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					                                                                                                                                         Friday,
                                                                                                                                         June 18, 2010




                                                                                                                                         Part II

                                                                                                                                         Department of
                                                                                                                                         Education
                                                                                                                                         34 CFR Parts 600, 602, et al.
                                                                                                                                         Program Integrity Issues; Proposed Rule
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                                                   34806                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   DEPARTMENT OF EDUCATION                                 on the Federal eRulemaking Portal at http://           (202) 502–7762, or via the Internet at:
                                                                                                           www.regulations.gov. Therefore, commenters             John.Kolotos@ed.gov.
                                                   34 CFR Parts 600, 602, 603, 668, 682,                   should be careful to include in their                     If you use a telecommunications
                                                   685, 686, 690, and 691                                  comments only information that they wish to            device for the deaf (TDD), call the
                                                                                                           make publicly available on the Internet.
                                                   [Docket ID ED–2010–OPE–0004]                                                                                   Federal Relay Service (FRS), toll free, at
                                                                                                           FOR FURTHER INFORMATION CONTACT:      For              1–800–877–8339.
                                                   RIN 1840–AD02                                           information related to gainful                            Individuals with disabilities can
                                                                                                           employment in a recognized                             obtain this document in an accessible
                                                   Program Integrity Issues                                occupation, John Kolotos. Telephone:                   format (e.g., braille, large print,
                                                   AGENCY: Office of Postsecondary                         (202) 502–7762 or via the Internet at:                 audiotape, or computer diskette) on
                                                   Education, Department of Education.                     John.Kolotos@ed.gov.                                   request to one of the contact persons
                                                   ACTION: Notice of proposed rulemaking.                    For information related to the                       listed under FOR FURTHER INFORMATION
                                                                                                           provisions related to the definition of                CONTACT.
                                                   SUMMARY:    The Secretary proposes to                   credit hour, Marianna Deeken or Fred
                                                                                                                                                                  SUPPLEMENTARY INFORMATION:
                                                   improve integrity in the programs                       Sellers. Telephone: (206) 615–2583 or
                                                   authorized under title IV of the Higher                 via the Internet at                                    Invitation To Comment
                                                   Education Act of 1965, as amended                       Marianna.Deeken@ed.gov. Telephone:                        As outlined in the section of this
                                                   (HEA) by amending the regulations for                   (202) 502–7502 or via the Internet at:                 notice entitled Negotiated Rulemaking,
                                                   Institutional Eligibility Under the HEA,                Fred.Sellers@ed.gov.                                   significant public participation, through
                                                   the Secretary’s Recognition of                            For information related to provisions                a series of three regional hearings and
                                                   Accrediting Agencies, the Secretary’s                   on State authorization, Fred Sellers.                  three negotiated rulemaking sessions,
                                                   Recognition Procedures for State                        Telephone: (202) 502–7502 or via the                   has occurred in developing this notice
                                                   Agencies, the Student Assistance                        Internet at: Fred.Sellers@ed.gov.                      of proposed rulemaking (NPRM). In
                                                   General Provisions, the Federal Family                    For information related to the
                                                                                                                                                                  accordance with the requirements of the
                                                   Education Loan (FFEL) Program, the                      provisions on retaking coursework,
                                                                                                                                                                  Administrative Procedure Act, the
                                                   William D. Ford Federal Direct Loan                     Vanessa Freeman. Telephone: (202)
                                                                                                                                                                  Department invites you to submit
                                                   Program, the Teacher Education                          502–7523 or via the Internet at:
                                                                                                                                                                  comments regarding these proposed
                                                   Assistance for College and Higher                       Vanessa.Freeman@ed.gov.
                                                                                                             For information related to the                       regulations on or before August 2, 2010.
                                                   Education (TEACH) Grant Program, the                                                                           To ensure that your comments have
                                                   Federal Pell Grant Program, and the                     provisions for written agreements
                                                                                                           between institutions, Carney                           maximum effect in developing the final
                                                   Academic Competitiveness Grant (AGC)                                                                           regulations, we urge you to identify
                                                   and National Science and Mathematics                    McCullough. Telephone: (202) 502–
                                                                                                           7639 or via the Internet at:                           clearly the specific section or sections of
                                                   Access to Retain Talent Grant (National                                                                        the proposed regulations that each of
                                                   Smart Grant) Programs.                                  Carney.McCullough@ed.gov.
                                                                                                             For information on the provisions                    your comments addresses and to arrange
                                                   DATES: We must receive your comments                                                                           your comments in the same order as the
                                                                                                           related to incentive compensation,
                                                   on or before August 2, 2010.                                                                                   proposed regulations.
                                                                                                           Marty Guthrie. Telephone: (202) 219–
                                                   ADDRESSES: Submit your comments                         7031 or via the Internet at:                              We invite you to assist us in
                                                   through the Federal eRulemaking Portal                  Marty.Guthrie@ed.gov.                                  complying with the specific
                                                   or via postal mail, commercial delivery,                  For information related to the                       requirements of Executive Order 12866
                                                   or hand delivery. We will not accept                    provisions on ability to benefit, Dan                  and its overall requirement of reducing
                                                   comments by fax or by e-mail. Please                    Klock. Telephone: (202) 377–4026 or via                regulatory burden that might result from
                                                   submit your comments only one time, in                  the Internet at Dan.Klock@ed.gov.                      these proposed regulations. Please let us
                                                   order to ensure that we do not receive                    For information related to the                       know of any further opportunities we
                                                   duplicate copies. In addition, please                   provisions on misrepresentation,                       should take to reduce potential costs or
                                                   include the Docket ID at the top of your                Vanessa Freeman. Telephone: (202)                      increase potential benefits while
                                                   comments.                                               502–7523 or via the Internet at:                       preserving the effective and efficient
                                                     • Federal eRulemaking Portal. Go to                   Vanessa.Freeman@ed.gov.                                administration of the programs.
                                                   http://www.regulations.gov to submit                      For information related to the                          During and after the comment period,
                                                   your comments electronically.                           provisions on satisfactory academic                    you may inspect all public comments
                                                   Information on using Regulations.gov,                   progress, Marianna Deeken. Telephone:                  about these proposed regulations by
                                                   including instructions for accessing                    (206) 615–2583 or via the Internet at:                 accessing Regulations.gov. You may also
                                                   agency documents, submitting                            Marianna.Deeken@ed.gov.                                inspect the comments, in person, in
                                                   comments, and viewing the docket, is                      For information related to the                       room 8031, 1990 K Street, NW.,
                                                   available on the site under ‘‘How To Use                provisions on high school diplomas and                 Washington, DC, between the hours of
                                                   This Site.’’                                            verification of information on the Free                8:30 a.m. and 4:00 p.m., Eastern time,
                                                     • Postal Mail, Commercial Delivery,                   Application for Federal Student Aid                    Monday through Friday of each week
                                                   or Hand Delivery. If you mail or deliver                (FAFSA), Jacquelyn Butler. Telephone:                  except Federal holidays.
                                                   your comments about these proposed                      (202) 502–7890, or via the Internet at:
                                                   regulations, address them to Jessica                                                                           Assistance to Individuals With
                                                                                                           Jacquelyn.Butler@ed.gov.
                                                                                                                                                                  Disabilities in Reviewing the
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                                                   Finkel, U.S. Department of Education,                     For information related to the return
                                                   1990 K Street, NW., room 8031,                                                                                 Rulemaking Record
                                                                                                           of title IV, HEA funds calculation
                                                   Washington, DC 20006–8502.                              provisions for term-based modules or                     On request, we will supply an
                                                                                                           taking attendance, Jessica Finkel.                     appropriate aid, such as a reader or
                                                     Privacy Note: The Department’s policy for
                                                   comments received from members of the                   Telephone: (202) 502–7647, or via the                  print magnifier, to an individual with a
                                                   public (including those comments submitted              Internet at: Jessica.Finkel@ed.gov.                    disability who needs assistance to
                                                   by mail, commercial delivery, or hand                     For information related to the                       review the comments or other
                                                   delivery) is to make these submissions                  provisions on timeliness and method of                 documents in the public rulemaking
                                                   available for public viewing in their entirety          disbursement, John Kolotos. Telephone:                 record for these proposed regulations. If


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                         34807

                                                   you want to schedule an appointment                        • June 15, 2009 at Community                           David Hawkins, National Association
                                                   for this type of aid, please contact one                College of Denver in Denver, CO.                       for College Admission Counseling, and
                                                   of the persons listed under FOR FURTHER                    • June 18, 2009 at University of                    Amanda Modar (alternate), National
                                                   INFORMATION CONTACT.                                    Arkansas in Little Rock, AR.                           Association for College Admission
                                                                                                              • June 22, 2009 at Community                        Counseling, representing admissions
                                                   Negotiated Rulemaking                                   College of Philadelphia in Philadelphia,               officers.
                                                      Section 492 of the HEA requires the                  PA.                                                       Susan Williams, Bridgeport
                                                   Secretary, before publishing any                           In addition, the Department accepted                University, and Anne Gross (alternate),
                                                   proposed regulations for programs                       written comments on possible                           National Association of College and
                                                   authorized by title IV of the HEA, to                   regulatory provisions submitted directly               University Business Officers,
                                                   obtain public involvement in the                        to the Department by interested parties                representing business officers.
                                                   development of the proposed                             and organizations. A summary of all                       Val Meyers, Michigan State
                                                   regulations. After obtaining advice and                 comments received orally and in writing                University, and Joan Berkes (alternate),
                                                   recommendations from the public,                        is posted as background material in the                National Association of Student
                                                   including individuals and                               docket for this NPRM. Transcripts of the               Financial Aid Administrators,
                                                   representatives of groups involved in                   regional meetings can be accessed at                   representing financial aid
                                                   the Federal student financial assistance                http://www2.ed.gov/policy/highered/                    administrators.
                                                   programs, the Secretary must subject the                reg/hearulemaking/2009/negreg-                            Barbara Brittingham, Commission on
                                                   proposed regulations to a negotiated                    summerfall.html#ph.                                    Institutions of Higher Education of the
                                                   rulemaking process. All proposed                           Staff within the Department also                    New England Association of Schools
                                                   regulations that the Department                         identified issues for discussion and                   and Colleges, Sharon Tanner (1st
                                                   publishes on which the negotiators                      negotiation.                                           alternate), National League for Nursing
                                                   reached consensus must conform to                          At its first meeting, Team I reached                Accreditation Commission, and Ralph
                                                   final agreements resulting from that                    agreement on its protocols. These                      Wolf (2nd alternate), Western
                                                   process unless the Secretary reopens the                protocols provided that for each                       Association of Schools and Colleges,
                                                   process or provides a written                           community identified as having                         representing regional/programmatic
                                                   explanation to the participants stating                 interests that were significantly affected             accreditors.
                                                   why the Secretary has decided to depart                 by the subject matter of the negotiations,                Anthony Mirando, Nation Accrediting
                                                   from the agreements. Further                            the non-Federal negotiators would                      Commission of Cosmetology Arts and
                                                   information on the negotiated                           represent the organizations listed after               Sciences, and Michale McComis
                                                   rulemaking process can be found at:                     their names in the protocols in the                    (alternate), Accrediting Commission of
                                                   http://www.ed.gov/policy/highered/leg/                  negotiated rulemaking process.                         Career Schools and Colleges,
                                                   hea08/index.html.                                          Team I included the following                       representing national accreditors.
                                                                                                           members:                                                  Jim Simpson, Florida State
                                                      On September 9, 2009, the
                                                                                                              Rich Williams, U.S. PIRG, and Angela                University, and Susan Lehr (alternate),
                                                   Department published a notice in the
                                                                                                           Peoples (alternate), United States                     Florida State University, representing
                                                   Federal Register (74 FR 46399)
                                                                                                           Student Association, representing                      work force development.
                                                   announcing our intent to establish two
                                                                                                           students.                                                 Carol Lindsey, Texas Guaranteed
                                                   negotiated rulemaking committees to                        Margaret Reiter, attorney, and Deanne               Student Loan Corp, and Janet Dodson
                                                   prepare proposed regulations. One                       Loonin (alternate), National Consumer                  (alternate), National Student Loan
                                                   committee would develop proposed                        Law Center, representing consumer                      Program, representing the lending
                                                   regulations governing foreign schools,                  advocacy organizations.                                community.
                                                   including the implementation of the                        Richard Heath, Anne Arundel                            Chris Young, Wonderlic, Inc., and Dr.
                                                   changes made to the HEA by the Higher                   Community College, and Joan Zanders                    David Waldschmidt (alternate),
                                                   Education Opportunity Act of 2008                       (alternate), Northern Virginia                         Wonderlic, Inc., representing test
                                                   (HEOA), Public Law 110–315, that affect                 Community College, representing two-                   publishers.
                                                   foreign schools. The proposed                           year public institutions.                                 Dr. Marshall Hill, Nebraska
                                                   regulations governing foreign schools                      Phil Asbury, University of North                    Coordinating Commission for
                                                   will be published in the Federal                        Carolina, Chapel Hill, and Joe Pettibon                Postsecondary Education, and Dr.
                                                   Register at a future date. A second                     (alternate), Texas A&M University,                     Kathryn Dodge (alternate), New
                                                   committee would develop proposed                        representing four-year public                          Hampshire Postsecondary Education
                                                   regulations to improve integrity in the                 institutions.                                          Commission, representing State higher
                                                   title IV, HEA programs. The notice                         Todd Jones, Association of                          education officials.
                                                   requested nominations of individuals                    Independent Colleges and Universities                     Carney McCullough and Fred Sellers,
                                                   for membership on the committees who                    of Ohio, and Maureen Budetti                           U.S. Department of Education,
                                                   could represent the interests of key                    (alternate), National Association of                   representing the Federal Government.
                                                   stakeholder constituencies on each                      Independent Colleges and Universities,                    These protocols also provided that,
                                                   committee.                                              representing private, non-profit                       unless agreed to otherwise, consensus
                                                      Team I—Program Integrity Issues                      institutions.                                          on all of the amendments in the
                                                   (Team I) met to develop proposed                           Elaine Neely, Kaplan Higher                         proposed regulations had to be achieved
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                                                   regulations during the months of                        Education Corp., and David Rhodes,                     for consensus to be reached on the
                                                   November 2009 through January 2010.                     (alternate), School of Visual Arts,                    entire NPRM. Consensus means that
                                                      The Department developed a list of                   representing private, for-profit                       there must be no dissent by any
                                                   proposed regulatory provisions,                         institutions.                                          member.
                                                   including provisions based on advice                       Terry Hartle, American Council on                      During the meetings, Team I reviewed
                                                   and recommendations submitted by                        Education, and Bob Moran (alternate),                  and discussed drafts of proposed
                                                   individuals and organizations as                        American Association of State Colleges                 regulations. At the final meeting in
                                                   testimony to the Department in a series                 and Universities, representing college                 January 2010, Team I did not reach
                                                   of three public hearings held on:                       presidents.                                            consensus on the proposed regulations


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                                                   34808                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   in this document. With regard to gainful                financial charges, or the employability                   • Allowing interim disbursements
                                                   employment in a recognized                              of its graduates;                                      when changes to an applicant’s FAFSA
                                                   occupation, this document addresses                        • Removing the ‘‘safe harbor’’                      information would not change the
                                                   technical, reporting, and disclosure                    provisions related to incentive                        amount that the student would receive
                                                   issues. The remaining issues under                      compensation for any person or entity                  under a title IV, HEA program;
                                                   consideration that address the extent to                engaged in any student recruitment or                     • Codifying the Department’s IRS
                                                   which certain educational programs                      admission activity, including making                   Data Retrieval System Process, which
                                                   lead to gainful employment and the                      decisions regarding the award of title IV,             allows an applicant to import income
                                                   conditions under which those programs                   HEA program assistance;                                and other data from the IRS into an
                                                   remain eligible for title IV, HEA                          • Clarifying what is required for an                online FAFSA;
                                                   program funds are not included in this                  institution of higher education, a                        • Requiring the processing of all
                                                   NPRM.                                                   proprietary institution of higher                      changes and corrections to an
                                                                                                           education, and a postsecondary                         applicant’s FAFSA information;
                                                   Summary of Proposed Changes                             vocational institution to be considered                   • Modifying the provisions related to
                                                       These proposed regulations would                    legally authorized by the State;                       institutional satisfactory academic
                                                   address program integrity issues by:                       • Defining a credit hour and                        progress policies and the impact these
                                                       • Requiring institutions to develop                 establishing procedures that certain                   policies have on a student’s eligibility
                                                   and follow procedures to evaluate the                   institutional accrediting agencies must                for title IV, HEA program assistance;
                                                   validity of a student’s high school                     have in place to determine whether an                     • Expanding the definition of full-
                                                   diploma if the institution or the                       institution’s assignment of a credit hour              time student to allow, for a term-based
                                                   Secretary has reason to believe that the                is acceptable;                                         program, repeated coursework taken in
                                                   diploma is not valid or was not obtained                   • Modifying provisions to clarify                   the program to count towards a full-time
                                                   from an entity that provides secondary                  whether and when an institution must                   workload;
                                                   school education;                                       award student financial assistance based                  • Clarifying when a student is
                                                       • Expanding eligibility for title IV,               on clock or credit hours and the                       considered to have withdrawn from a
                                                   HEA program assistance to students                      standards for credit-to-clock-hour                     payment period of enrollment for the
                                                   who demonstrate they have the ability                   conversions;                                           purpose of calculating a return of title
                                                   to benefit by satisfactorily completing                    • Modifying the provisions related to               IV, HEA program funds;
                                                   six credits of college work, or the                     written arrangements between two or                       • Clarifying the circumstances under
                                                   equivalent amounts of coursework, that                  more eligible institutions that are owned              which an institution is required to take
                                                   are applicable toward a degree or                       or controlled by the same person or                    attendance for the purpose of
                                                   certificate offered by an institution;                  entity so that the percentage of the                   calculating a return of title IV, HEA
                                                       • Amending and adding definitions                   educational program that may be                        program funds;
                                                   of terms related to ability to benefit                  provided by the institution that does not                 • Modifying the provisions for
                                                   testing, including ‘‘assessment center,’’               grant the degree or certificate under the              disbursing title IV, HEA program funds
                                                   ‘‘independent test administrator,’’                     arrangement may not exceed 50 percent;                 to ensure that certain students can
                                                   ‘‘individual with a disability,’’ ‘‘test,’’                • Prohibiting written arrangements                  obtain or purchase books and supplies
                                                   ‘‘test administrator,’’ and ‘‘test                      between an eligible institution and an                 by the seventh day of a payment period;
                                                   publisher’’;                                            ineligible institution that has had its                   • Updating the definition of the term
                                                       • Consolidating into a single                       certification to participate in title IV,              recognized occupation to reflect current
                                                   regulatory provision the approval                       HEA programs revoked or its                            usage; and
                                                   processes for ability to benefit tests                  application for recertification denied;                   • Establishing requirements for
                                                   developed by test publishers and States;                   • Expanding provisions related to the               institutions to submit information on
                                                       • Establishing requirements under                   information that an institution with a                 program completers for programs that
                                                   which test publishers and States must                   written arrangement must disclose to a                 prepare students for gainful
                                                   provide descriptions of processes for                   student enrolled in a program affected                 employment in recognized occupations.
                                                   identifying and handling test score                     by the arrangement, including, for
                                                   abnormalities, ensuring the integrity of                example, the portion of the educational                Significant Proposed Regulations
                                                   the testing environment, and certifying                 program that the institution that grants                 We group major issues according to
                                                   and decertifying test administrators;                   the degree or certificate is not providing;            subject, with appropriate sections of the
                                                       • Requiring test publishers and States                 • Revising the definition of                        proposed regulations referenced in
                                                   to describe any accommodations                          unsubsidized student financial aid                     parentheses. We discuss other
                                                   available for individuals with                          programs to include TEACH Grants,                      substantive issues under the sections of
                                                   disabilities, as well as the process a test             Federal PLUS Loans, and Direct PLUS                    the proposed regulations to which they
                                                   administrator would use to identify and                 Loans;                                                 pertain. Generally, we do not address
                                                   report to the test publisher instances in                  • Codifying current policy that an                  proposed regulatory provisions that are
                                                   which these accommodations were                         institution must complete verification                 technical or otherwise minor in effect.
                                                   used;                                                   before the institution may exercise its
                                                       • Revising the test approval                        professional judgment authority;                       Part 600 Institutional Eligibility Under
                                                   procedures and criteria for ability to                     • Eliminating the 30 percent                        the Higher Education Act of 1965, as
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                                                   benefit tests, including procedures                     verification cap;                                      Amended
                                                   related to the approval of tests for                       • Retaining the ability of institutions
                                                                                                           to select additional applicants for                    Gainful Employment in a Recognized
                                                   speakers of foreign languages and
                                                                                                           verification;                                          Occupation (§§ 600.2, 600.4, 600.5,
                                                   individuals with disabilities;
                                                       • Revising the definitions and                         • Replacing the five verification items             600.6, 668.6, and 668.8)
                                                   provisions that describe the activities                 for all selected applicants with a                       Statute: Sections 102(b) and (c) of the
                                                   that constitute substantial                             targeted selection from items included                 HEA define, in part, a proprietary
                                                   misrepresentation by an institution of                  in an annual Federal Register notice                   institution and a postsecondary
                                                   the nature of its educational program, its              published by the Secretary;                            vocational institution, respectively, as


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                          34809

                                                   an institution that provides an eligible                http://online.onetcenter.org or its                    graduation and placement rates, job-
                                                   program of training that prepares                       successor site.                                        related information for each of its
                                                   students for gainful employment in a                      Reasons: The definition of recognized                programs, and debt levels of students
                                                   recognized occupation. Section                          occupation in proposed § 600.2 would                   who completed the program during the
                                                   101(b)(1) of the HEA defines an                         simply replace an outdated reference to                past three years. We seek comment on
                                                   institution of higher education, in part,               the Dictionary of Occupational Titles                  whether the proposed Web-based
                                                   as any institution that provides not less               with current references to SOC codes                   approach is the most appropriate way to
                                                   than a one-year program of training that                established by the Office of Management                ensure that prospective students obtain
                                                   prepares students for gainful                           and Budget or the Department of Labor.                 this information or whether we should
                                                   employment in a recognized                              Gainful Employment                                     consider other approaches. With regard
                                                   occupation.                                                                                                    to disclosing Federal and non-Federal
                                                                                                              Current Regulations: Sections                       loan debt, based on the information an
                                                   One-Year Programs at Institutions of                    600.4(a)(4)(iii), 600.5(a)(5), and                     institution would submit under
                                                   Higher Education                                        600.6(a)(4) mirror the statutory                       proposed § 668.6(a), the Department
                                                      Current Regulations: § 600.4(a)(4)(iii)              provisions, and like the statute, do not               would be able to provide the institution
                                                   provides that a public or nonprofit                     define or further describe the meaning                 with the median title IV, HEA loan debt,
                                                   institution may provide a training                      of the phrase ‘‘gainful employment.’’                  by program, and the median debt from
                                                   program of at least one academic year                      Proposed Regulations: Under                         private loans and institutional financing
                                                   that leads to a certificate, degree, or                 proposed § 668.6(a), an institution                    plans by program. The institution would
                                                                                                           would annually submit information                      then disclose these amounts. While we
                                                   other recognized educational credential
                                                                                                           about students who complete a program                  believe that § 668.43 already requires an
                                                   and prepares students for gainful
                                                                                                           that leads to gainful employment in a                  institution to disclose program cost
                                                   employment in a recognized
                                                                                                           recognized occupation. That                            information, we wish to make it an
                                                   occupation. In addition, § 668.8(c)(3)
                                                                                                           information would include, at a                        explicit requirement in this part of the
                                                   provides that an eligible program at an
                                                                                                           minimum, identifying information                       regulations because our research
                                                   institution of higher education may be
                                                                                                           about each student who completed a                     showed that program cost information
                                                   at least a one-academic-year training
                                                                                                           program, the Classification of                         was not disclosed on the Web sites of
                                                   program that leads to a certificate,
                                                                                                           Instructional Program (CIP) code for that              many institutions.
                                                   degree, or other recognized credential
                                                                                                           program, the date the student completed
                                                   and prepares students for gainful                       the program, and the amounts the                       Definition of a Credit Hour (§§ 600.2,
                                                   employment in a recognized                              student received from private                          602.24, 603.24, and 668.8)
                                                   occupation.                                             educational loans and institutional                       Statute: Section 481(a)(2) of the HEA
                                                      Proposed Regulations: The proposed                   financing plans.                                       defines an academic year for an
                                                   regulations would amend                                    In addition, under proposed                         undergraduate program, in part, as
                                                   §§ 600.4(a)(4)(iii) and 668.8(c)(3) by                  § 668.6(b), an institution would be                    requiring a minimum of 24 semester or
                                                   removing the reference to degree                        required to disclose on its Web site                   trimester credit hours or 36 quarter
                                                   programs.                                               information about (1) the occupations                  credit hours in a course of study that
                                                      Reasons: In keeping with the statute,                that its programs prepare students to                  measures academic progress in credit
                                                   we would clarify in proposed                            enter, along with links to occupational                hours or 900 clock hours in a course of
                                                   §§ 600.4(a)(4)(iii) and 668.8(c)(3) that                profiles on O*NET, (2) the on-time                     study that measures academic progress
                                                   only certificate or credentialed                        graduation rate of students entering a                 in clock hours. Section 481(b) of the
                                                   nondegree programs of at least one                      program, (3) the cost of each program,                 HEA defines an eligible program, in
                                                   academic year, that are offered by a                    including costs for tuition and fees,                  part, as a program of at least 600 clock
                                                   public or nonprofit institution of higher               room and board, and other institutional                hours, 16 semester hours, or 24 quarter
                                                   education, are programs that must                       costs typically incurred by students                   hours or, in certain instances, a program
                                                   prepare students for gainful                            enrolling in the program, (4) beginning                of at least 300 clock hours, 8 semester
                                                   employment in a recognized                              no later than June 30, 2013, the                       hours, or 12 quarter hours. Sections
                                                   occupation.                                             placement rate for students completing                 428(b)(1), 428B(a)(2), 428H(d)(1),
                                                      Recognized Occupation                                each of those programs, as determined                  455(a)(1), and 484(b)(3) and (4) of the
                                                      Current Regulations: Section 600.2                   under § 668.8(g) or a State-sponsored                  HEA specify that a student must be
                                                   defines a recognized occupation as an                   workforce data system, and (5) the                     carrying at least one-half of the normal
                                                   occupation that is listed in an                         median loan debt incurred by students                  full-time work load for the student’s
                                                   ‘‘occupational division’’ of the latest                 who completed each program in the                      course of study in order to qualify for
                                                   edition of the Dictionary of                            preceding three years, identified                      any loan under parts B and D of title IV
                                                   Occupational Titles, published by the                   separately as title IV, HEA loan debt and              of the HEA. Section 401 of the HEA
                                                   U.S. Department of Labor, or an                         debt from private educational loans and                provides that a student’s Federal Pell
                                                   occupation determined to be a                           institutional financing plans.                         Grant must be adjusted based on the
                                                   recognized occupation by the Secretary                     Reasons: The Department plans to use                student’s enrollment status and that a
                                                   in consultation with the Secretary of                   this information to continue to assess                 student must be enrolled at least half-
                                                   Labor.                                                  the outcomes of programs that lead to                  time to be eligible for a second
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                                                      Proposed Regulations: Proposed                       gainful employment in a recognized                     consecutive Federal Pell Grant in an
                                                   § 600.2 would define recognized                         occupation. The proposed new                           award year. Section 496(a)(5)(H) of the
                                                   occupation as an occupation identified                  requirement would enable the                           HEA requires that an accrediting agency
                                                   by a Standard Occupational                              Department to further evaluate and                     assess an institution’s measure of
                                                   Classification (SOC) code established by                monitor the outcomes of these                          program length. Section 487(c)(4) of the
                                                   the Office of Management and Budget or                  programs. In addition, to better inform                HEA requires that the Secretary publish
                                                   an Occupational Information Network                     prospective students, proposed                         a list of State agencies which the
                                                   O* NET–SOC code established by the                      § 668.6(b) would require an institution                Secretary determines to be reliable
                                                   Department of Labor and available at                    to disclose on its Web site the cost,                  authorities as to the quality of public


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                                                   34810                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   postsecondary vocational education in                   accrediting agency to review and                       class with the clock-hours of instruction
                                                   their respective States for the purpose of              evaluate an institution’s policies and                 in order to meet or exceed the numeric
                                                   determining institutional eligibility for               procedures for the assignment of credit                requirements established in proposed
                                                   Federal student assistance programs.                    hours and the institution’s application                § 668.8(l)(1). However, under proposed
                                                      Current Regulations: There is no                     of its policies and procedures in                      § 668.8(l)(2), the institution must use at
                                                   definition of a credit hour in any current              assigning credit hours to its programs                 least 30 clock hours for a semester or
                                                   regulations for programs funded under                   and courses. An accrediting agency                     trimester hour or 20 clock hours for a
                                                   the HEA; and the term is not defined in                 would be required to make a reasonable                 quarter hour.
                                                   the regulations that set out the                        determination of whether the                              In determining whether there is
                                                   requirements for the Secretary’s                        institution’s assignment of credit hours               outside work that a student must
                                                   recognition of accrediting agencies or                  conforms to commonly accepted                          perform, the analysis must take into
                                                   State agencies for the approval of public               practice in higher education. The                      account differences in coursework and
                                                   postsecondary vocational education.                     proposed regulations in § 602.24(f) also               educational activities within the
                                                   The regulations that address an                         would provide that an accrediting                      program. Some portions of a program
                                                   institutional accrediting agency’s, or                  agency may use sampling or other                       may require student work outside of
                                                   State approval agency’s, reviews and                    methods in its reviews of programs at                  class that justifies the application of
                                                   evaluations of an institution’s                         institutions, must take such actions that              proposed § 668.8(l)(2). In addition, the
                                                   assignment of credit hours are set out in               it deems appropriate to address any                    application of proposed § 668.8(l)(2)
                                                   34 CFR part 602 for an accrediting                      deficiencies that it identifies, and must              may vary within a program depending
                                                   agency and 34 CFR part 603 for a State                  notify the Secretary promptly of any                   on variances in required student work
                                                   approval agency.                                        systemic noncompliance with the                        outside of class for different portions of
                                                      In current § 668.8(k) and (l), the                   agency’s policies or significant                       the program. Other portions of the
                                                   regulations provide the formula that                    noncompliance regarding one or more                    program may not have outside work,
                                                   certain undergraduate programs must                     programs at the institution.                           and proposed § 668.8(l)(1) must be
                                                   use to convert the number of clock                                                                             applied. Of course, an institution
                                                   hours offered to the appropriate number                 State Approval Agency Procedures                       applying only proposed § 668.8(l)(1) to
                                                   of credit hours used for title IV, HEA aid                The Department proposes to amend                     a program eligible for conversion from
                                                   calculations and the requirements for                   current § 603.24 by redesignating                      clock hours to credit hours, without an
                                                   identifying the undergraduate programs                  paragraph (c) as paragraph (d) and                     analysis of the program’s coursework,
                                                   subject to using the formula. For these                 adding a new paragraph (c). For State                  would be considered compliant with the
                                                   programs, each semester or trimester                    agencies for the approval of public                    requirements of proposed § 668.8(l).
                                                   hour must include at least 30 clock                     postsecondary education, proposed                         Proposed § 668.8(k)(1)(ii) modifies a
                                                   hours of instruction, and each quarter                  § 603.24(c) would provide for the same                 provision in current regulations to
                                                   hour must include at least 20 hours of                  responsibilities as described for                      provide that a program is not subject to
                                                   instruction. An institution must use the                accrediting agencies regarding the                     the conversion formula in § 668.8(l)
                                                   formula to determine if a program is                    review and evaluation of an institution’s              where each course within the program
                                                   eligible for title IV, HEA purposes                     policies and procedures for the                        is acceptable for full credit toward a
                                                   unless (1) the institution offers an                    assignment of credit hours and the                     degree that is offered by the institution
                                                   undergraduate program in credit hours                   institution’s application of its policies              and that this degree requires at least two
                                                   that is at least two academic years in                  and procedures in assigning credit                     academic years of study. Additionally,
                                                   length and leads to an associate degree,                hours to its programs and courses.                     under proposed § 668.8(k)(1)(ii), the
                                                   a bachelor’s degree, or a professional                                                                         institution would be required to
                                                                                                           Clock-to-Credit-Hour Conversion
                                                   degree or (2) each course within the                                                                           demonstrate that students enroll in, and
                                                   program is acceptable for full credit                      Proposed § 668.8(l)(1) would revise                 graduate from, the degree program.
                                                   toward an associate degree, bachelor’s                  the method of converting clock hours to                   Proposed § 668.8(k)(2)(i) would
                                                   degree, or professional degree offered by               credit hours to use a ratio of the                     provide that a program is considered to
                                                   the institution, and the degree offered                 minimum clock hours in an academic                     be a clock-hour program if the program
                                                   by the institution requires at least two                year to the minimum credit hours in an                 must be measured in clock hours to
                                                   academic years of study.                                academic year, i.e., 900 clock hours to                receive Federal or State approval or
                                                                                                           24 semester or trimester hours or 36                   licensure, or if completing clock hours
                                                   Proposed Regulations: Definition of a                   quarter hours. Thus, a semester or                     is a requirement for graduates to apply
                                                   Credit Hour                                             trimester hour would be based on at                    for licensure or the authorization to
                                                     The Department proposes to add to                     least 37.5 clock hours, and a quarter                  practice the occupation that the student
                                                   § 600.2 a definition of a credit hour that              hour would be based on at least 25 clock               is intending to pursue. Under proposed
                                                   would measure credit hours in terms of                  hours. Proposed § 668.8(l)(2) creates an               § 668.8(k)(2)(ii) and (iii), the program is
                                                   the amount of time and work during                      exception to the conversion ratio in                   also considered to be offered in clock
                                                   which a student is engaged in academic                  proposed § 668.8(l)(1) if neither an                   hours if the credit hours awarded for the
                                                   activity using commonly accepted                        institution’s designated accrediting                   program are not in compliance with the
                                                   academic practice in higher education,                  agency nor the relevant State licensing                definition of a credit hour in proposed
                                                   and further would provide for                           authority for participation in the title IV,           § 600.2, or if the institution does not
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                                                   institutionally established equivalencies               HEA programs determines there are any                  provide the clock hours that are the
                                                   as represented by learning outcomes                     deficiencies in the institution’s policies,            basis for the credit hours awarded for
                                                   and verified achievement.                               procedures, and practices for                          the program or each course in the
                                                                                                           establishing the credit hours that the                 program and, except as provided in
                                                   Accrediting Agency Procedures                           institution awards for programs and                    current § 668.4(e), require attendance in
                                                     The Department proposes to amend                      courses, as defined in proposed § 600.2.               the clock hours that are the basis for the
                                                   current § 602.24 by adding a new                        Under the exception provided by                        credit hours awarded. The proposed
                                                   paragraph (f). Proposed § 602.24(f)                     proposed § 668.8(l)(2), an institution                 regulations on which tentative
                                                   would describe the responsibilities of an               may combine students’ work outside of                  agreement was reached did not include


