Reauthorization of the Higher Education Act of 1965
Mr. Robert Collins Vice President of Student Financial Aid University of Phoenix
Archived Information


U.S. Department of Education
Jeffrey R. Andrade
Deputy Assistant Secretary for Policy, Planning and Innovation
Office of Postsecondary Education
1990 K Street, NW, Room 8046
Washington, DC 20006

ATTENTION: HEA Reauthorization

Dear Mr. Andrade,

The University of Phoenix is writing in response to your request for issues for the upcoming Title IV Reauthorization. The University of Phoenix is the largest private, degree granting institution in the United States and is the current leader in adult education. The University is a regionally accredited, multi-state institution, whose mission is to serve adult students by offering associates, bachelors, masters and doctoral degrees with an emphasis in business, administration, and technology. We also provide a broad range of bachelor's and master's degree programs in other professional areas such as nursing, counseling and education fields. In addition to the campus-based programs, most programs are also offered to students via the Internet by the University's Online campus. The University has been delivering distance education programs for over twelve years and is the largest distance delivery institution.

Due to the nature of our programs and students, we believe we are uniquely able to respond to issues relating to the awarding of aid in a non-traditional environment. As such, the University's proposals focus heavily on the regulatory and legal barriers for institutions that offer nontraditional educational models. We have organized our proposals based on the categories/questions that your office posed for comment.


Laura Palmer Noone, Ph.D., J.D.
University of Phoenix

Robert Collins
Vice President of Student Financial Aid
Apollo Group Inc.
University of Phoenix

> Transmitted via email to and overnight delivery

* ED Topic: How can we improve access and promote additional educational opportunity for all students, especially students with disabilities, within the framework of the HEA? How can the Federal Government encourage greater persistence and completion of students enrolled in postsecondary education?

> General Response

The HEA can encourage institutions of higher education, through recognized and regulated accrediting bodies, to offer courses and degree programs on an alternative schedule to meet the needs of all students, especially minorities, who hold full or part time jobs while attending college. Students consistent progress toward degree completion is impeded by offering only a traditional daytime schedule, intermittent availability of courses to complete degrees, and an academic calendar which assumes all higher education students are supported by their parents as they study.

HEA should call on organizations such as the American Association of Collegiate Registrars and Admission Officers (AACRAO), the American Association of Community Colleges (AACC), and the American Association of State Colleges and Universities (AASCU), state regulatory agencies, regional accrediting bodies to place the issue of ease of transfer credits at the top of their list to encourage participation in higher education rather than to discourage consistent pursuit of degrees. Through the Department of Education and the National Advisory Committee on Institutional Quality and Integrity, (NACIQI) accrediting bodies should be encouraged to mandate institutional full disclosure of transfer credit policies and recent credit acceptance decisions so that students can maximize the number of transfer credits they might receive. Similarly, voluntary articulation agreements among institutions across states should be encouraged through competitive grant programs.

Maintaining and strengthening of the current voluntary regional accrediting organizational structure and decentralized system of educational accountability are key to the continued success of American higher education.

* ED Topic: How can existing HEA programs be changed and made to work more efficiently and effectively? In what ways do they need to be adapted or modified to respond to changes in postsecondary education that have occurred since 1998? How can we best prioritize the use of funds provided for postsecondary education and the benefits provided under the HEA programs? How can the significant levels of Federal funding already provided for the HEA programs best help to further the goals of improving educational quality, expanding access, and ensuring affordability?

> FFELP/Direct Loan Limits

Reference: FFELP: 34CFR 682.204, Direct Loan: 34CFR 685.203, GEN-97-03

Statutory Authority: HEA Sec. 425

Explanation and Rationale for Changes:

The current structure of the federal loan limits disadvantages independent students entering into college for the 1st time. The federal loan amounts adjust incrementally as students progress through school, however they do not account for the fact that students have equal costs throughout their years of study. For 1st and 2nd year dependent students, with the availability of the PLUS loan, a student may borrow up to their cost of attendance (COA) without any specific loan limit cap. Therefore, dependent students in their first years of study are able to meet their educational costs. However, independent students in their 1st and 2nd year of study are distinctly disadvantaged by the fact that their loan limits are 1) capped at lower amounts then students enrolled in the subsequent years of study, and 2) they are not eligible to borrow under the PLUS loan. Therefore, these independent students are confronted with barriers to their educational goals. Often, these students are older non-traditional students who are already in the workforce, but are just entering into their first experience with higher education. Recent studies indicate that approximately 39 percent of all students enrolled in higher education were at least 25 years old . Ironically, these students can borrow more funds for their children who are enrolled at an institution then they can for themselves as students.

In addition to the issues surrounding independent borrowers, the current loan limits for the FFELP/Direct loan programs have not been adjusted materially since 1985. Therefore, the University supports the National Association of Student Financial Aid Administrator's (NASFAA) proposals relating to adjustments in annual loan limits to account for changes in the Consumer Price Index (CPI), and to address the issues facing independent borrowers in their 1st and 2nd years of study.


