FR Doc 2010-26531
[Federal Register: October 29, 2010 (Volume 75, Number 209)]
[Rules and Regulations]
[Page 66831-66975]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29oc10-18]
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Part II
Department of Education
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34 CFR Parts 600, 602, 603, et al.
Program Integrity Issues; Final Rule
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DEPARTMENT OF EDUCATION
34 CFR Parts 600, 602, 603, 668, 682, 685, 686, 690, and 691
[Docket ID ED-2010-OPE-0004]
RIN 1840-AD02
Program Integrity Issues
AGENCY: Office of Postsecondary Education, Department of Education.
ACTION: Final regulations.
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SUMMARY: The Secretary is improving integrity in the programs
authorized under title IV of the Higher Education Act of 1965, as
amended (HEA), by amending the regulations for Institutional
Eligibility Under the HEA, the Secretary's 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 Competitiveness Grant (AGC) and National Science and
Mathematics Access to Retain Talent Grant (National Smart Grant)
Programs.
DATES: 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 INFORMATION CONTACT: For information related to the
provisions on high school diplomas and verification of information on
the Free Application for Federal Student Aid (FAFSA), Jacquelyn Butler.
Telephone: (202) 502-7890 or via the Internet at:
Jacquelyn.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.Macias@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.
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.Guthrie@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
Dan.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.McCullough@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.McCullough@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@ed.gov.
For information related to the provisions related to the definition
of credit hour, Fred Sellers. Telephone: (202) 502-7502 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 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 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
[[Page 66833]]
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-to-clock-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;
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 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 Sec. 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
Sec. 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 Sec.
600.9.
Analysis of Comments and Changes
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 not
address comments pertaining to issues that were not within the scope of
the NPRM.
General Comments
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
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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 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 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 concern. These
commenters decried the Department's ``one-size-fits-all'' approach to
ensuring program integrity.
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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 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 (Sec. Sec. 600.2, 600.4,
600.5, 600.0, 668.6, and 668.8) Gainful Employment Reporting and
Disclosure Requirements (Sec. 668.6)
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 Sec. 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 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 Sec. 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 Sec. 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
machine-readable, 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
[[Page 66836]]
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 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 platform-
independent, is machine-readable, and is made available to the public
without restrictions that would impede the reuse of that information.
Finally, Sec. 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 Sec. 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 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 Sec. 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 Sec. 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 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 Sec. 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
Sec. 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
[[Page 66837]]
institution would have to obtain for each of these exclusions.
(2) Removing the requirement in Sec. 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 Sec. 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 Sec.
668.8(g) does not take into 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 Sec. 668.8(g).
Many of the commenters believed the requirement to document employment
on a case-by-case basis under Sec. 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 Sec. 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
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 Sec. 668.8(g) were
inadequate. The commenters made several suggestions, including:
(1) Expanding the category of students who complete a program
(currently in Sec. 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 Sec. 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 Sec. 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.
(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 Sec.
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 Sec. 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
[[Page 66838]]
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
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
Sec. 668.41(d)(5). However, under new Sec. 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 Sec.
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 Sec.
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 NCES-developed placement rate would have to be
disclosed when the 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 Sec.
668.45, or encouraged the Department to either (1) adopt the current
requirements in Sec. 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 Sec.
668.45 for normal time and incorporate the exclusions for students
transferring out of programs and other exceptions identified in Sec.
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 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 Sec. 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,
[[Page 66839]]
whether a completion rate could be calculated based on normal time, as
defined in Sec. 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. 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 Sec. 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 Sec.
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 Sec. 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 self-certified, 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 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 Sec. 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 degree-granting
institutions stating that such institutions only have a 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
[[Page 66840]]
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 Sec. 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 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 (short-term 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 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 self-
certification 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 self-certification form to a private education
loan borrower if the institution itself is the creditor. Once the
private loan self-certification 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-to-consumer 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 Sec. 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 debt arising from an institutional
financing plan and must be reported as such under Sec. 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
[[Page 66841]]
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 Sec. 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 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
Sec. 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 debt Loan debt
--------------------------------------------------------------------------------------------------------------------------------------------------------
Certificate....... $3,000 Completed......... Degree............ $4,000 Completed......... Gainful
Employment
Program?
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.............................. .................. ......... Yes............... .................. ......... Yes............... Yes.