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                           34811

                                                   the provision in proposed                               represented in intended learning                       would limit an institution’s ability to
                                                   § 668.8(k)(2)(iii) that, except as provided             outcomes and verified by evidence of                   use alternative measures of student
                                                   in current § 668.4(e), an institution must              their achievement. Further, the                        work.
                                                   require attendance in the clock hours                   institution’s equivalencies must be in
                                                                                                                                                                  Accrediting Agency Procedures
                                                   that are the basis for the credit hours                 accordance with any process or
                                                   awarded. However, during the                            conditions required by an institution’s                   Section 496(a)(5) of the HEA requires
                                                   negotiations we had previously                          designated accrediting agency for title                that, to be recognized by the Secretary,
                                                   proposed to include such a provision.                   IV, HEA program participation, because                 an accrediting agency must have
                                                      Proposed § 668.8(k)(3) would provide                 these agencies are well positioned to                  standards to evaluate an institution’s or
                                                   that proposed § 668.8(k)(2)(i) would not                provide oversight in this area.                        program’s ‘‘measures of program length
                                                   apply if a limited portion of the program                  During the negotiated rulemaking                    and the objectives of the degrees or
                                                   includes a practicum, internship, or                    sessions, a few of the non-Federal                     credentials offered.’’ Thus, accrediting
                                                   clinical experience component that                      negotiators were opposed to any                        agencies are required to make a
                                                   must include a minimum number of                        proposal to define a credit hour because               judgment about program length and the
                                                   clock hours due to a State or Federal                   they believed that a definition would                  amount of credit an institution or
                                                   approval or licensure requirement.                      impinge upon an institution’s ability to               program grants for course work.
                                                                                                           create innovative courses and teaching                 Accrediting agency standards related to
                                                   Reasons: Definition of a Credit Hour                                                                           program length differ significantly in
                                                                                                           methods. They also argued that the
                                                     A credit hour is a unit of measure that               proposed definition was too restrictive                their specificity and these standards
                                                   gives value to the level of instruction,                and inhibited the academic freedom of                  generally do not define what a credit
                                                   academic rigor, and time requirements                   schools. Other non-Federal negotiators                 hour is. This lack of specificity in
                                                   for a course taken at an educational                    agreed that a definition was necessary                 standards covering student achievement
                                                   institution. At its most basic, a credit                and did not believe the Department’s                   and program length has inherent
                                                   hour is a proxy measure of a quantity of                proposed definition would adversely                    limitations and may result in
                                                   student learning. The credit hour was                   impact institutions. These other non-                  inconsistent treatment of Federal funds.
                                                   developed as part of a process to                       Federal negotiators agreed with our                       We believe that the lack of more
                                                   establish a standard measure of faculty                 position that the proposed definition of               direct accrediting agency oversight in
                                                   workloads, costs of instruction, and                    a credit hour would provide sufficient                 the assignment of credits to coursework
                                                   rates of educational efficiencies as well               flexibilities for institutions and                     may result in some institutions not
                                                   as a measure of student work for transfer               supported keeping it in the proposed                   being able to demonstrate that there is
                                                   students. While the credit hour was                     regulations.                                           sufficient course content to substantiate
                                                   developed to provide some uniform                          One significant change is proposed in               the credit hours for certain programs.
                                                   measure, it may not consistently relate                 the regulations to address a concern                   Such abuse may be more likely due to
                                                   to comparable measures of time or                       raised during the negotiated rulemaking                the expanded availability to a student of
                                                   workload within institutions or between                 sessions regarding a definition of a                   two Federal Pell Grants in an award
                                                   different types of institutions. Most                   credit hour. The change is to recognize                year. We believe that the potential for
                                                   postsecondary institutions do not have                  in paragraph (3) of the proposed                       such abuse and the inconsistent
                                                   specific policies or criteria to assign                 definition that an institution would be                treatment of Federal funds would be
                                                   credit hours to coursework in a uniform                 able to establish reasonable equivalent                significantly alleviated by establishing
                                                   manner.                                                 measures of a credit hour. As is also the              the proposed definition of credit hour in
                                                     In keeping with the original purpose                  case with paragraphs (1) and (2) of the                § 600.2 and providing in proposed
                                                   of providing a consistent measure of at                 proposed definition, the measures must                 § 602.24(f) that accrediting agencies
                                                   least a minimum quantity of a student’s                 be reasonable and in accordance with                   must review (1) an institution’s policies
                                                   academic engagement, the proposed                       the requirements of the institution’s                  and procedures for the assignment of
                                                   definition of a credit hour will establish              designated accrediting agency, or State                credit hours in accordance with the
                                                   a basis for measuring eligibility for                   agency for the approval of public                      proposed definition in § 600.2 and (2)
                                                   Federal funding. This standard measure                  postsecondary vocational education, for                the institution’s application of its
                                                   will provide increased assurance that a                 title IV, HEA program participation as                 policies and procedures in assigning
                                                   credit hour has the necessary                           well as for participation in other HEA                 credit hours to its programs and courses.
                                                   educational content to support the                      programs. This change further ensures                     The negotiators reached tentative
                                                   amounts of Federal funds that are                       that the definition will allow                         agreement on adding proposed
                                                   awarded to participants in Federal                      institutions to adopt alternative                      § 602.24(f).
                                                   funding programs and that students at                   measures of student work.
                                                   different institutions are treated                         The proposed definition of a credit                 State Agency Procedures for the
                                                   equitably in the awarding of those                      hour does not change our policy that we                Approval of Public Vocational
                                                   funds.                                                  provide funding based only on credit                   Education
                                                     We recognize, however, that other                     hours that are the direct result of                      The regulations concerning the
                                                   measures of educational content are                     postsecondary student work. Thus, we                   recognition of State agencies for the
                                                   being developed by institutions and do                  do not currently, nor do we propose to,                approval of public vocational education
                                                   not intend to limit the methods by                      provide funding for credits awarded                    were not discussed during the
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                                                   which an institution may measure a                      based on Advanced Placement (AP) or                    negotiations. We believe that § 603.24
                                                   student’s work in his or her educational                International Baccalaureate (IB)                       should be amended to make changes
                                                   activities. We, therefore, are including                programs, tests or testing out, life                   comparable to the proposed regulations
                                                   in paragraph (3) of the proposed                        experience, or similar competency                      for the recognition of accrediting
                                                   definition of a credit hour a provision                 measures.                                              agencies. We believe these proposed
                                                   that an institution may provide                            No agreement was reached to amend                   changes are needed for the same reasons
                                                   institutional equivalencies for the                     § 600.2 to include a definition of a credit            as we are proposing to amend part 602.
                                                   amount of work specified in paragraph                   hour due to the belief of some non-                    The changes are also necessary for
                                                   (1) of the proposed definition as                       Federal negotiators that a definition                  purposes of determining equivalencies


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                                                   34812                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   to a credit hour under paragraph (3) of                 of study. Some institutions appear to                  (k), except for proposed § 668.8(k)(2)(iii)
                                                   the proposed definition of a credit hour                have established degree programs in                    which has been changed to provide that
                                                   in § 600.2 as well as for § 668.8(l)                    which few if any students enroll or                    an institution must require attendance
                                                   regarding credit-to-clock-hour                          graduate but which are the basis for                   in the clock hours that are the basis for
                                                   conversions.                                            claiming that all courses of another                   the credit hours awarded, except as
                                                                                                           nondegree program are acceptable for                   provided in current § 668.4(e). We
                                                   Credit-to-Clock-Hour Conversion
                                                                                                           full credit in the degree program. To                  believe the change assures that the clock
                                                     Section 668.8(k) and (l) of the current               address this abuse, proposed                           hours are being offered and that
                                                   regulations that provide conditions and                 § 668.8(k)(1)(ii) would require the                    students are attending the clock hours
                                                   formulas for the conversion of clock                    institution to demonstrate that students               that are the basis for the clock-to-credit-
                                                   hours to credit hours for undergraduate                 enroll in, and graduate from, the degree               hour conversion.
                                                   programs were adopted prior to the                      program. Proposed § 668.8(k)(2)(i)
                                                   statutory change in the definition of an                                                                       State Authorization (§§ 600.4(a)(3),
                                                                                                           would provide that a program must be
                                                   academic year for clock-hour programs.                                                                         600.5(a)(4), 600.6(a)(3), and 600.9)
                                                                                                           considered a clock-hour program if the
                                                   Under section 481(b) of the HEA, an                     program must be measured in clock                         Statute: Section 101(a)(2) of the HEA
                                                   academic year for a program must now                    hours to receive Federal or State                      defines the term ‘‘institution of higher
                                                   provide for a minimum of 26 weeks of                    approval or licensure or completing                    education’’ to mean, in part, an
                                                   instructional time in a clock-hour                      clock hours is a requirement for                       educational institution in any State that
                                                   program as opposed to the 30 weeks of                   graduates to apply for licensure or the                is legally authorized within the State to
                                                   instructional time required for credit-                 authorization to practice the occupation               provide a program of education beyond
                                                   hour programs. However, undergraduate                   that the student is intending to pursue.               secondary education. Section 102(a) of
                                                   programs continue to include 900 clock                  We believe such requirements show that                 the HEA provides, by reference to
                                                   hours, 24 semester or trimester hours, or               the program is still fundamentally a                   section 101(a)(2) of the HEA, that a
                                                   36 quarter credits. We are proposing to                 clock-hour program and should not be                   proprietary institution of higher
                                                   update the formula to reflect the                       treated as a credit-hour program for                   education and a postsecondary
                                                   statute’s treatment of 900 clock hours                  purposes of title IV, HEA program                      vocational institution must be similarly
                                                   over 26 weeks of instructional time as                  assistance. We also believe it is                      authorized within a State.
                                                   reflecting no outside student work and                  appropriate under proposed                                Current Regulations: The regulations
                                                   the 900 clock hours being directly                      § 668.8(k)(2)(ii) and (iii) to require that            do not define or describe the statutory
                                                   proportional to 24 semester hours or 36                 a program must be considered to be                     requirement that an institution must be
                                                   quarter credits.                                        offered in clock hours if an institution               legally authorized in a State.
                                                     As a result, proposed § 668.8(l)(1)                   is failing either to award the credit                     Proposed Regulations: Under
                                                   would revise the minimum general                        hours that are in compliance with the                  proposed § 600.9, an institution would
                                                   standard for converting clock hours to                  definition of a credit hour in proposed                be legally authorized by a State through
                                                   credit hours to reflect the ratio of the                § 600.2 or to ensure that students are                 a charter, license, approval, or other
                                                   minimum clock hours in an academic                      attending at least the minimum number                  document issued by a State government
                                                   year to the minimum credit hours in an                  of clock hours that are the basis for the              agency or State entity that affirms or
                                                   academic year. As some non-Federal                      credit hours awarded for the program. A                conveys the authority to the institution
                                                   negotiators noted, portions of some                     program that may qualify for conversion                to operate educational programs beyond
                                                   clock-hour programs require student                     to credit hours is still fundamentally a               secondary education. An institution
                                                   work outside of class. Proposed                         clock-hour program that must meet                      would also be considered legally
                                                   § 668.8(l)(2) would, therefore, provide                 additional requirements. If the                        authorized in a State if the institution
                                                   an exception to the standard in                         provisions of proposed § 668.8(k)(1) and               were authorized to offer programs
                                                   proposed § 668.8(l)(1) for coursework in                (2) are applicable, a program should not               beyond secondary education by the
                                                   a program that qualifies for a lesser rate              qualify for conversion to credit hours                 Federal Government or an Indian Tribe
                                                   of conversion based on additional                       because the program’s essential nature                 as that term is described in 25 U.S.C.
                                                   student work outside of class. For                      as a clock-hour program requires that it               1802(2) or if it were exempt from State
                                                   coursework that includes student work                   be measured in clock hours for other                   authorization as a religious institution
                                                   outside of class in a qualifying program,               purposes or because it fails to be offered             under the State constitution.
                                                   an institution would take into account                  in a manner that supports the                             The Secretary would consider an
                                                   the amount of outside coursework to                     conversion.                                            institution to be legally authorized by a
                                                   determine the appropriate number of                        In response to some non-Federal                     State if (1) the authorization is given to
                                                   clock hours to convert to a credit hour,                negotiators’ concerns, proposed                        the institution specifically to offer
                                                   but may not use less than the current                   § 668.8(k)(3) would clarify the                        programs beyond secondary education,
                                                   requirements of 30 clock hours for a                    requirements in proposed                               (2) the authorization is subject to
                                                   semester or trimester hour or 20 clock                  § 668.8(k)(2)(i) by providing that                     adverse action by the State, and (3) the
                                                   hours for a quarter hour.                               proposed § 668.8(k)(2)(i) would not                    State has a process to review and
                                                     We believe that changes are needed to                 apply if a limited portion of a program                appropriately act on complaints
                                                   the conditions in current § 668.8(k)(1)                 such as a practicum, internship, or                    concerning an institution and enforces
                                                   for determining that a program is not                   clinical experience component must be                  applicable State laws.
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                                                   subject to the conversion formula in                    measured in clock hours due to a State                    References to § 600.9 would be added
                                                   § 668.8(l). We have identified potential                or Federal approval or licensure                       for clarity in §§ 600.4(a)(3), 600.5(a)(4),
                                                   abuses with the provision that an                       requirement. We agree with the non-                    and 600.6(a)(3).
                                                   institution’s program is not subject to                 Federal negotiators that such a limited                   Reasons: The HEA requires
                                                   the conversion formula in § 668.8(l) if                 requirement should not be an                           institutions to have approval from the
                                                   each course within the program is                       impediment to the program qualifying                   States where they operate to provide
                                                   acceptable for full credit toward a                     for a clock-to-credit-hour conversion.                 postsecondary educational programs.
                                                   degree that is offered by the institution                  The negotiators reached tentative                   State oversight through obtaining
                                                   and requires at least two academic years                agreement on proposed § 668.8(l) and                   approval to offer postsecondary


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                            34813

                                                   education and by State regulatory                       designate a different State agency to                  we accepted the position of some of the
                                                   agency ongoing activities plays an                      perform the required State functions                   non-Federal negotiators that States
                                                   important role in protecting students,                  during the transition to a new State                   could enter into reciprocal agreements
                                                   although there may be a lot of variation                oversight agency. Otherwise, under the                 on an as needed basis without
                                                   in how those responsibilities are                       provisions of proposed § 600.9(b), the                 regulations.
                                                   exercised. One indicator of the                         affected institutions would have ceased                   Also, in response to recommendations
                                                   importance of State oversight has been                  to be considered legally authorized by                 of the non-Federal negotiators, we
                                                   seen in the movement of substandard                     the State for Federal purposes when the                added provisions to clarify that an
                                                   institutions and diploma mills from                     prior agency’s existence lapsed and
                                                                                                                                                                  institution would be considered to be
                                                   State to State in response to changing                  would have ceased to be eligible
                                                                                                                                                                  legally authorized in a State if the
                                                   requirements. These entities set up                     institutions.
                                                                                                              Additionally, we are concerned that                 institution is authorized to offer
                                                   operation in States that may initially
                                                                                                           some States are deferring all, or nearly               educational programs beyond secondary
                                                   provide very little oversight and operate
                                                   until a State strengthens its oversight of              all, of their oversight responsibilities to            education by the Federal Government
                                                   those entities in response to complaints                accrediting agencies for approval of                   or, as defined in 25 U.S.C. 1802(2), an
                                                   from the public. In some cases, those                   educational institutions, or are                       Indian tribe or if it is exempt from State
                                                   entities simply move to another State                   providing exemptions for a subset of                   authorization as a religious institution
                                                   that appears to offer little oversight and              institutions for other reasons. Since                  under the State constitution. In
                                                   repeats the process.                                    accrediting agencies generally require                 proposed § 600.9(b), we also further
                                                      The Department historically viewed                   that an institution be legally operating               revised the bases under which we
                                                   the requirement for State authorization                 in the State, we are concerned that the                would consider an institution to be
                                                   for entities to offer postsecondary                     checks and balances provided by the                    legally authorized by a State. We would
                                                   education as minimal, and would deem                    separate processes of accreditation and                require that the authorization must be
                                                   an entity that had been exempted by its                 State legal authorization are being                    specifically to offer programs beyond
                                                   State from State oversight to have such                 compromised.                                           secondary education and may not be
                                                   approval so long as it was able to                         We initially proposed that State legal              merely of the type required to do
                                                   operate within the State. Thus, in some                 authorization be based on a charter,                   business in the State. We believe that
                                                   States an institution was considered to                 license, or other document issued by an                this provision would remove any
                                                   be legally authorized to offer                          appropriate State government agency                    ambiguity regarding the type of
                                                   postsecondary education based on such                   providing the authority to an institution              authorization acceptable to establish
                                                   methods as a business license or                        to operate educational programs beyond                 institutional eligibility to participate in
                                                   establishment as an eleemosynary                        secondary education and grant degrees                  Federal programs. The regulations also
                                                   organization.                                           within the jurisdiction of the State or                require an institution’s legal
                                                      Upon further review, we believe the                  other documentation, issued by an                      authorization to be subject to adverse
                                                   better approach is to view the State                    appropriate State government agency                    action by the State, and that a State has
                                                   approval to offer postsecondary                         that authorizes, licenses, or otherwise                a process to review and appropriately
                                                   educational programs as a substantive                   approves the institution to establish and              act on complaints concerning an
                                                   requirement where the State is expected                 operate within the State nondegree                     institution, and to enforce applicable
                                                   to take an active role in approving an                  programs that provide education and                    State laws. We believe these additional
                                                   institution and monitoring complaints                   training beyond secondary education.                   conditions are necessary to establish
                                                   from the public about its operations and                We also provided that State legal                      minimal State oversight for institutions
                                                   responding appropriately. The weakness                  authorization could include reciprocal                 to be considered legally authorized to
                                                   of the historical approach of not                       agreements between appropriate State                   offer postsecondary education for
                                                   requiring active State approval and                     agencies. In addition, for institutions in             purposes of qualifying as an eligible
                                                   oversight may have contributed to the                   a State to be legally authorized, the State            institution for Federal programs.
                                                   recent lapse in the existence of                        would be expected to monitor (1)
                                                   California’s Bureau for Private                         institutional academic quality,                           The committee did not reach
                                                   Postsecondary and Vocational                            potentially relying on accrediting                     agreement on this issue. A few
                                                   Education. The Bureau served as the                     agencies recognized by the Secretary; (2)              negotiators objected to allowing States
                                                   State’s oversight and regulatory agency                 an institution’s financial viability; and              to continue to rely on an institution’s
                                                   for private proprietary postsecondary                   (3) compliance with applicable State                   status with an outside entity, for
                                                   institutions until the State legislature                laws with respect to consumer                          example, accredited status with a
                                                   eliminated the Bureau. We were advised                  protection and other matters of State                  nationally recognized accrediting
                                                   that the Bureau was permitted to lapse                  oversight.                                             agency, as a basis for State legal
                                                   because the State determined that doing                    In response to concerns from the non-               authorization and were also concerned
                                                   so would not immediately harm the                       Federal negotiators, we clarified in                   that the proposed regulations would no
                                                   institutions that participate in the title              proposed § 600.9(a) that legal                         longer have a requirement that a State
                                                   IV, HEA programs. During the period                     authorization could not only be                        review an institution’s fiscal viability.
                                                   when there was no State agency                          provided by an appropriate State                       The regulations do not prohibit a State
                                                   authorizing private postsecondary                       agency, but also another State entity,                 from relying in part upon an accrediting
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                                                   institutions, these institutions                        e.g., a State legislature or State                     agency, but the State is still required to
                                                   continued to participate in the title IV,               constitution. We removed the references                perform certain functions itself. For
                                                   HEA programs under some voluntary                       to monitoring the quality of educational               example, an institution’s authorization
                                                   agreements while the State legislature                  programs and financial responsibility.                 must be subject to adverse action by a
                                                   worked on creating a new oversight                      We accepted the position of some of the                State agency or other State entity, and
                                                   agency. The proposed regulations, had                   non-Federal negotiators who argued that                the State must have a process for a State
                                                   they been in effect at that time, would                 these additional State requirements                    agency to review and appropriately act
                                                   have required that the State keep in                    could unnecessarily duplicate Federal                  on complaints concerning an
                                                   place the prior oversight agency, or to                 or accrediting agency actions. Similarly               institution.


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                                                   34814                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   Part 668 Student Assistance General                     program in the format in which it is                   required to make a determination that
                                                   Provisions Coursework (§ 668.2)                         being provided, such as through                        the arrangement met the agency’s
                                                     Statute: None.                                        distance education, when the other                     standards for written arrangements. This
                                                     Current regulations: None                             institution is providing instruction                   initial proposal was based on discussion
                                                     Proposed regulations: The proposed                    under a written agreement using that                   at the first negotiated rulemaking
                                                   regulations would amend the definition                  method of delivery. Proposed                           session that suggested most accrediting
                                                   of ‘‘full-time student’’ in § 668.2 to allow            § 668.5(c)(1) would expand the list of                 agencies already review a significant
                                                   repeated coursework to count towards a                  conditions that would preclude an                      portion of their institutions’ written
                                                   student enrollment status in term-based                 arrangement between an eligible                        arrangements, even those between or
                                                   programs.                                               institution and an ineligible institution.             among eligible institutions.
                                                     Reasons: The current policy provides                  Proposed §§ 668.5(e) and 668.43 would                  Subsequently, several non-Federal
                                                                                                           require an institution that enters into a              negotiators explained that, contrary to
                                                   that a student enrolled in a term-based
                                                                                                           written arrangement to provide a                       the Department’s initial understanding,
                                                   program may not be paid for repeating
                                                                                                           description of the arrangement to                      this type of review of written
                                                   a course unless the student will receive
                                                                                                           enrolled and prospective students.                     arrangements was not common practice.
                                                   credit for the coursework in addition to                   Reasons: Under the definition of an                 Some of the non-Federal negotiators
                                                   any credits previously earned. The non-                 ‘‘educational program’’ in 34 CFR 600.2,               expressed concerns that the proposed
                                                   Federal negotiators were concerned that                 if an institution does not provide any                 changes would increase workload and
                                                   institutions are unable to track this type              instruction itself, but merely gives credit            costs as well as impede the
                                                   of information without doing a program                  for instruction provided by other                      development of innovative programs at
                                                   audit of each individual student. We                    institutions, it is not considered to                  institutions where there is no evidence
                                                   agreed and proposed to amend the                        provide an educational program. The                    of the problems the Department seeks to
                                                   definition of full-time to provide that                 change reflected in proposed                           address. After hearing these concerns,
                                                   such credits would count toward                         § 668.5(a)(1) would eliminate the                      the Department reconsidered its initial
                                                   enrollment status and be eligible for                   inconsistency in these two provisions                  proposal and focused its proposed
                                                   payment under the title IV, HEA                         by clarifying that an institution may                  regulatory changes more narrowly on
                                                   programs.                                               provide part, but not all, of an                       the types of institutions and situations
                                                     The negotiators reached tentative                     educational program under a written                    where problems have been identified.
                                                   agreement on this issue.                                arrangement.                                              The Department subsequently
                                                   Written Arrangements (§§ 668.5 and                         Proposed § 668.5(a)(2) would be                     proposed regulatory language that
                                                   668.43)                                                 added to address concerns that may                     would limit the portion of an
                                                                                                           arise when two institutions under                      educational program that could be
                                                      Statute: None.                                       common ownership enter into written                    provided under a written arrangement
                                                      Current Regulations: Under current                   arrangements with each other. One                      between two eligible for-profit
                                                   § 668.5(a), an eligible institution may                 concern, for example, is that such                     institutions under common ownership
                                                   enter into a written agreement with                     written agreements between institutions                or control to 25 percent.
                                                   another eligible institution, or with a                 under common ownership could be                           While some non-Federal negotiators
                                                   consortium of eligible institutions, to                 used to circumvent regulations                         expressed support for the 25 percent
                                                   provide all or part of an educational                   governing cohort default rates and ‘‘90–               limitation, a number of them expressed
                                                   program. The educational program is                     10’’ provisions, which limit the                       concern that the 25 percent limitation
                                                   considered to be an eligible program if                 percentage of revenue for-profit                       was too low. For example, one non-
                                                   it meets the requirements of § 668.8.                   institutions may receive from the                      Federal negotiator questioned the
                                                   There is no requirement in either                       Federal student financial assistance                   rationale for limiting the percentage of
                                                   § 668.5 or § 668.43 of the current                      programs, by having one institution                    an educational program provided by
                                                   regulations that institutions provide                   provide substantially all of a program                 two eligible institutions under a written
                                                   information on written arrangements to                  while attributing the title IV revenue                 arrangement to 25 percent when, under
                                                   enrolled or prospective students.                       and cohort default rates to the other                  certain circumstances, current
                                                      Proposed Regulations: The                            commonly-owned institution. In other                   regulations permit an ineligible
                                                   Department proposes to amend current                    situations, campus-based institutions                  institution to provide up to 50 percent
                                                   § 668.5(a) by revising and redesignating                have been used as ‘‘portals’’ to attract               of an educational program. Another
                                                   paragraph (a) as paragraph (a)(1) and                   students for online institutions under                 non-Federal negotiator said that an
                                                   adding a new paragraph (a)(2). Proposed                 common ownership where students may                    institution should be responsible for at
                                                   § 668.5(a)(1) would be based on the                     not have expected the program to be                    least 50 percent of the courses in a
                                                   language that is in current paragraph (a),              offered by a different institution.                    student’s major. During the discussions,
                                                   but it would be modified to make it                        During the negotiated rulemaking                    several non-Federal negotiators
                                                   consistent with the definition of an                    sessions, the Department initially                     supported an overall limitation of 50
                                                   ‘‘educational program’’ in 34 CFR 600.2.                proposed draft regulations that would                  percent. One non-Federal negotiator
                                                   Proposed new § 668.5(a)(2) would                        have required accrediting or State                     expressed the view that non-profit
                                                   specify that if a written arrangement is                agency review of any written                           institutions want to ‘‘own’’ the degrees
                                                   between two or more eligible                            arrangement between an eligible                        they confer, and if an institution
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                                                   institutions that are owned or controlled               institution and another eligible                       provides less than 50 percent of an
                                                   by the same individual, partnership, or                 institution or consortium of eligible                  educational program, it does not own
                                                   corporation, the institution that grants                institutions if the portion of the                     the degree. Other non-Federal
                                                   the degree or certificate must provide                  educational program provided by the                    negotiators argued that a limitation of 75
                                                   more than 50 percent of the educational                 other institution under the written                    percent would be more appropriate.
                                                   program. These clarifications are also                  arrangement were more than 50 percent.                    Non-Federal negotiators also
                                                   intended to ensure that the institution                 Under this initial proposal, the                       expressed concerns that, as proposed,
                                                   enrolling the student has all necessary                 institution’s accrediting agency, or State             this restriction would have an impact on
                                                   approvals to offer an educational                       agency, as applicable, would have been                 students’ academic opportunities and


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                           34815