  • Adopt NASFAA's proposals relating to increases in loan limits.
  • Alternatively, to address the fact that the loan limits have not been materially adjusted for changes in the CPI, we would propose that undergraduate loan limits be increased to account for these changes. Additionally, to address the disparity in funding for 1st and 2nd year independent students, we propose that the loan limits be leveled across all years in school. The University proposes that the unsubsidized loan limit be raised such that the combined limits (un-subsidized and subsidized) remain constant regardless of the student's year in school. Thus, we propose the following increases:
    • 1st year combined loan limit = $14,000, of which the maximum subsidized amount is $2,625, and the maximum unsubsidized amount is $11,375. However, consistent with current provisions, we propose that students who do not qualify for all or part of a subsidized loan may borrow up to the additional $2,625 via the unsubsidized loan so that they may still receive a total loan of $14,000.
    • 2nd year combined loan limit = $14,000, of which the maximum subsidized amount is $3,500, and the maximum unsubsidized amount is $10,500. However, consistent with current provisions, we propose that students who do not qualify for all or part of a subsidized loan may borrow up to the additional $3,500 via the unsubsidized loan so that they may still receive a total loan of $14,000.
    • 3rd through 5th year combined loan limit = $14,000, of which the maximum subsidized amount is $5,500, and the maximum unsubsidized amount is $8,500. However, consistent with current provisions, we propose that students who do not qualify for all or part of a subsidized loan may borrow up to the additional $5,500 via the unsubsidized loan so that they may still receive a total loan of $14,000.

    > FFELP/Direct Loan Pro-ration

    Reference:  FFELP: 34CFR 682.204, Direct Loan: 34CFR 685.203

    Statutory Authority: HEA Sec 425

    Explanation and Rationale for Changes:

    Current law and regulation require institutions to pro-rate loan amounts for undergraduate students enrolled in remaining periods that are less than an academic year in length. This generally affects students who are in their final year of study and do not need to complete a full year of credit. Currently, (for programs that are greater than an academic year in length) you must first pro-rate the loan based on the number of credits remaining, then adjust the loan again for the student's cost of attendance (COA). We believe this double calculation is un-necessary and harmful to students whose costs are higher than the pro-rated loan limit. We believe that these students should be allowed to borrow up to the lesser of their loan limit (non-prorated) or their COA. This process is currently in place for students attending graduate programs.


    Eliminate the pro-ration requirement for graduating undergraduate students enrolled in programs greater than an academic year, and replace it with a requirement that the university certify up to the lesser of the student's annual/aggregate loan limit or their COA.

    * ED Topic: How can the HEA programs be changed to eliminate any unnecessary burdens on students, institutions, or the Federal Government, yet maintain accountability of Federal funds? How can program requirements be simplified, particularly for students?

    > Single Loan Disbursement Option

    Reference: 34CFR 682.604, GEN-02-06

    Statutory Authority: HEA Sec. 428G Explanation and Rationale for Changes:

    Previously, Congress had allowed institutions whose default rates were below 10% to take advantage of regulatory relief for their students. One such item waived under the regulatory relief provision was the requirement that students receive their federal loan funds in two disbursements. The waiver allowed students, whose loan periods were less than an academic year (i.e. loans for graduating students whose final academic year was less than a full year), to receive their funds in a single installment. This provision has expired.


    Restore the legislative authority that provided for this waiver.

    > 30 Day Delayed Disbursement Rule

    Reference: 34CFR 682.604, GEN-02-06

    Statutory Authority: HEA Sec. 428G

    Explanation and Rationale for Changes:

    Congress previously provided regulatory relief for institutions whose default rates were below 10%. Under these regulatory relief provisions, first year first time borrowers were exempted from the 30-day delayed disbursement requirement. This waiver was critical to those students who, in order to be successful, need to receive their funds timely in order to pay for their educational costs including living and book costs for their upcoming courses. Specifically, funds need to be delivered to them prior to them starting school and incurring charges. Therefore, the waiver allowed these students to receive their funds when they were most needed. This provision has expired.


    Restore the legislative authority that provided for this waiver.

    >Recognized Occupation Requirement for Programs Offered at Proprietary Schools

    Reference: 34CFR 668.8, 34CFR 600.5

    Statutory Authority: HEA Sec. 101

    Explanation and Rationale for Changes:

    The regulations currently have different definitions for determining program eligibility based on the type of institution offering the program. We believe that the determination of program eligibility should not be based on whether a school is for profit, public or private non-profit. The current provisions provide minimal protection to the federal government for programs or degrees that do not lead to an occupation if they are offered at a public or private not-for profit school. And yet for-profit institutions are blocked via the regulations from offering degree or certificate programs unless they "provide training for gainful employment in a recognized occupation" (as found in the U.S. Department of Labor's Dictionary of Occupational Titles).