2.............................. .................. ......... Yes............... .................. ......... No................ Yes.
3.............................. .................. ......... Yes............... .................. ......... Yes............... No.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Same School
--------------------------------------------------------------------------------------------------------------------------------------------------------
4.............................. .................. ......... Yes............... .................. ......... Yes............... Yes.
5.............................. .................. ......... Yes............... .................. ......... No................ Yes.
6.............................. .................. ......... Yes............... .................. ......... Yes............... No.
--------------------------------------------------------------------------------------------------------------------------------------------------------
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
[[Page 66842]]
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 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
education-related 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 Sec. 668.6(a) for the 2006-07, 2007-08, and
2008-09 award years. In accordance with the record retention
requirements under Sec. 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
Sec. 668.6(a). Institutions that are not otherwise required to
maintain the information for the 2006-07 award year described in Sec.
668.6(a) at the time this regulation goes into 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 Sec. 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
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
graduate-level programs, like MBAs and PhDs in Psychology, institutions
would be required to provide an unwieldy amount of data.
[[Page 66843]]
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
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 http://
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.
52.9999 Business, Management, Marketing, & Related Support Services,
Other
11-9151.00 Social and Community Service Managers
11-9199.00 Managers, All Other
13-1199.00 Business Operations Specialists, All Other
41-1011.00 First-Line Supervisors/Managers of Retail Sales Workers
41-1012.00 First-Line Supervisors/Managers of Non-Retail Sales Workers
41-3099.00 Sales Representatives, Services, All Other
41-4011.00 Sales Representatives, Wholesale and Manufacturing,
Technical and Scientific Products
41-4012.00 Sales Representatives, Wholesale and Manufacturing, Except
Technical and Scientific Products
41-9099.00 Sales 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 Sec.
668.6(b)(2) differ from the costs an institution makes available under
Sec. 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 Sec. 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 Sec. 668.43(a) to 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 Sec. 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.pdf) raising
concerns over program cost information, Sec. 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 Sec. 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
[[Page 66844]]
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 Sec. 668.43(a).
One-Year Program
Comment: A commenter supported removing references to degree
programs in proposed Sec. 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 Sec.
600.4(a)(4)(i)(C).
To better understand which programs would be subject to the
reporting and disclosure requirements in proposed Sec. 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 Sec. 668.8(b)(1)(ii) and
qualifies a student for admission into a third year of a bachelors
degree program.
We agree that proposed Sec. 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 Sec.
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 Sec. 600.4(a)(4)(iii) has been removed and Sec.
600.4(a)(4)(i)(C) has been revised as noted in the discussion above.
Definition of a Credit Hour (Sec. Sec. 600.2, 602.24, 603.24, and
668.8)
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.
Comment: Several commenters believed that during the negotiated
rulemaking process, Federal and non-Federal negotiators reached
tentative agreement on proposed credit-hour 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
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 Sec. 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
[[Page 66845]]
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 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 credit-hour
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, 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 Sec. 600.2 and the
provisions in Sec. Sec. 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 Sec. Sec.
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 Sec. 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 Sec. 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 Sec. 600.2 is consistent with general
practice, provides for the necessary 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 Sec. 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 Sec. Sec. 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 Sec. 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
[[Page 66846]]
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 Sec. 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
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 Sec. 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 Sec. 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 Sec. 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-of-class work does not provide
assurance that the student has acquired a certain level of competency.
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 credit-hour
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 Sec. 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 Sec. 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.
Changes: None.
Comment: Many commenters believed that a Federal credit-hour
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,
[[Page 66847]]
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
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 credit-hour
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 credit-hour
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 Sec. 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 Sec. 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.
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 Sec. 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 ``12-
hour 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 quarter-term 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
standard-term 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 Sec.
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 Sec. 600.2.
Discussion: Institutions have a responsibility to ensure that the
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 Sec.
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
[[Page 66848]]
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 Sec. 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,
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 Sec. 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 Sec. 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 Sec. 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 Sec.
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 Sec. 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
Sec. 600.2 did not appropriately address faculty workloads or faculty
time in class.
Discussion: We do not believe that Sec. 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 Sec. 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 Sec.
668.8(l) to determine the number of semester, trimester, or quarter
hours 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 Sec.
668.8(k) and (l).
Discussion: Section 481A of the HEA and Sec. 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 Sec. 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 Sec. Sec. 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 Sec. 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 Sec. 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 Sec. 600.2 of these
final regulations and that its processes are in 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.