                                                   would limit access to students attending                students. Several non-Federal                          number of questions about what types of
                                                   certain institutions. Specifically, they                negotiators said that information should               arrangements would be subject to these
                                                   explained that the proposed restrictions                be made available to prospective                       proposed requirements. The Department
                                                   on the portion of the educational                       students, as well as to enrolled students,             explained that the proposed disclosure
                                                   program that could be provided by the                   so prospective students could know                     requirements would apply to blanket,
                                                   other eligible institution could                        before applying to an educational                      existing arrangements between or
                                                   unnecessarily limit the number of                       program whether any part of the                        among institutions. Individual, student-
                                                   online courses students could take, or                  program would be provided under a                      initiated written arrangements would
                                                   make it difficult for students in the                   written arrangement. For this reason,                  not be subject to the disclosure
                                                   military who are deployed, and want to                  proposed § 668.5(e) would make clear                   requirements in proposed §§ 668.5 and
                                                   take their remaining courses at an                      that any eligible institution providing                668.43. Not only would such
                                                   online institution, to finish their                     educational programs under a written                   disclosures be impractical and
                                                   educational programs. Both Department                   arrangement is required to provide the                 excessively burdensome, but they
                                                   officials and some of the non-Federal                   information described in proposed                      would also be unnecessary: As a party
                                                   negotiators pointed out that these                      § 668.43(a)(12) to both prospective and                to an individual, student-initiated
                                                   outcomes are avoidable if the students                  enrolled students.                                     written arrangement, the student would
                                                   in these situations transferred to the                     The committee also discussed at                     already have the information required to
                                                   institution that was providing the                      length what content the proposed                       be disclosed under these proposed
                                                   preponderance of courses.                               disclosures should include. Several                    provisions. In addition, these proposed
                                                      Based on these discussions, the                      non-Federal negotiators requested that                 disclosure requirements would not
                                                   Department modified the proposed                        institutions be required to disclose the               apply to internships or externships
                                                   regulatory language to refer to eligible                locations of the other institutions or                 because the Department does not
                                                   institutions that are owned or controlled               organizations at which a portion of the                consider these arrangements to be
                                                   by the same individual, partnership, or                 educational program would be                           written arrangements under § 668.5.
                                                   corporation, because this language                      provided. We agreed with these non-                    While it is reasonable to expect that
                                                   would be parallel to the language in                    Federal negotiators and incorporated                   institutions that offer or require
                                                   current § 668.5(c)(3)(ii)(B). Some non-                 this disclosure requirement in proposed                internships and externships will
                                                   Federal negotiators expressed concern                   § 668.43(a)(12)(ii).                                   provide students in affected programs
                                                   that the phrase ‘‘owned or controlled by                   There was also widespread support                   with the types of information described
                                                   the same individual, partnership, or                    for requiring the disclosure of any                    in proposed § 668.43(a)(12), such
                                                   corporation’’ could be read to apply to                 additional costs that students might                   programs would not be covered under
                                                   Jesuit institutions or other institutions               incur as a result of enrolling in an                   this proposed requirement for
                                                   under the control of a religious                        educational program provided, in part,                 institutional disclosure of written
                                                   organization, or to institutions in a                   under a written arrangement. There was                 arrangements.
                                                   public system under the control of a                    much discussion about which costs                        Some non-Federal negotiators
                                                   board of governors. The Federal                         would need to be disclosed. One non-                   contended that institutions should be
                                                   negotiator explained that it is not the                 Federal negotiator requested that                      required to display the information
                                                   Department’s intention for either public                institutions only be required to provide               described in proposed § 668.43(a)(12)
                                                   or private, non-profit institutions to be               ‘‘estimated’’ costs, given that in some                prominently on their Web sites. Other
                                                   covered by the proposed language                        situations, such as study abroad                       non-Federal negotiators did not support
                                                   because these institutions are not owned                programs, costs might change due to                    this idea, pointing out that § 668.43
                                                   or controlled by other entities, and                    variability in living accommodations,                  contains a long list of disclosures, and
                                                   generally act autonomously.                             changes in airfare for programs offered                to single out this one disclosure
                                                      The proposed additions to                            at distant locations, etc. We agreed with              requirement for special treatment would
                                                   § 668.5(c)(1) would make it clear that                  these suggestions and clarified in                     suggest that it is more important than all
                                                   educational programs offered under                      proposed § 668.43(a)(12)(iv) that the                  the other institutional information
                                                   written arrangements between an                         required disclosures include estimated                 disclosure requirements. They
                                                   eligible institution and an ineligible                  additional costs students may incur as                 explained that this proposed
                                                   institution would not be considered                     the result of enrolling in an educational              requirement should be considered in the
                                                   eligible programs if the ineligible                     program that is provided, in part, under               context of all the consumer disclosure
                                                   institution had had its certification to                a written arrangement described in                     requirements regarding information that
                                                   participate in the title IV, HEA programs               § 668.5.                                               students need to know when they are
                                                   revoked (see proposed § 668.5(c)(1)(iii)),                 In proposed § 668.43(a)(12)(iii), we                considering enrolling in an institution,
                                                   its application for re-certification to                 would require institutions to disclose                 and noted that from a practical
                                                   participate in the title IV, HEA programs               the method of delivery of the portion of               standpoint, it is likely that institutions
                                                   denied (see proposed § 668.5(c)(1)(iv)),                the educational program that the                       will post the required information on
                                                   or its application for certification to                 institution that grants the degree or                  their Web sites. One non-Federal
                                                   participate in the title IV, HEA programs               certificate is not providing so potential              negotiator expressed the concern that
                                                   denied (see proposed § 668.5(c)(1)(v)).                 students are given accurate information.               there is already too much general
                                                   These additions are consistent with the                 In response to a question raised at one                information provided to students that
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                                                   existing reference in the regulations to                of the negotiated rulemaking sessions,                 they do not read, and suggested that
                                                   institutions that have been terminated                  the Federal negotiator explained that the              institutions might find it most useful to
                                                   from the title IV, HEA programs.                        Department would expect an institution                 include information on written
                                                      Finally, there was considerable                      to disclose whether the instruction is                 arrangements in the context of
                                                   discussion during the negotiated                        offered on campus or on-line, or offered               individual programs of study.
                                                   rulemaking sessions about the                           through a combination of methods.                        While the Department wants to make
                                                   Department’s proposal to require that                      During the discussions about the                    sure students receive appropriate
                                                   institutions make information about                     disclosure requirements in proposed                    information so they can make informed
                                                   written arrangements available to                       §§ 668.5 and 668.43, there were a                      decisions, the Department agrees with


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                                                   34816                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   the non-Federal negotiators who urged                   two adjustments (upward or downward)                      7. Managerial and supervisory
                                                   that institutions be given the discretion               to a covered employee’s annual salary or               employees (current
                                                   to determine the best way to                            fixed hourly wage rate within any 12-                  § 668.14(b)(22)(i)(G)). This safe harbor
                                                   disseminate the required information to                 month period without the adjustment                    states that the incentive payment
                                                   their students.                                         being considered an incentive payment,                 prohibition in section 487(a)(20) of the
                                                     The negotiators reached tentative                     provided that no adjustment is based                   HEA and current § 668.14(b)(22)(i) does
                                                   agreement on this issue.                                solely on the number of students                       not apply to managerial and supervisory
                                                   Incentive Compensation (§ 668.14(b))                    recruited, admitted, enrolled, or                      employees who do not directly manage
                                                                                                           awarded financial aid. This safe harbor                or supervise employees who are directly
                                                      Statute: Section 487(a)(20) of the HEA               also permits one cost-of-living increase               involved in recruiting or admissions
                                                   requires that the title IV, HEA program                 that is paid to all or substantially all of            activities, or the awarding of title IV,
                                                   participation agreement prohibit an                     the institution’s full-time employees.                 HEA program funds.
                                                   institution from making any                                2. Enrollment in programs that are not                 8. Token gifts (current
                                                   commission, bonus, or other incentive                   eligible for title IV, HEA program funds               § 668.14(b)(22)(i)(H)). Under this safe
                                                   payments based directly or indirectly on                (current § 668.14(b)(22)(i)(B)). This safe             harbor, an institution may provide a
                                                   success in securing enrollments or                      harbor permits compensation to                         token gift not to exceed $100 to an
                                                   financial aid to any persons or entities                recruiters based upon enrollment of                    alumnus or student provided that the
                                                   involved in student recruiting or                       students who enroll in programs that are               gift is not in the form of money and no
                                                   admissions activities, or in making                     ineligible for title IV, HEA funds.                    more than one gift is provided annually
                                                   decisions about the award of student                       3. Contracts with employers to                      to an individual.
                                                   financial assistance. The statute states                provide training (current                                 9. Profit distributions (current
                                                   that this prohibition does not apply to                 § 668.14(b)(22)(i)(C)). This safe harbor               § 668.14(b)(22)(i)(I)). This safe harbor
                                                   the recruitment of foreign students                     addresses payments to recruiters who                   states that profit distributions to owners
                                                   residing in foreign countries who are                   arrange contracts between an institution               of the institution are not payments
                                                   not eligible to receive Federal financial               and an employer, where the employer
                                                                                                                                                                  based on success in securing
                                                   assistance.                                             pays the tuition and fees for its
                                                      Current Regulations: Current                                                                                enrollments or awarding financial aid in
                                                                                                           employees (either directly to the
                                                   § 668.14(b)(22)(i) incorporates the                                                                            violation of the prohibition in section
                                                                                                           institution or by reimbursement to the
                                                   prohibition and exception reflected in                                                                         487(a)(20) of the HEA and current
                                                                                                           employee).
                                                   section 487(a)(20) of the HEA. It                          4. Profit-sharing bonus plans (current              § 668.14(b)(22)(i) as long as the
                                                   prohibits an institution from making                    § 668.14(b)(22)(i)(D)). Under this safe                distribution represents a proportionate
                                                   any commission, bonus, or other                         harbor, profit-sharing and bonus                       share of the profits based upon the
                                                   incentive payments based directly or                    payments to all or substantially all of an             individual’s ownership interest.
                                                   indirectly on success in securing                       institution’s full-time employees are not                 10. Internet-based activities (current
                                                   enrollments or financial aid to any                     considered incentive payments based on                 § 668.14(b)(22)(i)(J)). This safe harbor
                                                   persons or entities involved in student                 success in securing enrollments or                     permits an institution to award
                                                   recruiting or admissions activities, or in              awarding financial aid in violation of                 incentive compensation for Internet-
                                                   making decisions about the award of                     the prohibition in section 487(a)(20) of               based recruitment and admission
                                                   student financial assistance. It also                   the HEA and current § 668.14(b)(22)(i).                activities that provide information about
                                                   states that this restriction does not apply             As long as the profit-sharing or bonus                 the institution to prospective students,
                                                   to the recruitment of foreign students                  payments are substantially the same                    refer prospective students to the
                                                   living in foreign countries who are not                 amount or the same percentage of salary                institution, or permit prospective
                                                   eligible to receive Federal student aid.                or wages, and as long as the payments                  students to apply for admission online.
                                                      Current § 668.14(b)(22)(ii) goes on to               are made to all or substantially all of the               11. Payments to third parties for non-
                                                   specify 12 ‘‘safe harbors’’—12 activities               institution’s full-time professional and               recruitment activities (current
                                                   and arrangements that an institution                    administrative staff, compensation paid                § 668.14(b)(22)(i)(K)). This safe harbor
                                                   may carry out without violating the                     as part of a profit-sharing or bonus plan              states that the incentive compensation
                                                   prohibition against incentive                           is not considered a violation of the                   prohibition does not apply to payments
                                                   compensation reflected in section                       incentive payment prohibition.                         to third parties, including tuition
                                                   487(a)(20) of the HEA and current                          5. Compensation based upon program                  sharing arrangements, that deliver
                                                   § 668.14(b)(22)(i). The first safe harbor               completion (current                                    various services to the institution,
                                                   explains the conditions under which an                  § 668.14(b)(22)(i)(E)). This safe harbor               provided that none of the services
                                                   institution may adjust compensation                     permits compensation based upon                        involve recruiting or admission
                                                   without that compensation being                         students successfully completing their                 activities, or the awarding of title IV,
                                                   considered an incentive payment. The                    educational programs or one academic                   HEA program funds.
                                                   12 safe harbors describe the conditions                 year of their educational programs,                       12. Payments to third parties for
                                                   under which payments that could                         whichever is shorter.                                  recruitment activities (current
                                                   potentially be construed as based upon                     6. Pre-enrollment activities (current               § 668.14(b)(22)(i)(L)). Under this safe
                                                   securing enrollments or financial aid are               § 668.14(b)(22)(i)(F)). This safe harbor               harbor, if an institution uses an outside
                                                   nonetheless not prohibited under                        states that clerical pre-enrollment                    entity to perform activities for it,
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                                                   section 487(a)(20) of the HEA and                       activities, such as answering telephone                including recruitment or admission
                                                   current § 668.14(b)(22)(i).                             calls, referring inquiries, or distributing            activities, the institution may make
                                                      The payment or compensation plans                    institutional materials, are not                       incentive payments to the third party
                                                   covered by the safe harbors address the                 considered recruitment or admission                    without violating the incentive payment
                                                   following subjects:                                     activities. Accordingly, under this safe               prohibition in section 487(a)(20) of the
                                                      1. Adjustments to employee                           harbor, an institution may make                        HEA and current § 668.14(b)(22)(i) as
                                                   compensation (current                                   incentive payments to individuals                      long as the individuals performing the
                                                   § 668.14(b)(22)(i)(A)). Under this safe                 whose responsibilities are limited to                  recruitment or admission activities are
                                                   harbor, an institution may make up to                   clerical pre-enrollment activities.                    not compensated in a way that is


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                            34817

                                                   prohibited by section 487(a)(20) of the                    Proposed § 668.14(b)(22)(iii)(C) would              stated why the Department views them
                                                   HEA and current § 668.14(b)(22)(i).                     define enrollment as the admission or                  as either inappropriate or unnecessary:
                                                      Proposed Regulations: The                            matriculation of a student into an                        1. Adjustments to employee
                                                   Department proposes to revise                           eligible institution.                                  compensation. The Department
                                                   § 668.14(b)(22) to align it more closely                   Reasons: Consistent with comments                   explained that this safe harbor has led
                                                   with the statutory language from section                made by a majority of the non-Federal                  to allegations in which institutions
                                                   487(a)(20) of the HEA. Specifically,                    negotiators, the Department believes                   concede that their compensation
                                                   proposed § 668.14(b)(22)(i)(A) would                    that the language in section 487(a)(20) of             structures include consideration of the
                                                   restate the statutory provision in the                  the HEA is clear, and that the                         number of enrolled students, but aver
                                                   HEA, which provides that to be eligible                 elimination of all of the regulatory safe              that they are not solely based upon such
                                                   to participate in the Federal student                   harbors reflected in current                           numbers. In some of these instances, the
                                                   financial aid programs authorized under                 § 668.14(b)(22)(ii) would best serve to                substantial weight of the evidence has
                                                   title IV of the HEA, an institution must                effectuate congressional intent. The                   suggested that the other factors
                                                   agree that it will not provide any                      Department previously explained that it                purportedly analyzed are not truly
                                                   commission, bonus, or other incentive                   was adopting the safe harbors based on                 considered, and that, in reality, the
                                                   payment based directly or indirectly on                 a ‘‘purposive reading of section                       institution bases salaries exclusively
                                                   success in securing enrollments or                      487(a)(20) of the HEA.’’ 67 FR 51723                   upon the number of students enrolled.
                                                   financial aid to any person or entity                   (August 8, 2002). Since that time,                     For this reason, the Department
                                                   engaged in any student recruiting or                    however, the Department’s experience                   proposes to delete this safe harbor. After
                                                   admission activities or in making                       demonstrates that unscrupulous actors                  careful consideration, the Department
                                                   decisions regarding the award of student                routinely rely upon these safe harbors to              has determined that removal of the safe
                                                   financial assistance. Proposed                          circumvent the intent of section                       harbor is preferable to trying to revise
                                                   § 668.14(b)(22)(i)(B) would provide that                487(a)(20) of the HEA. As such, rather                 the safe harbor. For example, changing
                                                   the incentive compensation prohibition                  than serving to effectuate the goals                   the word solely in this safe harbor to
                                                   does not apply to the recruitment of                    intended by Congress through its                       some other modifier, such as ‘‘primarily’’
                                                   foreign students residing in foreign                    adoption of section 487(a)(20) of the                  or ‘‘substantially,’’ would not correct the
                                                   countries who are not eligible to receive               HEA, the safe harbors have served to                   problem, as the evaluation of any
                                                   Federal student assistance.                             obstruct those objectives. For example,                alternative arrangement would merely
                                                      The Department would delete the 12                   the first safe harbor, which prohibits the             shift to whether the compensation was
                                                   safe harbors reflected in current                       payment of incentives based solely                     ‘‘primarily’’ or ‘‘substantially’’ based
                                                   § 668.14(b)(22)(ii). The Department                     upon success in securing enrollments,                  upon enrollments.
                                                   would, however, clarify, in proposed                    has led institutions to establish, on                     2. Compensation related to
                                                   § 668.14(b)(22)(ii), that eligible                      paper, other factors that are purportedly              enrollment in programs that are not
                                                   institutions and their contractors may                  used to evaluate student recruiters other              eligible for title IV, HEA program funds.
                                                   make merit-based adjustments to                         than the sheer numbers of students                     Section 487(a)(20) of the HEA provides
                                                   employee compensation, provided that                    enrolled. However, in practice,                        that compensation may not be based
                                                   such adjustments are not based directly                 consideration of these factors has been                upon success in securing enrollments
                                                   or indirectly upon success in securing                  minimal at best, or otherwise                          whether the students receive title IV,
                                                   enrollments or the award of financial                   indiscernible. This has led the                        HEA funds, or some other form of
                                                   aid.                                                    Department to expend vast resources                    student financial assistance. This safe
                                                      Finally, in proposed                                 evaluating the legitimacy of institutional             harbor provides an impetus to steer
                                                   § 668.14(b)(22)(iii), the Department                    compensation plans, and considerable                   students away from title IV, HEA
                                                   would define the following key terms                    time and effort has been lost by both the              programs. The potential also exists for
                                                   that would be used in proposed                          Department and institutions engaged in                 manipulation, as students who were
                                                   § 668.14(b)(22): Commission, bonus, or                  litigation. Moreover, the Department                   initially enrolled in non-title IV, HEA
                                                   other incentive payment, securing                       believes that students are frequently the              eligible programs may then be re-
                                                   enrollments or the awards of financial                  victims of compensation plans that                     enrolled in title IV, HEA eligible
                                                   aid, and enrollment.                                    institutions have adopted within the                   programs. As a result, the Department
                                                      Proposed § 668.14(b)(22)(iii)(A) would               ambit of the first safe harbor. When                   proposes to remove this safe harbor.
                                                   define commission, bonus, or other                      admissions personnel are compensated                      3. Compensation related to contracts
                                                   incentive payment as a sum of money or                  substantially, if not entirely, upon the               with employers to provide training.
                                                   something of value paid or given to a                   numbers of students enrolled, the                      Compensation permitted under this safe
                                                   person or entity for services rendered.                 incentive to deceive or misrepresent the               harbor includes compensation that is
                                                      Proposed § 668.14(b)(22)(iii)(B) would               manner in which a particular                           ultimately based upon success in
                                                   define securing enrollments or the                      educational program meets a student’s                  securing enrollments, and is thus
                                                   awards of financial aid as activities that              need increases substantially. As a result,             inconsistent with section 487(a)(20) of
                                                   a person or entity engages in for the                   the Department believes that the                       the HEA.
                                                   purpose of the admission or                             existence of the safe harbors is a major                  4. Compensation related to profit-
                                                   matriculation of students for any period                impediment to ensuring that students                   sharing bonus plans. There is no
                                                   of time or the award of financial aid to                are enrolled in educational programs                   statutory proscription upon offering
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                                                   students. Proposed                                      that are meaningful to them. There was                 employees either profit-sharing or a
                                                   § 668.14(b)(22)(iii)(B)(1) and                          considerable discussion on this                        bonus; however, if either is based upon
                                                   (b)(22)(iii)(B)(2) would clarify that the               proposed approach during the                           success in securing enrollments, it is not
                                                   term securing enrollments or the awards                 negotiated rulemaking sessions.                        permitted. Therefore, this safe harbor is
                                                   of financial aid includes recruitment                      At the outset of the discussions on                 unnecessary.
                                                   contact in any form and excludes                        incentive compensation during                             5. Compensation based on program
                                                   making a payment to a third party for                   negotiated rulemaking, the Department                  completion. The Department believes
                                                   student contact information for                         reviewed each of the 12 safe harbors                   that this safe harbor permits
                                                   prospective students, respectively.                     reflected in the current regulations and               compensation that is ‘‘indirectly’’ based


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                                                   34818                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   upon securing enrollments—that is,                      as a $100 gift card constitute a                       activities as they relate to recruitment
                                                   unless the student enrolls, the student                 substantial incentive for many students.               activities is also unnecessary.
                                                   cannot successfully complete an                         Further, the fair market value of an item                 The Department believes that removal
                                                   educational program. With the                           might be considerably greater than its                 of these regulatory safe harbors is
                                                   proliferation of short-time, accelerated                cost. A high value item for which the                  necessary to ensure that section
                                                   programs, the potential exists for shorter              institution paid a minimal cost could                  487(a)(20) of the HEA is properly
                                                   and shorter programs, and increased                     not be considered a token gift. As a                   applied. The Department has
                                                   efforts to rely upon this safe harbor to                result, even the provision of token gifts              determined that these safe harbors do
                                                   incentivize recruiters. Moreover, this                  to students and alumni is fraught with                 substantially more harm than good, and
                                                   safe harbor may lead to lowered or                      the potential for abuse, creating the                  believes that institutions should not
                                                   misrepresented admissions standards                     need to remove this safe harbor, as well.              look to safe harbors to determine
                                                   and program offerings, lowered                             9. Compensation based on profit                     whether a payment complies with
                                                   academic progress standards, altered                    distributions that are based on an                     section 487(a)(20) of the HEA. Rather,
                                                   attendance records, and a lack of                       individual’s ownership interest. Section               the Department believes that
                                                   meaningful emphasis on retention. The                   487(a)(20) of the HEA prohibits                        institutions can readily determine if a
                                                   Department has seen schools that have                   compensation, including profit                         payment or compensation is permissible
                                                   devised and operated grading policies                   distributions, that is based upon success              under section 487(a)(20) of the HEA by
                                                   that all but ensure that students who                   in securing enrollments and the award                  analyzing—
                                                   enroll will graduate, regardless of their               of financial aid. It does not prohibit                    (1) Whether it is a commission, bonus,
                                                   academic performance. For these                         profit distributions based upon an                     or other incentive payment, defined as
                                                   reasons, the Department believes it is                  individual’s ownership interest. As a                  an award of a sum of money or
                                                   appropriate to delete this safe harbor.                 result, it is the Department’s view that               something of value paid to or given to
                                                      6. Compensation related to pre-                      this safe harbor is unnecessary.                       a person or entity for services rendered;
                                                   enrollment activities. The Department                      10. Compensation related to Internet-               and
                                                   does not believe that this safe harbor is               based activities. Technological                           (2) Whether the commission, bonus,
                                                   appropriate. Individuals may not                        advancements and developments in                       or other incentive payment is provided
                                                   receive incentive compensation based                    Internet-based activities since this safe              to any person based directly or
                                                   on their success in soliciting students                 harbor was adopted, and the frequency                  indirectly upon success in securing
                                                   for interviews; soliciting students for                 with which such activities are now                     enrollments or the award of financial
                                                   interviews is a recruitment activity, not               relied upon, argue against the continued               aid, which are defined as activities
                                                   a pre-enrollment activity. In addition,                 provision of this safe harbor. Moreover,               engaged in for the purpose of the
                                                   because a recruiter’s job description is                with the elimination of the first safe                 admission or matriculation of students
                                                   to recruit, it would be very difficult for              harbor, it can be anticipated that an                  for any period of time or the award of
                                                   an institution to document that it was                  institution seeking to avoid compliance                financial aid.
                                                   paying a bonus to a recruiter solely for                with section 487(a)(20) of the HEA will                   If the answer to each of these
                                                   clerical pre-enrollment activities. Such                maximize its Internet-based recruitment                questions is yes, the commission, bonus,
                                                   activities certainly contribute                         activities. For this reason, the                       or incentive payment would not be
                                                   ‘‘indirectly,’’ if not ‘‘directly,’’ to the             Department proposes to remove this safe                permitted under the statute. Therefore,
                                                   success in securing enrollments, and                    harbor.                                                the Department proposes to simplify its
                                                   hence compensation based upon them is                      11. Compensation to third parties for               regulations to better align them with
                                                   prohibited by the statute. Moreover,                    non-recruitment activities. The                        section 487(a)(20) of the HEA.
                                                   with the elimination of the safe harbor                 Department believes that this safe                        Most non-Federal negotiators favored
                                                   relating to adjustments to employee                     harbor is no longer necessary. Proposed                the Department’s proposal to remove the
                                                   compensation, an unscrupulous actor                     § 668.14(b)(22) states that a person or                current safe harbors because they
                                                   could claim that the activities in which                entity who is engaged in any student                   believe that the regulatory safe harbors
                                                   its recruiters engaged, and for which                   recruitment or admission activity, or in               have led to inappropriate incentive
                                                   they were compensated, consisted of                     making decisions regarding the                         compensation practices by institutions
                                                   ‘‘clerical’’ or ‘‘pre-enrollment’’ activities,          awarding of title IV, HEA program funds                that are prohibited by the HEA. The
                                                   regardless of whether a student                         may not be compensated directly or                     majority of the non-Federal negotiators
                                                   ultimately enrolled.                                    indirectly based upon the success in                   indicated strong support for the removal
                                                      7. Compensation related to                           securing enrollments. Thus, there is no                of these safe harbors, believing that
                                                   managerial and supervisory employees.                   reason to provide any discussion of                    doing so would more accurately reflect
                                                   The Department believes that this safe                  third-party activities as they relate to               congressional intent and protect
                                                   harbor provision is no longer                           non-recruitment activities as a potential              students from abusive recruitment
                                                   appropriate because senior management                   safe harbor.                                           practices that have directly resulted
                                                   may drive the organizational and                          12. Compensation to third parties for                when institutions have sought to
                                                   operational culture at an institution,                  recruitment activities. This safe harbor               circumvent, if not directly flaunt,
                                                   creating pressures for top, and even                    expands the scope of the eleventh safe                 section 487(a)(20) of the HEA.
                                                   middle, management to secure                            harbor to include ‘‘recruiting or                         The non-Federal negotiator who
                                                   increasing numbers of enrollments from                  admission activities,’’ while providing                opposed the Department’s proposed
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                                                   their recruiters. As a result, these                    the caveat that the compensation cannot                removal of the safe harbors and their
                                                   individuals should not be exempt from                   be offered in an otherwise legally                     replacement with certain definitions
                                                   the ban on receiving incentive                          impermissible manner. As mentioned in                  argued that the safe harbors are needed
                                                   compensation.                                           regard to the eleventh safe harbor,                    to explain the scope of the prohibition
                                                      8. Compensation related to token                     section 487(a)(20) of the HEA expressly                in section 487(a)(20) of the HEA, which
                                                   gifts. As at least one non-Federal                      proscribes payments to ‘‘any persons or                was perceived as being unclear. Without
                                                   negotiator noted, students oft-times do                 entities’’ based directly or indirectly on             the safe harbors, it was argued,
                                                   things with little reflection if it brings              success in securing enrollments, so any                institutions would not have a clear
                                                   an immediate reward, and such things                    further discussion of third party                      sense of what practices are permitted


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                                                   and, therefore, would be more likely to                 among those factors. Further, an                       any money or item of value on the basis
                                                   unintentionally violate the prohibition                 increase that is based either directly or              of direct or indirect success in securing
                                                   in section 487(a)(20) of the HEA and                    indirectly on individual student                       enrollments or the award of financial
                                                   § 668.14(b)(22). However, any merit to                  numbers would be prohibited. The                       aid.
                                                   this argument is belied by the ease of                  Department believes that the language                     Several non-Federal negotiators asked
                                                   the application of the two-part test the                in proposed § 668.14(b)(22)(ii) makes                  for clarification about the extent to
                                                   Department has offered that will                        this clear.                                            which supervisors and upper level
                                                   demonstrate whether a compensation                          One negotiator felt strongly that it was           administrators would be covered by
                                                   plan or payment complies with the                       critical to use the word ‘‘solely,’’ or some           proposed § 668.14(b)(22). The
                                                   statute and its implementing                            other modifier, to limit the prohibition               Department’s position is that section
                                                   regulations.                                            in proposed § 668.14(b)(22)(i) (i.e., ‘‘It             487(a)(20) of the HEA is clear that the
                                                      A sub-caucus of non-Federal                          will not provide any commission,                       incentive compensation prohibition
                                                   negotiators worked between the second                   bonus, or other incentive payment based                applies all the way to the top of an
                                                   session of negotiated rulemaking and                    solely upon success * * *’’ rather than                institution or organization. Therefore,
                                                   the third session of negotiated                         ‘‘It will not provide any commission,                  individuals who are engaged in any
                                                   rulemaking to develop draft regulatory                  bonus, or other incentive payment based                student recruitment or admissions
                                                   language that would retain, but narrow                  directly or indirectly upon success’’).                activity or in making decisions about
                                                   the scope of, the safe harbors in the                   This negotiator said that the use of the               the award of student financial aid are
                                                   current regulations. There was much                     word solely, or some other modifier,                   covered by this prohibition.
                                                   discussion regarding the sub-caucus’                    would be consistent with the use of that                  One negotiator asked the Department
                                                   proposed draft language, as well as one                 term solely in the first safe harbor                   to clarify how the prohibition reflected
                                                   final counter-proposal brought to the                   reflected in current § 668.14(b)(22)(ii)(A)            in proposed § 668.14(b)(22) would work
                                                   negotiating table.                                      (i.e., ‘‘ * * * is not based solely on the             in the case of an institution that partners
                                                      A number of specific concerns were                   number of students recruited, admitted,                with other institutions or organizations
                                                   raised during these discussions. First                  enrolled, or awarded financial aid’’). As              to receive shared services, an approach
                                                   and foremost, negotiators wanted to                     discussed earlier in this preamble, given              that some institutions are turning to for
                                                   understand what the likely impact                       the Department’s experience with how                   economic reasons. As an example, a
                                                   would be if the safe harbors were                       the first safe harbor in current                       group of institutions might share a
                                                   removed from the regulations. They                      § 668.14(b)(22) has been abused, the                   centralized campus security team
                                                   questioned whether all previously                       Department does not believe that such                  because doing so could be less
                                                   permitted actions would now be                          a construction is warranted. It is the                 expensive than having each institution
                                                   prohibited. The Department explained                    Department’s view that, consistent with                set up its own team. If institutions use
                                                   its position: That, going forward, under                section 487(a)(20) of the HEA, incentive               this model of shared services for
                                                   the proposed regulations, institutions                  payments should not be based in any                    financial aid purposes and the payment
                                                   would need to re-examine their                          part, directly or indirectly, on success in            for the shared services is volume-driven
                                                   practices to ensure that they comply                    securing enrollments or the awards of                  (e.g., an institution is billed based on
                                                   with proposed § 668.14(b)(22). To the                   financial aid.                                         the number of student files that are
                                                   extent that a safe harbor created an                        In addition, some negotiators                      processed), the negotiator asked if
                                                   exception to the statutory prohibition                  advocated for an institution’s ability to              institutions would comply with
                                                   found in section 487(a)(20) of the HEA,                 pay bonuses on the basis of students                   proposed § 668.14(b)(22). The
                                                   its removal would establish that such an                who complete their programs of                         Department does not believe that the
                                                   exception no longer exists, and that the                instruction, as currently provided for in              proposed language would automatically
                                                   action that had been permitted is now                   the fifth safe harbor. They believed that              preclude an institution’s use of this type
                                                   prohibited.                                             this category of students (i.e., students              of arrangement, provided that payment
                                                      Several negotiators were concerned                   who complete their programs), is                       is not based on success in securing
                                                   that under the Department’s proposal,                   different from the category of students                enrollments or the awards of financial
                                                   institutions would be prohibited from                   who enroll, for which compensation                     aid. In the normal course, the contractor
                                                   paying merit-based increases to their                   may not be based. The Department does                  would be paid for services rendered
                                                   financial aid or admissions personnel.                  not agree. As previously stated, the                   without violating the proposed
                                                   In particular, some negotiators                         Department believes that the regulations               regulations.
                                                   supported the inclusion of language that                must clearly reinforce the statutory                      Several negotiators were concerned
                                                   would permit an institution to make                     provision and exclude the possibility of               about the impact of the proposed
                                                   merit-based adjustments based on an                     basing any portion of a bonus on                       language on an institution’s Internet-
                                                   employee’s performance in relation to                   success in securing student enrollments                based activities. Negotiators asserted
                                                   an institution’s goals, such as those for               or financial aid awards.                               that the HEA permits advertising and
                                                   enrollment, completion, or graduation.                      Several negotiators requested that the             marketing activities by a third party, as
                                                      The Department’s proposed                            Department define the term ‘‘bonus’’ as                long as payment to the third party is
                                                   regulations continue to authorize merit-                a way to help institutions understand                  based on those who ‘‘click’’ and is not
                                                   based compensation for financial aid or                 what types of compensation are                         based on the number of individuals who
                                                   admissions staff. An institution could                  appropriate. Accordingly, in proposed                  enroll. The Department agrees and does
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                                                   use a variety of standard evaluative                    § 668.14(b)(22)(iii)(A), the Department                not believe that the proposed regulatory
                                                   factors as the basis for such an increase;              proposes to define the term commission,                language would prohibit such click-
                                                   however, consistent with section                        bonus, or other incentive payment as a                 through payments.
                                                   487(a)(20) of the HEA, under proposed                   sum of money or something of value                        The issue of token gifts prompted
                                                   § 668.14(b)(22), it would not be                        paid to or given to a person or an entity              some discussion. Several negotiators
                                                   permitted to consider the employee’s                    for services rendered. Linked to the                   asked the Department to clarify whether
                                                   success in securing student enrollments                 language in proposed                                   an institution that offers some type of
                                                   or the award of financial aid or                        § 668.14(b)(22)(i)(A), this definition is              payment to current students in
                                                   institutional goals based on that success               unambiguous in prohibiting payment of                  exchange for their contact list would


