Archived Information

Reauthorization of the Higher Education Act


Title I--General Provisions and Program Integrity Triad

Section-by-Section Analysis

Section 101. Section 101(a) of the bill would repeal title I, part H of title IV, and title XII of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq., hereinafter in this Act referred to as "the Act"). Title I of the Act currently contains the School, College and Universities Partnerships (SCUP) program, Articulation Agreements, and the Access and Equity To Education For All Americans Through Telecommunications program. Amendments to the SCUP program are proposed elsewhere in the bill.

Section 101(b) of the Act would set out a new Title I for the Act that would contain the general provisions for the Act, many of which were taken from current title XII of the Act, as well as the program integrity "triad" that applies primarily to title IV of the Act, but has some applicability (the authorization of an institution by a State to provide a program of postsecondary education in that State, as well as the Secretary's recognition of accrediting agencies and associations) to the other titles of the Act as well. Proposed new part A of title I of the Act would consist of the definitions (currently in section 1201 of the Act, with some amendments, as described below) for the Act and the program integrity triad provisions, divided into subparts that represent the three aspects of the triad: proposed new subpart 1 would contain the definitions for the Act, which include the requirement for the State authorization of an institution of higher education (references to the State Postsecondary Review program here and throughout title IV of the Act, would be eliminated, consistent with the 1995 rescission of funding for that program); proposed new subpart 2 would contain the standards for accrediting agency approval; and proposed new subpart 3 would contain the Department's eligibility and certification procedures for institutions. Proposed new part B of title I of Act would contain the general provisions applicable to the Act that, except as noted below, are currently in title XII of the Act.

Proposed new section 101 contains the new definitions for the Act. Section 1201 of the Act currently sets out the definitions for the Act, and most of those definitions have been moved to proposed new section 101 with only minor stylistic and technical changes. However, proposed new section 101(a) of the Act, which defines "institution of higher education," has been extensively revised. This revision is intended to clarify the definition and to move more of the definition of an institution of higher education for purposes of Title IV of the Act, currently in section 481(a) of the Act, to proposed new section 101(a), so that the interrelationship of the two definitions is more easily understood and to eliminate duplicative provisions.

Proposed new section 101(a) would also explicitly provide that graduate and professional programs are eligible to participate in HEA programs; this is currently implied in the definitions in sections 481(a) and 1201(a) of the Act. In addition, community colleges offering short-term programs would no longer be subject to a two-year waiting period for eligibility to participate in title IV programs. We understand that this requirement was not intended to apply to State-supported institutions. However, proprietary institutions would still be subject to the two-year waiting period under section 481(b) of the Act, as amended by section 481 of the bill.

In addition to moving the provisions regarding the definition of an "eligible program" from section 481(e) of the Act to proposed new sections 101(a)(2) and (3), the bill would expand the applicability of the outcome measures added to the Act in 1992 for short­term vocational programs. Currently, a 300­to­600 hour nondegree vocational program (a program that prepares students for gainful employment in a recognized occupation) at a proprietary or vocational institutions, must have a verified completion rate of at least 70 percent and a verified placement rate (of those completers) of at least 70 percent for its students to be eligible to receive student loans. Proposed new section 101(a)(3) would instead apply this "70/70" requirement to programs of one academic year or less offered by proprietary institutions, and add the alternate requirement that such a program could also be considered an eligible program for title IV purposes if the program has a verified placement rate of at least 70 percent in the recognized occupation for which the students were trained, or in a related comparable recognized occupation. This alternate requirement would permit a program to include in its placement rate students that did not complete the program, but obtained a job in the field for which the student received some training. The Secretary would also be authorized to prescribe in regulation performance measures in addition to, or in lieu of, these requirements. It is intended that such additional or substitute requirements would be similar to the types of performance measures currently under consideration by Congress in the job training context. The expanded requirements would be phased in, so that institutions will have time to assemble the data needed to calculate the placement and completion rates on these longer programs.

The 70/70 requirements, as amended, would still focus on programs that are statutorily defined to be in existence to serve the particular goal of preparing students for employment in the field for which the student was trained. The amendments would apply the 70/70 requirements to a larger group of institutions, but the requirements would still be limited to the institutions that generate the most concern about the quality of education, as well as the institutions that have the most problems with itle IV compliance.