[[Page 66849]]
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 Sec. 600.2. The credit-hour
definition in Sec. 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
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 in-class
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 Sec. 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
Sec. Sec. 600.2, 602.24, 603.24, and 668.8. These commenters believed
the credit-hour definition in proposed Sec. 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
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 Sec. 600.2, where the credit hours awarded have been approved by
the institution's accrediting agency based upon a review performed in
accordance with Sec. 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
Sec. 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-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 Sec. Sec. 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
[[Page 66850]]
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 Sec. 600.2 conflicts with the Americans with Disabilities Act of
1990, as amended. The credit-hour definition in Sec. 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 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 credit-hour
definition is unnecessary because State agencies already review
institutions' credit-hour policies within their general oversight of an
institution's integrity.
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 Sec. 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 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 (Sec. 602.24(f))
Comment: Several commenters supported the addition of Sec.
602.24(f). These commenters believed that accrediting agencies are the
appropriate entities to ensure institutions' compliance with the
credit-hour provisions in Sec. 600.2.
Many other commenters believed that the proposed provisions in
Sec. 602.24(f) are unnecessary. These commenters
[[Page 66851]]
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 long-standing
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 Sec. 602.24 to add Sec.
602.24(f) initially was a proposal of the non-Federal 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 Sec. 600.2, we added Sec. 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
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 Sec. 600.2 for non-Federal purposes nor do the regulations prohibit
an accrediting agency from only using the definition of credit hour in
Sec. 600.2.
We believe that Sec. 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 Sec. 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 Sec.
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 Sec. 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 credit-hour
definition in Sec. 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 Sec.
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 Sec. 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 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec.
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 credits for purposes of
evaluating credit for transfer.
One commenter asked the Department to revise proposed Sec.
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 Sec. 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
[[Page 66852]]
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 Sec. 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
Sec. 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 Sec. 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 Sec. 602.24(f). Accrediting agencies must
have the flexibility to review institutional credit-assignment
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 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 Sec. 668.10. In the first scenario, the institution's
accrediting agency would review the institution's compliance with the
provisions in Sec. 600.2 or Sec. 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 Sec.
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 Sec. 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 Sec. 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 Sec. 600.2 be stricken from proposed Sec.
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 Sec. 602.16(f).
Discussion: We do not believe that the provisions in proposed Sec.
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
Sec. 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 Sec. 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 Sec. 602.24, and not Sec. 602.16. The provisions in Sec. 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 Sec. 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 Sec.
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 Sec. 600.2 and expressed a
preference for the language in proposed Sec. 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 Sec. 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 Sec. Sec. 600.2
and 602.24(f)(1)(ii) are inconsistent. The provisions in Sec. 600.2
establish a title IV, HEA program requirement for institutions 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 Sec. 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
[[Page 66853]]
acceptable institutional practices at comparable institutions of higher
education.
We believe that it is necessary to include Sec. 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 Sec.
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 Sec. 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 Sec. 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 Sec. 602.24(f), to notify
the Secretary of the identified deficiencies. A few commenters believed
that proposed Sec. 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-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 Sec. 602.24(f)(4) was
redundant with regard to the existing notification requirements in
Sec. 602.27. These commenters suggested removing proposed paragraph
Sec. 602.24(f)(4) and cross-referencing Sec. 602.27.
One commenter believed that proposed Sec. 602.24(f)(4) contradicts
the requirements of proposed Sec. 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 Sec. 602.24(f)(1)(i).
A few commenters believed that the terms ``systemic noncompliance''
and ``significant noncompliance'' in proposed Sec. 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 Sec. 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 Sec. 602.24(f)(4) is needed because it corresponds
to the provisions in Sec. 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 Sec. 602.24(f)(4) specify
the agency's existing responsibility under Sec. 602.27 with regard to
inappropriate institutional processes for assigning credits.
We do not agree with the commenter who believed that Sec.
602.24(f)(3) and (f)(4) is contradictory. The provisions in Sec.
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 Sec. 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
Sec. 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 Sec.
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 Sec. 600.2.
We do not believe that it is necessary to delay the effective date
of the definition of a credit hour in Sec. 600.2 or Sec. 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 Sec. 602.24(f). While an
accrediting agency is required to implement Sec. 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 (Sec. 603.24(c))
General
Comment: Several commenters opposed proposed Sec. 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
Sec. 600.2.