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                                                   34820                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   violate proposed § 668.14(b)(22). The                   student, the personal injury or illness of             even if the student does not meet these
                                                   Department believes that this type of                   the student, or special circumstances as               requirements, if the student’s failure to
                                                   activity is permitted as long as the                    determined by the institution.                         meet these requirements is based upon
                                                   student is not paid or given an item of                    Current Regulations: Three sections in              the death of a relative of the student, an
                                                   value on the basis of the number of                     current regulations contain satisfactory               injury or illness of the student, or other
                                                   students who apply or enroll. Most                      academic progress requirements.                        special circumstances. Current
                                                   negotiators agreed with this position.                  Current § 668.16(e) specifies that for an              § 668.34(e) requires an institution to
                                                     Finally, several non-Federal                          institution to be considered                           review a student’s academic progress at
                                                   negotiators asked whether the                           administratively capable, it must, for the             the end of each year, at a minimum.
                                                   Department would offer private letter                   purpose of determining student                            Proposed regulations: The proposed
                                                   guidance on conduct that may violate                    eligibility, establish, publish and apply              regulations would restructure the
                                                   proposed § 668.14(b)(22). Accordingly,                  reasonable standards for measuring                     satisfactory academic progress
                                                   the Department believes the proposed                    whether a student is maintaining                       requirements. Proposed § 668.16(e)
                                                   language is clear and reflective of                     satisfactory progress in his or her                    (Standards of administrative capability)
                                                   section 487(a)(20) of the HEA. The                      educational program.                                   would be revised to include only the
                                                   Department believes it will                                Under current § 668.16(e), a                        requirement that an institution
                                                   appropriately guide institutions as they                satisfactory academic progress policy is               establish, publish, and apply
                                                   evaluate compensation issues. To the                    considered reasonable if the standards                 satisfactory academic progress standards
                                                   extent that ongoing questions arise on a                are the same as or stricter than the                   that meet the requirements of § 668.34.
                                                   particular aspect of the regulations, the               institution’s standards for students                   The remainder of current § 668.16(e)
                                                   Department will respond appropriately.                  enrolled in the same educational                       would be moved to proposed § 668.34
                                                   This response may include a                             program who are not receiving title IV,                such that it, alone, describes all of the
                                                   clarification in a Department                           HEA program funds and contain both                     required elements of a satisfactory
                                                   publication, such as the Federal Student                qualitative (grade-based) and                          academic progress policy as well as how
                                                   Aid Handbook or a Dear Colleague                        quantitative (time-related) standards.                 an institution would implement such a
                                                   Letter. The Department believes that                    Under current § 668.16(e)(3), the                      policy. The references in paragraph
                                                   rather than focusing clarifying guidance                institution must apply the standards                   § 668.32(e) would be updated to
                                                   on the situation at a particular                        consistently to all students within each               conform the section with the changes
                                                   institution, any illuminating statements                category of students, e.g., full-time, part-           proposed to §§ 668.16(e) and 668.32.
                                                   must be broadly applicable and                          time, undergraduate, and graduate                         Proposed § 668.34(a) would specify
                                                   distributed widely to all participating                 students, and each educational program.                the elements an institution’s satisfactory
                                                   institutions. As a result, the Department                  The policy must provide that the                    academic policy must contain to be
                                                   does not intend to provide private                      institution checks both qualitative and                considered a reasonable policy. Under
                                                   guidance regarding particular                           quantitative components of the                         the proposed regulations, institutions
                                                   compensation structures in the future                   standards at the end of each increment,                would continue to have flexibility in
                                                   and will enforce the law as written.                    which may not be longer than one half                  establishing their own policies;
                                                     Negotiators did not reach agreement                   of the educational program or one                      institutions that choose to measure
                                                   on this issue.                                          academic year, whichever is less.                      satisfactory academic progress more
                                                                                                              Current § 668.16(e)(5) and (e)(6)                   frequently than at the minimum
                                                   Satisfactory Academic Progress                          require that a satisfactory academic                   required intervals would have
                                                   (§§ 668.16(e), 668.32(f), 668.34)                       policy provide specific procedures                     additional flexibility (see proposed
                                                     Statute: Section 484(a)(2) of the HEA                 under which a student may appeal a                     § 668.34(a)(3)).
                                                   requires that a student make satisfactory               determination that the student is not                     All of the policy elements in the
                                                   progress in the student’s course of study               making satisfactory academic progress                  current regulations under §§ 668.16(e)
                                                   in order to be eligible to receive title IV,            and specific procedures for a student to               and 668.34 would be combined in
                                                   HEA program funds. Section 484(c) of                    re-establish that the student is making                proposed § 668.34. In addition,
                                                   the HEA provides that a student is                      satisfactory academic progress.                        proposed § 668.34(a)(5) would make
                                                   making satisfactory progress if the                        Current § 668.32 contains general                   explicit the requirement that
                                                   institution reviews the progress of the                 student eligibility requirements. Current              institutions specify the pace at which a
                                                   student at the end of each academic                     paragraph (f) of this section specifies                student must progress through his or her
                                                   year, or its equivalent, and the student                that to be eligible to receive title IV,               educational program to ensure that the
                                                   has a cumulative C average, or its                      HEA program assistance, a student must                 student will complete the program
                                                   equivalent, or academic standing                        maintain satisfactory progress in his or               within the maximum timeframe, and
                                                   consistent with the requirements for                    her course of study under the                          provide for measurement of a student’s
                                                   graduation, as determined by the                        institution’s published satisfactory                   pace at each evaluation. Under
                                                   institution, at the end of the student’s                progress standards. These standards                    proposed § 668.34(a)(6), institutional
                                                   second academic year. Section 484(c)(2)                 must comply with the provisions of                     policies would need to describe how a
                                                   of the HEA provides that a student who                  § 668.16(e) and, if applicable, § 668.34.              student’s GPA and pace of completion
                                                   has failed to maintain satisfactory                        Current § 668.34 specifies that a                   are affected by transfers of credit from
                                                   progress and, subsequent to that failure,               student who is enrolled in a program of                other institutions. This provision would
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                                                   has academic standing consistent with                   study that is longer than two academic                 also require institutions to count credit
                                                   the requirements for graduation, as                     years must, at the end of the second                   hours from another institution that are
                                                   determined by the institution, may                      year, have a grade point average (GPA)                 accepted toward a student’s educational
                                                   again be determined eligible for                        of at least a ‘‘C’’ or its equivalent, or have         program as both attempted and
                                                   assistance under title IV, HEA programs.                academic standing that is consistent                   completed hours.
                                                   Section 484(c)(3) of the HEA allows an                  with the institution’s graduation                         Proposed § 668.34(a)(7) would
                                                   institution to waive the satisfactory                   requirements. Under current § 668.34(c),               provide that, except as permitted in
                                                   progress provisions for undue hardship                  an institution may find that a student is              § 668.34(c) and (d), the policy requires
                                                   based on the death of a relative of the                 making satisfactory academic progress,                 that, at the time of each evaluation, if


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                             34821

                                                   the student is not making satisfactory                  provide for notification to students of                have raised concerns about the
                                                   academic progress, the student is no                    the results of an evaluation that impacts              effectiveness of institutions’ satisfactory
                                                   longer eligible to receive title IV, HEA                the student’s eligibility for title IV, HEA            academic policies, even those that
                                                   assistance.                                             program funds.                                         comply with the Department’s current
                                                      Proposed § 668.34(a)(8) would require                   In proposed § 668.34(b), we would                   regulatory criteria. For example, it has
                                                   institutions that use ‘‘financial aid                   define several important terms that are                become evident that the use of
                                                   warning’’ and ‘‘financial aid probation’’               used in this section:                                  automatic probationary periods has
                                                   statuses (concepts that would be defined                   We would define the term appeal as                  resulted in some students receiving title
                                                   in proposed § 668.34(b)) in connection                  a process by which a student who is not                IV, HEA aid for as long as 24 months
                                                   with satisfactory academic progress                     meeting the institution’s standards                    even though they are not meeting the
                                                   evaluations to describe these statuses                  petitions the institution for                          institution’s satisfactory academic
                                                   and how they are used in their                          reconsideration of the student’s                       progress standards. Moreover, it is also
                                                   satisfactory academic progress policies.                eligibility for title IV, HEA program                  clear that institutions use a variety of
                                                   Proposed § 668.34(a)(8)(i) would specify                funds.                                                 terms—warning, probation, amnesty—to
                                                   that a student on financial aid warning                    The term financial aid probation                    describe situations in which a student is
                                                   may continue to receive assistance                      would be defined as a status assigned by               not making satisfactory academic
                                                   under the title IV, HEA programs for one                an institution to a student who fails to               progress, but nevertheless has been
                                                   payment period despite a determination                  make satisfactory academic progress and                determined eligible to receive assistance
                                                   that the student is not making                          who has appealed and has had                           under the title IV, HEA programs.
                                                   satisfactory academic progress.                         eligibility for aid reinstated.                        Repeated uses of these statuses, or use
                                                   Financial aid warning status may be                        The term financial aid warning would                of a combination of these statuses,
                                                   assigned without an appeal or other                     be defined as a status assigned to a                   applied sequentially, may lead to
                                                   action by the student. Proposed                         student who fails to make satisfactory                 prolonged periods during which
                                                   § 668.34(a)(8)(ii) would make clear that                academic progress at an institution that               students who are not making
                                                   an institution with a satisfactory                      evaluates academic progress at the end                 satisfactory academic progress
                                                   academic progress policy that includes                  of each payment period.                                nevertheless continue to receive title IV,
                                                   the use of the financial aid probation                     We would add a definition of the term               HEA program funds.
                                                   status could require that a student on                  maximum timeframe, which would be                         The proposed changes to §§ 668.16(e),
                                                   financial aid probation fulfill specific                based entirely on the description of                   668.32, and 668.34 are designed to
                                                   terms and conditions, such as taking a                  maximum timeframe in current                           implement a more structured,
                                                   reduced course load or enrolling in                     § 668.16(e)(2)(ii).                                    comprehensive, and consistent
                                                   specific courses.                                          Proposed § 668.34(c) and (d) would                  approach to the development and
                                                      Proposed § 668.34(a)(9) would require                specify that an institution’s policy may               implementation of institutional
                                                   an institution that permits a student to                provide for disbursement of title IV,                  satisfactory progress policies.
                                                   appeal a determination that the student                 HEA program funds to a student who                        During the discussions at the
                                                   is not making satisfactory academic                     has not met an institution’s satisfactory              negotiated rulemaking sessions, the
                                                   progress to describe the appeal process                 academic standards in certain                          Department explained the problems it
                                                   in its policy. The policy would need to                 circumstances.                                         has identified and solicited information
                                                   contain specified elements. Proposed                       Proposed § 668.34(c) would permit an                on current institutional policies and
                                                   § 668.34(a)(9)(i) would require an                      institution that measures satisfactory                 recommendations from the non-Federal
                                                   institution to describe how a student                   academic progress at the end of each                   negotiators on ways to amend the
                                                   may re-establish his or her eligibility to              payment period to have a policy that                   current regulations that would curtail
                                                   receive assistance under the title IV,                  would permit a student who is not                      abuses while retaining flexibility for
                                                   HEA programs. Under proposed                            making satisfactory academic progress                  institutions. The Department used this
                                                   § 668.34(a)(9)(ii), a student would be                  to be placed automatically on financial                information in developing the proposed
                                                   permitted to file an appeal based on the                aid warning, a newly defined term.                     regulations.
                                                   death of a relative, an injury or illness                  Finally, under proposed § 668.34(d),                   In the following paragraphs, we
                                                   of the student, or other special                        at an institution that measures                        describe the Department’s rationale for
                                                   circumstances. Under proposed                           satisfactory academic progress annually,               the specific substantive changes
                                                   § 668.34(a)(9)(iii), a student would be                 or less frequently than at the end of each             proposed to the satisfactory academic
                                                   required to submit, as part of the appeal,              payment period, a student who has been                 progress regulations.
                                                   information regarding why the student                   determined not to be making                               First we propose to expand the
                                                   failed to make satisfactory academic                    satisfactory academic progress would be                elements required for an institution’s
                                                   progress, and what has changed in the                   able to receive title IV, HEA program                  satisfactory academic progress policy to
                                                   student’s situation that would allow the                funds only after filing an appeal and                  include a description and specific
                                                   student to demonstrate satisfactory                     meeting one of two conditions: (1) The                 treatment of transfer credits, a
                                                   academic progress at the next                           institution has determined that the                    description of financial aid warning and
                                                   evaluation.                                             student should be able to meet                         probationary statuses (if applicable), a
                                                      Proposed § 668.34(a)(10) would                       satisfactory progress standards after the              requirement to notify students of the
                                                   require the satisfactory academic                       subsequent payment period, or (2) the                  results of a satisfactory progress review
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                                                   progress policy of an institution that                  institution develops an academic plan                  that impacts their eligibility for title IV,
                                                   does not permit students to appeal a                    with the student that, if followed, will               HEA program assistance, specific
                                                   determination that they are not making                  ensure that the student is able to meet                information required for appeals (if the
                                                   satisfactory academic progress to                       the institution’s satisfactory academic                institution permits appeals), and if an
                                                   describe how a student may regain                       progress standards by a specific point in              institution does not permit appeals, how
                                                   eligibility for assistance under the title              time.                                                  students may re-establish eligibility for
                                                   IV, HEA programs.                                          Reasons: Recent questions from                      title IV, HEA program funds. Having a
                                                      Proposed § 668.34(a)(11) would                       institutions and reviews of institutional              clear understanding of an institution’s
                                                   require that an institution’s policy                    satisfactory academic progress policies                satisfactory progress policy will help


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                                                   34822                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   students understand the institution’s                   specify the circumstances under which                  permit institutions to have satisfactory
                                                   academic expectations and will increase                 a student may appeal a determination                   academic policies that provide for
                                                   the likelihood of their academic success.               that the student is not making                         academic amnesty. One of the examples
                                                      We also propose to make changes to                   satisfactory academic progress and is                  given was of an individual who had an
                                                   the regulatory language concerning the                  not eligible to receive title IV, HEA                  unsuccessful academic career 10 years
                                                   frequency with which an institution                     funds for the subsequent term. The                     ago and now wants to reenroll. The
                                                   measures the satisfactory academic                      proposed regulations would not require                 Department’s position is that in such a
                                                   progress of its students. During                        institutions to permit students to                     situation, it would be appropriate for
                                                   negotiated rulemaking, several of the                   appeal, but they would specify that                    the institution to require the individual
                                                   non-Federal negotiators stressed the                    students may appeal only under certain                 to submit an appeal that explains the
                                                   importance of early intervention in                     circumstances. Several non-Federal                     change in circumstances from when the
                                                   helping students meet their educational                 negotiators asserted that their                        student failed to make satisfactory
                                                   goals. The Department agrees with this                  institutions had established the practice              academic progress 10 years ago. Under
                                                   approach; however, because section                      of granting appeals only to students who               proposed § 668.34(d), an institution’s
                                                   484(c) of the HEA requires institutions                 could explain how the circumstances                    satisfactory academic progress policy
                                                   to evaluate a student’s progress at the                 that had caused their academic                         could provide for such students to
                                                   end of each academic year or the                        problems had changed. These                            submit an appeal and develop an
                                                   equivalent, the Department is limited in                negotiators explained that in their                    academic plan with the institution that
                                                   its ability to have institutions evaluate               experience, if the root problem was not                would specify milestones the student
                                                   students’ progress more frequently (for                 addressed successfully, the student was                would be expected to meet. As in other
                                                   example, at the end of each payment                     just setting himself or herself up for                 situations where a student has had
                                                   period). To encourage institutions to                   failure the next term. These non-Federal               academic difficulty and been placed on
                                                   evaluate a student’s academic progress                  negotiators made a compelling argument                 financial aid probation, the institution
                                                   more frequently, the Department                         for this approach; therefore, we have                  would have the option of placing certain
                                                   proposes regulatory language that would                 incorporated it in proposed                            restrictions on the student, such as
                                                   offer additional flexibility to institutions            § 668.34(c)(8)(ii) (i.e., the student must             limiting the number of hours taken or
                                                   that measure satisfactory academic                      submit information regarding why the                   specifying a certain sequence of courses.
                                                   progress at the end of each payment                     student failed to make satisfactory                       We propose to require institutions
                                                   period. Proposed § 668.34(c) would                      academic progress and what has                         that do not permit students to appeal a
                                                   permit institutions that review student                 changed in the student’s situation that                determination that they are not making
                                                   progress at the end of each payment                     will allow the student to demonstrate                  satisfactory academic progress to inform
                                                   period to place students on financial aid               satisfactory academic progress in the                  students how they may re-establish
                                                   warning for one payment period, which                   next evaluation).                                      eligibility. This regulatory provision
                                                   would encourage institutions to provide                    There was also discussion during the                would be consistent with the language
                                                   additional support to students in a                     negotiated rulemaking sessions                         in section 484(c)(2) of the HEA, which
                                                   timely manner and would help students                   regarding what aspect of failure to meet               provides that a student who has failed
                                                   be successful.                                          satisfactory academic progress standards               to maintain satisfactory progress and,
                                                      We would define the term financial                   a student could appeal. The non-Federal                subsequent to that failure, has academic
                                                   aid warning (as well as the term                        negotiators generally agreed that failure              standing consistent with the
                                                   financial aid probation) in proposed                    to meet both the qualitative and                       requirements for graduation, as
                                                   § 668.34(b) to promote consistent                       quantitative standards may be appealed                 determined by the institution, may
                                                   application of these types of                           under current regulations, and that this               again be determined eligible for
                                                   designations among institutions that use                should be true under the proposed                      assistance under title IV, HEA programs.
                                                   these designations in connection with                   regulations as well. The Department                       Throughout the discussions during
                                                   their satisfactory academic progress                    agrees. There was also discussion about                the negotiated rulemaking sessions,
                                                   reviews. The term financial aid warning                 whether failure to meet the maximum                    non-Federal negotiators raised questions
                                                   would be defined as a status conferred                  timeframe has been subject to appeal in                about whether the statutory requirement
                                                   automatically and without action by a                   the past, and whether it would be                      that an institute review a student’s
                                                   student, while the term financial aid                   permitted under the proposed                           academic progress at the end of each
                                                   probation would be defined as a status                  regulations. Under the current                         academic year or its equivalent is tied
                                                   conferred after a student has submitted                 regulations, a student can appeal his or               to the student’s academic year, the
                                                   an appeal that has been granted. The                    her failure to complete his program in                 award year, the calendar year, or the
                                                   financial aid warning designation would                 the maximum timeframe. The                             institution’s defined academic year. It
                                                   be available only at an institution that                Department believes a student should                   became apparent that most institutions
                                                   measures satisfactory academic progress                 continue to be able to appeal a                        that review student progress annually,
                                                   at the end of each payment period.                      determination that the student has                     review all students at a specific point in
                                                   Defining each status would help all                     failed or will fail to meet the maximum                time, such as at the end of the spring
                                                   institutions to clearly distinguish when                timeframe requirements. We note that                   term or spring payment period. The
                                                   a student may continue to receive title                 the proposed regulations provide                       Department agrees that this is an
                                                   IV, HEA funds and under what                            flexibility to institutions to help address            appropriate and reasonable institutional
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                                                   conditions. By defining these terms to                  the needs of a student who is likely to                policy for an institution that reviews
                                                   describe the eligibility of the student to              exceed the maximum timeframe. An                       academic progress annually.
                                                   receive future disbursements, we can                    institution could work with the student                   Finally, there was some discussion
                                                   help ensure that students are treated                   to develop an academic plan that would                 during the negotiated rulemaking
                                                   consistently and equitably regardless of                require the student to meet the                        sessions about whether a student’s work
                                                   the institution they attend.                            institution’s graduation requirements by               completed during a summer term is
                                                      We also would add some regulatory                    a specific point in time.                              subject to evaluation. The Department’s
                                                   language to ensure that institutional                      Some non-Federal negotiators asked                  position is that any evaluations of
                                                   satisfactory academic progress policies                 whether the proposed regulations would                 satisfactory academic progress,


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                             34823

                                                   regardless of the frequency with which                  The language reflected in this proposed                response to these questions to help
                                                   they are conducted, must include all                    provision is also intended to address the              identify whether each student has a
                                                   work completed by the student since the                 Government Accountability Office                       valid high school diploma. If, in
                                                   last review. The Department welcomes                    recommendation raised in its August 17,                response to these questions on the
                                                   comments as to the clarity of the                       2009 report that the Secretary should                  FAFSA, a student lists a secondary
                                                   proposed language in this regard.                       provide institutions of higher education               school or entity that does not match the
                                                                                                           with information and guidance on                       list of secondary schools maintained by
                                                   Evaluating the Validity of High School                  determining the validity of high school
                                                   Diplomas (§ 668.16(p))                                                                                         the Department, or if the student does
                                                                                                           diplomas for use in gaining access to                  not provide the name of the secondary
                                                   Standards of Administrative Capability                  Federal student aid.                                   school or entity or the State that issued
                                                   (§ 668.16(p))                                              During the negotiated rulemaking
                                                                                                           sessions, we initially proposed draft                  the diploma, the Department may select
                                                      Statute: None.                                                                                              the student’s FAFSA for further review
                                                                                                           regulatory language that would have
                                                      Current Regulations: The current                                                                            by the institution to determine if the
                                                                                                           required institutions to evaluate the
                                                   regulations do not define the term ‘‘high                                                                      student has a valid high school diploma
                                                                                                           credentials of secondary schools for
                                                   school diploma’’ or otherwise include                                                                          before the student can receive any title
                                                                                                           purposes of determining whether high
                                                   provisions regarding the evaluation of                                                                         IV, HEA aid. Therefore, in cases where
                                                                                                           school diplomas issued from the schools
                                                   the validity of a student’s high school                                                                        the student is selected for review
                                                                                                           were valid. As part of this evaluation,
                                                   diploma. While the term recognized                                                                             because the Secretary questions the
                                                                                                           institutions would have been required
                                                   equivalent of a high school diploma is
                                                                                                           to maintain three listings of secondary                validity of his or her high school
                                                   defined in 34 CFR 600.2 (Definitions),
                                                                                                           schools (schools that are acceptable,                  diploma, institutions are expected to
                                                   the term ‘‘high school diploma’’ is not
                                                                                                           schools that are unacceptable, and                     determine the validity of the high
                                                   defined anywhere in the HEA or its                      schools that require further evaluation)
                                                   implementing regulations. The current                                                                          school diploma. Under proposed
                                                                                                           based on regulatory criteria for                       § 668.16(p), institutions also would be
                                                   regulations do, however, refer to high                  determining the acceptability of their
                                                   school diplomas in the context of                                                                              responsible for determining the validity
                                                                                                           credential for title IV, HEA program                   of a high school diploma if the
                                                   determining institutional eligibility as                purposes.
                                                   well as student eligibility for the title IV,                                                                  institution has reason to believe that the
                                                                                                              Many non-Federal negotiators                        diploma is invalid or was not obtained
                                                   HEA programs.                                           expressed concern over this proposed
                                                      First, 34 CFR 600.4(a)(2) (Institutions                                                                     from an entity that provides secondary
                                                                                                           draft regulatory language. Several non-
                                                   of higher education) requires an                                                                               school education. To determine the
                                                                                                           Federal negotiators stated that K–12
                                                   institution of higher education                         issues, including defining high school                 validity of a student’s high school
                                                   participating in the Federal student aid                diploma, should be handled at the State                diploma, an institution would need to
                                                   programs to admit as regular students                   level. Some non-Federal negotiators also               follow the procedures it develops to
                                                   only individuals who have obtained a                    objected to requiring institutions to                  evaluate the validity of diplomas. These
                                                   high school diploma or its recognized                   research the legitimacy of the high                    procedures could include, for example,
                                                   equivalent, or who are beyond the age                   school diploma a student presents and                  obtaining a copy of the student’s
                                                   of compulsory school attendance in the                  to maintain lists of secondary schools                 diploma.
                                                   State in which the institution is located.              based on this research. They argued that                  We intend to provide more specific
                                                      In order to be eligible to receive title             these activities would be unduly                       guidance to institutions on developing
                                                   IV, HEA aid, current § 668.32(e)                        burdensome. Instead, many non-Federal
                                                   (Student eligibility) requires a student to                                                                    and following procedures for evaluating
                                                                                                           negotiators argued that the Department                 the validity of high school diplomas
                                                   have a high school diploma or its                       should assume responsibility for
                                                   recognized equivalent, have completed                                                                          through the Federal Student Aid
                                                                                                           maintaining a centralized list of                      Handbook or through other means. This
                                                   secondary school in a home school                       secondary schools that institutions
                                                   setting, or pass an independently                                                                              guidance will address such issues as
                                                                                                           could use to determine whether a                       what procedures an institution might
                                                   administered examination approved by                    student’s high school diploma was
                                                   the Secretary.                                                                                                 use to determine the validity of a high
                                                                                                           valid.
                                                      Proposed Regulations: Under                             Based on concerns raised by the non-                school diploma.
                                                   proposed § 668.16(p), an institution                    Federal negotiators, the Department                       A non-Federal negotiator expressed
                                                   would be required to develop and                        agreed to establish and maintain a list                concern that the proposed regulations
                                                   follow procedures to evaluate the                       of secondary schools. We believe that                  do not go far enough to address fraud
                                                   validity of a student’s high school                     such a solution moves us appropriately                 committed at an institution. This
                                                   completion if the institution or the                    toward our goal of uncovering                          negotiator suggested that the proposed
                                                   Secretary has reason to believe that the                questionable high school diplomas,                     regulations should be further modified
                                                   high school diploma is not valid or was                 while imposing a minimal burden on                     to indicate that officials at an institution
                                                   not obtained from an entity that                        institutions.                                          should be aware and held accountable
                                                   provides secondary school education.                       In furtherance of this approach, the                for fraudulent activities committed at
                                                      Reasons: We propose adding                           Department has begun the process of
                                                   paragraph (p) to § 668.16 to provide that                                                                      the institution. We did not accept this
                                                                                                           adding two questions to the FAFSA for                  suggestion because the Department has
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                                                   it is the institution’s responsibility to               the 2011–2012 award year:
                                                   evaluate the validity of the diploma if                                                                        other avenues to address fraudulent
                                                                                                              (1) What is the name of the secondary
                                                   either the institution or the Secretary                                                                        activities. We noted that the Department
                                                                                                           school or entity that provided the
                                                   believes that a closer examination of the               student’s secondary school program of                  has successfully litigated cases where
                                                   diploma is warranted. This proposed                     study?                                                 institutions are held responsible for
                                                   change is designed to ensure that                          (2) What is the State that awarded the              regulatory violations of its employees.
                                                   students who report having high school                  student’s high school diploma?                            We were able to reach tentative
                                                   diplomas and obtain title IV, HEA aid in                   The Department intends to use the                   agreement on this issue.
                                                   fact have valid high school diplomas.                   information it collects from students in


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                                                   34824                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   Return of Title IV, HEA Program Funds                      These proposed regulations would                    completed should be considered to
                                                   (§§ 668.22(a), 668.22(b), and 668.22(f))                affect all programs with courses that are              determine how much of the title IV,
                                                   Treatment of Title IV, HEA Program                      less than the length of a term, including,             HEA aid the student earned. Third, the
                                                   Funds When a Student Withdraws From                     for example, a semester-based program                  prior guidance has resulted in abusive
                                                   Term-Based Programs With Modules or                     that has a summer nonstandard term                     cases where institutions have created
                                                                                                           with two consecutive six-week sessions                 term-based programs with a very short
                                                   Compressed Courses (§ 668.22(a) and (f))
                                                                                                           within the term.                                       initial module or course of as little as
                                                      Statute: None.                                          Reasons: The Department proposes                    one week in length so that institutions
                                                      Current Regulations: In accordance                   these changes to ensure more equitable                 can keep all of the title IV, HEA aid for
                                                   with § 668.22, when a recipient of title                treatment between students who                         students who withdraw after that point.
                                                   IV, HEA aid withdraws from an                           withdraw from programs that are                          During the negotiations, the non-
                                                   institution, the institution must                       measured in credit hours, regardless of                Federal negotiators raised concerns
                                                   determine the amount of title IV, HEA                   whether those programs span the full                   about the proposed approach, believing
                                                   aid that the student earned for the                     length of the term, or are programs with               that it would unfairly penalize students.
                                                   period the student attended. For term-                  modules or compressed courses.                         The negotiators also raised concerns
                                                   based programs, a student is paid aid for                  Under the guidance provided in Dear                 about the possibility of additional
                                                   each term. The regulations address the                  Colleague Letter GEN–00–24, we have                    burden from a significant increase in the
                                                   institution’s and the student’s                         equated completing one compressed                      number of return to title IV funds
                                                   responsibilities when a student does not                course or module with completing one                   calculations that an institution might
                                                   finish the term (i.e., withdraws from all               course taken over the span of the term.                have to perform, as well as about the
                                                   courses in the term) and specifies how                  Under this guidance, a student who was                 inability of many institutions to track
                                                   to calculate how much aid the student                   scheduled to take several modules or                   the number of students who are taking
                                                   earned for attending part of the term                   compressed courses in a term but                       these types of compressed courses.
                                                   prior to withdrawing. The regulations                   dropped out after completing only one                    The non-Federal negotiators
                                                   do not, however, specifically address                   course (for example, a 5-week course in                presented three options to address their
                                                   the treatment of term-based programs, in                a 15-week term) was not viewed as                      concerns by limiting the applicability of
                                                   which courses are less than the length                  having withdrawn from the term.                        the proposed treatment based upon the
                                                   of the term, under the return of title IV               Accordingly, while we required an                      relative amounts of the modules that
                                                   funds calculation. In Dear Colleague                    institution to recalculate the student’s               students completed before withdrawing.
                                                   Letter GEN–00–24, published in                          Federal Pell Grant payment as a result                 The first option was to exclude students
                                                   December 2000, the Department                           of any reduction in enrollment status                  who completed the same enrollment
                                                                                                           under § 690.80(b)(2)(ii) when the                      status for which they were originally
                                                   established the policy that a student
                                                                                                           student did not begin attendance in                    paid title IV, HEA aid. The second
                                                   who completes only one module or
                                                                                                           subsequent classes in the term, we did                 option suggested by the non-Federal
                                                   compressed course, within a term in
                                                                                                           not require the school to perform a                    negotiators was to exclude students who
                                                   which he or she is expected to continue
                                                                                                           return calculation under § 668.22.                     completed 50 percent of the credits that
                                                   attendance in additional coursework, is                    Based on this guidance, a student who               were awarded and 50 percent of the
                                                   not considered to have withdrawn                        completed only a one- or two-week                      projected enrollment time. The third
                                                   under the return calculation.                           course in a 15-week term and then                      option was to only apply the proposed
                                                      Proposed Regulations: The proposed                   ceased attendance for the term would                   regulations to compressed coursework
                                                   changes to § 668.22(a)(2) would clarify                 NOT be considered to have withdrawn                    that was shorter than a ‘‘to-be-
                                                   when a student is considered to have                    from the term under the return of title                determined’’ percent of the payment
                                                   withdrawn from a payment period or                      IV requirements. The institution or                    period; the non-Federal negotiators did
                                                   period of enrollment. In the case of a                  student or both would keep aid                         not reach agreement as to what the
                                                   program that is measured in credit                      intended for a 15-week period of time                  appropriate percentage should be.
                                                   hours, the student would be considered                  when the student only attended the                       We appreciate the concerns of the
                                                   to have withdrawn if he or she does not                 term for as little as one week.                        non-Federal negotiators, but we do not
                                                   complete all the days in the payment                       For a number of reasons, we have                    agree with the proposed alternatives. By
                                                   period or period of enrollment that the                 reconsidered our prior guidance. First,                recognizing that students who are taking
                                                   student was scheduled to complete                       this change would provide a more                       module classes are expected to earn
                                                   prior to withdrawing. In the case of a                  equitable treatment of students who are                their title IV, HEA aid over time on a
                                                   program that is measured in clock                       attending for comparable periods of                    prorata basis, those students are subject
                                                   hours, the student would be considered                  time during a semester because a                       to those requirements up to the point
                                                   to have withdrawn if he or she does not                 student’s aid is based on, and intended                where they complete more than 60
                                                   complete all of the clock hours in the                  to cover, in whole or in part, not only                percent of the period. We continue to
                                                   payment period or period of enrollment                  tuition and fees for the term, but the                 believe that the proposed changes are
                                                   that the student was scheduled to                       student’s living expenses for the term.                necessary to ensure the equitable
                                                   complete prior to withdrawing.                          Title IV, HEA aid is provided for the                  application of these provisions for all
                                                      The proposed change to                               entire term, and section 484B of the                   students, regardless of the academic
                                                   § 668.22(f)(2)(i) would clarify that, for               HEA provides that these same amounts                   calendar of the programs that students
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                                                   credit hour programs, in calculating the                are earned on a prorata basis for the first            are attending.
                                                   percentage of the payment period or                     60 percent of the term. Second, a
                                                   period of enrollment completed, it is                   student who only attends one module or                 Withdrawal Date for a Student Who
                                                   necessary to take into account the total                compressed course and then ceases to                   Withdraws From an Institution That Is
                                                   number of calendar days that the                        be enrolled without attending other                    Required To Take Attendance
                                                   student was scheduled to complete                       modules or compressed courses he or                    (§ 668.22(b))
                                                   prior to withdrawing without regard to                  she is scheduled to attend in the term                    Statute: Section 484B(c)(1) of the HEA
                                                   any course completed by the student                     is withdrawing before completing the                   requires institutions and students to
                                                   that is less than the length of the term.               term, and the portion of the term                      return unearned portions of title IV,