    These limitations are unfair to students and consumers. Their choice of schools will be driven by the wrong conditions; rather than choosing a school based on quality, location, or services provided that meet their needs, the student will need to choose based on public vs. for-profit. If the program of study does not meet the test of the "Dictionary of Occupational Titles" the student has no choice but to choose a public school. Additionally, we believe that this provision creates inequity among schools and gives an unfair competitive advantage to specific sectors of institutions.


    ED and Congress should modify the regulations and laws to provide for the following:

    • All programs should be reviewed for eligibility for the purpose of this provision, based on the nature of the degree. Programs that are at the associate, bachelors, or graduate level should be exempt from the requirement that the program lead to a specific occupation.
    • Programs that do not lead to an associate, bachelors, or graduate degree could be eligible if they meet the following criteria:
      1. The credits are fully acceptable towards an associate, bachelors program, or graduate degree and the program meets the minimum program lengths described below OR
      2. The program leads to a recognized occupation and meets the following minimums:
        • It is an undergraduate program that provides at least 15 weeks of instruction and 600 clock hours, 16 semester or trimester hours, or 24-quarter hours. The program may admit students without an associate degree or equivalent.
        • It is a graduate/professional program, or admits only students with an associate degree, and provides at least 10 weeks of instruction and 300 clock hours, 8 semester or trimester hours, or 12-quarter hours.
        • It is a program that admits some students who do not have an associate degree or equivalent, and must meet specific qualitative standards (these programs are only eligible for FFEL and Direct Loans). The program provides at least 10 weeks of undergraduate instruction and 300-599 clock hours. The program may admit students without an associate degree or equivalent.


    >The "50% Rule" for Distance Education

    Reference: 34CFR 600.7, 34CFR 600.2, GEN 98-10

    Statutory Authority: HEA Sec. 102, HEA Sec. 484 Explanation and Rationale for Changes:

    The University previously responded to Congress in support of HR 1992. We supported that proposed legislation, which provided for an appropriate, balanced approach toward modification of the 50% rule. We continue to fully support the language in HR 12 pertaining to the 50% rule with only one added suggestion. We believe that the 50% rule was prompted originally at least in part by the program integrity concerns that could arise if purely virtual higher education institutions enjoyed unfettered access to the very crucial federal student aid programs. For example, because the operation of a 100% virtual University does not entail the same level of long-term investment in facilities, human resources or student services, concerns with respect to long-term stability, academic quality, and financial and administrative capability were factors of concern when the law was first enacted.

    Therefore, the University respectfully proposes that HR 12 be amended to state that even if an institution were to meet the waiver thresholds described in HR 12 (i.e. an institution had three consecutive years of cohort default rates under 10%, and are currently eligible to participate in the Title IV Programs), the institution in question must have offered and taught for at least two years -- and must continue to offer and teach -- some portion of its programs in an on-ground instructional setting. This approach would allow an institution to seek authorization from the Secretary to expand its distance education offerings without concerns regarding Title IV institutional eligibility, yet would still require that the institution maintain an on-ground structure to provide appropriate student services. This approach would also allow the institution to maintain the core academic structure that provides for quality academics and student support. We believe this proposal provides for added flexibility in the area of distance education, while providing for reasonable safeguards to the federal programs.


    Proceed with the HR 12 proposal authorizing the Secretary to grant exceptions to the 50% rule thresholds, provided that such exceptions may be granted only if 1) the subject institution meets each of the conditions, and follows the procedures, that were proposed and set forth in subsections 2(a) and 2(b) of HR12; and 2) the subject institution has, during the two years predating any notice seeking an exception, offered and provided (and will continue to provide) one or more programs of study utilizing a delivery modality that includes as a component classroom-based, face-to-face instruction.

    >ED's Distance Education Demonstration Project (DEDP)

    Statutory Authority: HEA Sec. 486

    Explanation and Rationale for Changes:

    Congress previously provided certain regulatory waivers for institutions to use in their participation in the ED "Distance Education Demonstration Project". ED and the institutions that are participating in this project have been attempting to share their learning and experiences in the offering and administration of distance education programs. The primary waivers that were granted to these institutions were the "12 Hour Rule" and the "50 % Rule". ED has been working collaboratively with the institutions to understand the impacts of these waivers to the institution and the programs. As a participant in the DEDP, the University of Phoenix has been pleased with the positive interaction and knowledge sharing clearly evidenced in the process. ED has been able to closely study the challenges and barriers of administering aid and quality education in non-traditional formats. We believe, that as a result of this positive work, ED has succeeded in the goals of the project, and has already demonstrated the success of the project by eliminating or clarifying rules that were unnecessary barriers, like the "12 Hour Rule".

    We believe that ED has fulfilled its mission in the administration of this project. Therefore, we respectfully recommend that Congress retire this project.