One commenter believed that some State agencies, such as those in
Iowa, would not be able to comply with proposed Sec. 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
[[Page 66854]]
policy, the agency must promptly notify the Secretary.
One commenter believed that with regard to proposed Sec.
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 Sec. 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
Sec. 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 Sec. 603.24(c) or will lack the administrative
resources to meet these requirements. To be subject to Sec. 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 Sec. 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 Sec. 600.2.
Changes: None.
Program Eligibility: Clock-to-Credit-Hour Conversion (Sec. 668.8)
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 Sec. Sec. 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-to-credit-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
39618-39623) 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 Sec. 668.8(k) and (l) continues to
be essential to the administrative integrity of the title IV, HEA
programs. In Sec. 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 Sec. 668.8(l)(1).
Due to the separate conversion formula in new Sec. 668.8(l),
programs that are subject to the clock-to-credit-hour conversion in
Sec. 668.8(l) are exempted from using the credit-hour definition in
Sec. 600.2. Therefore, we do not believe there is any inconsistency
between the definition in Sec. 600.2 and the provisions of Sec.
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 Sec. 668.8(k)(1)(ii), from the requirements to
perform a clock-to-credit-hour conversion under the provisions in
proposed Sec. 668.8(l) with regard to students in a diploma program in
which all credits are fully transferable to the new degree program.
Discussion: Section 668.8(k)(1)(ii) provides that an institution's
shorter length program is not subject to the conversion formula in
Sec. 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
Sec. 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 Sec.
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 Sec.
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 Sec. 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 Sec. 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.
A few commenters believed that proposed Sec. 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
[[Page 66855]]
but do not necessarily require that an institution measure student
progress in clock hours. These commenters recommended revising proposed
Sec. 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 Sec. 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 clock-hour programs to transfer to
credit-hour programs. The commenters also believed that employer-paid
or employer-reimbursed tuition programs are generally administered
based on credit hours.
One commenter believed that the proposed clock-to-credit-hour
conversion provisions that only use credit hours were not consistent
concerning States throughout the proposed regulations.
Discussion: The provisions in Sec. 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 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 Sec. 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-to-credit-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 Sec. 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 Sec. 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 Sec. 668.8(l)(2) with State requirements.
Proposed Sec. 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.
Changes: Section 668.8(l)(2) has been modified to remove the
reference from proposed Sec. 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 Sec.
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 Sec. 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 Sec. 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 Sec. 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 Sec. 600.2.
Discussion: We believe it is essential for an institution to
require students to
[[Page 66856]]
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 provisions of Sec. 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 Sec.
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 Sec. 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 Sec.
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 Sec. 600.2 as (1) a 50- to 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 Sec. 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 Sec. 600.2.
Discussion: We do not believe it is necessary to amend Sec.
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 Sec. 600.2. The
credit-hour definition in Sec. 600.2 specifically excludes its
applicability to a program subject to the conversion formula in Sec.
668.8(l).
Changes: None.
Comment: Many commenters believed that proposed Sec. 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
Sec. 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 Sec. 668.8(l) of these final regulations
provide for a more equitable accounting for student work outside of
class. New Sec. 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 Sec. 668.8(l)(1) would be considered compliant with Sec.
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 Sec. 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-to-credit-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 Sec. 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 Sec. 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.
[[Page 66857]]
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 Sec. 668.8(l);
however, institutions are responsible for ensuring that the credit
hours awarded for title IV, HEA program purposes comply with the
provisions in Sec. 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 Sec. 668.8(l)(2) provide an exception to the
minimum standard for converting clock hours to credit hours in Sec.
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 Sec. 668.8(l)(1) for the courses
without the work outside of class and may apply the exception in Sec.
668.8(l)(2) to courses with work outside of class.
Changes: None.
Comment: One commenter supported proposed Sec. 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 Sec.
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 Sec. 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 Sec. 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
vocational institutions, recognized under 34 CFR 603, is responsible
for making determinations of the appropriate credit hours under
proposed Sec. 668.8(l)(2). If an institution is unsure of how to apply
the provisions of Sec. 668.8(l)(2) to a program, it would be
considered compliant if it uses the appropriate conversion ratio
specified in Sec. 668.8(l)(1).