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                             34825

                                                   HEA grant or loan assistance (other than                   Proposed § 668.22(b)(3)(ii) would                   potential for fraud and abuse of Federal
                                                   funds received under the Federal Work-                  clarify that if an institution is required             funds.
                                                   Study Program) when a student                           to take attendance by an outside entity                   Proposed § 668.22(b)(3)(iii) would
                                                   withdraws during a payment period or                    or requires its instructors to take                    address instances where institutions
                                                   period of enrollment. The statute                       attendance for only some of its student,               take attendance for the period of time
                                                   defines the term the ‘‘day the student                  then it must use its attendance records                between the beginning of classes and
                                                   withdrew’’ differently for institutions                 to determine a withdrawal date for those               the deadline for adding or dropping
                                                   that are required to take attendance and                students.                                              classes. Where a student withdraws and
                                                   for those not required to take                             Proposed § 668.22(b)(3)(iii) would                  an institution’s records show that the
                                                   attendance. For an institution that is                  incorporate in the regulations current                 student stopped attending during that
                                                   required to take attendance, the ‘‘day the              nonregulatory guidance regarding an                    period, that is the best information
                                                   student withdrew’’ is determined by the                 institution that is required to take                   available for determining how much aid
                                                   institution from its attendance records.                attendance, or requires that attendance                the student earned. This proposed
                                                   For an institution that is not required to              be taken, for a limited period of time,                regulation reflects current guidance
                                                   take attendance, the ‘‘day the student                  such as for the first two weeks of                     about whether such institutions were
                                                   withdrew’’ is the date that the                         courses or until a ‘‘census date.’’ These              viewed as being required to take
                                                   institution determines that (1) the                     proposed provisions would specify that                 attendance for this limited period, and
                                                   student began the withdrawal process                    an institution must use its attendance                 this change in the text will help clarify
                                                   prescribed by the institution; (2) the                  records to determine a withdrawal date                 that requirement. The non-Federal
                                                   student otherwise provided official                     for a student who withdraws during that                negotiators expressed concern that
                                                   notification to the institution of the                  limited period. A student in attendance                students who appear to have stopped
                                                   intent to withdraw; or (3) in the case of               at the end of that limited period who                  attending during a census period may
                                                   a student who does not begin the                        subsequently stops attending during the                have subsequently attended other
                                                   withdrawal process or otherwise notify                  payment period would be treated as a                   classes before withdrawing. Institutions
                                                   the institution of the intent to withdraw,              student for whom the institution was                   have the option under § 668.22(c)(3) to
                                                   the date that is the midpoint of the                    not required to take attendance.                       use a student’s participation in an
                                                   payment period for which title IV, HEA                     Proposed § 668.22(b)(3)(iv) would also              academically related activity to show
                                                   program funds were disbursed or a later                 incorporate in the regulations current                 that the student continued to be
                                                   date documented by the institution.                     nonregulatory guidance that if an
                                                      Current regulations: Section                                                                                enrolled to a point where the institution
                                                                                                           institution is required to take                        was no longer required to take
                                                   668.22(b)(3) provides the requirements
                                                                                                           attendance, or requires that attendance                attendance.
                                                   for determining whether an institution
                                                                                                           be taken, on a specified date to meet a                   Proposed § 668.22(b)(3)(iv) also would
                                                   is required to take attendance for an
                                                                                                           census reporting requirement, the                      incorporate in the regulations our
                                                   educational program. Under
                                                                                                           institution is not considered to take                  current nonregulatory guidance that an
                                                   § 668.22(b)(3), an institution is required
                                                   to take attendance if an outside entity                 attendance.                                            institution is not required to use
                                                   (such as the institution’s accrediting                     Reasons: These proposed changes                     attendance records for return of title IV,
                                                   agency or a State agency) requires that                 would provide a more accurate                          HEA aid purposes if it is only required
                                                   the institution take attendance, as                     determination of how much title IV,                    to take attendance on a specific date. We
                                                   determined by the entity. In this case,                 HEA aid a student earned who                           would welcome comments on whether
                                                   the student’s withdrawal date is the last               withdrew from an institution during a                  this proposed regulation should be
                                                   date of academic attendance, as                         period when an instructor or other                     further clarified to specify that it applies
                                                   determined by the institution from its                  institution employee or procedure was                  only for one calendar date, or, for one
                                                   attendance records.                                     required to monitor student attendance.                class that meets during a small range of
                                                      Proposed regulations: The proposed                   The non-Federal negotiators had a                      dates, for example, for one day for any
                                                   revisions to § 668.22(b)(3) would clarify               number of concerns with respect to our                 class that met during a particular week,
                                                   the programs for which institutions are                 proposals regarding whether an                         rather than ‘‘a specific date.’’
                                                   required to take attendance. An                         institution is required to take attendance
                                                   institution would be required to take                   and regarding the proposed requirement                 Verification and Updating of Student
                                                   attendance if an outside entity or the                  that these institutions must use their                 Aid Application Information (Subpart E
                                                   institution itself has a requirement that               records in determining a student’s                     of Part 668)
                                                   its instructors take attendance, or if the              withdrawal date in a return to title IV                Application Information
                                                   institution or an outside entity has a                  calculation. The non-Federal negotiators
                                                   requirement that can only be met by                     pointed out that having to determine a                    Current subpart E of part 668 governs
                                                   taking attendance or a comparable                       more exact date of withdrawal, as                      the verification and updating of the
                                                   process, including, but not limited to,                 opposed to assuming a 50 percent point,                FAFSA information used to calculate an
                                                   requiring that students in a program                    would be more burdensome. They also                    applicant’s Expected Family
                                                   demonstrate attendance in the classes of                noted that attendance does not                         Contribution (EFC) for purposes of
                                                   that program, or a portion of that                      necessarily accurately reflect academic                determining an applicant’s need for
                                                   program. In addition, the proposed                      activity, and also stated that they cannot             student financial assistance under title
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                                                   regulations would remove the                            ensure that faculty members will keep                  IV of the HEA. In general, financial need
                                                   provisions in § 668.22(b)(3)(i) and (ii)                accurate and up-to-date attendance                     is defined as the difference between the
                                                   that it is the entity that determines                   records. While we can appreciate these                 applicant’s cost of attendance (COA)
                                                   whether there is a requirement to take                  concerns, we continue to believe that                  and EFC (see section 471 of the HEA).
                                                   attendance since the new provision                      the best date available should be used                 Based on the need analysis formula
                                                   looks at the substance of the information               to determine the amount of time that a                 established in part F of the HEA, the
                                                   being collected rather than the                         student was in attendance. Using the                   EFC is the amount that an applicant and
                                                   characterization of that information or                 best date available would support the                  the applicant’s family can reasonably be
                                                   process by the entity.                                  fair treatment of students and avoid the               expected to contribute toward the


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                                                   34826                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   applicant’s cost of attendance at an                      • Allowing interim disbursements                     programs.’’ In addition, in paragraph (c)
                                                   institution of higher education.                        when changes to an applicant’s FAFSA                   of proposed § 668.51, we would refer to
                                                      These proposed regulations would                     information would not change the                       ‘‘participating institutions’’ rather than
                                                   implement statutory changes made to                     amount the applicant would receive                     ‘‘institutions participating in the Federal
                                                   part F of the HEA by the HEOA and                       under title IV, HEA;                                   Stafford Loan Program.’’
                                                   further align these regulations with                      • Requiring all corrections to be                       Reasons: Throughout the proposed
                                                   enhancements that have been made to                     submitted to the Secretary for                         regulations, including in this proposed
                                                   the Federal Student Aid (FSA)                           reprocessing;                                          § 668.51, we propose to remove all the
                                                   application processing system. In the                     • Removing all allowable tolerances;                 program names and regulatory citations
                                                   following paragraphs we describe the                      • Applying the cash management                       for the ACG and National SMART Grant
                                                   substantive changes we propose to make                  procedures for proceeds received from a                programs because the authority to make
                                                   to subpart E of part 668 and the reasons                Subsidized Stafford Loan or Direct                     grants under these programs will expire
                                                   for the changes. These proposed                         Subsidized Loan on behalf of an                        at the end of the 2010–2011 award year,
                                                   changes include—                                        applicant; and                                         before these proposed regulations
                                                      • Revising the subpart E heading to                    • Describing the liability to an                     become effective. In making this change,
                                                   reflect that an applicant and an                        institution that disburses title IV, HEA               we also determined that it would be
                                                   institution have updating                               aid to an applicant without receiving a                appropriate to refer to the title IV, HEA
                                                   responsibilities in addition to                         corrected Student Aid Report (SAR) or                  programs affected by this subpart more
                                                   completing specific verification                        Institutional Student Information                      generally as ‘‘subsidized student
                                                   responsibilities;                                       Record (ISIR) within an established                    financial assistance programs’’ and
                                                      • Removing, redefining, and adding                   deadline.                                              ‘‘unsubsidized student financial
                                                   definitions;                                              Tentative agreement was reached on                   assistance programs,’’ as appropriate.
                                                      • Codifying current policy that an                   these proposed regulations during the                  We would define these terms in
                                                   institution must complete verification                  negotiated rulemaking.                                 proposed § 668.52.
                                                   before exercising any authority under                   General (§ 668.51)                                     Definitions (§ 668.52)
                                                   professional judgment;
                                                      • Removing the 30 percent cap on the                    Statute: Section 487(a)(5) of the HEA                  Statute: In 2008, the HEOA amended
                                                   number of applicants selected by the                    provides that an institution may                       the definition of the term total income
                                                   Secretary that an institution must verify               participate in a title IV, HEA program if              in section 480(a) of the HEA to provide
                                                   in order to move towards a more                         the institution enters into a written                  that, when calculating total income, the
                                                   targeted verification system;                           program participation agreement with                   Secretary may use income and other
                                                      • Restructuring the exclusions from                  the Secretary. A program participation                 data from the second preceding tax year
                                                   verification section;                                   agreement conditions the initial and                   to carry out the FAFSA simplification
                                                      • Requiring any changes to a                         continued participation of an eligible                 efforts used for the estimation and
                                                   student’s dependency status be updated                  institution in any title IV, HEA program               determination of financial aid
                                                   throughout the award year, including                    upon compliance with the provisions of                 eligibility. This provision also allows
                                                   changes resulting from a change in the                  part 668, the individual program                       the sharing of data between the IRS and
                                                   student’s marital status;                               regulations, and any additional                        the Secretary with the consent of the
                                                      • Updating the section heading under                 conditions specified in the program                    taxpayer as discussed later under
                                                   § 668.56 and replacing the five items                   participation agreement that the                       proposed § 668.57.
                                                   that an institution currently is required               Secretary requires the institution to                     Current Regulations: Current § 668.52
                                                   to verify for all applicants selected for               meet.                                                  includes definitions of key terms used
                                                   verification with a targeted verification                  Current Regulations: Current                        in this subpart including base year,
                                                   process that is specific to each applicant              § 668.51(a) describes the scope and                    edits, institutional student information
                                                   selected as described in a Federal                      purpose of subpart E of part 668.                      record, and student aid application.
                                                   Register notice published annually by                   Current § 668.51(b) requires that if the                  Proposed Regulations: Proposed
                                                   the Secretary;                                          Secretary or an institution requests                   § 668.52 would (1) remove the
                                                      • Codifying the Department’s Internal                documents or information from an                       definitions of base year, edits, and
                                                   Revenue Service (IRS) Data Retrieval                    applicant under this subpart, the                      student aid application; (2) revise the
                                                   Process, which allows an applicant to                   applicant must provide the specified                   definition for institutional student
                                                   import income and other data from the                   documents or information. Under                        information record (ISIR); and (3) add
                                                   IRS into an online FAFSA;                               current § 668.51(c), institutions                      definitions for the terms Free
                                                      • Updating the IRS deadline granted                  participating in the Federal Stafford                  Application for Federal Student Aid
                                                   for extension filers;                                   Loan Program that are not located in a                 (FAFSA), specified year, Student Aid
                                                      • Clarifying when an institution is                  State are exempted from the provisions                 Report (SAR), subsidized student
                                                   required to reverify the adjusted gross                 of subpart E of part 668.                              financial assistance programs, and
                                                   income (AGI) and taxes paid by an                          Proposed Regulations: Proposed                      unsubsidized student financial
                                                   applicant and his or her spouse or                      § 668.51 would remain largely                          assistance programs.
                                                   parents for individuals with an IRS tax                 unchanged from current § 668.51. We                       Reasons: We propose to delete the
                                                   filing extension;                                       propose to revise § 668.51(a) to refer to              definitions of the terms base year, edits,
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                                                      • Expanding the information a tax                    ‘‘student financial assistance under the               and student aid application because
                                                   preparer must provide on the copy of                    subsidized student financial assistance                these terms would no longer be used in
                                                   the filer’s return that has been signed by              programs’’ rather than to ‘‘student                    these proposed regulations.
                                                   the preparer;                                           financial assistance in connection with                   We propose to define the term Free
                                                      • Describing in an annual Federal                    the calculation of their expected family               Application for Federal Student Aid
                                                   Register notice other documentation                     contributions (EFC) for the Federal Pell               (FAFSA) and to use this term ‘‘FAFSA
                                                   that an applicant must provide for the                  Grant, ACG, National SMART Grant,                      information’’—rather than application—
                                                   information that is selected for                        campus-based, Federal Stafford Loan,                   throughout subpart E of part 668 in
                                                   verification;                                           Federal Direct Stafford/Ford Loan                      order to clarify that the information we


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                           34827

                                                   seek to verify includes not only the                    in the weeks, and in some cases months,                value of the data items used to calculate
                                                   information provided in the initial                     before the general tax-filing deadline of              the EFC.
                                                   FAFSA form submitted by an applicant,                   April 15. The proposed definition of                     Reasons: Proposed § 668.53(c) would
                                                   but also any subsequent transactions                    specified year would allow the                         codify as a requirement the
                                                   sent to the Secretary for processing that               Department to use a single term that,                  Department’s longstanding policy that
                                                   originated from the information                         depending on the context in which it is                an institution must complete
                                                   reported on the initial FAFSA (i.e.,                    used, means (1) the base year (i.e., the               verification before exercising
                                                   corrections).                                           calendar year preceding the first                      professional judgment under section
                                                      We propose to revise the definition of               calendar year of an award year) or (2)                 479A of the HEA.
                                                   the term institutional student                          the year before the base year.
                                                   information record (ISIR) to make it                                                                           Selection of FAFSA Information for
                                                                                                              We propose to add a definition of the               Verification (§ 668.54)
                                                   consistent with the definition of ISIR in               term Student Aid Report (SAR) and
                                                   34 CFR 690.2(c) of the Federal Pell                     simplify the repeated references to it in                 Statute: None.
                                                   Grant Program regulations. By                           these proposed regulations.                               Current Regulations: Current
                                                   establishing this definition in this                       We propose to add definitions for the               § 668.54(a) provides that an institution
                                                   subpart, we would make the term                         terms subsidized student financial                     is not required to verify the information
                                                   generally applicable to all title IV, HEA               assistance programs and unsubsidized                   from more than 30 percent of its
                                                   programs that are subject to the                        student financial assistance programs to               applicants for title IV, HEA assistance in
                                                   requirements in subpart E of part 668.                  group similar title IV, HEA programs                   any award year. Under current
                                                      We propose to define the term                        together (i.e., subsidized programs                    § 668.54(a)(2)(ii), an institution may
                                                   specified year to assist in the                                                                                only include those applicants selected
                                                                                                           versus unsubsidized programs). By
                                                   implementation of section 480(a) of the                                                                        for verification by the Secretary in its
                                                                                                           doing so, we would simplify the
                                                   HEA, which gives the Secretary the                                                                             calculation of the 30 percent total
                                                                                                           repeated references to the numerous
                                                   option of using income and other data                                                                          number of applicants. Under current
                                                                                                           affected programs in these proposed
                                                   from the second preceding tax year to                                                                          § 668.54(a)(3), if an institution has
                                                                                                           regulations.
                                                   calculate the statutorily defined EFC                                                                          reason to believe that any information
                                                   that determines the applicant’s                         Policies and Procedures—Professional                   on an application used to calculate an
                                                   eligibility for, and amount of, Federal                 Judgment (§ 668.53(c))                                 EFC is inaccurate, it must require the
                                                   aid. While the Department does not plan                                                                        applicant to verify the information that
                                                                                                             Statute: Section 479A of the HEA
                                                   to exercise this option for the 2011–                                                                          it has reason to believe is inaccurate.
                                                                                                           specifically gives the financial aid
                                                   2012 award year, we believe it is                                                                                 Except for information already
                                                                                                           administrator the authority to use
                                                   appropriate to modify the regulations at                                                                       verified under a previous application, if
                                                                                                           professional judgment to make
                                                   this time to allow for this flexibility in                                                                     an applicant is selected for verification,
                                                                                                           adjustments to the cost of attendance or
                                                   the future.                                                                                                    each additional application he or she
                                                      Under the current process for                        to the values of the items used in
                                                                                                                                                                  submits for the award year must also be
                                                   completing the FAFSA, an applicant,                     calculating the EFC to reflect a student’s
                                                                                                                                                                  verified (see current § 668.54(a)(4)).
                                                   the parents of a dependent applicant, or                special circumstances.
                                                                                                                                                                     Current § 668.54(a)(5) provides that an
                                                   the spouse of an applicant are required                   Current Regulations: Current § 668.53                institution or the Secretary may require
                                                   to use base year income and tax                         requires institutions to establish and use             an applicant to verify any data elements
                                                   information to respond to questions                     written policies and procedures for                    that the institution or the Secretary
                                                   used to calculate the statutorily defined               verifying information contained in the                 specifies.
                                                   EFC that determines the applicant’s                     FAFSA. Current § 668.53(a)(1) through                     Under current § 668.54(b)(1), the
                                                   eligibility for, and amount of, Federal                 (5) describes the items that must be                   Secretary excludes an applicant who
                                                   aid i.e., grants, loans and work-study                  included in the policies and procedures.               dies during the award year from
                                                   assistance. Under the new flexibility                   Current § 668.53(b) requires that an                   verification.
                                                   offered to the Secretary in section 480(a)              institution’s procedures provide that the                 In addition, under current
                                                   of the HEA, applicants could use                        institution furnish to each application                § 668.54(b)(2), the Secretary excludes
                                                   income and other data from the second                   selected for verification an explanation               the following categories of applicants
                                                   preceding tax year—rather than only the                 of the documentation needed to satisfy                 from verification if the institution has
                                                   base year. For example, an applicant                    the verification requirements and the                  no reason to believe that the information
                                                   completing the FAFSA for the 2013–                      applicant’s responsibilities with respect              reported by the applicant is incorrect:
                                                   2014 award year could use income and                    to the verification of applicant                          • An applicant or his or her parents
                                                   other related data pertaining to January                information.                                           who are legal residents of the
                                                   1, 2011–December 31, 2011 (the second                     Proposed Regulations: Except for                     Commonwealth of the Northern Mariana
                                                   preceding tax year) in addition to the                  minor technical and conforming                         Islands, Guam, or American Samoa; or
                                                   data the Secretary currently collects                   changes, proposed § 668.53(a) and (b)                  a citizen of the Republic of the Marshall
                                                   from the base year (January 1, 2012–                    would remain largely unchanged from                    Islands, the Federated States of
                                                   December 31, 2012).                                     current § 668.53(a) and (b). We propose                Micronesia, or the Republic of Palau
                                                      Allowing the use of data from an                     to add paragraph (c) to this section.                  (current § 668.54(b)(2)(i)).
                                                   earlier tax year would help with the                    Under proposed § 668.53(c), an                            • An applicant who is incarcerated
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                                                   significant calendar difference between                 institution’s written policies and                     (current § 668.54(b)(2)(ii)).
                                                   when an applicant may file a FAFSA                      procedures for verifying information                      • A dependent applicant whose
                                                   and when the data is available from the                 contained in a FAFSA must provide that                 parents are residing in a country other
                                                   filed income tax return. This is because                verification for an application selected               than the United States and cannot be
                                                   the FAFSA application process begins                    for verification is completed prior to the             contacted by normal means of
                                                   on January 1, and it is unlikely that tax               institution exercising professional                    communication (current
                                                   return information would be available                   judgment authority as permitted under                  § 668.54(b)(2)(iii)).
                                                   for the majority of financial aid                       section 479A of the HEA to make                           • An applicant who is a recent
                                                   applicants who complete their FAFSA                     changes to the applicant’s COA or to the               immigrant (current § 668.54(b)(2)(iv)).


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                                                   34828                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                      • An applicant whose parents’                        a citizen of the Republic of the Marshall              Register notice published under
                                                   address is unknown and cannot be                        Islands, the Federated States of                       § 668.56(a) and specifies that those
                                                   obtained by the applicant (current                      Micronesia, or the Republic of Palau.                  items must be verified for that one
                                                   § 668.54(b)(2)(v)).                                        • An applicant who is incarcerated.                 applicant) while another applicant may
                                                      • A dependent applicant, both of                        • An applicant who is a recent                      only be required to verify AGI and
                                                   whose parents are deceased or are                       immigrant.                                             household size (because the Secretary
                                                   physically or mentally incapacitated                       • A dependent applicant, both of                    includes these two items in the Federal
                                                   (current § 668.54(b)(2)(vi)).                           whose parents are deceased or are                      Register notice published under
                                                      • An applicant who does not receive                  physically incapacitated.                              § 668.56(a) and specifies that these are
                                                   assistance for reasons other than his or                   • An independent applicant’s spouse                 the only items that must be verified for
                                                   her failure to verify the information on                who is physically incapacitated.                       this applicant).
                                                   the application (current                                   Proposed § 668.54(b)(2) and (b)(3)                     Moreover, we expect information
                                                   § 668.54(b)(2)(vii)).                                   would list the circumstances under                     obtained through the IRS Data Retrieval
                                                      • An applicant who previously                        which the parents’ or spouse’s                         process to significantly reduce
                                                   completed verification at another                       information is not subject to verification             institutional burden as discussed later
                                                   institution (current § 668.54(b)(2)(viii)).             unless the institution has reason to                   under proposed § 668.57. For example,
                                                      Finally, under current § 668.54(b)(3),               believe the parents’ or spouse’s                       if one of the items selected for
                                                   the Secretary excludes the following                    information reported by the applicant is               verification for an applicant includes
                                                   categories of applicants from                           incorrect.                                             data that the applicant imported from
                                                   verification:                                              Reasons: The proposed changes to                    the IRS, we likely would not require the
                                                      • An applicant whose spouse is                       § 668.54 are needed to align this section              institution to verify that item.
                                                   deceased (current § 668.54(b)(3)(i)).                   of the regulations with modifications                     We are proposing to restructure
                                                      • An applicant whose spouse is                       that the Department proposes to make to                paragraph (b) to clarify under what
                                                   mentally or physically incapacitated                    the verification selection process.                    circumstances an institution is not
                                                   (current § 668.54(b)(3)(ii)).                           Specifically, the Department proposes to               required to verify the FAFSA
                                                      • An applicant whose spouse is                       remove the 30 percent limitation of the                information of: (1) the applicant; (2) the
                                                   residing in a country other than the                    total number of applicants selected for                parents of a dependent applicant; or (3)
                                                   United States and cannot be contacted                   verification and target the selection                  the spouse of an independent applicant.
                                                   by normal means of communication                        criteria based on the most error prone                 In instances where FAFSA information
                                                   (current § 668.54(b)(3)(iii)).                          data items that are specific to each                   from the parents or a spouse is not
                                                      • An applicant whose spouse cannot                   applicant selected.                                    required, we would still expect an
                                                   be located because his or her address is                   Based on years of data analysis                     institution to verify any information that
                                                   unknown and cannot be obtained by the                   compiled from random samples of                        would be applicable to the applicant.
                                                   applicant (current § 668.54(b)(3)(iv)).                 FAFSA submissions and the IRS                             We are also proposing to modify a
                                                      Proposed Regulations: The                            Statistical Study and Quality Assurance                number of exclusions that are included
                                                   Department proposes to require an                       Program analysis, we have made                         in the current regulations. Previously, if
                                                   institution to verify an applicant’s                    improvements to the verification                       the parent of a dependent student, or
                                                   FAFSA information for all applicants                    process that will better identify and                  the spouse of an independent student,
                                                   that are selected for verification by the               select those applicants whose FAFSA                    could not be located because their
                                                   Secretary (see proposed § 668.54(a)).                   information is most error prone. For this              address was unknown, verification was
                                                   Under proposed § 668.56(a), the                         reason, we propose to remove the 30                    not required. Given the shift to routinely
                                                   Secretary would publish an annual                       percent limitation on the number of                    contacting people using e-mail and cell
                                                   Federal Register notice that would                      applicants an institution is required to               phone numbers, lack of a physical
                                                   describe the information that an                        verify.                                                mailing address no longer precludes
                                                   institution and an applicant may be                        During negotiated rulemaking, some                  contact and communication. We believe
                                                   required to verify for those applicants                 non-Federal negotiators expressed                      it would be more appropriate to provide
                                                   selected for verification. In proposed                  concern that the removal of the 30                     an exclusion from verification only in
                                                   § 668.54(a)(2), we would retain the                     percent limitation on the number of                    circumstances where the parents or
                                                   provisions requiring an institution to                  applicants an institution is required to               spouse cannot be located because their
                                                   verify the accuracy of FAFSA                            verify would significantly increase an                 contact information is unknown. We are
                                                   information it has reason to believe is                 institution’s workload. Other non-                     also proposing to eliminate the
                                                   inaccurate. In proposed § 668.54(a)(3),                 Federal negotiators stated that many                   provision that a dependent student need
                                                   we would continue to provide                            institutions currently verify 100 percent              not provide parental information if both
                                                   institutions with the flexibility to verify             of those applicants the Department                     parents are deceased or are physically
                                                   any FAFSA information that an                           selects for verification.                              incapacitated. If both parents are
                                                   institution specifies.                                     Although some institutions may                      deceased, the student would be an
                                                      Under § 668.54(b), we would                          experience an increase in the number of                independent student, not a dependent
                                                   restructure the exclusions from                         applicants that are selected for                       student. Parents who are physically
                                                   verification to make clear the provisions               verification under the new process,                    incapacitated, but not mentally
                                                   that are applicable to all applicants, and              institutions would no longer be required               incapacitated, should be able to provide
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                                                   those that are specific to dependent or                 to verify all five items for each applicant            the documentation required for
                                                   independent applicants. We also would                   selected. Instead the information that an              verification under most circumstances.
                                                   remove the following categories of                      institution would be required to verify
                                                   applicants from the list of verification                would be specific to each applicant                    Updating Information—Changes in
                                                   exclusions:                                             selected (see proposed § 668.56(b)). For               Dependency Status (§ 668.55(c))
                                                      • An applicant or his or her parents                 example, one applicant may be required                   Statute: None.
                                                   who are legal residents of the                          to verify the five items required under                  Current Regulations: Current § 668.55
                                                   Commonwealth of the Northern Mariana                    the current regulations (because the                   describes the information in an
                                                   Islands, Guam, or American Samoa; or                    Secretary includes them in the Federal                 application that applicants must update


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                            34829

                                                   when there is a change and when and                     assistance received by an applicant is                 applicants to update changes to
                                                   how these changes must be made.                         based on the best available information.               dependency status that occur
                                                      Under current § 668.55(a)(2), an                        During negotiated rulemaking, there                 throughout the award year regardless of
                                                   institution need not require an applicant               was much discussion about identifying                  whether the applicant was selected for
                                                   to verify information in the applicant’s                in the regulations a specific time by                  verification to provide more accurate
                                                   FAFSA if the applicant previously                       which an institution would need to                     information for determining an
                                                   submitted a FAFSA for that award year,                  require an applicant to update his or her              applicant’s need for assistance. It is
                                                   the applicant updated the FAFSA                         family household size, number of family                important to note that the applicant is
                                                   information, and no change in the                       members enrolled in college, and                       responsible for notifying an institution
                                                   information has taken place since the                   dependency status in the applicant’s                   when there is a change that affects his
                                                   last update.                                            FAFSA. Non-Federal negotiators wanted                  or her dependency status and not the
                                                      Current § 668.55(a)(3) requires                      the updating requirements to be date                   responsibility of the institution to
                                                   applicants to update their dependency                   specific because of concerns that                      initiate the updating of this data item.
                                                   status on the FAFSA at any time the                     institutions would be continually                      However, an institution must resolve
                                                   status changes throughout the award                     revising an applicant’s aid package                    discrepancies in the information that
                                                   year, except when the change in                         throughout the award year. To address                  the institution receives from different
                                                   dependency status results from a change                 these concerns, we considered a number                 sources with respect to a student’s
                                                   in the student’s marital status.                        of alternatives:                                       application for financial aid under the
                                                      Under current § 668.55(b), updating                     • Allow updating up to the beginning                title IV, HEA programs in accordance
                                                   the family household size and number                    of the award year (i.e., July 1, 2011 for              with § 668.16(f).
                                                   of family members enrolled in college is                the 2011–2012 award year). We have not                    Finally, we propose to delete current
                                                   required for students selected for                      adopted this alternative in the proposed               § 668.55(c) to remove an obsolete
                                                                                                           regulations because this date would not                process that required applicants to
                                                   verification and is updated as of the
                                                                                                           take into account those applicants who                 complete a correction application if his
                                                   time verification is completed.
                                                                                                           apply later in the processing year.                    or her dependency status changes.
                                                      Current § 668.55(c) describes an                        • Require updating by the later of July
                                                   institution’s responsibilities when an                  1 or the date of verification, after which             Information To Be Verified (§ 668.56)
                                                   applicant has received Federal financial                updating would become optional. We
                                                   assistance for an award year, the                                                                                 Statute: None.
                                                                                                           have not adopted this alternative in the                  Current Regulations: Under current
                                                   applicant submits another application                   proposed regulations because it would
                                                   for Federal financial assistance, and the                                                                      § 668.56 an institution must require an
                                                                                                           not allow a student who transfers to an                applicant selected for verification to
                                                   applicant is required to update                         institution after this deadline to update
                                                   household size or the number of                                                                                submit acceptable documentation to
                                                                                                           his or her application information to                  verify or update the following items, if
                                                   household family members attending                      reflect his or her current status unless
                                                   postsecondary educational institutions                                                                         applicable, used to determine the
                                                                                                           the institution selects the student for                applicant’s EFC:
                                                   on the subsequent application.                          verification.                                             • Adjusted gross income (AGI);
                                                      Current § 668.55(d) provides that if an                 • Allow updating until the end of the                  • U.S. income tax paid;
                                                   applicant’s dependency status changes                   first payment period. We have not                         • Number of family members in the
                                                   after the applicant applies to have his or              adopted this alternative in the proposed               household;
                                                   her EFC calculated for an award year,                   regulations because it would result in                    • Number of family members in the
                                                   the applicant must file a new                           inconsistent treatment between students                household enrolled at least half-time in
                                                   application for that award year                         at institutions that have open                         postsecondary educational institutions;
                                                   reflecting the applicant’s new                          enrollment with multiple start dates and               and
                                                   dependency status regardless of whether                 students at institutions whose                            • Untaxed income and benefits.
                                                   the applicant is selected for verification.             enrollment is based on a traditional                      Current § 668.56(b) through (e)
                                                      Proposed Regulations: We propose to                  calendar.                                              provides a number of exclusions from
                                                   revise § 668.55 to require an applicant to                 Other time periods considered                       verification of the number of family
                                                   update all changes in dependency status                 included allowing updating half way                    members in the household, the number
                                                   that occur throughout the award year,                   through the award year, throughout the                 of family members enrolled in college
                                                   including changes resulting from a                      award year, up to the first day of an                  and untaxed income and benefits under
                                                   change in the applicant’s marital status,               applicant’s enrollment at an institution,              certain circumstances.
                                                   regardless of whether the applicant is                  through an institution’s academic year,                   Proposed Regulations: The
                                                   selected for verification. With this                    or by the end of the calendar year                     Department proposes to amend the
                                                   proposed change, which would be                         similar to the precedent set by the IRS                section heading for § 668.56 by
                                                   reflected in proposed paragraph (c) of                  for changes to income tax data. After                  replacing the term ‘‘Items’’ with the term
                                                   § 668.55, we would make a number of                     considerable discussion, we determined                 ‘‘Information’’.
                                                   other changes to this section to remove                 that no single date would be ideal for all                We also propose to eliminate from the
                                                   language that implements the marital                    situations.                                            regulations the five items that an
                                                   status exception in the current                            Therefore, we propose no substantive                institution currently is required to verify
                                                   regulations, including removing current                 change to the current requirement,                     for all applicants selected for
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                                                   § 668.55(a)(3) and revising § 668.55(b).                reflected in § 668.55(b), that if an                   verification. Instead, pursuant to
                                                      We would remove current § 668.55(c).                 applicant is selected for verification, the            proposed § 668.56(a), for each award
                                                      Reasons: We propose to simplify                      applicant must update information as to                year, the Secretary would specify in a
                                                   § 668.55 and to make the updating                       the family household size and the                      Federal Register notice the FAFSA
                                                   requirement for dependency status                       number of family members enrolled in                   information and documentation that an
                                                   consistent with the other changes we                    postsecondary institutions at the time of              institution and an applicant may be
                                                   propose to make to § 668.58(a)(3)(i) and                verification.                                          required to verify. The Department
                                                   § 668.59(a). We believe these changes                      We propose to eliminate the marital                 would then specify on an individual
                                                   would help ensure that the amount of                    status exception and to require all                    student’s SAR and ISIR what