Subpart 2 of part A of proposed new title I of the Act would contain the standards for accrediting agency approval, and except as noted below, are taken from section 496 of the Act with only minor technical and stylistic changes.

Proposed new sections 111(a)(3)(C) and (h) are minor clarifications of language taken from current section 496(a)(3)(C) and (h) of the Act.

Proposed new sections 111(a)(5)(M) and (N) of the Act would add a requirement that accrediting agencies have specific standards on distance learning programs or courses at an institution (if any), including the institution's criteria for the selection of students, its provisions for monitoring student progress, the academic and student support services available to students, and its measures of educational outcomes, as well as on an institution's refund policy. Proposed new section 111(a)(9) of the Act would also require an accrediting agency to have in effect its own fair and equitable refund policy establishing the minimum terms and conditions under which an institution that it accredits shall return unearned tuition, fees, room and board, and other charges to a student, if the student withdraws from, or otherwise fails to complete, the period of enrollment for which such charges were assessed. These changes are intended to provide accountability in two areas that have a significant potential for abuse, and complement the changes regarding distance learning proposed in section 481 of the bill, and regarding refunds in section 486 of the bill.

Proposed new section 111(c)(1) of the Act would contain revised requirements for unannounced inspections by an accrediting agency of the institutions that it accredits. Current section 496(c)(1) of the Act, on which proposed new section 111(c)(1) is based, requires an accrediting agency to conduct an unannounced inspection of every institution that offers vocational education, regardless of whether it is a single purpose vocational institution or a multi-purpose research university that happens to offer a few vocational programs that are clearly ancillary to its principal mission. Proposed new section 111(c)(1)(B) of the Act would limit the requirement for unannounced site visits by accrediting agencies or associations to instances where at least 10 percent of the institutions accredited by the agency or association have a cohort default rate for the most recent year of 20 percent or more. In those instances, the accrediting agency or association would still be required to performs at least one unannounced on-site inspection or review, during the interval between the agency's grant of accreditation or preaccreditation to the institution or program and the expiration of the accreditation or preaccreditation period, at each institution that it accredits and that offers vocational education;

Unannounced visits are intended to reveal fraud and abuse, such as instances where an institution has a library on the day of the announced site visit that subsequently disappear as soon as the accrediting agency personnel leave. It is highly unlikely that an unannounced site visit would uncover a serious problem with personnel, resources, or facilities at a large, multi-purpose institution that would not otherwise be discovered during an announced site visit. Proposed new section 111(c)(1)(B) of the Act would target unannounced agency reviews to institutions that have historically experienced program administration problems, while relieving burden on institutions where unannounced reviews are not cost effective.

Proposed new subpart 3 of part A of title I of the Act would contain the the Department's eligibility and certification procedures for institutions seeking to participate in the student assistance programs under title IV of the Act, and except as noted below, are taken from sections 498 and 498A of the Act with only minor technical and stylistic changes.

Proposed new section 121(b)(3) of the Act would modify the language taken from current section 498(b)(3) of the Act to require that an institution maintain a copy of any contract between the institution and a financial aid service provider or loan servicer, and provide a copy of any such contract to the Secretary upon request, instead of requiring that the institution supply the copy with its application to participate in the student aid programs under title IV of the Act.

Proposed new section 121(c)(3) of the Act would modify the language taken from current section 498(c)(3) of the Act by clarifying that third party financial guarantees may be used to satisfy the statutory financial responsibility standards only by institutions that are currently eligible to participate in the title IV programs, not by institutions seeking an initial determination of eligibility. Proposed new section 121(c)(2) of the Act would be modified slightly to replace a reference to operating losses, net worth, asset­to­liabilities ratios, and operating fund deficits with a more general reference to ratios that demonstrate financial responsibility. This modification is only intended to provide additional flexibility for future determinations of the appropriate measures of financial responsibility; it should not be construed as requiring any change to the current regulations on financial responsibility, or that the current statutory and regulatory provisions are inconsistent. In addition, proposed new section 121(c)(3)(A) of the Act would eliminate the reference to performance bonds as one type of third party financial guarantee that the Secretary might accept in satisfaction of the financial responsibility standards. Performance bonds are rarely used and do not offer adequate protection of the Federal financial interest.