Changes: None.
Comment: One commenter suggested eliminating the provision in
proposed Sec. 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 Sec. 600.2. The commenter believed the Secretary's
proposed credit-hour definition in Sec. 600.2 allowed the Secretary to
interfere in academic matters.
Discussion: The definition of credit hour in Sec. 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 Sec. 600.2 may still be eligible for
title IV, HEA program funds. Thus, Sec. 668.8(k)(2)(ii) provides that
a program that does not award credit hours in compliance with Sec.
600.2 may still be eligible for title IV, HEA programs using the
underlying clock-hours 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 Sec. 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 credit-hour programs in
the 2010-11 academic year, but will need to measure student progress in
clock hours under proposed Sec. 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 Sec.
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 Sec.
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 Sec. 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 Sec. 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 Sec.
668.8(k) and (l) until these students complete the program or to apply
amended Sec. 668.8(k) and (l) in these final regulations for all
students enrolled in payment periods or assigned to the 2011-12 and
subsequent award years. For students who enroll or reenroll on or after
July 1, 2011 in programs affected by changes in Sec. 668.8(k) and (l),
institutions must determine title IV, HEA eligibility using Sec.
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 Sec.
602.24(f) for an accrediting agency, or Sec. 603.24(c) for a State
agency, the institution must use the conversion formula in Sec.
668.8(l)(1) of these final regulations until the State agency and
accrediting agency are compliant.
Changes: None.
[[Page 66858]]
State Authorization (Sec. Sec. 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
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.
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 Sec. 600.9. A State agency
official praised the Department's proposed regulations but suggested
that the Department insert ``by name'' in the proposed Sec.
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 Sec. 600.9.
Changes: We are amending proposed Sec. 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 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 Sec. 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 Sec. 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' 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 Sec. Sec. 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
[[Page 66859]]
another commenter regarding problem areas with certain types of
institutions.
Changes: None.
Comment: Several commenters questioned the need for proposed Sec.
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 Sec. 600.9, or the States with adequate or inadequate
oversight. Several commenters were concerned that proposed Sec. 600.9
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 Sec.
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 Sec. 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 Sec. 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 Sec. 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 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 Sec. 600.9 in these
final regulations as Sec. 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 Sec. 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 Sec. 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 Sec. 600.9 of these final regulations, the
institution and State will take the necessary actions to meet the
requirements of Sec. 600.9 of these final regulations.
Changes: None.
Comment: One commenter believed that proposed Sec. 600.9 would
result in an unfunded mandate by the Federal Government. Another
commenter stated that many States may see proposed Sec. 600.9 as a
revenue-generating opportunity and pass the costs of this requirement
on to institutions, which
[[Page 66860]]
would have no choice but to pass that cost on to students.
Discussion: We do not agree that Sec. 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 Sec. 600.9, there is no requirement
that it do so. We also do not agree that States will see coming into
compliance with Sec. 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 Sec. 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 public
institutions. The commenter believed that proposed Sec. 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 Sec. 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 Sec. 600.9 did not adequately
address the affect an institution's compliance with proposed Sec.
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 Sec. 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 Sec. 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 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 Sec. 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 Sec. 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 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 Sec. 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 Sec. 600.9 should be amended to differentiate the
[[Page 66861]]
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 Sec. 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 with Sec.
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
Sec. 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 Sec. 600.9 to distinguish the
type of State approvals that are acceptable for an 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 Sec. 600.9:
[[Page 66862]]
Meets State Authorization Requirements\*\
----------------------------------------------------------------------------------------------------------------
Legal entity Entity description Approval or licensure process
----------------------------------------------------------------------------------------------------------------
Educational institution............ A public, private nonprofit, or for- The institution must comply with any
profit institution established by applicable State approval or
name by a State through a charter, licensure process and be approved
statute, or other action issued by or licensed by name, and may be
an appropriate State agency or State exempted from such requirement
entity as an educational institution based on its accreditation, or
authorized to operate educational being in operation at least 20
programs beyond secondary education, years, or use both criteria.
including programs leading to a
degree or certificate.
Business........................... A for-profit entity established by The State must have a State approval
the State on the basis of an or licensure process, and the
authorization or license to conduct institution must comply with the
commerce or provide services. State approval or licensure process
and be approved or licensed by
name.