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                                                   34830                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   information must be verified for that                   Federal income tax return by an                        enrolled in postsecondary institutions
                                                   applicant.                                              applicant, or any other individual                     that is listed on the applicant’s FAFSA.
                                                      We would also remove current                         whose financial information is required                   Current § 668.57(d) describes the
                                                   § 668.56(c) through (e).                                on the FAFSA. Under this provision of                  documentation that an institution must
                                                      Reasons: Due to several statutory                    the HEA, as a condition of a student                   require an applicant selected for
                                                   changes that remove untaxed income                      receiving title IV, HEA assistance, the                verification to provide to verify any
                                                   and benefits items from the FAFSA and                   Secretary may require an applicant, the                untaxed income and benefits listed on
                                                   need analysis formula and with the                      parents of a dependent applicant, or the               the applicant’s FAFSA.
                                                   importing of data as part of the IRS Data               spouse of an applicant to provide                         Proposed Regulations: We propose to
                                                   Retrieval process, we believe it is no                  consent in order for the IRS to disclose               make a number of technical and
                                                   longer necessary to require all selected                the necessary information.                             conforming changes throughout
                                                   applicants to verify AGI, U.S. taxes                       Current Regulations: Current § 668.57               § 668.57. We also propose to make the
                                                   paid, the number of family members in                   specifies the documentation an                         following substantive changes:
                                                   the household size, number of family                    institution must obtain from an                           Proposed § 668.57(a)(2) would allow
                                                   members enrolled in college, and                        applicant to verify an applicant’s                     an institution to accept, in lieu of an
                                                   untaxed income and benefits. Therefore,                 household size, number of family                       income tax return or an IRS form that
                                                   in § 668.56, we propose to remove the                   members enrolled in college, AGI, U.S.                 lists tax account information, the
                                                   list of items to be verified as well as the             income tax paid, and certain untaxed                   electronic importation of data obtained
                                                   exclusions from verification contained                  income and benefits.                                   from the IRS into an applicant’s online
                                                   in current § 668.56(b) through (e).                        Current § 668.57(a) describes the                   FAFSA.
                                                   Instead, we propose to target                           documentation that an institution must                    We also propose to amend
                                                   verification based on the most error                    require an applicant selected for                      § 668.57(a)(4)(ii)(A) to accurately reflect
                                                   prone data items that are specific to                   verification to provide to verify the AGI,             that, upon application, the IRS grants a
                                                   each applicant selected.                                income earned from work, and U.S.                      six-month extension beyond the April
                                                      During negotiated rulemaking, the                    income tax paid listed on the                          15 deadline rather than the four-month
                                                   non-Federal negotiators supported this                  applicant’s FAFSA.                                     extension currently stated in the
                                                   targeted approach of selecting specific                    Under current § 668.57(a)(2), if the                regulations.
                                                   items for verification. In particular, they             applicant selected for verification does                  Under proposed § 668.57(a)(5), an
                                                   stated that including dependency status                 not have a copy of his or her tax return,              institution may require an applicant
                                                   as a verifiable item would help alleviate               an institution may require an applicant                who has been granted an extension to
                                                   the difficulties institutions experience                to submit a copy of an IRS form which                  file his or her income tax return to
                                                   with inappropriate designations of                      lists tax account information.                         provide a copy of that tax return once
                                                   dependency status.                                         As alternate documentation to verify                it has been filed. If the institution
                                                      In implementing this proposed                        an applicant’s AGI, income earned from                 requires the applicant to submit the tax
                                                   section, we expect that the Federal                     work or taxes paid, the applicant may                  return, it must reverify the AGI and
                                                   Register notice may, at least initially,                provide the institution with a copy of                 taxes paid of the applicant and his or
                                                   include the five items included for                     IRS Form 4868 that was filed with the                  her spouse or parents when the
                                                   verification under current § 668.56 as                  IRS for the base year requesting an                    institution receives the return.
                                                   well as other items the Department                      extension to file income tax return, or a                 Proposed § 668.57(a)(7) would clarify
                                                   deems necessary to ensure the accuracy                  copy of the extension beyond the                       that an applicant’s income tax return
                                                   of the data being reported. With this                   automatic four-month extension granted                 that is signed by the preparer or
                                                   approach, not all applicants selected for               to the applicant by the IRS (see current               stamped with the preparer’s name and
                                                   verification would have to verify all the               § 668.57(a)(4)(ii)(A)). Once the return is             address must also include the preparer’s
                                                   information identified in the notice. For               filed, the applicant must provide the                  Social Security Number, Employer
                                                   each applicant, the Department would                    institution with a copy of the tax return              Identification Number or the Preparer
                                                   identify on an applicant’s SAR or ISIR                  pursuant to current § 668.57(a)(5). When               Tax Identification Number.
                                                   the specific FAFSA information that                     the institution receives a copy of the tax                Proposed § 668.57(b) and (c) would
                                                   requires further review applicable to                   return that was filed, the institution                 remain substantively unchanged.
                                                   that applicant.                                         could, but is not required to, re-verify                  We would delete current § 668.57(d)
                                                      We intend to publish the Federal                     the applicant’s AGI and taxes paid.                    regarding acceptable documentation for
                                                   Register notice described in proposed                   Under current § 668.60, if the tax return              untaxed income and benefits and
                                                   § 668.56 as early as possible to give                   was not collected, the institution and                 replace it with new proposed
                                                   institutions sufficient time to make any                the student are liable for any funds                   § 668.57(d). This new section would
                                                   system changes that may be necessary to                 disbursed.                                             provide that if an applicant is selected
                                                   verify the information the Secretary may                   Under current § 668.57(a)(7), an                    to verify other information specified in
                                                   require under the notice. (Note that the                institution may accept the tax preparer’s              an annual Federal Register notice, the
                                                   notice referred to under proposed                       signature or stamp instead of the filer’s              applicant must provide the
                                                   § 668.56 is not the same notice referred                signature on the tax return.                           documentation specified for that
                                                   to under proposed § 668.60(c)(1).)                         Current § 668.57(b) describes the                   information in the Federal Register
                                                                                                           documentation that an institution must                 notice.
                                                   Acceptable Documentation
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                                                                                                           require an applicant selected for                         Reasons: Generally, our proposed
                                                   (§ 668.57(a)(2), (a)(4)(ii)(A), (a)(5), (a)(7),         verification to provide to verify the                  changes to § 668.57 are intended to
                                                   and (d))                                                number of family household members                     implement section 484(q) of the HEA,
                                                      Statute: Section 484(q) of the HEA                   that is listed on the applicant’s FAFSA.               update and clarify the language to
                                                   gives the Secretary authority, in                          Current § 668.57(c) describes the                   ensure that it accurately reflects the IRS
                                                   cooperation with the Secretary of                       documentation that an institution must                 documentation and processes to which
                                                   Treasury, to obtain from the IRS the                    require an applicant selected for                      it refers and is consistent with the other
                                                   AGI, Federal income taxes paid, filing                  verification to provide to verify the                  changes we propose to make to subpart
                                                   status, and exemptions reported on the                  number of family household members                     E of part 668.


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                             34831

                                                      Our goal with the implementation of                  selected to verify other information                   Consequences of a Change in an
                                                   the IRS Data Retrieval Process in                       specified in an annual Federal Register                Applicant’s FAFSA Information
                                                   proposed § 668.57(a)(2) is to relieve                   notice to provide the documentation                    (§ 668.59)
                                                   burden on institutions by no longer                     identified as acceptable in the Federal                   Statute: None.
                                                   requiring verification of the information               Register notice. We propose to add this                   Current Regulations: For the Federal
                                                   that is imported from the IRS to                        paragraph to allow the Secretary the                   Pell Grant, Academic Competitiveness
                                                   populate a student’s online FAFSA or                    flexibility to identify in an annual                   Grant (ACG) and National Science and
                                                   requiring institutions to collect the                   Federal Register notice other                          Mathematics Access to Retain Talent
                                                   documentation for those items. For                      documentation that can be used to                      Grant (National SMART Grant)
                                                   instance, an institution would no longer                verify FAFSA information.                              programs, if the information on an
                                                   be required to verify an applicant’s and                                                                       application changes as a result of
                                                   his or her family’s AGI and taxes paid                  Interim Disbursements (§ 668.58(a)(3))
                                                                                                                                                                  verification, the institution must require
                                                   or collect income tax returns for                          Statute: None.                                      the applicant to resubmit his or her
                                                   students who import that data from the                     Current Regulations: Current § 668.58               application information to the
                                                   IRS.                                                    sets out the conditions under which an
                                                      Under current § 668.57(a)(5), an                                                                            Department for corrections (see current
                                                                                                           institution may, but is not required to,               § 668.59(a)(1)).
                                                   institution that requires an applicant                  disburse title IV, HEA program funds to                   Under current § 668.59(a)(2), an
                                                   who was granted an extension to file his                an applicant before the applicant
                                                   or her income tax return to submit to the                                                                      institution is not required to make an
                                                                                                           completes verification.                                applicant resubmit his or her
                                                   institution his or her completed return                    Under current § 668.58(a)(2)(ii)(A), if
                                                   once it was filed, has the option of re-                                                                       application information if the errors are
                                                                                                           an institution does not have reason to                 nondollar items used to calculate the
                                                   verifying the AGI and taxes paid by the                 believe that an applicant’s FAFSA
                                                   applicant and his or her spouse or                                                                             applicant’s EFC or the errors in the
                                                                                                           information is inaccurate, it may choose               dollar amount are within a $400
                                                   parents when the institution receives                   to disburse only one disbursement of
                                                   the copy of the return. Under these                                                                            tolerance.
                                                                                                           title IV, HEA program funds to the                        Current § 668.59(b) provides that if an
                                                   proposed regulations, if an institution                 applicant before he or she completes
                                                   requires an applicant that is granted an                                                                       institution does not recalculate an
                                                                                                           verification.                                          applicant’s EFC under the provisions of
                                                   extension to file his or her income tax
                                                                                                              Proposed Regulations: Proposed                      § 668.59(a), the institution must
                                                   return to submit a copy of the return
                                                                                                           § 668.58 would largely reflect the                     disburse the applicant’s Federal Pell
                                                   that was filed, the institution must act
                                                                                                           substance of current § 668.58 except that              Grant, ACG, or National SMART Grant
                                                   on the return received by re-verifying
                                                                                                           we would make a number of technical                    award based on the applicant’s original
                                                   the AGI and taxes paid by the applicant
                                                                                                           and conforming changes throughout the                  EFC.
                                                   and his or her spouse or parents.
                                                      During the negotiated rulemaking                     section and we would add a new                            If an institution recalculates an
                                                   sessions, we initially proposed                         paragraph (a)(3). Under proposed                       applicant’s EFC because of a change in
                                                   removing current § 668.57(a)(7), which                  § 668.58(a)(3), an institution would be                application information resulting from
                                                   allows a tax preparer to sign an                        allowed to disburse title IV, HEA                      verification, the institution must require
                                                   applicant’s income tax return. Some                     program funds after verification is                    the applicant to resubmit his or her
                                                   non-Federal negotiators indicated that                  completed but before receiving the                     application to the Secretary; recalculate
                                                   administrative burden would be                          corrected SAR or ISIR if the changes to                the applicant’s Federal Pell Grant, ACG,
                                                   reduced if an institution could continue                an applicant’s FAFSA information                       and National SMART Grant award
                                                   to accept a tax preparer’s signature or                 would not change the amount the                        based on the EFC on the corrected SAR
                                                   stamp in lieu of the filer’s signature on               applicant would receive under a title IV,              or ISIR and disburse any additional
                                                   the tax return. Based on concerns raised                HEA program. If an institution chooses                 funds, if additional funds are payable,
                                                   by the non-Federal negotiators, we                      to make a disbursement before receiving                once the applicant provides the
                                                   agreed to retain this provision in the                  the corrected SAR or ISIR, it must                     institution with the corrected SAR or
                                                   proposed regulations, but to clarify that               ensure that all corrections are submitted              ISIR.
                                                   an applicant’s income tax return must                   to the Department to avoid any liability                  If an institution determines, after
                                                   include the preparer’s Social Security                  for a disbursement made without                        verification, that the change in
                                                   Number, Employer Identification                         receiving a corrected SAR or ISIR within               application information increases the
                                                   Number or the Preparer Tax                              the established deadline as discussed                  applicant’s award, the institution may
                                                   Identification Number in addition to his                under proposed § 668.61(c).                            disburse the applicant’s Federal Pell
                                                   or her signature or a stamp of the                         Reasons: During the negotiated                      Grant, ACG, and National SMART Grant
                                                   preparer’s name and address.                            rulemaking sessions, some non-Federal                  based on the original EFC without
                                                      Except for minor technical and                       negotiators expressed concern that                     requiring the applicant to resubmit his
                                                   conforming changes, proposed                            applicants would be harmed if their                    or her application information and
                                                   § 668.57(b) and (c) would remain largely                disbursements were delayed until the                   disburse any additional funds under the
                                                   unchanged from current § 668.57(b) and                  institution received a corrected SAR or                increased award reflecting the new EFC
                                                   (c).                                                    ISIR. To address these concerns, we                    if the institution receives the corrected
                                                      We would delete current § 668.57(d)                  propose to add paragraph (a)(3) to                     SAR or ISIR, except as provided under
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                                                   regarding acceptable documentation for                  § 668.58. This new provision would                     current § 668.60(b).
                                                   untaxed income and benefits because                     permit institutions to make interim                       For the campus-based, Federal
                                                   several statutory changes would                         disbursements of title IV, HEA program                 Stafford Loan and Federal Direct
                                                   eliminate any consideration of untaxed                  funds prior to receiving an applicant’s                Stafford Loan programs, if the
                                                   income and benefits from the need                       corrected SAR or ISIR within the                       information on an application changes
                                                   analysis formula to determine an                        established deadline date. By adding                   as a result of verification, the institution
                                                   applicant’s eligibility for assistance                  this provision, we would increase                      must recalculate the applicant’s EFC,
                                                   under the title IV, HEA programs.                       institutional flexibility in disbursing                and adjust the applicant’s financial aid
                                                   Instead, we would require an applicant                  title IV, HEA program funds.                           package to reflect the new EFC if the


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                                                   34832                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   new EFC results in an over award of                     package on the basis of the EFC on the                 applicant who was initially eligible only
                                                   campus-based funds or decreases the                     corrected SAR or ISIR.                                 for unsubsidized assistance may qualify
                                                   applicant’s recommended loan amount                        With the exception of minor technical               for subsidized assistance based on
                                                   (see current § 668.59(c)(1)). Under                     edits, proposed § 668.59(d), which                     corrected FAFSA information.
                                                   current § 668.59(c)(2), an institution is               describes the consequences of a change                    Proposed § 668.59(b) would require
                                                   not required to recalculate an                          in an applicant’s FAFSA information,                   an institution to recalculate the
                                                   applicant’s EFC or adjust his or her aid                would be substantively the same as                     applicant’s Federal Pell Grant award
                                                   package if the errors are nondollar items               current § 668.59(d).                                   based on the EFC on the corrected SAR
                                                   used to calculate the applicant’s EFC; or                  Finally, we would remove current                    or ISIR and to disburse any additional
                                                   the errors in the dollar amount is within               § 668.59(e), the provision that requires               funds only after receiving a corrected
                                                   a $400 tolerance.                                       an institution to refer to the Department              SAR or ISIR. This requirement would
                                                      Under current § 668.59(d), if the                    unresolved disputes over the accuracy                  ensure that if the amount of the
                                                   institution selects an applicant for                    of information provided by the                         applicant’s Federal Pell Grant increases
                                                   verification for an award year who                      applicant if the applicant received funds              as a result of verification, the applicant
                                                   previously received a Subsidized                        on the basis of that information.                      would receive any additional funds only
                                                   Stafford Loan or Direct Subsidized Loan                    Reasons: Some non-Federal                           after providing the institution with a
                                                   for that award year, and as a result of                 negotiators objected to the Department’s               corrected SAR or ISIR. If the Federal
                                                   verification the loan amount is reduced,                proposal to require that all corrections               Pell Grant award decreased as a result
                                                   the institution must eliminate the                      to an applicant’s FAFSA information be                 of verification, the institution would be
                                                   amount in excess of the student’s need                  submitted to the Department for                        required to apply the procedures
                                                                                                           reprocessing. They argued that this                    specified in § 668.61(a) to eliminate any
                                                   by returning funds to the lender or by
                                                                                                           approach would increase burden on                      overpayment. We are proposing changes
                                                   reducing or cancelling subsequent
                                                                                                           both institutions and applicants with                  to the current regulatory requirements to
                                                   disbursements.
                                                                                                           minimum impact on an applicant’s EFC                   ensure that all applicants receive the
                                                      An institution must forward the
                                                                                                           and the amount of assistance the                       Federal Pell Grant funds for which the
                                                   applicant’s name, social security
                                                                                                           applicant is eligible to receive. They                 applicants are eligible and to ensure that
                                                   number, and other relevant information                  recommended that the Department
                                                   to the Department if the applicant                                                                             the Department’s database reflects the
                                                                                                           require the submission of corrections                  information upon which any
                                                   received funds based on information                     only for applicants receiving a Federal
                                                   that may be incorrect and the institution                                                                      disbursements are based.
                                                                                                           Pell Grant or if the corrections would                    Under § 668.59(c), the current
                                                   has made a reasonable effort to resolve                 change an applicant’s EFC. They did not
                                                   the alleged discrepancy (see current                                                                           exceptions to the requirement to
                                                                                                           object to removal of the tolerances.                   recalculate an applicant’s EFC and
                                                   § 668.59(e)).                                           Negotiators who offered their views                    adjust subsidized financial aid awards
                                                      Proposed Regulations: We propose to                  indicated they did not use the                         other than Pell—for nondollar items and
                                                   revise § 668.59 by removing all                         tolerances.                                            tolerance of net income changes under
                                                   allowable tolerances and requiring                         The Department believes that                        $400—would be eliminated to ensure
                                                   instead that an institution submit to the               allowing any errors in financial and                   that all applicants receive the amounts
                                                   Department all changes to an applicant’s                nonfinancial information would                         for which they are eligible and that the
                                                   FAFSA information resulting from                        undermine our efforts to make decisions                Department’s database reflects the
                                                   verification for those applicants                       based on the best available information.               information upon which any
                                                   receiving assistance under any of the                   We believe that requiring all changes to               disbursements are based.
                                                   subsidized student financial assistance                 an applicant’s FAFSA data to be                           Finally, we propose to remove current
                                                   programs (see proposed § 668.59(a)).                    submitted to the Department will                       § 668.59(e) because it refers to an
                                                      Under proposed § 668.59(b), for the                  enhance particularly our ability to                    obsolete operational unit in the
                                                   Federal Pell Grant program, once the                    identify error-prone applications. We                  Department that resolved verification
                                                   applicant provides the institution with                 removed the tolerances because a                       discrepancies reported by an institution.
                                                   the corrected SAR or ISIR, the                          change in an applicant’s FAFSA
                                                   institution would be required to                        information could have a major impact                  Deadlines for Submitting
                                                   recalculate the applicant’s Federal Pell                on an applicant’s EFC, which would                     Documentation and the Consequences
                                                   Grant and disburse any additional                       either reduce or increase an applicant’s               of Failing To Provide Documentation
                                                   funds, if additional funds are payable. If              Federal student aid awards. Taken                      (§§ 668.60(b)(1)(ii), (b)(3) (c)(1), and (d))
                                                   the applicant’s Federal Pell Grant would                together, the removal of the tolerances                   Statute: None.
                                                   be reduced as a result of verification, the             and the requirement to report any errors                  Current Regulations: Current § 668.60
                                                   institution would be required to                        in FAFSA data would ensure that the                    contains the regulatory requirements
                                                   eliminate any overpayment by adjusting                  Department can rely on accurate data for               concerning the deadlines for submitting
                                                   subsequent disbursements or                             applicant selection, EFC calculation,                  documentation when a student is
                                                   reimbursing the program account by                      cross-year edits, and data analysis and                selected for verification and the
                                                   requiring the applicant to return the                   would make certain that applicants                     consequences of failing to provide
                                                   overpayment or making restitution from                  receive the Federal student aid funds for              documentation.
                                                   its own funds (see proposed                             which they are eligible.                                  Current § 668.60(b)(1)(ii) provides that
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                                                   § 668.59(b)(2)(ii)).                                       Although proposed § 668.59(a) would                 if an applicant fails to provide the
                                                      Proposed § 668.59(c) would provide                   require an institution to submit only                  requested documentation within a
                                                   that, for the subsidized student financial              changes affecting students receiving                   reasonable time period established by
                                                   assistance programs, excluding the                      subsidized student financial assistance,               the institution or the Secretary, the
                                                   Federal Pell Grant Program, if an                       institutions are encouraged to submit all              institution must return to the lender or
                                                   applicant’s FAFSA information changes                   changes in any student’s FAFSA                         Secretary, as applicable, any Federal
                                                   as a result of verification, the institution            information because those changes                      Stafford Loan or Direct Subsidized Loan
                                                   must recalculate the applicant’s EFC                    could impact the type of aid for which                 proceeds that otherwise would be
                                                   and adjust the applicant’s financial aid                a student qualifies. For example, an                   payable to the applicant.


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                           34833

                                                      Current § 668.60(b)(3) provides that                 finds that an institution maintains                    of Federal Pell Grant regardless of when
                                                   an institution may not withhold any                     excess cash for an amount or time                      they complete verification.
                                                   Federal Stafford Loan proceeds from an                  period greater than that allowed, an
                                                                                                                                                                  Recovery of Funds (§ 668.61(c))
                                                   applicant for more than 45 days for an                  institution may be subject to adverse
                                                   applicant that fails to provide the                     actions (e.g., reimbursing the Secretary                  Statute: None.
                                                   requested documents for verification                    the cost incurred for providing the                       Current Regulations: Current § 668.61
                                                   within the time period established by                   excess cash to the institution, or                     describes the institution’s obligation to
                                                   the institution. Under this provision, if               providing funds to the institution under               recover funds if the institution
                                                   the applicant does not complete                         the reimbursement or cash monitoring                   discovers, as a result of the verification
                                                   verification within 45 days, the                        payment method) (see § 668.166(c)).                    process, that an applicant received or
                                                   institution must return the proceeds to                    For Subsidized Stafford Loans,                      would receive more financial aid than
                                                   the lender.                                             § 668.167(b)(1) requires an institution to             the applicant was eligible to receive.
                                                      Current § 668.60(c)(1) grants an                     return to a lender loan proceeds if the                   Proposed Regulations: Proposed
                                                   extension of the submission deadline for                institution does not disburse the funds                § 668.61 would retain the substance
                                                   students who must resubmit a verified                   to a student or parent within (a) 10                   from current § 668.61, except that we
                                                   SAR or ISIR when the SAR or ISIR must                   business days following the date the                   would add a paragraph (c) that would
                                                   be corrected. Under this provision,                     institution receives the loan funds if the             require an institution to reimburse the
                                                   when an extension is granted, the                       institution receives the funds by EFT                  program account using its own funds if
                                                   student is paid from the original SAR or                and master check on or after July 1,                   it disbursed subsidized student
                                                   ISIR or the corrected SAR or ISIR                       1997 but before July 1, 1999; (b) 3                    financial assistance to an applicant
                                                   depending upon which SAR or ISIR                        business days following the date the                   without receiving his or her corrected
                                                   yields the lower award.                                 institution receives the loan funds if the             SAR or ISIR within the established
                                                      Current § 668.60(d) provides that the                institution receives the funds by EFT                  deadlines under § 668.60.
                                                   Secretary may determine not to process                  and master check on or after July 1,                      Reasons: We propose this change to
                                                   any subsequent application for Federal                  1999; or (c) 30 days after the institution             § 668.61 to clarify what would happen
                                                   Pell Grant, ACG, or National SMART                      receives the loan funds by check. For                  if institutions did not submit corrections
                                                   Grant program assistance, and an                        funds that are not disbursed within the                and to emphasize the liability an
                                                   institution, if directed by the Secretary,              specified timeframe, § 668.167(b)(2)                   institution could face if subsidized
                                                   may not process any subsequent                          requires the institution to return the                 student financial assistance is disbursed
                                                   application for campus-based, Federal                   funds to the lender no later than 10                   under § 668.58(a)(3) (interim
                                                   Direct Stafford/Ford Loan, or Federal                   business days after the last day those                 disbursements) and the institution does
                                                   Stafford Loan program assistance of an                  funds are required to be disbursed. If the             not receive a corrected SAR or ISIR by
                                                   applicant who has been requested to                     borrower establishes eligibility before                the deadline date established in the
                                                   provide documentation until the                         the institution returns the loan funds to              notice of deadline dates for receipt of
                                                   applicant provides the documentation                    the lender, the institution may disburse               applications, reports, and other records
                                                   or the Secretary decides that there is no               those funds to the borrower (see                       published annually pursuant to
                                                   longer a need for the documentation.                    § 668.167(b)(3)).                                      § 668.60.
                                                      Proposed Regulations: Proposed                          In proposed § 668.60(c)(1), we would                   Some non-Federal negotiators argued
                                                   § 668.60 would largely retain the                       remove the language that requires a                    that the proposed requirement to make
                                                   substance of current § 668.60. In                       student to receive the lowest amount of                institutions liable for funds disbursed in
                                                   addition to minor clarifying changes, we                a Federal Pell Grant if the student                    accordance with § 668.58(a)(3) is
                                                   propose to remove paragraphs (b)(1)(ii)                 submits a valid SAR or valid ISIR after                unreasonable given that the interim
                                                   and (b)(3) of § 668.60.                                 verification while the student was no                  disbursement would not result in an
                                                      We would replace current                             longer enrolled.                                       applicant receiving an overpayment of
                                                   § 668.60(b)(3) with a provision that                       Proposed § 668.60(d) and (e) contain                title IV, HEA program funds.
                                                   would require an institution to follow                  only editorial changes from the                           Section 668.58(a)(3) was added at the
                                                   the cash management procedures under                    corresponding current regulations.                     request of non-Federal negotiators who
                                                   § 668.166(a) or § 668.166(b), or under                     Reasons: We propose to remove                       wanted institutions to have the
                                                   § 668.167(c), (which incorporates the                   paragraph (b)(1)(ii) of § 668.60. This                 flexibility to disburse title IV, HEA
                                                   provisions of § 668.167(b) by reference),               paragraph refers to an outdated process                program funds to students without
                                                   if the institution has received proceeds                that prohibits an institution from                     having to wait for a corrected SAR or
                                                   from a Subsidized Stafford Loan and                     certifying the student’s loan application              ISIR when a student’s award did not
                                                   Direct Subsidized Loan and an                           or processing a check, and requires the                change after completing verification.
                                                   applicant does not complete verification                check payable to the student to be                     Under this provision, the disbursement
                                                   within the time period specified. A                     returned to the lender for any student                 would be allowed if the institution
                                                   description of these cash management                    who does not provide the required                      ensured that all corrections were
                                                   procedures follows.                                     verification information within the                    submitted to the Department for
                                                      Under § 668.166(a), any proceeds                     required reasonable time.                              reprocessing.
                                                   from a Direct Subsidized Loan that an                      The proposed changes to                                Therefore, we believe it is appropriate
                                                   institution has not disbursed to students               § 668.60(b)(3) are needed to update                    to hold institutions liable for disbursing
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                                                   by the end of the third business day                    these regulations to be consistent with                aid if corrections are not submitted to
                                                   following the date the institution                      the Department’s current cash                          the Department in a timely manner to
                                                   received those funds is considered                      management policy.                                     allow the institution to receive the
                                                   excess cash. Under § 668.166(b), an                        In proposed § 668.60(c)(1), we would                corrected SAR or ISIR within the
                                                   institution is allowed to maintain excess               remove the limit placed on students that               deadlines established in § 668.60. This
                                                   cash for seven days in an amount not to                 complete verification while no longer                  provision would also help in our efforts
                                                   exceed one percent of the total amount                  enrolled at an institution. We made this               to obtain accurate information for data
                                                   of funds it drew down in the previous                   change because students should be                      analysis and identification of error
                                                   year. In instances where the Department                 permitted to receive the correct amount                prone applications.