    Retire the DEDP project.

    >Title IV Eligibility for Telecommunication Programs

    Reference: 34CFR 668.38

    Statutory Authority: HEA Sec. 484

    Explanation and Rationale for Changes:

    Current law and regulation prohibit students from receiving aid if they are enrolled via telecommunication in short-term programs (programs that are less than an academic year in length). We believe that these programs should not be excluded from eligibility simply based on the manner in which the program is delivered. As these programs and student are otherwise eligible for aid, we suggest that this rule be eliminated to expand access to students.


    We suggest that this rule be eliminated for students enrolled in technology-mediated programs that are less than an academic year in length.

    >Payment Period Definition

    Reference: 34 CFR 668.4, 682.604, 685.301, 690.75, 676.16, 674.16

    Statutory Authority: HEA Sec. 484(b)(3)(B), HEA Sec. 455(j)(2)

    Explanation and Rationale for Changes:

    ED has recently promulgated new rules that provide guidance on payment periods for non-term institutions. However, the University believes that ED needs to review the definitions of a payment period found in the program specific provisions as they vary from the master definition found in the general provisions and the concept provided in the law. In the HEA, it is specified that the payment periods created by the Secretary for use in the awarding of loans be consistent with the payment of the federal Pell Grant program funds. However, the program specific provisions have conflicting definitions regarding 1) payment period length, 2) academic year (and loan period) midpoints, 3) academic year (and loan period) length for non-term programs. This creates significant burdens and compliance issues with other provisions such as the Return of Title IV Funds (ROTIV).

    A. Payment Period Definition vs. the FFELP Payment Period/Loan Period Mid-Point

    The new payment period rules have added the requirement that a Pell payment period midpoint be based on completed weeks of instruction, however, the midpoint used for the FFELP programs is the greater of one half of the loan period credits or one half of the loan period as measured in calendar time. The loan period for FFELP, due to the 12-month rule for the maximum length of a loan period, often does not coincide with the academic year and payment period definitions found in 668.4. For non-term programs there may be cases where an academic year extends beyond a calendar year; however, a school may not certify a FFELP loan for over a 12-month period. Therefore, the midpoint of the FFELP loan period may not be the same as the midpoint of the academic year (which is the payment period used for ROTIV).

    Further issues are created in the process for students who drop and re-enter a non-term program. As non-term students cannot receive aid until they complete an academic year, and borrower-based academic years (BBAY) must start at the beginning of the students program and extend until the minimum academic year credits and weeks are completed, an academic year could extend over several calendar years, and multiple award years. However, a FFELP loan could only be certified through a 12-month period. This would again create a case where the FFELP payment and the other program payments would not coincide.

    Additionally, ED has required that students who return within 180 days of their withdrawal should be considered to have maintained eligibility for funds as if they had not withdrawn. While we agree that students who rapidly re-enter should not be penalized, we believe that this provision will further divide the FFELP loan period from the Academic Year dates unless the FFELP 12 month rule is addressed.

    For example:

    • A student starts courses on 2-1-02. The student's Academic Year (due to an LOA) will not end until 5-1-03. However, due to the loan 12-month rule, the loan period will end on 1-31-03. Therefore, the loan 2nd disbursement would be made on 8-1-02 (approximate midpoint of the loan period based on calendar time), but the Pell 2nd disbursement would not be eligible for disbursement until one half of the weeks of instruction in the academic year had passed.

    This creates issues where the mid-point for disbursements used for some programs is markedly different than for others.


    Modify the FFELP provisions to allow for loan certification in excess of 12 months, and thus allow the certification to correspond exactly with the academic year. As this certification may include prior periods of non-attendance, the institution would exclude costs from the cost of attendance for the periods of non-attendance. The FFELP payment period could then be clarified as the later of one half of an academic year as measured by credits or one half the academic year as measured in instructional time, to better coincide with other programs such as Pell.

    B. Payment Period Definition vs. the ROTIV Rules Regarding Payment Period of Completion

    The differences relating to program specific payment periods described previously create significant issues with other provisions such as the Return of Title IV Funds (ROTIV), which is based on the completion of one half of an academic year, as measured in calendar time, not instructional time. In the scenario above, the loan period is 12 months, and the academic year is 15 months, you would disburse the loan funds to cover 6 months of calendar time (one half of the loan period) but you must measure percentage of completion for the Return of Title IV funds based on the payment period of one half of the academic year (in calendar time), which would be 7.5 months. And, as noted above, the midpoint for Pell may in turn be different than either the ROTIV midpoint or the FFELP midpoint as the measurement used is weeks of instruction.


    Modify the overall program provisions to provide for consistency in academic year/payment period definitions. By doing this, the ROTIV process completion measurement in calendar time would be consistent across programs.