Charitable organization............ A nonprofit entity established by the An institution in this category may
State on the basis of an not be exempted from State approval
authorization or license for the or licensure based on
public interest or common good. accreditation, years in operation,
or a comparable exemption
----------------------------------------------------------------------------------------------------------------
*Notes:
Federal, tribal, and religious institutions are exempt from these requirements.
A State must have a process, applicable to all institutions except tribal and Federal institutions, to
review and address complaints directly or through referrals.
The chart does not take into requirements related to State reciprocity.
Examples
Institutions considered legally authorized under amended Sec.
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 Sec.
600.9:
An institution is a publicly traded corporation
established 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
Sec. 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 Sec. 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 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 Sec. 600.9. Another
commenter believed
[[Page 66863]]
that the Department should accept State laws and regulations that can
be reasonably interpreted as meeting the requirements of Sec. 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 Sec.
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 Sec. 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, 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 Sec. 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 Sec. 668.26 regarding the
end of its participation in those programs. If an institution's State
legal authorization subsequently became compliant with amended Sec.
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 Sec. 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 Sec. 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 Sec. 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 Sec. 600.9 for every type of
institution within the State. However, we believe the framework in
Sec. 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 Sec. 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 Sec. 600.9. However, in the event a State is
unable to provide appropriate State authorizations to its institutions
by the July 1, 2011 effective date of amended Sec. 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 Sec. 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 Sec. 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.
Discussion: While a State must have a process to handle student
complaints under amended Sec. 600.9(a) for all institutions in the
State except Federal and tribal institutions, the regulations do not
require, nor do they prohibit, any
[[Page 66864]]
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 Sec.
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 Sec. 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 Sec. 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 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.
One commenter believed that proposed Sec. 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
[[Page 66865]]
evaluate the institution. Based on our consideration of the public
comment, we believe that standard should be at least 20 years of
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 Sec. 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 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
Sec. 600.9(b)(3) is an unnecessary use of limited public 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 Sec. 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
[[Page 66866]]
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 Sec.
668.43(b). Directly relying on an institution's accrediting agency
would not comply with Sec. 600.9(a)(1) of these final regulations;
however, to the extent a complaint relates to an institution's quality
of education or 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 Sec. 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 Sec. 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 Sec. 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 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 Sec.
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 Sec. 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 Sec.
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 Sec. 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
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
[[Page 66867]]
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 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 Sec. 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 Sec.
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 Sec. 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 Sec. 600.9 to clarify in paragraph (c)
that, if an institution is offering postsecondary education 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 Sec. 600.9(a)(1)(i), and
no exemption from the provisions of Sec. 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
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 Sec. 600.9(b) to provide that an
institution is considered to be legally authorized by the State if it
is exempt from State
[[Page 66868]]
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 Sec. 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.
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 Sec. 600.9(a)(2) provided that a tribal college would be
considered to meet the basic provisions of proposed Sec. 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 Sec. 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 Sec. 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 Sec. 600.9(b)(2) regarding adverse actions. Further,
we are providing that, in Sec. 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 668 Student Assistance General Provisions Retaking Coursework
(Sec. 668.2)
Comment: Many commenters agreed with the Secretary's proposal to
amend the definition of full-time student in Sec. 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 Sec. 668.2(b) will 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-quarter-time enrollment statuses.
Discussion: Less-than-half-time, half-time, and three-quarter-time
statuses are generally defined in relation to the definition of a full-
time student. In Sec. 668.2 half-time and three-quarter-time 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 full-time 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 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
[[Page 66869]]
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 Sec. 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
Sec. 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 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 Sec. 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 Sec.
668.4(g) apply.
Changes: None.
Written Arrangements (Sec. Sec. 668.5 and 668.43)
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 minutia-driven 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 Sec. Sec. 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 Sec. Sec. 668.5 and 668.43.
Changes: None.
Written Arrangements Between Two or More Eligible Institutions (Sec.
668.5(a))
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
Sec. 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 Sec. 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 Sec. 668.5. Under proposed Sec. 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 Sec. 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
certificate-granting 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 Sec. 668.5(a)(2)(ii).
Moreover, Sec. 668.5(a) does not apply to articulation agreements
under which
[[Page 66870]]
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 Sec.
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 Sec. 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
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 Sec.
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 Sec. 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 Sec. 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 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
Sec. 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 Sec. 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 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
[[Page 66871]]
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 Sec.