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                                                   34834                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                     Moreover, an institution is not                       charges, or the employability of its                   endorsement or testimonial to
                                                   required to make an interim                             graduates.                                             participate in a program.
                                                   disbursement of title IV, HEA program                      Current § 668.71(b) provides                           Reasons: We propose to restructure
                                                   funds to an applicant. However, if an                   definitions for the terms                              § 668.71 to lay out more clearly the
                                                   institution exercises this option, it                   misrepresentation, prospective students,               scope of subpart F of part 668.
                                                   assumes liability for the funds                         and substantial misrepresentation.                        In new paragraph (b) of proposed
                                                   disbursed.                                                 Proposed regulations: We propose to                 § 668.71, we would clarify that an
                                                                                                           restructure § 668.71 so that paragraph                 eligible institution is deemed to have
                                                   Misrepresentation (Subpart F of Part                    (a) describes the actions the Secretary                engaged in substantial
                                                   668)                                                    may take if the Secretary determines                   misrepresentation when the institution
                                                     Statute: Section 487 of the HEA                       that an eligible institution has engaged               itself, one of its representatives, or any
                                                   provides that institutions participating                in substantial misrepresentation.                      ineligible institution, organization, or
                                                   in the title IV, HEA programs shall not                    Paragraph (b) of proposed § 668.71                  person with whom the eligible
                                                   engage in substantial misrepresentation                 would—                                                 institution has an agreement, makes a
                                                   of the nature of the institution’s                         • Describe generally what types of                  substantial misrepresentation regarding
                                                   educational program, its financial                      activities constitute substantial                      the eligible institution. We believe it is
                                                   charges, or the employability of its                    misrepresentation;                                     appropriate to hold the eligible
                                                   graduates.                                                 • Provide that an eligible institution              institution accountable in these
                                                                                                           is deemed to have engaged in                           instances because the integrity of the
                                                   General                                                 substantial misrepresentation when the                 title IV, HEA programs requires that
                                                      Current regulations: Current subpart F               institution itself, one of its                         institutions are responsible for the
                                                   of part 668 sets forth the types of                     representatives, or any ineligible                     actions of their representatives and
                                                   consumer information statements and                     institution, organization, or person with              agents.
                                                   communications by an eligible entity                    whom the eligible institution has an                      Proposed § 668.71(b) would also state
                                                   that constitute misrepresentation. The                  agreement, makes a substantial                         that substantial misrepresentations are
                                                   regulations prohibit any substantial                    misrepresentation regarding the eligible               prohibited in all forms, including those
                                                   misrepresentation made by an                            institution, including about the nature                made in any advertising, promotional
                                                   institution regarding the nature of its                 of its educational program, its financial              materials, or in the marketing or sale of
                                                   educational program, its financial                      changes, or the employability of its                   courses or programs of instruction
                                                   charges, or the employability of its                    graduates; and                                         offered by the institution. We propose to
                                                   graduates.                                                 • Clarify that substantial                          add this language because of the
                                                      Proposed regulations: In the following               misrepresentations are prohibited in all               importance of these materials and
                                                   paragraphs, we explain in detail the                    forms.                                                 activities in communicating to students
                                                   changes we propose to make to subpart                      Current § 668.71(b) would be                        and prospective students information
                                                   F of part 668.                                          redesignated as proposed § 668.71(c)                   regarding the nature of the institution’s
                                                      Reasons: We propose to make changes                  and we would make a number of                          educational programs, its financial
                                                   to subpart F of part 668 to strengthen                  revisions to the definition of the term                charges, and the employment
                                                   the Department’s regulatory                             misrepresentation:                                     opportunities available to the
                                                   enforcement authority against eligible                     • We would clarify that a                           institution’s graduates.
                                                   institutions that engage in substantial                 misrepresentation is any false,                           In the revised definition of the term
                                                   misrepresentations. The Department oft-                 erroneous, or misleading statement an                  misrepresentation, we would again state
                                                   times receives complaints from students                 eligible institution, one of its                       that a misrepresentation is any false,
                                                   who allege that they were the victims of                representatives, or any ineligible                     erroneous, or misleading statement
                                                   false promises and other forms of                       institution, organization, or person with              made not only by the eligible
                                                   deception when they were considering                    whom the eligible institution has an                   institution, but also any false,
                                                   their postsecondary educational                         agreement makes directly or indirectly                 erroneous, or misleading statement
                                                   opportunities. We believe that helping                  to a student, prospective student or any               made by one of its representatives, or
                                                   students to make sound decisions                        member of the public, or to an                         any ineligible institution, organization,
                                                   regarding their educational pursuits is                 accrediting agency, to a State agency, or              or person with whom the eligible
                                                   essential to maintaining the integrity of               to the Secretary.                                      institution has an agreement. As
                                                   the title IV, HEA programs.                                • Within this definition, we would                  discussed earlier in this preamble, we
                                                      For these reasons, we propose to                     also define what we mean by the term                   believe that it is appropriate to hold
                                                   revise subpart F of part 668 by making                  ‘‘misleading statement;’’ we would                     eligible institutions accountable for
                                                   changes based on information the                        clarify that a misleading statement                    misrepresentations made by
                                                   Department has received and comments                    includes any statement (which is any                   representatives and agents to ensure
                                                   from participants in the negotiated                     communication made in writing,                         program integrity.
                                                   rulemaking meetings.                                    visually, orally, or through other means)                 We propose to broaden the definition
                                                                                                           that has the capacity, likelihood, or                  of misrepresentation to include false,
                                                   Scope and Special Definitions (§ 668.71)                tendency to deceive or confuse.                        erroneous, or misleading statements
                                                      Current regulations: Current                            • Finally, we would retain the                      made directly or indirectly to a student,
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                                                   § 668.71(a) describes the scope of                      express reference in the definition of                 prospective student or any member of
                                                   subpart F of part 668 as establishing the               misrepresentation to the dissemination                 the public, or to an accrediting agency,
                                                   standards and rules by which the                        of a student endorsement or testimonial                to a State agency, or to the Secretary. We
                                                   Secretary may initiate a proceeding                     that a student gives under duress. We                  propose to broaden the concept of
                                                   under subpart G of part 688 against an                  would expand this language to also refer               misrepresentation to include both direct
                                                   otherwise eligible institution for any                  to the dissemination of a student                      and indirect false, erroneous or
                                                   substantial misrepresentation made by                   endorsement or testimonial that a                      misleading statements because students,
                                                   that institution regarding the nature of                student gives because the institution                  prospective students, members of the
                                                   its educational program, its financial                  required the student to make such an                   public, and others can be significantly


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                           34835

                                                   harmed by indirect false, erroneous, or                 institution’s educational program that                    • The requirements for successfully
                                                   misleading statements. For example, an                  would be prohibited as                                 completing the course of study or
                                                   institution could be deemed to engage                   misrepresentations under subpart F of                  program and the circumstances that
                                                   in misrepresentation if it falsely                      part 668.                                              would constitute grounds for
                                                   advertised an exceptional placement                        Proposed Regulations: Proposed                      terminating the student’s enrollment
                                                   rate. Further, the institution could also               § 668.72 would retain the list of the                  (see proposed § 668.72(d)).
                                                   be deemed to engage in                                  types of misrepresentation regarding the                  • Whether the institution’s courses
                                                   misrepresentation if an individual heard                nature of an institution’s educational                 have been the subject of unsolicited
                                                   an advertisement containing the false                   program that is included in current                    testimonials or endorsements by
                                                   placement rate and relayed the                          § 668.72, but would expand this list.                  vocational counselors, high schools,
                                                   information to a potential student. In                  First, in proposed § 668.72(a), we would               colleges, educational organizations,
                                                   this example, the potential student                     expand the types of programmatic false                 employment agencies, members of a
                                                   received the information indirectly but                 statements that would be prohibited as                 particular industry, students, former
                                                   the information could still have the                    misrepresentations under this section.                 students, or others; or governmental
                                                   capacity, likelihood, or tendency to                    Specifically, false, erroneous, or                     officials for governmental employment
                                                   deceive or confuse.                                     misleading statements about                            (see proposed § 668.72(e)).
                                                     In an effort to give the field more                   programmatic and specialized                              • The subject matter, content of the
                                                   guidance on what the Department                         accreditation—not only institutional                   course of study, or any other fact related
                                                   means by misrepresentation, we                          accreditation—would be expressly                       to the degree, diploma, certificate of
                                                   propose to provide more detail in the                   covered as misrepresentations.                         completion, or any similar document
                                                   definition. Because the definition of                      Second, in proposed § 668.72(b)(2),                 that the student is to be, or is, awarded
                                                   misrepresentation turns on the meaning                  we propose to add language on the                      upon completion of the course of study
                                                   of the term a ‘‘statement’’, we would                   conditions under which an institution                  (see proposed § 668.72(m)).
                                                   clarify that a misleading statement                     will accept credits earned at another                     • Whether the academic,
                                                   includes any statement (which is any                    institution.                                           professional, or occupational degree that
                                                   communication made in writing,                             Third, in proposed § 668.72(c), we                  the institution will confer upon
                                                   visually, orally, or through other means)               would revise the language regarding                    completion of the course of study has
                                                   that has the capacity, likelihood, or                   misrepresentations about whether                       been authorized by the appropriate State
                                                   tendency to deceive or confuse. We                      successful completion of a course of                   educational agency. This type of
                                                   believe that fleshing out the definition                instruction qualifies a student to receive             misrepresentation includes, in the case
                                                   of misrepresentation would help                         a local, State, or Federal license or a                of a degree that has not been authorized
                                                   institutions determine whether                          non-governmental certification required                by the appropriate State educational
                                                   statements they (or their representatives               as a precondition for employment, or to                agency, any failure by an eligible
                                                   or any ineligible institution,                          perform the functions required of an                   institution to disclose this fact in any
                                                   organization, or person with whom they                  employee in the occupation for which                   advertising or promotional materials
                                                   have an agreement) make constitute a                    the program is represented to prepare                  that reference such degree (see proposed
                                                   misrepresentation under subpart F of                    students. We would broaden this                        § 668.72(n)).
                                                   part 668. Moreover, by providing more                   language to clarify that a prohibited                     Reasons: The Department believes it
                                                   detail in the definition of                             misrepresentation includes false,                      is critical that potential students have a
                                                   misrepresentation, we believe that the                  erroneous, or misleading statements                    clear understanding about any
                                                   regulations would be clearer as to the                  regarding whether completion of a given                educational program in which they may
                                                   difference between misrepresentations,                  course of study will qualify a student ‘‘to            enroll. Each institution has a
                                                   on the one hand, and substantial                        apply to take or to take an examination                responsibility to provide complete and
                                                   misrepresentations, on the other. This                  required to receive’’ a needed license or              accurate information about the programs
                                                   subpart would prohibit substantial                      certification as a precondition of                     it offers. For this reason, we are
                                                   misrepresentations only and those                       employment in an occupation for which                  proposing numerous changes to
                                                   would continue to be defined as any                     the program is represented to prepare its              § 668.72. Many of these proposed
                                                   misrepresentation on which the person                   students (rather than only qualifying a                changes are based on discussions during
                                                   to whom it was made could reasonably                    student to receive such a license or                   the negotiated rulemaking sessions and
                                                   be expected to rely, or has reasonably                  certification).                                        the concerns raised by non-Federal
                                                   relied, to that person’s detriment.                        In addition, we would refine the                    negotiators during those discussions.
                                                     Finally, we would add language to the                 language in § 668.72(c)(2) to clarify that                Several non-Federal negotiators
                                                   definition of misrepresentation                         institutions must not make false,                      believed that institutions should make
                                                   regarding the dissemination of a student                erroneous, or misleading statements                    potential or current students aware of
                                                   endorsement or testimonial that a                       regarding whether completion of a given                institutional accreditation or any
                                                   student gives because the institution                   course of study will qualify a student to              specific programs at the institution that
                                                   required the student to make such an                    perform certain functions in the State in              have accreditation before students
                                                   endorsement or testimonial to                           which the program or institution is                    enroll in the program. Some negotiators
                                                   participate in a program. We propose to                 located, or to meet additional conditions              also argued that an institution’s failure
                                                   add this language because we are                        that the institution knows, or reasonably              to disclose a lack of accreditation
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                                                   concerned about the potential of such                   should know, are generally needed to                   should constitute misrepresentation
                                                   testimonials to mislead students or                     secure employment in a recognized                      under § 668.72. The Department agrees
                                                   prospective students.                                   occupation for which the program is                    that students need accurate information
                                                                                                           represented to prepare students.                       about the types, sources, nature, and
                                                   Nature of Educational Program                              Finally, we would add to the list of                extent of institutional, programmatic or
                                                   (§ 668.72)                                              the types of misrepresentations                        specialized accreditation an institution
                                                      Current regulations: Current § 668.72                regarding the nature of an institution’s               or program has. Proposed § 668.72(a)
                                                   describes the types of false, erroneous,                educational program, any                               would expressly prohibit institutions
                                                   or misleading statements about an                       misrepresentation regarding:                           from making false, erroneous, or


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                                                   34836                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   misleading statements concerning these                  committing to attend a particular                      type of financial aid (see proposed
                                                   matters.                                                postsecondary institution.                             § 668.73(d) and (e), respectively), the
                                                      Some non-Federal negotiators                                                                                Department seeks to ensure that
                                                                                                           Nature of Financial Charges (§ 668.73)
                                                   expressed concern that students should                                                                         students are provided with the accurate
                                                   understand the conditions under which                      Current regulations: Current § 668.73               information they need to make informed
                                                   their transfer credits would count                      describes prohibited false, erroneous, or              choices about the type of financial aid
                                                   towards a degree program before they                    misleading statements related to the cost              they use to fund their education.
                                                   left another program or institution. The                of the program and financial aid that is
                                                                                                           available to potential and current                     Employability of Graduates (§ 668.74)
                                                   Department agrees and proposes to add
                                                   § 668.72(b)(2) to expressly prohibit                    students.                                                 Current regulations: Current § 668.74
                                                   misrepresentations about the conditions                    Proposed regulations: Proposed                      lists what constitutes misrepresentation
                                                   under which an institution will accept                  § 668.73 would retain the list of the                  by an institution regarding the
                                                   credits earned at another institution.                  types of misrepresentation regarding the               employability of its graduates.
                                                                                                           nature of an institution’s financial                      Proposed regulations: Proposed
                                                      Some non-Federal negotiators
                                                                                                           charges that are in current § 668.73, but              § 668.74 would retain the list of the
                                                   expressed concern about the extent of
                                                                                                           also would add the following:                          types of misrepresentation regarding the
                                                   information that institutions
                                                                                                              • Misrepresentation regarding the                   employability of graduates that is in
                                                   ‘‘reasonably’’ should know. For example,
                                                                                                           cost of the program and the institution’s              current § 668.74. In addition to the types
                                                   they argued that it is unrealistic to
                                                                                                           refund policy if the student does not                  of misrepresentations already included
                                                   expect institutions to have knowledge
                                                                                                           complete the program (see proposed                     in the regulations, we would add the
                                                   about each State’s licensure
                                                                                                           § 668.73(c)).                                          following:
                                                   requirements.                                              • Misrepresentation regarding the                      • Misrepresentations relating to the
                                                      The Department agrees. Proposed                      availability or nature of any financial                institution’s knowledge about the
                                                   § 668.72(c)(2), therefore, would                        assistance offered to students, including              current or likely future conditions,
                                                   specifically refer to licensure and                     a student’s loan repayment                             compensation, or employment
                                                   certification information for the State in              responsibility, regardless of program                  opportunities for its graduates (see
                                                   which the program or institution is                     completion or subsequent employment                    proposed § 668.74(c)).
                                                   located, as well as conditions generally                (see proposed § 668.73(d)).                               • Misrepresentations relating to
                                                   needed to secure employment in a                           • Misrepresentation regarding a                     whether employment is being offered by
                                                   particular occupation.                                  student’s right to apply for or reject any             the institution or that a talent hunt or
                                                      We would add proposed § 668.72(d),                   particular type of financial aid or other              contest is being conducted (see
                                                   regarding misrepresentations                            assistance (see proposed § 668.73(e)).                 proposed § 668.74(d)).
                                                   concerning the requirements for                            Reasons: Several non-Federal                           • Misrepresentations relating to other
                                                   successfully completing the course of                   negotiators expressed concern about                    requirements that are generally needed
                                                   instruction and the circumstances that                  whether students clearly understand the                in order to be employed in certain fields
                                                   would constitute grounds for                            cost of their educational program. Other               (see proposed § 668.74(f)).
                                                   terminating the student’s enrollment,                   non-Federal negotiators emphasized the                    Reasons: During the negotiated
                                                   because potential and current students                  difficulty of estimating program costs                 rulemaking sessions, the non-Federal
                                                   need to be able to make informed                        and cautioned the Department against                   negotiators appeared to be in agreement
                                                   decisions regarding course completion                   making the regulations too specific in                 that students should be fully informed
                                                   and situations that may lead to their                   this regard. The Department agrees it is               about their likely employment options
                                                   inability to complete the program of                    a serious problem if students who enroll               once they complete a course of study.
                                                   instruction they choose to pursue.                      in a program do not have the necessary                 Several non-Federal negotiators,
                                                      In proposed § 668.72(e), we would                    information about the cost of the                      however, expressed concern about how
                                                   expressly include as prohibited any                     program or the institution’s refund                    best to address this issue in the
                                                   misrepresentations regarding whether                    policy. For this reason, the Department                regulations. In particular, given the
                                                   an institution’s courses have been the                  proposes to add proposed § 668.73(c) to                uncertainty of the economic climate,
                                                   subject of unsolicited testimonials or                  highlight that misrepresentations about                they were concerned about the
                                                   endorsements because potential and                      the cost of an institution’s program or its            possibility of having an enforcement
                                                   current students should not be mislead                  refund policy are prohibited.                          action brought against them even in
                                                   into pursuing a particular program of                      In addition, some non-Federal                       instances when they provided students
                                                   instruction based upon purported (but                   negotiators pointed out as a significant               and the public with the best available
                                                   not actual) recommendations and                         problem the fact that some students do                 information about likely employment
                                                   endorsements.                                           not understand the financial aid options               options, which, in retrospect, were
                                                      We would add proposed § 668.72(m)                    available to them when they enroll in a                overly optimistic. The Department
                                                   and (n), regarding misrepresentations                   program. Others expressed concern that                 believes that proposed § 668.74
                                                   concerning any fact related to the                      students may feel pressure to apply for                appropriately highlights the types of
                                                   degree, diploma, certificate of                         credit financing to pay for the cost of                information about employability that
                                                   completion, or similar document to be                   their educational program.                             institutions need to monitor carefully
                                                   awarded to a student upon course                           The Department strongly believes that               when advertising or otherwise
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                                                   completion, as well as whether the                      students, potential students, and parents              promoting their educational programs.
                                                   academic, professional, or occupational                 must have relevant information to make                 Institutions must disclose clear
                                                   degree that the institution confers upon                informed decisions about the type of                   information about the employability of
                                                   completion has been authorized by the                   financial aid that is available to the                 graduates from a program, including
                                                   appropriate State educational agency.                   student. By prohibiting institutions from              likely compensation, and other
                                                   We propose adding these provisions                      making misrepresentations regarding                    requirements necessary to perform the
                                                   because potential and current students                  the availability or nature of the financial            job for which the educational program
                                                   need to know the truth regarding the                    aid offered to students, as well as a                  prepares students, to help give students
                                                   credential they will receive before                     student’s right to reject any particular               the knowledge they need to make


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                           34837

                                                   informed decisions about potential                      provision, a student who does not have                 students who satisfactorily complete six
                                                   career paths.                                           a high school diploma or the equivalent                credits of college work, or the
                                                                                                           may establish eligibility for title IV,                equivalent amounts of coursework, that
                                                   Relationship With the Department of
                                                                                                           HEA program funds by: (1) Taking an                    are applicable to a degree or certificate
                                                   Education (§ 668.75)
                                                                                                           ability to benefit (ATB) test approved by              offered by the school qualify to receive
                                                      Current regulations: Current § 668.75                the Secretary; (2) being enrolled in an                title IV, HEA program funds. In
                                                   describes the Department’s procedures                   institution that participates in an                    proposing regulations to implement this
                                                   for reviewing allegations or complaints                 approved State process; or (3) by                      statutory change, the Department took
                                                   regarding misrepresentation claims.                     completing a secondary school                          into consideration extensive discussions
                                                      Proposed regulations: We are                         education in a home school setting that                at the negotiated rulemaking sessions.
                                                   proposing to delete current § 668.75                    is treated as a home school or private                    The Department explained during
                                                   (Procedures) and replace it with new                    school under State law. In 2008, this                  negotiated rulemaking that its proposal
                                                   § 668.75 (Relationship with the                         section of the HEA was amended by                      was based on the statutory language that
                                                   Department of Education). Proposed                      adding section 484(d)(4), which                        students would need to earn six credit
                                                   § 668.75 would prohibit an institution,                 provides that a student shall be                       hours or the equivalent. The statute
                                                   its representatives, or any ineligible                  determined by an institution of higher                 does not distinguish among semester,
                                                   institution, organization, or person with               education as having the ability to                     trimester or quarter hours, nor does it
                                                   whom the eligible institution has an                    benefit from the education or training                 suggest an equivalent number of clock
                                                   agreement from making statements that                   offered by the institution of higher                   hours. Under the proposed regulations
                                                   suggest the U.S. Department of                          education upon satisfactory completion                 and the statute, all credit hour students,
                                                   Education approves or endorses the                      of six credit hours or the equivalent                  whether earning semester, trimester, or
                                                   quality of an institution’s educational                 coursework that are applicable toward a                quarter hours would need to be enrolled
                                                   program simply because the institution                  degree or certificate offered by the                   for six hours—the number of hours that
                                                   is eligible to participate in the title IV,             institution.                                           would be equivalent to enrollment on a
                                                   HEA programs.                                                                                                  half-time basis for one term. A student
                                                      Reasons: We propose to remove                        Student Eligibility (§ 668.32(e))                      who completed 6 semester hours, 6
                                                   current § 668.75 because these                             Current Regulations: Paragraph (e) of               trimester hours, or 225 clock hours
                                                   procedures have not been used to take                   current § 668.32 provides that, in order               would be completing one quarter of an
                                                   enforcement actions against institutions                to be eligible for title IV, HEA program               academic year. The Federal negotiator
                                                   for making substantial                                  funds, a student must: (1) Have a high                 noted the apparent inconsistency
                                                   misrepresentations. Instead, when the                   school diploma or its recognized                       between the statutory language
                                                   Department determines that there has                    equivalent; (2) have obtained a passing                regarding the new ATB provision,
                                                   been a misrepresentation by an                          score on an ATB test administered in                   which requires satisfactory completion
                                                   institution, its representatives, or any                accordance with subpart J of part 668;                 of six credit hours or the equivalent
                                                   ineligible institution, organization, or                (3) have been enrolled in an eligible                  coursework, and the definition of an
                                                   person with whom the eligible                           institution that participates in a State               ‘‘academic year’’, which is defined as a
                                                   institution has an agreement, the                       process approved by the Secretary                      period of time during which a full-time
                                                   Department has used its other                           under subpart J of part 668; or (4) have               undergraduate student is expected to
                                                   administrative remedies to take the                     been home-schooled and have obtained                   complete 24 semester or trimester hours,
                                                   appropriate actions against the                         a secondary school completion                          36 quarter hours, or 900 clock hours.
                                                   institution without relying upon the                    credential for home school or, if State                Several non-Federal negotiators
                                                   procedures described in current                         law does not require a home-schooled                   expressed their belief that completion of
                                                   § 668.75. Proposed § 668.71(a) addresses                student to obtain such a credential, have              six hours of program leading to a
                                                   the types of actions the Department                     completed a secondary school education                 certificate or degree was a much better
                                                   anticipates it may take in response to a                in a home school setting that qualifies                indicator of an individual’s ability to
                                                   violation of subpart F of part 668.                     as an exemption from compulsory                        benefit from a program than passing an
                                                      We propose to add new § 668.75                       attendance requirements under State                    ATB test.
                                                   because the Secretary has been made                     law.                                                      Some of the discussion at the
                                                   aware of instances where institutions                      Proposed Regulations: We propose to                 negotiated rulemaking sessions focused
                                                   have misled the public by mentioning                    revise § 668.32(e) by adding new                       on whether a student should be required
                                                   the U.S. Department of Education in                     paragraph (e)(4) to provide that a                     to complete the specified credit hours or
                                                   their advertising in a manner that                      student is eligible to receive title IV,               clock hours in the program in which the
                                                   implies that the Department endorses                    HEA program assistance if the student                  student planned to enroll and for which
                                                   the quality of these institutions’                      has been determined by the institution                 the student applied to receive title IV,
                                                   educational programs. The Department                    to have the ability to benefit from the                HEA program funds. The Department
                                                   does not approve of this behavior and                   education or training offered by the                   noted that the provision was based on
                                                   considers it to be a misrepresentation.                 institution based on the satisfactory                  an experimental site program which
                                                   For this reason, the proposed                           completion of 6 semester hours, 6                      tested and established the effectiveness
                                                   regulations would expressly forbid this                 trimester hours, 6 quarter hours, or 225               of permitting students to display the
                                                   type of activity.                                       clock hours that are applicable toward                 ability to benefit based on successful
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                                                                                                           a degree or certificate offered by the                 completion of six semester hours in any
                                                   Ability To Benefit (668.32 and Subpart                  institution.                                           program leading to a degree or
                                                   J of Part 668)                                             Reasons: We propose to add new                      certificate. One non-Federal negotiator
                                                      Statute: Section 484(d) of the HEA                   paragraph (e)(4) to § 668.32 to                        expressed concern that unless the hours
                                                   describes the circumstances under                       incorporate the new method for                         completed were in the intended
                                                   which a student who does not have a                     students to show that they have the                    program, the coursework might not be
                                                   high school diploma or the equivalent                   ability to benefit, which was added to                 rigorous enough, and the provision
                                                   may establish eligibility for title IV,                 the section 484(d) of the HEA in 2008.                 would not be effective as a means of
                                                   HEA program funds. Under this                           Under this new statutory provision,                    demonstrating the student’s ability to


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                                                   34838                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   benefit from the program in which they                  IV, HEA eligibility by completing six                  Special Definitions (§ 668.142)
                                                   intend to enroll. Several non-Federal                   credit hours, or the equivalent,                       Definition of Assessment Center
                                                   negotiators voiced their view that the                  eligibility is not established until after
                                                   statutory language did not impose that                  the end of the payment period, and the                    Current regulations: Current § 668.142
                                                   kind of limitation. They pointed out that               student may not be paid for the payment                contains a definition of the term
                                                   students often start a program and                      period during which the student took                   assessment center.
                                                   change their mind; therefore, the                       the requisite coursework. Furthermore,                    Proposed regulations: The proposed
                                                   simplest approach to the provision                      to establish eligibility under the new                 definition of assessment center would
                                                   would be the best. The Department                       ATB provision, a student in a credit                   largely track the current definition of
                                                   agrees, but expects that the credit hours               hour program must earn six credit                      that term. We propose only to clarify in
                                                   completed would be part of an eligible                  hours; a student who enrolls in six                    the definition that an assessment center
                                                   program offered by the institution and                  credit hours but receives a failing grade              uses test administrators who, by
                                                   would show that the student has the                     for one or more of those credits has not               definition, have been certified by the
                                                   ability to benefit from the postsecondary               successfully completed six credit hours.               test publisher or State to administer
                                                   educational program in which the                        Similarly, a student in a clock hour                   ATB tests approved by the Secretary
                                                   student is enrolled or intends to enroll.               program must have attended 225 clock                   under this subpart.
                                                      One non-Federal negotiator expressed                 hours and been graded on those 225                        Reasons: We propose to require, as
                                                   concern that some institutions might                    clock hours to establish eligibility.                  part of this definition, that the
                                                   reduce or waive tuition for the portion                                                                        individuals who administer ATB tests
                                                   of the program required to demonstrate                  Scope (§ 668.141)                                      in assessment centers be certified by the
                                                   the ability to benefit, while not                                                                              test publisher, or the State, as
                                                   requiring the student to complete                          Current Regulations: Current
                                                                                                                                                                  appropriate. Test publishers have
                                                   coursework at a sufficiently challenging                § 668.141 describes the scope of subpart
                                                                                                                                                                  indicated that they have encountered
                                                   level, thereby nullifying the impact of                 J of part 668 of the current regulations.
                                                                                                                                                                  situations at assessment centers where
                                                   the provision and setting a student up                  Current subpart J sets forth: (1) The
                                                                                                                                                                  there has been high staff turnover, and
                                                   for failure. Other non-Federal                          provisions under which a student who
                                                                                                                                                                  individuals giving tests are not familiar
                                                   negotiators pointed out that if an                      does not have a high school diploma or
                                                                                                                                                                  with the requirements and procedures.
                                                   institution did not waive or reduce                     the equivalent may establish eligibility
                                                                                                                                                                  The Department solicits comments on
                                                   tuition, a student who did not yet                      for title IV, HEA program funds either
                                                                                                                                                                  whether it would be appropriate or
                                                   qualify for aid might be forced to take                 by taking an ATB test approved by the                  advisable to permit specified test
                                                   out a high interest private loan to pay                 Secretary or by being enrolled in an                   administrators in the assessment center
                                                   for the initial 6 credit hours or 225 clock             institution that participates in an                    to train other individuals at that
                                                   hours needed to establish student                       approved State process; and (2) the                    assessment center to administer ATB
                                                   eligibility.                                            criteria and procedures for approval of                tests.
                                                      In response to a question regarding                  ATB tests, the requirements for
                                                   whether the option to demonstrate the                   independent administration of approved                 Definition of Independent Test
                                                   ability to benefit from the educational or              tests, the requirements for maintaining                Administrator
                                                   training program by passing an                          the Secretary’s approval of ATB tests,                    Current regulations: None.
                                                   approved test or successfully                           and the procedures for the Secretary’s
                                                                                                                                                                     Proposed regulations: We propose to
                                                   completing six credit hours or the                      approval of alternate State processes.
                                                                                                                                                                  add a definition of the term independent
                                                   equivalent was at the discretion of the                    Proposed Regulations: Section
                                                   student or the institution, the                                                                                test administrator to § 668.142. Under
                                                                                                           668.141 would be revised to reference                  this proposed definition, an
                                                   Department noted that the provision                     the new requirements that we propose
                                                   relates to establishing eligibility for                                                                        independent test administrator would
                                                                                                           to add to subpart J of part 668.                       be a test administrator who administers
                                                   assistance under the title IV, HEA
                                                                                                           Specifically, we would redesignate                     tests at a location other than an
                                                   programs. It is a financial aid
                                                                                                           current paragraph (b)(4) of § 668.141 as               assessment center and who—
                                                   requirement, not an admissions
                                                                                                           paragraph (b)(6) and add new                              (1) Has no current or prior financial
                                                   requirement. An institution may have a
                                                                                                           paragraphs (b)(4) and (b)(5). Proposed                 or ownership interest in the institution,
                                                   policy that it does not admit any
                                                                                                           § 668.141(b)(4) would reference the                    its affiliates, or its parent corporation,
                                                   students who do not have a high school
                                                                                                           information on test anomaly studies that               other than the interest obtained through
                                                   diploma or the equivalent. There is no
                                                                                                           the test publishers and States must                    its agreement to administer the test, and
                                                   requirement that an institution
                                                                                                           submit as part of their test submission,               has no controlling interest in any other
                                                   determine a student’s eligibility for title
                                                                                                           and proposed § 668.141(b)(5) would                     institution;
                                                   IV, HEA program funds on the basis of
                                                   either passing an ATB test or                           reference the proposed requirements                       (2) Is not a current or former
                                                   successfully completing coursework.                     that test publishers and States have a                 employee of or consultant to the
                                                      There was considerable discussion                    process to identify and follow up on test              institution, its affiliates, or its parent
                                                   during the negotiated rulemaking                        score irregularities, take corrective                  corporation, a person in control of
                                                   sessions regarding whether a student                    action when irregularities have                        another institution, or a member of the
                                                   who established student eligibility                     occurred, and report the names of                      family of any of these individuals;
                                                                                                           decertified test administrators to the
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                                                   under one of the ATB provisions could                                                                             (3) Is not a current or former member
                                                   be paid for the payment period in which                 Secretary.                                             of the board of directors, a current or
                                                   eligibility was established. The                           Reason: These proposed changes to                   former employee of or a consultant to a
                                                   Department’s position is that a student                 § 668.141 would align the description of               member of the board of directors, chief
                                                   who establishes eligibility for title IV,               the subpart’s scope with the substantive               executive officer, chief financial officer
                                                   HEA program funds by passing an ATB                     changes the Department proposes to                     of the institution, its affiliates, or its
                                                   test during a payment period may be                     make to this subpart. These proposed                   parent corporation or of any other
                                                   paid for the entire payment period.                     changes are discussed in more detail in                institution, or a member of the family of
                                                   However, if a student establishes title                 the following sections.                                any of these individuals; and