    C. Payment Period Definition vs. Pell Payment Period and Mid-point

    In order to better align the processing of all the federal programs for non-term programs and students, the University seeks to propose modifications to the Pell payment period and formula IV process as follows:


    • Modify the Pell grant and campus based provisions to clarify that the student is to be certified for a full academic year (not individual payment periods), to correspond with the proposed modified FFELP provisions.
    • Remove the Pell requirement that all payment periods within the academic year be "equal" in length (for non-term programs). The definition contained in the law and general provisions should be used instead (that the payment period is a minimum of one half of an academic year as measured by credits). This would provide for programs where the credit distribution in an academic year (for individual students within the program or across programs) is not equal and would allow the Pell and FFELP payment period definitions to be synchronized.
    • As a result of the above noted modification, Pell Formula 4 would need to be clarified that in the case where there is an unequal credit split (i.e. a 27 credit academic year that splits at 15/12, or similar splits other than a straight one half, based on the student's individual program and course calendar), or the student requires more credits than the academic year definition (i.e. due to the student's calendar for their program, for a given year, the student will complete 28 credits instead of the minimum 27 credits). The clarification should address both of the following scenarios: (A) students enrolled for a full academic year in programs equal to or greater than one academic year in length , including cross-over payments and students with less than a full academic year remaining ; and (B) students enrolled in programs less than an academic year in length .

    D. Payment Periods for Students Who Drop and Re-enter After 180 Days, Change Programs, or Transfer Between Institutions

    1. ED Should Clarify How to Handle Overlapping Loan Periods and Academic Years

    ED has instituted regulations that seek to clarify and/or amend how to address with issues dealing with students who re-enter after 180 days, or who transfer between institutions. Our understanding of these rules is that students who transfer between institutions, or change programs within an institution, would have their payment period and academic year "re-started" based on the date of their entry into the new program or school, regardless of any breaks in attendance. We understand that this means that the student does not have to complete the credits for which they were previously paid and for which a Return of Title IV was presumably calculated. However, we believe ED should specifically clarify this. Assuming students do not have to complete the credits previously paid, we believe ED should clarify its longstanding guidance regarding overlapping loan periods and academic years.

    We believe it is ED's intent with this new guidance to allow transfer students and students who change programs to re-start their academic year and thus renew their eligibility for loans (and grants). Thus, we believe that ED should clarify when and how institutions should adjust for overlapping loan periods and academic years. Similarly, for the Pell grant program, ED will need to modify its guidance that currently indicates that students who withdraw and re-enter in the same or subsequent award year must complete prior credits paid; however students who return after two years would not need to complete previously paid credits (ED SFA Handbook, 2001-02, pp. 3-84 and 3-85). We believe that the new 180-day rule should replace this "two year" rule. We believe this approach is appropriate as students who have withdrawn, at any point, would have had a ROTIV funds processed which would have assessed what funds had been earned for the period of time the student was enrolled.

    Additionally, as ED intends that non-term programs re-start the student's academic year as well as accounting for funds previously received for a loan period or academic year that overlaps with a prior period, we believe that students will be negatively impacted by these proposed rules. Under current ED rules, a non-term student must have their loan period certified to correspond with their academic year (with the exception of times where the academic year extends beyond a year, and the loan period ends at 12 months, as previously discussed), and non-term programs cannot certify loans for a period less than an academic year. For non-term programs, students cannot have a new loan until they complete a full academic year.

    Under the new rules, if a student starts their academic year, and drops for over 180 days, or they transfer programs at any time, the student's academic year would start over. Yet, in almost all cases, the new start date would overlap with the previously certified academic year (and possibly their prior loan period). Thus, even though the student completed credits previously paid, the student will need to fully complete a new academic year, and can only receive the difference between the new loan limit less funds received. Additionally, currently students who graduate and progress to a new program (i.e. advance from an undergraduate program to a graduate program) are affected by the same funding limitations discussed above. For example:

    • Current Scenario with a BBAY and a withdrawal

      Student starts courses 9-1-02, BBAY is for 9-1-02 to 7-5-03 for 24 credits. Student is a grade level 3, and is eligible for $10, 500. Student is paid for their 1st payment period of 12 credits, but withdraws on 11-15-02 after completing 6 credits. Return of Title IV is done and a return is made to the federal programs, therefore the actual funds received were $2,500.

      Student returns to school on 6-1-03. The University would still consider the academic year to have started on 9-1-02, but the end date would be extended down until the student would complete the 24 credits (and weeks of instruction). In this scenario, the student could receive a remaining amount of $8,000 to cover the remaining credits of 18 (24 less the 6 previously completed prior to the withdrawal) in the academic year. Thus, they would have been paid a total of $10,500 for 24 credits.