Proposed new section 121(f) of the Act would eliminate the current requirement that the Department conduct a site visit at each institution before certifying or recertifying its eligibility to participate in the title IV programs, as well as the authority for the Department to charge reasonable fees for these site visits. Instead, the proposed new section 121(f) would state that the Secretary would ensure that prompt action is taken by the Department on an application to participate in the title IV programs and that the Secretary may establish priorities by which institutions are to receive site visits, if any, and may coordinate such visits with site visits by States, guaranty agencies, and accrediting bodies in order to eliminate duplication and reduce administrative burden.

Limited resources prevent the Department from being able to conduct site visits for all certifications and recertifications of institutions. The authority to charge fees does not alleviate this problem, since any fees that Department might charge could not be retained by the Department to offset the cost of site visits. The fees would merely be deposited in the Treasury.

Moreover, such visits are not necessary for every institution; if the Department needs to visit an institution during recertification because of apparent concerns with the institution, it will conduct an on-site program review as authorized elsewhere in the statute.

Proposed new section 121(g) of the Act would reword the recertification requirements to eliminate outdated language as well as to modify those requirements as they would apply to an institution located outside of the United States, so that a foreign institution that received less than $500,000 in Federal Family Education Loan (FFEL) program funds would be subject to a recertification schedule set by the Secretary in regulations, rather than the typical five year cycle. (Foreign institutions may only participate in the FFEL program.)

The Department has encountered substantial administrative difficulty in its effort to certify and monitor all foreign schools in the same manner as all other Title IV schools. Problems in certifying and monitoring foreign institutions include the myriad complications inherent in monitoring schools on foreign soil. Because the vast majority of foreign institutions have low loan volumes, the Department believes that the costs and resources needed to fully monitor these schools that have, over time, posed limited problems with respect to compliance with Title IV rules and regulations, can be better spent elsewhere.

Proposed new section 121(i)(4) of the Act would modify the change of ownership provisions in current section 498(i) of the Act to recognize that the Secretary may grant a limited period of provisional certification when a materially complete application for approval of a change of ownership is filed within 10 days of the change. The initial period of provisional certification would run until the end of the month following the transaction that results in the change of ownership, and the Secretary would be authorized to continue the provisional certification on a month-to-month basis until a final decision is issued on the application.

Proposed new section 121(j)(1) of the Act, which is based on the language from current section 498(j)(1) of the Act on the treatment of branches, would clarify that, prior to seeking certification as a main campus or free­standing institution, a branch is required to be in existence at least 2 years after it has been certified by the Secretary as a branch campus participating in a title IV program.

Proposed new section 122(b) of the Act would modify slightly the language from current section 498A(b) of the Act, to be a more general statement of the Secretary's actions in relation to ensuring uniform interpretation and application of regulations. Proposed new section 122(c) of the Act would modify the language from current section 498A(c) of the Act to eliminate the requirement that the Secretary develop and carry out a plan for the data collection concerning institutional accreditation, eligibility, and certification, and make the information obtained in that data collection readily available to all institutions of higher education, guaranty agencies, States, and other organizations participating in the title IV programs. Instead, proposed new section 122(c) of the Act would merely authorize the Secretary to make the information available to title IV program participants. The requirement for a data collection plan is an unwarranted intrusion on the Secretary's management of the Department.

Proposed new section 122(d) of the Act would modify the language from current section 498A(d) of the Act to make the provision of audit and program review training (including criminal investigative training) to Department personnel optional rather than mandatory. The current statutory requirement is an undue interference into the Secretary's management of the Department.

Proposed new part B of title I of Act would contain the general provisions applicable to the Act that, except as noted below, are currently in title XII of the Act.