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 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 Sec.
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 Sec. 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 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 (Sec. 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 Sec. 668.5(c). Another
commenter stated that the list of exclusions in proposed Sec. 668.5(c)
is overly broad. This commenter agreed with the Department's intent but
pointed out that denial of recertification (Sec. 668.5(c)(iv)) may be
due to a factor such as program length. The commenter suggested that we
narrow Sec. 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 Sec. 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 (Sec. Sec. 668.5(e) and 668.43(a)(12))
Comment: Several commenters supported the requirement that
institutions providing an educational program under Sec. 668.5(a),
(b), or (c) inform students when part of their educational program is
provided by a different institution and 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 Sec.
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 Sec. 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
[[Page 66872]]
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-degree-granting 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 requirements
reflected in Sec. Sec. 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 (Sec. 668.14(b))
General
Comment: A significant number of commenters supported the
Secretary's proposed changes to Sec. 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 Sec. 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 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 Sec. 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 Sec. 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 Sec.
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 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
[[Page 66873]]
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 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
Sec. 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 Sec. 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 Sec. 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 Sec. 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 non-title 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 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 Sec. 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 non-degree 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, 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
[[Page 66874]]
financial aid. If it is not, such compensation would continue to be
permissible even with the removal of the safe harbor from current Sec.
668.14(b)(22)(ii)(C).
Changes: None.
Comment: A number of commenters voiced their support for the safe
harbor from current Sec. 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 Sec. 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 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 Sec. 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 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 Sec.
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 Sec. 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 discussed two-part test to receive assistance as to whether
a particular activity is permissible.
Finally, recruitment of student athletes is not different from
[[Page 66875]]
recruitment of other students. Incentive compensation payments to
athletic department staff are governed by the restrictions included in
Sec. 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 Sec. 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 Sec. 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.
Changes: None.
Comment: Several commenters asked for clarification regarding the
safe harbor in current Sec. 668.14(b)(22)(ii)(J) permitting an
institution to award compensation for Internet-based 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 Sec. 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
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
Sec. 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 Sec.
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 volume-driven 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 Sec. 668.2; the responsibilities of a
third-party servicer are described in Sec. 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 Sec. 668.14(b)(22)
and section 487(a)(20) of the HEA. A few commenters who supported the
proposed changes to Sec. 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 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
[[Page 66876]]
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 Sec. 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 Sec.
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 Sec. 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 prohibition on the payment of incentive compensation.
Finally, it is appropriate to pay recruitment personnel a fixed salary.
Changes: We have revised Sec. 668.14(b)(22)(i)(A) (which has been
redesignated as Sec. 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 Sec.
668.14(b)(22)(i)(B) as Sec. 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 Sec. 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 compensation systems that
seem to fall outside the scope of compensation restriction but that
could fail to satisfy the two-part 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 Sec. 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 Sec.
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 Sec. 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
[[Page 66877]]
compliance with the new 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
Sec. 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 Sec. 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 Sec.
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 Sec.
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 Sec. 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 enrollments or the award of
financial aid.
The safe harbor in current Sec. 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
Sec. 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.
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 merit-based
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 Sec. 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 Sec.
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 merit-based 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
[[Page 66878]]
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 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 Sec. 668.14(b)(22).
The Department agrees with commenters that there are circumstances
when profit-sharing payments should be permitted. Under proposed Sec.
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 Sec. 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 Sec. 668.14(b)(22)(ii) to clarify that,
notwithstanding the ban in Sec. 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 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 Sec. 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 Sec. 668.14(b)(22)(iii)(B)(1) of these
final regulations).
We also revised the definition to clarify that it does not include
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 Sec. 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 Sec. 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 Sec. 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
[[Page 66879]]
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 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 (Sec. Sec. 668.16(e), 668.32(f), and
668.34)
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 Sec. 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 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 Sec.
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.
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 Sec. Sec. 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
[[Page 66880]]
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 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 Sec. Sec. 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, 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 (Sec. 668.34)
Comment: Two commenters stated that the term ``financial aid
applicants'' should be substituted for the word ``students'' in Sec.
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 Sec. 668.34(a)(2)
retained the language from current Sec. 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 sub-categories 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 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 Sec. 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
[[Page 66881]]
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. 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 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 Sec. 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 Sec.
