
of
schools
43
2,124
103
13,208
510
38,774
44
7,182
81
9,806
438
61,906
1
98
29,332
243
65,614
745
217,715
3
75
65,442
138
60,923
303
182,362
49
73,798
99
62,776
224
185,705
5
78
129,079
110
84,659
228
235,888
9
$500,000
$500,000
to $1
million
$1 million
to $3
million
$3 million
to $5
million
$5 million
to $7
million
$7 million
to $10
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million
Approximately two-thirds of these institutions are for-profit schools subject to
1,585
18,480,000 1,067
4,312,010
1,793,951 14
$10
the disclosure and reporting requirements related 383programs leading to
to
18
million
gainful employment. Other affected small institutions include small
and
community colleges and tribally controlled schools. For these institutions, the
above
new disclosure and administrative requirements imposed under the
Total
4,608,996 2,831
2,716,301 32
regulations1,972 impose some 1,841 costs as described below. The impact of 26
could 18,786,957 new
the
regulations on individuals is not subject to the Regulatory Flexibility
Act.
As discussed in the preamble to these regulations, the program integrity
regulations were developed to update administrative procedures for the
Federal student aid programs and to ensure that funds are provided to
students at eligible programs and institutions. As detailed in the Paperwork
Reduction Act of 1995 section of these final regulations, many of these
regulations modify existing regulations and requirements. For example, the
regulations on FAFSA verification would change the number of items to be
verified, but do not require the creation of a new process. The table below
summarizes the estimated total hours, costs, and requirements applicable to
small entities from these provisions on an annual basis. In the initial
reporting period, there will be an additional 235,866 hours and $5,979,203 in
gainful employment reporting for award years back to 2006-07.
Provision & requirement
Hours
Costs
295,186
7,482,964
668.6(a)
288,597
7,315,937
668.6(b)
6,589
167,027
8,800
194,836
10,543
233,412
Reg.
OMB
section
control
No.
Gainful Employment
668.6
1845NEW1
Annual submission of private loan, CIP,
program name, further matriculation, and
identifying data for entrants and
completers by program
Disclose occupational information,
graduation rates, on-time completion
rates, program placement rates, and
program costs
Eligible Program
668.8
18450022
Determine if program is affected,
evaluate amount of outside student work
that should be included, and perform
credit to clock hour conversion.
Standards of Administrative Capability
668.16
18450022
To assess overall burden imposed on institutions meeting the definition of
small entities, the Department developed a methodology using IPEDS data
and the percentage of institutions with revenues below $7 million and all nonprofit institutions, allocating approximately 66 percent of the paperwork
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burden to small institutions. Using this methodology, the Department
estimates the regulations will increase total burden hours for these schools by
2.58 million, or roughly 590 hours per institution. Monetized using salary
data from the Bureau of Labor Statistics, this burden is $58.1 million and
$13,270, respectively. If calculated using the distribution of students from
2007-08, the share of the burden allocated to small institutions would be
much lower at approximately 21 percent, resulting in an estimated burden of
235 hours and $5,410 per institution. Even the more conservative estimate of
$13,270 represents one percent or less of the midpoint revenue
for all but
the lowest revenue category, for which it is four percent of midpoint revenue.
For institutions, an hourly rate of $22.14 was used to monetize the burden of
these provisions. This rate was a blended rate based on wages of $16.79 for
office and administrative staff and $38.20 for managers, assuming that office
staff would perform 75 percent of the work affected by these regulations. For
the gainful employment provision, an hourly rate of $25.35 was used to reflect
increased management time to establish new data collection procedures
associated with that provision.
These rates are the same as those used for all institutions in the Costs section
of this analysis, reflecting the fact that the primary cost of meeting the
paperwork burden is in additional labor and that wages at small institutions
should not be systematically higher than those at all institutions. In response
to comments that the regulations would be costly, we reviewed the wage rates
for more recent information and the share of work performed by office
workers and management and professional staff. This review increased the
general wage rate from $18.63 to $22.14 and the wage rate for gainful
employment related matters from $20.71 to $25.35.