Proposed new section 131 of the Act would contain the antidiscrimination requirements currently in section 1202 of the Act. Section 1203 of the Act, which describes State agreements for programs under title I of the Act, the State Student Incentive Grant (SSIG)program (in an outdated reference), and under part A of title VII of the Act, is no longer necessary. The title I programs were never funded and would be eliminated by the amendments in this title of the bill, and the SSIG program and part A of title VII are proposed for repeal elsewhere in the bill.

Due to a numbering error in the Act, there are currently two sections designated as section 1204 of the Act. The first section 1204, which contains the prohibition against Federal control of education, would be moved to proposed new section 132 of the Act; the second

section 1204 of the Act, which relates to the treatment of territories and territorial student assistance, would be moved to proposed new section 133 of the Act.

Proposed new section 134 of the Act would contain the authority for the National Advisory Committee on Institutional Quality and Integrity, currently in section 1205 of the Act. This proposed new provision would extend the authorization of the Committee until September 30, 2003, and eliminate outdated references to the terms of initial members of the Committee and to a repealed provision of the General Education Provisions Act. Section 1206 of the Act, which currently authorizes a Joint Study Commission on Postsecondary Institutional Recognition, would be eliminated as no longer necessary.

Proposed new section 135 of the Act contains the provision on student representation on committees and other administrative bodies currently in section 1207 of the Act.

Proposed new section 136 of the Act contains the provision relating to the financial responsibility of foreign students currently in section 1208 of the Act.

Proposed new section 137 of the Act contains the disclosure of foreign gifts provision currently in section 1209 of the Act, with minor changes to the definition of an "institution" for purposes of that section to make it more consistent with the definition in proposed new section 101(a).

Proposed new section 138 of the Act contains the peer review provision currently in section 1210 of the Act. Sections 1211 and 1212 of the Act would be eliminated. Section 1211 of the Act contains outdated limits on aggregate appropriations for most of the HEA programs for fiscal years 1987 through 1991, and section 1212 of the Act contains the expired authority for technology transfer centers.

Proposed new section 139 of the Act contains the requirement for the adoption and implementation of policies on drug and alcohol abuse by institutions of higher education that is currently in section 1213 of the Act. A minor clarification would be made to the title of the section to more accurately reflect the substance of the provision.

Proposed new section 140 of the Act is a new provision that would authorize such sums as may be necessary to be appropriated for fiscal year 1999 and the four succeeding fiscal years to enable the Secretary to: 1) carry out comprehensive evaluations of any HEA programs, and the performance of recipients of HEA funds, as the Secretary determines appropriate; 2) evaluate the aggregate short­ and long­term net effects and cost efficiencies across HEA programs and other related Federal postsecondary education and training programs; and 3) assess the impacts of student financial assistance policies. These appropriations would be in addition to any other appropriations for evaluations and related activities authorized by the Act.

An applicant for funds under an HEA program to be evaluated under proposed new section 140 would be required to include in its application: 1) the applicant's objective, quantifiable and measurable performance goals to be achieved by the activities supported by those funds; and 2) the applicant's policies and procedures for evaluating the effectiveness of its activities in reaching those performance goals. The applicant's performance goals must be consistent with the performance indicators that the Secretary would publish for a variety of activities under the HEA programs that the Secretary determines will be evaluated under proposed new section 140. The Secretary could award program funds to an otherwise eligible applicant only if the applicant's performance goals were sufficiently rigorous as to meet the purposes of the program and the performance indicators for the program established by the Secretary. The Secretary could make a continuation award only after determining that the grantee is making sufficient progress toward achieving its performance goals.

The Secretary would also be authorized to collect such information as may reasonably be necessary to evaluate the effectiveness and operations of any HEA program that the Secretary determines will be evaluated under proposed new section 140.

Finally, section 101(c) of the bill would require the Secretary to conduct a study to examine the effectiveness of accrediting agencies and associations in developing and enforcing the distance learning standards described in proposed new section 111(a)(5) of the Act. The Secretary's report on the study would be due to Congress not later than two years after the date of enactment of the bill. This would help to ensure accountability in the field of distance learning, and provide the Secretary and the Congress with more information about this developing area of technology and its impact on the HEA programs.

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Last updated: April 4, 2002 by [pss]

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