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 Sec. 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 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 Sec. 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 Sec. 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
[[Page 66882]]
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 Sec. 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 Sec. 668.34 for evaluating the academic
progress of students in 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 Sec. 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 Sec. 668.34, an
institution may take into consideration factors that could 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 re-evaluated 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 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 Sec.
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
[[Page 66883]]
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 Sec. 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 Sec. 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 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 program completion needed to be part of the pace
measurement. Another commenter expressed concern that proposed Sec.
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 Sec. 668.34(a)(5)(i), together with the
definition of maximum timeframe in Sec. 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 Sec. 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.
Transfer Credits
Comment: Several commenters stated that, for purposes of
calculating pace toward program completion under Sec. 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 Sec. 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
[[Page 66884]]
category when measuring pace towards completion for each SAP evaluation
period.
Changes: None.
Comment: One commenter recommended that the Department revise Sec.
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 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 Sec.
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 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 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
[[Page 66885]]
statuses proposed in Sec. 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 Sec. 668.34(c)
could be interpreted to allow an institution to place 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 Sec. 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 Sec. 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 Sec. 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 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 Sec.
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 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
[[Page 66886]]
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 Sec. 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 Sec. 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 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 Sec. 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 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 Sec. 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.
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
[[Page 66887]]
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 Sec. 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 Sec. 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 (Sec. 668.16(p))
High School Diploma (Sec. 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 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 Sec. 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 Sec.
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 schools. Also, a school that does not
appear on the list should not be inferred to be ``bad.'' The intent of
new Sec. 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 Sec.
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
Sec. 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.
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
[[Page 66888]]
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 Sec. 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 Sec. 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 first-year
undergraduate students to provide on FAFSA on the Web information about
the high school they graduated from. However, Sec. 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 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 Sec. 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.
Changes: None.
Comment: Several commenters asked what the effect of proposed Sec.
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 Sec. 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 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 Sec. 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
[[Page 66889]]
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 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
Sec. 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 Sec. 668.16(p) for any applicant who completes a FAFSA beginning
with the 2011-2012 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 Sec. 668.16(p) to follow procedures to check the
validity of a high school diploma, that 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.
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 Sec. 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.
[[Page 66890]]
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 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.
Changes: None.
Comment: Several commenters expressed concern that complying with
Sec. 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 Sec. 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 Sec.
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 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
[[Page 66891]]
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 Sec. 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.
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 Sec. 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 Sec. 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 Sec. 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
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 Sec. 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 Sec. 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 Sec. 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 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 Sec. 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
[[Page 66892]]
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 Sec. 668.32(e), or
they are students with intellectual disabilities who are seeking Pell,
FSEOG, or FWS program assistance under Sec. 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 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 2011-2012
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 (Sec. Sec. 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 (Sec. Sec.
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. 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
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, GEN-00-24, 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
[[Page 66893]]
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
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 Sec.
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
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 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
[[Page 66894]]
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 clock-hour 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 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 Sec. 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 clock-hour programs and
nonterm credit-hour programs. Under Sec. 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 Sec.
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 Sec. 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 Sec. 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 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
Sec. 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 (Sec. 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 Sec. 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 nonstandard-term programs or nonterm
programs, in amended Sec. 668.22(l)(8), we have defined the term
``nonstandard-term program'' as
[[Page 66895]]
a term-based program that does not qualify under 34 CFR 690.63(a)(1) or
(2) to calculate Federal Pell Grant payments 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 Sec.
668.22(a)(2)(ii)(A).
Section 668.22(a)(2) also has been revised to cross-reference Sec.
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.
In addition, Sec. 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 Sec.
668.22(d).
Finally, Sec. 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 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
[[Page 66896]]
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 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 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 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 Sec. 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
[[Page 66897]]
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.
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 (Sec. Sec. 668.22(b) and 668.22(l))
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 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 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
[[Page 66898]]
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.'' 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 Sec.
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 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, face-to-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 Sec. 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 Sec.
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 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
Sec. 668.22(l)(7) by providing examples of academically-related
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
[[Page 66899]]
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 academically-related. 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 Sec.
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 academically-related activities is no longer an acceptable
example of participation in an academically related activity.
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 Sec. 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 Sec. 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 Sec. 668.22(c)(3)(i) as Sec.
668.22(c)(3) to reflect the removal of Sec. 668.22(c)(3)(ii).
We have added to the definition at Sec. 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 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 impr