    • Scenario Under the New Rules and a Withdrawal over 180 days

      Using the above scenario, when the student re-enters on 6-1-03, the student would still have an overlapping loan period, and academic year. The University would be required to start the new academic year on 6-1-03, but must certify for another full academic year through 5-31-04 for another 24 credits. The student would be paid the remaining $8,000, but due to the overlapping loan period and academic year the student could not receive a new loan in entirety until after 5-31-04. Thus, the student would receive a total of $10,500 to cover 30 credits, not 24 (as provided under current guidance).


    The above withdrawal scenario is similar to what occurs currently when students transfer from term based schools to non-term schools. For example:

    • Transfer Student Scenario

      Student starts courses 9-1-02 at school A. School A is a term based school, and certifies the student for a fall-spring 02/03 loan of $10,500. The student withdraws at the end of the fall semester after receiving $5,250. The student transfers to school B (a non-term school). The student starts on 2-1-03 therefore the student is certified with a BBAY of 2-1-03 to 1-31-04. However, due to the overlapping loan period and academic year with the prior school, the maximum the student could receive is $5,250 at school B for the entire academic year. However, had the student started with another term based school in the spring semester, the student could have received the remaining $5,250, and then in the following fall, the student could be re-certified for a new loan in entirety.


    Clarify that non-term students can receive additional funding in their academic year subsequent to the end date of the overlapping loan period or academic year as follows: Using the transfer scenario above, the student should be allowed to receive the $5,250 loan amount immediately as described above, and subsequent to the end date of the loan period or academic year at school A (approximately 5-03), non-term school B could award the student additional funds of $5,250. This would allow the student to be fully funded for the student's academic year, similar to what would have occurred had the student transferred into a term based program. The above methodology should also apply to students whose academic years were re-started due to a withdrawal over 180 days, or due to a change of program.

    >Frequency of Annual Loan Limits

    Reference: Sub-Regulatory, SFA Handbook FFEL; Academic Year and Additional Eligibility in the Same Academic Year, Dear Colleague/Guaranty Agency Letter Dated March 16, 1994:

    Explanation and Rationale for Changes:

    Currently, a student may not advance a grade level within an academic year for non-term programs, but they can in a term-based program. We believe that this creates inequity in the programs for students and schools. Students attending non-term programs should be given credit during their academic year for their advancement and should be allowed to borrow additional funds up the to the new loan limit (less funds already received for the academic year).

    Further, under the new 180 day rules, as the academic year was re-started, it would appear that the student could not advance until they have completed a new academic year, plus the credits previously completed (in essence, as the academic year was re-started, the student would not be credited for completing the prior credits in the original academic year), thus further creating a funding disparity between non-term and term based programs.


    • ED should remove the requirement that non-term students cannot progress a grade level in an academic year. Non-term students should be allowed to borrow any remaining funds up to their new grade level loan limit in an academic year, less any funds already received for the academic year. If Congress were to adopt NASFAA's proposal, this recommended change would no longer be needed. If Congress were to adopt the University's proposal regarding the increased annual loan limits, this matter would only relate to an increase in subsidized funding. If the annual loan limits are not adjusted at all, and thus remain at their current levels, this issue remains a significant one, as there is a significant difference in fund amounts between grade levels.
    • In order to resolve the issues previously discussed that are affecting students at non-term schools, the University proposes that non-term schools should be allowed to advance grade levels within an academic year, similar to term based schools. As described under the over 180 day withdrawal scenario, students in non-term programs would need to complete more than an academic years worth of credits due to the regulatory guidance that prohibits non-term programs from advancing grade levels with an academic year, and until an academic year is completed. We believe the regulatory guidance should be modified to allow for a non-term student to advance based on credits earned prior to a re-started academic year (in the case of program changes or withdrawals over 180 days), and based on credits earned during a payment period in an academic year as follows:
      • Using the 180-day withdrawal scenario described in Section D of this response, when the University re-starts the students academic year, the University would re-assess the students grade level based on the students transfer credits, and the credits completed prior to the re-started academic year.
      • Under any scenario (regular academic year, transfer student, withdrawals, program changes etc.), the University should be allowed to reassess the student at the start of their second payment period to account for changes in grade level related to the prior payment period's completed credits. This is consistent with a term-based school's ability to reassess grade level for a spring semester, based on the fall semester's completed credits.

    > Return of Title IV Funds

    Reference: 34CFR 668.22

    Statutory Authority: HEA Sec. 484B

    Explanation and Rationale for Changes:

    The current "Return of Funds" regulations are unduly harsh on high-risk, low-income students and are unnecessarily complex for schools to administer. Students are given funds in advance to pay for costs including living costs. For universities that do not charge for a full program, and may, in fact, only charge course by course, in order to hold funds for a payment period the student must authorize the withholding. If the student later withdraws, and the University has already given the funds to the student to manage the University is responsible for returning funds that were not retained. The student is then forced to manage two debts on unequal terms. Further, the student may have no reasonable means to pay his or her debt to the school given that he or she sought and qualified for federal aid for that purpose.