The costs discussed above represent the cost of the regulations in the first year
of implementation, beginning on July 1, 2011, but several provisions will have
a longer period to take effect. Most importantly, the regulations contained in
subpart E of part 668, Verification and Updating of Student Aid Application
Information, are effective July 1, 2012. These regulations account for
approximately 50 percent of the estimated burden described above. We would
expect 30 percent of the verification costs to be incurred in 2011 as
institutions update their systems for the changes, but the main part of those
costs will occur in the second year. These costs would occur after the other
provisions had been implemented and, while we do not have a split between
the development and ongoing costs of each provision, we would expect the
costs to taper off as the institutions become familiar with the regulations and
have the systems in place to comply. Seventy percent of the estimated costs
for the Verification regulation would not be realized in the first year, reducing
the overall projected costs for small institutions during the first year by
approximately one-third to approximately $8,000. Assuming a 10 percent
reduction in the costs of other provisions from reduced development costs
and prior experience, full implementation in 2012 would cost approximately
$11,000. The State authorization provision is also subject to a delayed
implementation, but that implementation is not expected to have a significant
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cost effect on small entities. Additionally, the recurring costs of many of the
provisions are based on the number of students enrolled. As shown above,
schools with small revenues have lower enrollments than others classified as
small entities and would have to perform fewer verifications and reviews on
an ongoing basis. Since they already have some systems and processes in
place to comply with the existing regulations, once the development changes
have been made to implement the regulatory changes, we would expect their
ongoing costs to be lower than the averages estimated above.
Where possible, the Department has allowed institutions flexibility to establish
processes that fit the institution's administrative capabilities. For example,
the requirement to distribute funds to Pell Grant recipients for books and
supplies within seven days of the start of the payment period allows
institutions to use book vouchers or a credit to the student's account. The
Department has also tried to allow more time for all entities affected by these
regulations to establish procedures for new data collections, such as the
placement rate information required in the data collection related to gainful
employment. While these timing provisions are available to all institutions,
they should permit small institutions sufficient time to make the necessary
adjustments. Approximately 60 percent of the paperwork burden associated
with these regulations is in OMB 1845-0041, which relates to the updating of
FAFSA application information and reporting all changes resulting from
verification. These updated requirements will help ensure eligible students
receive aid. As detailed in the Paperwork Reduction Act of 1995 section of
these final regulations, the increase in burden associated with the FAFSA
acceptable documentation provision is largely driven by the increase in
student applicants since the burden for these requirements was last
calculated. Given the increase in the number of students applying for title IV,
HEA aid, the number of verifications is estimated to have increased from 3.0
million in 2002-03 to 5.1 million in 2008-09. Without the regulatory changes
reflected in these regulations, which are estimated to reduce the number of
items to be verified, the paperwork burden on small institutions in OMB
1845-0041 would increase by an additional 195,677 hours. Based on these
estimates, the Department believes the new requirements do not impose
significant new costs on these institutions.
We considered whether there would be any benefit to allowing small
institutions additional time to come into compliance with the regulations and
concluded that there would be no benefit to taking such action. First and
foremost, we think the risk of delaying implementation of these program
integrity regulations and the resulting negative impact on students and
taxpayers would be far too high.
Second, we do not believe the comments or the facts would support such
action. In the NPRM, the Secretary invited comments from small institutions
and other affected entities as to whether they believed the proposed changes
would have a significant economic impact on them and requested evidence to
support that belief. Several commenters indicated that the provisions would
be costly and the Department reviewed the estimates as described above.
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However, commenters did not provide us with evidence to suggest that small
institutions or entities would need additional time beyond July 1, 2011 to
come into compliance with the regulations. Additionally, because we did not
include such a proposal in the NPRM, we do not believe we could take this
type of action without seeking further public comment.
Finally, we note that, where possible, we have built in additional time or
flexibility for all institutions based on the nature of the provision and the data
requested.
end regulatory text
[FR Doc. 2010-26531 Filed 10-28-10; 8:45 am]
BILLING CODE 4000-01-P
FOOTNOTES
Back to Top
1. The use of the term “temporary impairments” for the
purposes of these regulations should not be confused with the
definition of disability as defined by these regulations (see §
668.142), section 504 of the Rehabilitation Act, or the
Americans with Disabilities Act.
Back to Context
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