    Additionally, students attending schools with rolling enrollments are often attending such schools due to the need for flexibility. These students often cease enrollment and re-enter rapidly and frequently. Currently the University is processing a refund at the same time that the institution has determined that the student has re-entered and needs financial aid. Therefore, the refund process needs to be rushed at the school and at the lender/holder in order for the University to re-certify the student for the funds that were just returned.

    Further, the laws and regulations do not fully comprehend the impact of calculating returns for a minimum of a "payment period". Specifically, for non-term programs where students are taking courses sequentially, not concurrently, the University must calculate percentages earned based on a payment period basis, not a course-by-course basis. This results in cases where the student has fully completed several courses, but may not have met the 60% threshold of the payment period. Therefore funds must be returned for courses the student fully completed. The formula should be modified to allow for cases where funds are fully earned for coursework completed.

    ED has clarified via preamble language to the Final Rules dated 11/1/2002 that for students who withdraw from all courses, but later return during the period that the institution is required to return funds, the school would not be required to make a refund (return of funds). This is similar to regulatory relief provided to certain standard term based programs. We believe that this change should be reflected in the actual regulations and statutes for clarity.


    • Modify the law and regulations such that institutions are not required to return funds that they did not retain.
    • Memorialize in law and regulations that students who interrupt their program, but later return during the period that the institution is required to return funds, would not have a return of Title IV funds processed. The school would not be required to make a refund (return of funds) or notify lenders via the SSCR process. Any existing funds could continue to be used for the student's education for the remainder of their academic year. This recommendation is similar to regulatory relief provided to certain standard term based programs, and could be extended and clarified as described above for non-term programs.
    • Modify the law and regulations such that institutions are not required to return funds for courses that the student successfully completed. This could be accomplished by using the existing formulas, but then subtracting from the final refund amount due from the school, any funds required to cover outstanding tuition and resource/materials charges for completed courses.
    • Modify the grant overpayment provisions (50% protection allowance) such that the protected amount would be 50% of the total award amount. Therefore, the protected amount would then be subtracted from the final refund amount due from the student.


    > Leaves of Absence

    Reference: 34 CFR Sec. 668.22

    Statutory Authority: HEA Sec. 484B(a)(2)

    Explanation and Rationale for Changes:

    Currently, in order for a leave of absence to be considered approved, the regulations require that the student file the leave of absence in advance of the leave (on or before their last date of attendance). ED allows that if the leave was due to unforeseen circumstances the University may allow the student to file the leave subsequent to the begin date of the leave. We believe that ED should clarify that for non-term programs, where students are enrolled in consecutive coursework, if the student files the leave between courses, this would be acceptable without further documentation. For example, if the student completed a course on 7/1/03, and was originally scheduled to start their next course on 7/15/03, it would be acceptable for the student to file their leave request by 7/14/03 without additional documentation of unforeseen circumstances.


    ED should clarify that for non-term programs where students are enrolled in consecutive coursework, a student may file for a leave between courses without further documentation of unforeseen circumstances.

    >Experimental Sites

    Reference: HEA Sec. 487 (A)

    Explanation and Rationale for Changes:

    ED has not utilized these programs to their full extent and has unnecessarily limited school participation in these programs.


    • Require ED to 1) conduct an analysis of the effectiveness of these programs that would result in the regulatory and statutory adoption of the successful experiments for all institutions participating in the federal programs and 2) reconsider the experiments that are not meeting expectations.
    • Develop initiatives that will expand school participation, provide for a broader base of schools participating in each experiment, and further reduce regulatory burden.

    * ED Topic: Are there innovative and creative ways the Federal Government can integrate tax credits, deductions, and tax-free savings incentives with the Federal student aid programs in the HEA to improve access to and choice in postsecondary education?

    >General Response:

    We strongly believe that the role of the Federal Government with respect to Internal Revenue Service tax credits and incentives is appropriate prior to college enrollment with tax-free savings incentives and after college enrollment with tax deductions of student loan interest paid. However, while the student is enrolled in college, we should not supplement nor supplant the current federal student aid programs but rather increase the expenditures in Title IV programs. Simplification and cost savings can be achieved by utilizing the existing infrastructure of the federal student aid programs. While the Hope and Lifelong Learning tax credits are commendable, they do not meet the needs of students when the college costs are incurred and the tax credit reporting places an expensive administrative burden on institutions of higher education. The savings from eliminating these tax credits would be better invested by the Federal Government by making the Pell Grant program an entitlement or to offset increased loan limits.

    The HEA could also improve access by increasing funding opportunities for full time students. Most states are faced with budget constraints that limit their ability to subsidize in state tuition for students. Similarly, most private institutions that could absorb excess capacity are facing dwindling endowments and decreased alumni giving due to difficult economic times. By increasing funding for loans, more students could take advantage of opportunities provided by higher education.

    Another vehicle for improving access is to increase tax credits to employers who offer employees tuition assistance programs for those who want to attend institutions of higher education while working.

    * ED Topic: What results should be measured in each HEA program to determine the effectiveness of that program?

    >General Response:

    We believe that in order to determine effectiveness, we must first determine the objective of the HEA programs. For example, if the sole objective of the HEA program is to provide access to higher education experiences, then one could measure the increasing percentages of students entering into higher education. However, if the primary goal were to insure that all students who enter complete a certain portion, or all of a given program, then the measurement would be focused on persistence and graduation. We believe that the objectives of the HEA programs are both 1) access to educational experiences that may improve the quality of life for the individual as well as the quality of our workforce, and 2) to provide educational services and funds sufficient for students to complete a degree if that is the students educational goal. As differing institutions serve differing student bodies with different areas of focus, we believe that ED should look to the accrediting agencies to evaluate the institutions mission and student body and to insure that the institutions services are meeting the needs of the student population.

    We believe that the job of evaluating an institutions programs and services in the context of the institution's mission should be within the province of regional, programmatic and national accreditors, as reviewed by NACIQI. The Department of Education, through recommendations made by NACIQI, currently reviews accreditors as they evaluate program and institutional effectiveness, including outcomes assessment, student grievance management, etc. Based on the mission and objectives of the individual institution, the accrediting agency is responsible for reviewing (and balancing) indicators such as:

    • funds awarded
    • documentation of partnerships, articulations
    • documentation of alternative access paths (delivery format)
    • number of students participating, entering or graduating
    • persistence rates
    • default rates
    • student demographics as relevant.

    We believe that the accrediting agency is best able to insure that the institution is delivering quality education that fulfills the needs of the student body, thus insuring that the HEA program funds are being used appropriately and effectively by the individual institution.

    * ED Topic: Are there other ideas or initiatives that should be considered during reauthorization that would improve the framework in which the Federal Government promotes access to postsecondary education and ensures accountability of taxpayer funds?

    >Loan Consolidation

    The intent of loan consolidation was to allow students with multiple loan holders to "collapse" their loan repayment into one single monthly payment to reduce "technical" loan defaults. Under the current statute, we are mortgaging future investments to Title IV programs by offering a refinancing vehicle for students that have already completed their educational objectives, regardless of their current financial condition. Loan consolidation should be limited only to students in financial duress. Indeed, it would be altruistic to allow a refinancing option for all previous aid recipients, but not at the cost of restricted access to future students in need of higher education financing options.

    >Accountability for Content Area Knowledge by Institutions Offering Post Baccalaureate Teacher Education Preparation

    Reference: HEA Title II, Sections 207 and 208

    Explanation and Rationale for Changes:

    HEA Title II requires institutions that prepare teachers to be held accountable for the tests scores of their program graduates. One of the tests these students take is a content knowledge exam that verifies they have the basic content knowledge required by the state to earn certification. The University of Phoenix provides graduate level programs for individuals seeking their initial teaching certification and candidates enter the program having completed their undergraduate degree program at another institution. Because these candidates have completed their content knowledge courses in their undergraduate degree program, we have no control over the information they obtain. However, we are held accountable for it under HEA Title II and these scores figure into the institution's aggregate scores and state rankings. Institutions that only offer post baccalaureate teacher education programs are being held accountable for information they did not provide to their students and can be negatively impacted by the teaching, or lack thereof, by another institution.

    As an institution, the University of Phoenix has required candidates to pass content area exams for many years. This provides a gauge of a student's knowledge prior to entering their field experience and ensures that they have the skills necessary to be successful in the classroom. However, there are critics that argue that requiring tests as part of program completion is 'cheating'. From an institutional perspective, this is good practice.


    Eliminate the measurement of content area knowledge/test scores for post baccalaureate programs and program completers from these programs.

    >Use of HEA Title II Data for Comparison Against Other States, Institutions, and in the Program Approval Process:

    Reference: HEA Title II, Sections 207 and 208:

    Explanation and Rationale for Changes:

    HEA Title II states that institutions and states will not be compared but in reading many of the articles and reports that have recently been published (ex. Teacher Quality Matters) there are several instances where comparisons are hinted at or suggested. It is impossible to use this data on a broad scale. Every state has different reporting requirements, requires different exams, and some don't even require teacher testing. For those states that require the same exam, i.e. Praxis series, each state has their own cut scores. This information cannot be applied globally because there is not an even bar to be judged against.

    In addition, as one of the few institutions that have teacher education programs in multiple states, the University is required to provide data for HEA Title II for multiple locations. Recently, the data for all states for the last academic year was reviewed as part of the program approval process in a state where the University does not currently offer teacher education programs. Subsequently, we were required to justify differing scores among states. It would seem that this was not the intended purpose of HEA Title II data.


    Ensure that data not be used for comparison among states and eliminate the use of HEA Title II data from other states as a measure for program approval.


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    Last Modified: 02/20/2009