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                            34839

                                                      (4) Is not a current or former student               other programs administered by the                     results secure from improper disclosure
                                                   of the institution.                                     Department. In addition, this proposed                 or release. The proposed definition
                                                      This definition would be based                       revision would clarify that the defined                would also clarify that a test
                                                   largely on the description of prohibited                term applies to individuals who are not                administrator may not be compensated
                                                   relationships of independent test                       yet students as well as to individuals                 on the basis of test outcomes. The non-
                                                   administrators contained in current                     who are already enrolled in institutions               Federal negotiators were generally in
                                                   § 668.151(b)(2).                                        participating in the title IV, HEA                     favor of including this additional clarity
                                                      Reasons: The proposed regulations                    programs.                                              in the definition.
                                                   would distinguish between ‘‘test
                                                   administrators,’’ defined in § 668.142,                 Definition of Test                                     Definition of Test Publisher
                                                   and ‘‘independent test administrators.’’                   Current regulations: None.                             Current regulations: Current § 668.142
                                                   For this reason, the Department                            Proposed regulations: We propose to                 defines a test publisher as an individual,
                                                   proposes to add a definition of the term                add a definition of the term test to                   organization, or agency that owns a
                                                   independent test administrator and, as                  § 668.142. Under this proposed                         registered copyright of a test, or is
                                                   discussed later in this preamble, to                    definition, a test would be a                          licensed by the copyright holder to sell
                                                   revise the current definition of test                   standardized test, assessment or                       or distribute a test.
                                                   administrator.                                          instrument that has formal protocols                      Proposed regulations: We propose to
                                                      The concept of an independent test                   regarding the administration of the test               revise the definition of a test publisher
                                                   administrator is not new. Current                       that include the use of parallel, equated              by providing that a test publisher may
                                                   § 668.151(b)(2) describes the                           forms, testing conditions, time allowed                be authorized by the copyright holder to
                                                   circumstances under which a test given                  for the test, and standardized scoring.                represent the copyright holder’s interest
                                                   by a test administrator is considered to                The definition also would clarify that                 regarding the test, rather than specifying
                                                   be ‘‘independently administered’’. We                   tests are not limited to traditional paper             that the individual or organization must
                                                   used much of this language in crafting                  and pencil (or computer-administered)                  be licensed the right to sell or distribute
                                                   the definition of the term independent                  instruments for which forms are                        the test by the copyright holder.
                                                   test administrator.                                     constructed prior to administration to                    Reasons: One non-Federal negotiator
                                                      During the negotiated rulemaking                     examinees and that tests may include                   recommended making this revision to
                                                   discussions, some of the non-Federal                    adaptive instruments that use                          the definition of test publisher. This
                                                   negotiators expressed confusion about                   computerized algorithms for selecting                  non-Federal negotiator explained that
                                                   the difference between test                             and administering items in real time                   this definitional change is appropriate
                                                   administrators and independent test                     provided that, for such instruments, the               because the term test publisher should
                                                   administrators. They suggested adding                   size of the item pool and the method of                include agencies or organizations that
                                                   language to make it clear that an                       item selection ensures negligible                      may represent the copyright holder’s
                                                   independent test administrator is a test                overlap in items across retests.                       interest in the test, but may not be
                                                   administrator who ‘‘administers tests at                   Reasons: We propose to add a                        licensed by the copyright holder. The
                                                   a location other than an assessment                     definition of the term test to § 668.142               Department agrees.
                                                   center’’ in addition to meeting the other               because, as one non-Federal negotiator
                                                   requirements. We agreed with this                       pointed out during our discussions, our                Approval of State Tests or Assessments
                                                   recommendation. Therefore, the                          current ATB regulations define the                     (§ 668.143)
                                                   proposed regulations would specify, as                  terms test item, test administrator and                   Current regulations: Current § 668.143
                                                   part of the definition of independent test              test publisher, but do not define the                  describes the procedures for the
                                                   administrator, that an independent test                 term test. The proposed definition is                  Secretary’s approval of State tests or
                                                   administrator is a test administrator                   based on the definition of test in 34 CFR              assessments.
                                                   who administers tests at a location other               462.4 of the Department’s Measuring                       Proposed regulations: We propose to
                                                   than at an assessment center.                           Educational Gain in the National                       move the requirements governing the
                                                                                                           Reporting System for Adult Education                   submission of tests by States in current
                                                   Definition of Individual With a                                                                                § 668.143 to proposed § 668.144
                                                                                                           regulations.
                                                   Disability                                                                                                     (Application for test approval). With
                                                      Current regulations: Current § 668.142               Definition of Test Administrator                       this change, we would reserve § 668.143
                                                   contains a definition of the term                          Current regulations: Current § 668.142              for future use.
                                                   disabled student.                                       defines a test administrator as an                        Reason: We propose to combine the
                                                      Proposed regulations: Proposed                       individual who may give tests under                    requirements from current §§ 668.143
                                                   § 668.142 would replace the term                        subpart J of part 668.                                 and 668.144 into a single section
                                                   ‘‘disabled student’’ with the term                         Proposed regulations: We propose to                 because the test publisher and State
                                                   ‘‘individual with a disability.’’ We                    revise the definition of the term test                 submission processes have common
                                                   would largely retain the current                        administrator to mean an individual                    elements. To the extent we propose to
                                                   definition, except we would make clear                  who (1) is certified by the test publisher             make changes to the submission
                                                   that the term refers to a person (not only              or the State to administer tests approved              requirements for States (and test
                                                   a student) who has a physical or mental                 under subpart J of part 668 and to                     publishers), we discuss those changes in
                                                   impairment which substantially limits                   protect the test and test results from                 the discussion relating to proposed
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                                                   one or more major life activities, has a                improper disclosure or release, and (2)                § 668.144.
                                                   record of such an impairment, or is                     is not compensated on the basis of test
                                                   regarded as having such an impairment.                  outcomes.                                              Application for Test Approval
                                                      Reasons: The Department proposes to                     Reasons: We propose to revise this                  (§ 668.144)
                                                   use the term individual with a disability,              definition to clarify that a test                         Current regulations: Current § 668.144
                                                   rather than disabled student, because                   administrator must be certified by the                 describes the approval process for tests
                                                   that is the term more commonly used in                  test publisher or the State, and that a                submitted by test publishers. The
                                                   the disability community and is                         test administrator is responsible for                  current regulations do not require test
                                                   consistent with the usage of the term by                keeping both the tests and the test                    publishers to describe their process for


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                                                   34840                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   certifying test administrators, their test              paragraphs (c)(16) through (c)(18).                    § 668.144(c)(17) (test publishers) and
                                                   anomaly analysis, or the types of                       Proposed § 668.144(c)(16) would require                § 668.144(d)(8) (States)).
                                                   accommodations available for                            test publishers to include in their                       Under proposed § 668.144(c)(18) and
                                                   individuals with disabilities. In current               applications a description of their test               (d)(9) respectively, both test publishers
                                                   regulations, the requirements for                       administrator certification process. In                and States would be required to
                                                   approval of State tests or assessments                  proposed § 668.144(c)(17), we would                    describe any accessible technologies
                                                   are contained in a separate section,                    require test publishers to include in                  that are available to individuals with
                                                   § 668.143.                                              their applications a description of the                disabilities, and the process for a test
                                                      Proposed regulations: We propose to                  test anomaly analysis the test publisher               administrator to identify and report to
                                                   clarify and expand the requirements in                  will conduct and submit to the                         the test publisher when
                                                   current §§ 668.143 and 668.144 and                      Secretary. Finally, proposed                           accommodations for individuals with
                                                   include all of the requirements for test                § 668.144(c)(18) would require test                    disabilities were provided.
                                                   approval in one section, proposed                       publishers to include in their                            Reasons: Because many of the
                                                   § 668.144. Paragraphs (a) and (b) of                    applications a description of the types                requirements for approval of tests,
                                                   proposed § 668.144 would describe the                   of accommodations available for                        whether submitted by test publishers or
                                                   general requirement for test publishers                 individuals with disabilities, including               States, are parallel, the non-Federal
                                                   and States to submit to the Secretary                   a description of the process used to                   negotiators suggested, and the
                                                   any test they wish to have approved                     identify and report when                               Department agreed, that it would be
                                                   under subpart J of part 668. Paragraph                  accommodations for individuals with                    appropriate to combine State
                                                   (c) of proposed § 668.144 would                         disabilities were provided.                            submission requirements, currently
                                                   describe the information that a test                       Proposed § 668.144(d) would be                      addressed in § 668.143, and the test
                                                   publisher must include with its                         added to describe what States must                     publisher submission requirements,
                                                   application for approval of a test.                     include in their test submissions to the               currently addressed in § 668.144 in a
                                                   Paragraph (d) of proposed § 668.144                     Secretary. While this provision would                  single regulatory provision. For this
                                                   would describe the information a State                                                                         reason, we combined and, where
                                                                                                           replace the content in current § 668.143,
                                                   must include with its application when                                                                         appropriate, standardized the language
                                                                                                           its language would be revised to be
                                                   it submits a test to the Secretary for                                                                         for the submission requirements for
                                                                                                           parallel, where appropriate, to the test
                                                   approval.                                                                                                      both States and test publishers in
                                                                                                           publisher submission requirements in
                                                      In proposed § 668.144(c), we would                                                                          proposed § 668.144.
                                                                                                           current § 668.144. In addition to                         We propose to make a number of
                                                   largely retain the test publisher
                                                                                                           paralleling most of the current                        changes to the test publisher submission
                                                   application requirements contained in
                                                                                                           requirements for test publisher test                   requirements, reflected in § 668.144(c).
                                                   current § 668.144(c). In addition to
                                                                                                           submissions, proposed § 668.144(d)                     First, we propose to revise
                                                   making some minor technical changes
                                                                                                           would also include the new                             § 668.144(c)(8) because we believe it is
                                                   to these requirements, we would revise
                                                                                                           requirements proposed to be added to                   important for test publishers to
                                                   paragraphs (c)(8) and (c)(11)(iv)(B).
                                                   Under proposed paragraph (c)(8), test                   the test publisher submissions. A                      periodically review the content and
                                                   publishers would be required to provide                 description of those new provisions                    specifications of all tests (not only those
                                                   documentation of periodic reviews of                    follows:                                               tests first published five years before
                                                   the content and specifications of all                      Both test publishers and States would               submission) to ensure that they reflect
                                                   tests submitted to the Secretary for                    be required to submit a description of                 secondary school level verbal and
                                                   approval (not just tests first published                their test administrator certification                 quantitative skills. In addition, we
                                                   five years before submission), to ensure                process that indicates how the test                    propose to revise § 668.144(c)(11)(iv)(B)
                                                   that the tests reflect secondary school                 publisher or State, as applicable, will                to require that a test publisher’s
                                                   level verbal and quantitative skills.                   determine that a test administrator has                technical manual, which must be
                                                      Under the revisions reflected in                     the necessary training, knowledge,                     submitted as part of its test submission,
                                                   proposed § 668.144(c)(11)(iv)(B), a test                skills, and integrity to test students in              include evidence demonstrating that the
                                                   publisher would be required to include,                 accordance with the test publisher’s                   test was normed using a sample that is
                                                   in its technical manual, evidence that                  requirements and how the test publisher                representative of the population of
                                                   the test was normed using a                             or the State will determine that the test              persons who have earned a high school
                                                   contemporary sample that is                             administrator has the ability and                      diploma in the United States. We
                                                   representative of the population of                     facilities to keep its test secure against             propose this change because the
                                                   persons who have earned a high school                   disclosure or release (see proposed                    purpose of this subpart is to implement
                                                   diploma in the United States instead of                 § 668.144(c)(16) (test publishers) and                 the statutory provisions that provide an
                                                   a contemporary population                               § 668.144(d)(7) (States)).                             alternative means for students who do
                                                   representative of persons who are                          The proposed regulations would                      not have a high school diploma or the
                                                   beyond the usual age of compulsory                      require both test publishers and States                equivalent to establish eligibility for the
                                                   school attendance in the United States.                 to submit a description of the test                    title IV, HEA programs. To determine
                                                      We would remove paragraph (c)(14),                   anomaly analysis they will conduct.                    the ability of such students to benefit
                                                   which required a test publisher to                      This analysis would need to include a                  from a postsecondary education or
                                                   include, for performance-based tests or                 description of how they will identify                  training program, passing scores on ATB
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                                                   tests containing performance-based                      potential test irregularities and make a               tests should be based only on the scores
                                                   sections, a description of the training or              determination that test irregularities                 of test takers who have a high school
                                                   certification required of test                          have occurred; an explanation of                       diploma, not the scores of test takers
                                                   administrators and scorers by the test                  corrective action to be taken in the event             who are beyond the age of compulsory
                                                   publishers.                                             of test irregularities; and information on             attendance but who may not have
                                                      We would then redesignate                            when and how the Secretary, test                       completed high school.
                                                   paragraphs (c)(15) and (c)(16) of                       administrator, and institutions will be                   We also propose to delete the
                                                   § 668.144 as proposed paragraphs (c)(14)                notified if a test administrator is                    requirements relating to performance-
                                                   and (c)(15) and add new proposed                        decertified (see proposed                              based tests or tests containing


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                             34841

                                                   performance-based sections, reflected in                accommodations for individuals with                    120 days after the date the notice of
                                                   current § 668.144(c)(14), because no                    disabilities were provided. This                       revocation is published in the Federal
                                                   performance-based tests have ever been                  additional information is necessary for                Register or an earlier date specified by
                                                   submitted to the Secretary for approval                 scoring and norming purposes.                          the Secretary in a notice published in
                                                   and, therefore, we believe the provision                                                                       the Federal Register. We propose this
                                                                                                           Test Approval Procedures (§ 668.145)
                                                   is unnecessary.                                                                                                change to ensure that the public has
                                                      Finally, we are proposing to add three                  Current regulations: Current § 668.145              access to this information.
                                                   requirements to both the test publisher                 describes both procedures for the review
                                                   and State test submission requirements.                 of tests submitted by test publishers and              Criteria for Approving Tests (§ 668.146)
                                                      First, we propose to include, in                     the circumstances under which the                         Current regulations: Current § 668.146
                                                   proposed § 668.144(c)(16) and (d)(7), a                 Secretary’s approval may be withdrawn.                 sets forth the criteria the Secretary uses
                                                   requirement that test publishers and                       Proposed regulations: We propose to                 to evaluate and approve tests submitted
                                                   States, respectively, describe their test               revise § 668.145 to extend the test                    under subpart J of part 668. Under this
                                                   administrator certification process,                    approval procedures to tests submitted                 provision, in order for a test to be
                                                   including how they will determine that                  by States. We would make a number of                   approved, a test publisher must provide
                                                   a test administrator has the necessary                  non-substantive technical changes to                   specified information and norm the test
                                                   training, knowledge, skills, and integrity              this section as well.                                  with groups of sufficient size to produce
                                                   to test students. We believe that it is                    Proposed § 668.145(c)(1) would
                                                                                                                                                                  defensible standard errors of the mean,
                                                   important for test publishers and States                specify that the approval of a test begins
                                                                                                                                                                  with groups not composed
                                                   to provide this information with their                  five years from the date the notice of
                                                                                                                                                                  disproportionately of any race or
                                                   test submissions to demonstrate that                    approval for the test is published in the
                                                                                                                                                                  gender, and with a contemporary
                                                   adequate screening procedures are used.                 Federal Register. Under proposed
                                                                                                                                                                  population representative of persons
                                                   Throughout the negotiated rulemaking                    § 668.145(d)(1), test approval could be
                                                                                                                                                                  who are beyond the usual age of
                                                   discussions on the ATB provisions, one                  revoked if a test publisher or State
                                                                                                                                                                  compulsory school attendance in the
                                                   of the non-Federal negotiators voiced                   violated any terms of the agreement
                                                                                                                                                                  United States.
                                                   the belief that test publishers should be               described in § 668.150 or if the test
                                                                                                           publisher or State substantially changed                  Proposed regulations: We propose to
                                                   required to determine the ‘‘integrity’’ of
                                                                                                           the test and did not resubmit the test, as             revise § 668.146 to provide that the
                                                   the test administrators they certify.
                                                                                                           revised, for approval. Proposed                        criteria for approving tests apply to tests
                                                   Other non-Federal negotiators
                                                                                                           § 668.145(d)(2) would provide that                     submitted by States as well as test
                                                   questioned how test publishers or States
                                                                                                           revocation would become effective 120                  publishers. In addition, we propose to
                                                   would evaluate a test administrator’s
                                                                                                           days from the date the notice of                       make a number of small technical and
                                                   integrity and expressed concern that if
                                                                                                           revocation was published in the Federal                conforming changes to this section.
                                                   such a requirement were in the
                                                                                                           Register or an earlier date specified by               Finally, in proposed § 668.146(c)(4)(ii),
                                                   regulations, it would be too prescriptive.
                                                                                                           the Secretary in a notice published in                 we require that States and test
                                                   We have included in proposed
                                                                                                           the Federal Register.                                  publishers norm their tests with a
                                                   § 668.144(c)(16)(i) and (d)(7)(i) a
                                                                                                              Reasons: Consistent with the changes                contemporary sample that is
                                                   requirement that test publishers and
                                                   States describe how they will determine                 reflected in proposed § 668.144, we                    representative of the population of
                                                   that a test administrator has the integrity             would amend § 668.145 to make the test                 persons who have earned a high school
                                                   necessary to administer tests. The                      approval procedures applicable to States               diploma in the United States.
                                                   Department does not intend to impose                    as well as to test publishers, where                      Reasons: Consistent with the changes
                                                   unnecessary or ill-defined burdens;                     appropriate. In proposed § 668.144(c)(1),              we propose to make to § 668.144, we
                                                   therefore, we are specifically soliciting               we would specify that the approval                     propose to amend § 668.145 to ensure
                                                   feedback on the proposal to require test                period, not to exceed five years, would                that the criteria for approving tests
                                                   publishers and States to describe how                   start on the date the notice of approval               apply to States as well as to test
                                                   they will determine that test                           is published in the Federal Register. We               publishers, where appropriate.
                                                   administrators have integrity, in                       propose to provide that the approval                      We propose to amend
                                                   addition to the training, skills, and                   period commences on this date, rather                  § 668.146(c)(4)(ii) to ensure that tests are
                                                   knowledge necessary to administer                       than on the date the Secretary provides                being normed with a contemporary
                                                   tests.                                                  written notice to the test publisher of                sample of persons who have earned a
                                                      Second, we propose to include, in                    approval, because the public will be                   high school diploma in the United
                                                   proposed § 668.144(c)(17) and (d)(8), a                 able to determine the effective date from              States, rather than persons who are
                                                   requirement that test publishers and                    the notice and that might be relevant                  beyond the usual age of compulsory
                                                   States submit a description of the test                 information for institutions.                          school attendance in the United States.
                                                   anomaly analysis they will conduct and                     One of the non-Federal negotiators                  The purpose of this subpart is to
                                                   how they will identify potential test                   suggested expanding the reasons for                    implement the statutory provisions that
                                                   irregularities and make a determination                 revocation to include substantially                    provide an alternative means for
                                                   that test irregularities have occurred. We              changing a test without resubmitting it                students who do not have a high school
                                                   propose these requirements to promote                   to the Department. The Department                      diploma or the equivalent to establish
                                                   some transparency in the screening                      agreed. For this reason, we would add                  eligibility for the title IV, HEA
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                                                   process that is being used.                             language to proposed § 668.145(d)(1) to                programs. Therefore, to determine the
                                                      Third, we propose to include, in                     provide that test approval could be                    ability of such students to benefit from
                                                   proposed § 668.144(c)(18) and (d)(9), a                 revoked if a test publisher or State                   a postsecondary education or training
                                                   requirement that test publishers and                    substantially changed the test and did                 program, pass scores should be based
                                                   States describe the types of                            not resubmit the test, as revised, for                 only on the scores of test takers who
                                                   accommodations available for                            approval.                                              have a high school diploma, not the
                                                   individuals with disabilities and the                      Finally, in proposed § 668.145(d)(2),               scores of test takers who are beyond the
                                                   process for identifying and reporting to                we would provide that a revocation of                  age of compulsory attendance but who
                                                   the test publisher or the State when                    test approval would become effective                   may not have completed high school.


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                                                   34842                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   Passing Scores (§ 668.147)                              language competence of non-native                      assessment procedures for individuals
                                                      Current regulations: Under current                   speakers of English would need to be                   with disabilities.
                                                                                                           based on the mean score of test takers                    We expect test administrators who
                                                   § 668.147, the Secretary specifies that
                                                                                                           beyond the age of compulsory school                    administer tests under this section to
                                                   the passing score on each approved test
                                                                                                           attendance who completed (rather than                  ensure there is documentation of the
                                                   is one standard deviation below the
                                                                                                           entered) specified programs.                           test-taker’s need for a modified test and
                                                   mean for students with high school
                                                                                                              Reasons: We propose to remove the                   to comply with the provisions of
                                                   diplomas who have taken the test
                                                                                                           regulatory provision related to                        § 668.149(c)(2). We would encourage a
                                                   within three years before the test was
                                                                                                           performance-based tests because, as                    test administrator to coordinate with the
                                                   submitted for approval.                                                                                        institution’s disability support services
                                                                                                           mentioned earlier in this preamble
                                                      Proposed regulations: Proposed
                                                                                                           discussion, no performance-based tests                 center, or other institutional or State
                                                   § 668.147 would specify that passing                                                                           staff who have knowledge of an
                                                                                                           have ever been submitted to the
                                                   scores are based on the mean score of                   Secretary for approval.                                individual’s need for a modified test to
                                                   a sample of individuals who have taken                     The change proposed in the                          ensure that an appropriate test is given.
                                                   the test during the three years before it               regulatory provision relating to tests                    We propose to remove the regulatory
                                                   was submitted. The sample would need                    developed for non-native speakers of                   language concerning the use of foreign
                                                   to be representative of the population of               English who are enrolled in a program                  language tests, because historically there
                                                   high school graduates in the United                     that is taught in their native language                have been no submissions of foreign
                                                   States.                                                 (other than Spanish) is intended to                    language tests for approval. Moreover,
                                                      Reasons: The proposed changes to                     provide that the provisional passing                   pursuant to the current regulations,
                                                   § 668.147 would specify that the passing                scores are based on a sample of test                   because there are no currently approved
                                                   score is based on the mean score of a                   takers whose native language is not                    foreign language tests, any foreign
                                                   sample of high school graduates who                     Spanish and who have a high school                     language test that has not been rejected
                                                   have taken the test. This change would                  diploma. This is parallel to the                       by the Secretary is considered
                                                   make it clear that a sample of test takers              proposed change in                                     automatically to be approved even if it
                                                   would be used, and that the test takers                 § 668.144(c)(11)(iv)(B).                               has not been submitted to the Secretary
                                                   whose scores are used need not be                          Finally, the change reflected in                    for approval. Under the current
                                                   students.                                               proposed § 668.148(b)(2), which would                  regulatory framework, therefore, test
                                                   Additional Criteria for the Approval of                 require basing recommendations for                     publishers and States lack an incentive
                                                   Certain Tests (§ 668.148)                               passing scores for tests to measure                    to submit tests in foreign languages for
                                                                                                           English language competence on scores                  the Secretary’s approval. Continuing
                                                     Current regulations: Current § 668.148                of test takers that have completed, rather             under the current regulations in
                                                   specifies additional criteria for approval              than entered, specified educational and                § 668.149(b) would allow test publishers
                                                   of tests that are performance-based,                    training programs, is designed to be                   and States to circumvent the ATB test
                                                   developed for non-native speakers of                    consistent with changes throughout                     approval process; therefore, we propose
                                                   English, modified for use for persons                   these proposed regulations. The                        its removal. With the removal of
                                                   with disabilities, and computer-based.                  Department specifically seeks input on                 ‘‘Students whose native language is not
                                                     Proposed regulations: Proposed                        the possible impact of this change due                 English’’ from § 668.149(b), foreign
                                                   § 668.148 would largely track current                   to the potential for unintended                        language tests would be required to be
                                                   § 668.148. In addition to making                        consequences.                                          submitted through the established test
                                                   technical updates and conforming                                                                               approval procedures in §§ 668.145 and
                                                   changes (e.g., updating references to                   Special Provisions for the Approval of
                                                                                                                                                                  668.148.
                                                   documents incorporated by reference                     Assessment Procedures for Individuals                     During the negotiated rulemaking
                                                   and updating defined terms to use those                 With Disabilities (§ 668.149)                          discussions, some of the non-Federal
                                                   terms proposed in this document), we                      Current regulations: Current § 668.149               negotiators thought it might be
                                                   propose to remove the criteria for                      (Special provisions for the approval of                advisable to have a transition period
                                                   approval of performance-based tests,                    assessment procedures for special                      before removing the special provisions
                                                   reflected in current § 668.148(a)(1). We                populations for whom no tests are                      in current § 668.149(b). In light of this
                                                   also propose to revise the regulatory                   reasonably available) describes the                    suggestion, the Department is soliciting
                                                   provision relating to tests developed for               special procedures that apply when                     comments on whether a transition
                                                   non-native speakers of English who are                  testing persons with disabilities and                  period is necessary and, if one is
                                                   enrolled in a program that is taught in                 students whose native language is not                  necessary, how long should it be.
                                                   their native language to provide that if                English and who are not fluent in
                                                   the test is in a language other than                    English under subpart J of part 668.                   Agreement Between the Secretary and a
                                                   Spanish, it must be accompanied by a                      Proposed regulations: We propose to                  Test Publisher or a State (§ 668.150)
                                                   recommendation for a provisional                        restructure § 668.149 to focus only on                   Current regulations: The current
                                                   passing score based upon performance                    the special provisions for the approval                regulations require test publishers to
                                                   of a sample of test takers representative               of assessment procedures for                           enter into an agreement with the
                                                   of non-English speaking individuals                     individuals with disabilities. We would                Secretary before an institution may use
                                                   who speak a language other than                         remove current § 668.149(b), which                     the test publisher’s test to determine a
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                                                   Spanish and who have a high school                      describes the procedures for automatic                 student’s eligibility for title IV, HEA
                                                   diploma. The sample upon which the                      test approval for tests provided in a                  program funds. Current § 668.150(b)
                                                   recommended provisional passing score                   student’s native language for students                 describes the specific provisions that
                                                   would be based would need to be large                   whose native language is not English.                  must be included in the agreement.
                                                   enough to produce stable norms. In                        Reasons: We propose to revise                        Current § 668.150(c) contains the
                                                   addition, we would provide, in                          § 668.149 to make clear the respective                 regulations governing the Secretary’s
                                                   proposed § 668.148(b)(2), that the                      responsibilities of test publishers (or                termination of an agreement.
                                                   recommended passing scores for tests                    States, where appropriate) and test                      Proposed regulations: Proposed
                                                   designed solely to measure the English                  administrators when using special                      § 668.150 would provide that States, as


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                           34843

                                                   well as test publishers, must enter into                Government Accountability Office                       language the Department offered to
                                                   agreements with the Secretary in order                  (GAO). GAO issued a report in August                   address this problem generated a
                                                   to have their tests approved.                           2009 that cited the Department for weak                considerable amount of discussion
                                                      We would also revise this section to                 oversight of the ATB test requirements;                during the negotiated rulemaking
                                                   require both test publishers and States                 in its report, GAO provided                            sessions. The Department initially
                                                   to comply with a number of new                          recommendations to the Department to                   proposed draft regulatory language that
                                                   requirements that would be added to the                 strengthen controls over the ATB testing               would require test publishers and States
                                                   agreement with the Secretary. These                     process and to amend the ATB                           to review the tests results of the tests
                                                   requirements would include:                             regulations. Specifically, the GAO                     administered by a decertified test
                                                      • Requiring the test administrators                  identified the following problems with                 administrator and determine which tests
                                                   that they certify to provide them with                  the current regulations:                               were invalid. During the discussion at
                                                   certain information about whether they                     • Current regulations require test                  negotiated rulemaking, it became clear
                                                   have been decertified (see proposed                     publishers to conduct test score                       that the focus of the proposed
                                                   § 668.150(b)(2)).                                       analyses only every three years. This                  regulations should be on a
                                                      • Certifying only test administrators                means it is possible for test                          determination of whether the tests were
                                                   who have not been decertified within                    administrators who are administering                   administered improperly, rather than on
                                                   the last three years (see proposed                      tests improperly to go undetected for up               a determination of whether the tests
                                                   § 668.150(b)(3)(iii)).                                  to three years.                                        were invalid. For this reason, proposed
                                                      • Re-evaluating the qualifications of a                 • While the current regulations                     § 668.150(b)(7)(i) would require test
                                                   test administrator who has been                         require that test publishers decertify test            publishers and States to review the test
                                                   decertified by another test publisher or                administrators who fail to administer                  results of tests administered by
                                                   State (see proposed § 668.150(b)(5)).                   tests properly, they do not require test               decertified test administrators to
                                                      • Immediately notifying the test                     publishers to report to the Department                 determine which tests may have been
                                                   administrator, the Secretary, and                       on implementation of their                             administered improperly. Proposed
                                                   institutions when the test administrator                decertification process.                               § 668.150(b)(7)(ii) would require that
                                                   is decertified (see proposed                               • Current regulations do not
                                                                                                                                                                  test publishers and States immediately
                                                   § 668.150(b)(6)).                                       specifically require test publishers to
                                                                                                                                                                  notify the affected institutions and
                                                      • Reviewing test results of tests                    follow up on test score irregularities or
                                                                                                                                                                  students when they determine that tests
                                                   administered by a decertified test                      report any corrective actions to the
                                                                                                                                                                  were improperly administered. The
                                                   administrator and immediately                           Department. Therefore, the Department
                                                                                                                                                                  Department is committed to providing
                                                   notifying affected institutions and                     has no way of knowing whether actual
                                                                                                                                                                  guidance to test publishers, States, and
                                                   students (see proposed § 668.150(b)(7)).                violations occurred or how the test
                                                                                                                                                                  institutions regarding how to handle
                                                      • Providing copies of test anomaly                   publishers dealt with any violations
                                                                                                                                                                  situations where tests have been
                                                   analysis every 18 months instead of                     they identified.
                                                                                                              In response to the first problem                    determined to be improperly
                                                   every 3 years (see proposed
                                                                                                           identified by GAO, we propose to                       administered and to working with the
                                                   § 668.150(b)(13)).
                                                                                                                                                                  test publishers and the States on
                                                      • Providing access to test records or                require, in proposed § 668.150(b)(13),
                                                                                                           that test publishers conduct test score                notification letters to institutions and
                                                   other documents related to an audit,
                                                                                                           analyses every 18 months, instead of                   students.
                                                   investigation, or program review of an
                                                   institution, the test publisher, or a test              every 3 years. This change would                          Some non-Federal negotiators said it
                                                   administrator (see proposed                             reduce the possibility that test                       was important for all students who had
                                                   § 668.150(b)(14)).                                      administrators who are administering                   been given an ATB test by a decertified
                                                      • Reporting to the Secretary any                     tests improperly would go undetected.                  test administrator to be notified. Other
                                                   credible information indicating that a                  The Department initially proposed that                 non-Federal negotiators believed this
                                                   test has been compromised (see                          test anomaly analysis be submitted 18                  was not necessary. The Department
                                                   proposed § 668.150(b)(15)).                             months after test approval, then                       solicits comments on whether
                                                      • Reporting to the Office of Inspector               annually thereafter. However, after                    notification to all potentially affected
                                                   General of the Department of Education                  hearing the discussion of the benefits                 institutions, students, or prospective
                                                   any credible information indicating that                and drawbacks of more frequent                         students should take place when a test
                                                   a test administrator or institution may                 analysis, the Department agrees that                   administrator is decertified, regardless
                                                   have engaged in fraud or other criminal                 receiving test score analyses every 18                 of whether there has been a
                                                   misconduct (see proposed                                months after approval would address its                determination that the tests given to
                                                   § 668.150(b)(16)).                                      concerns.                                              those students or prospective students
                                                      • Requiring a test administrator who                    The second problem identified by                    were improperly administered.
                                                   provides a test to an individual with a                 GAO was that current regulations do not                   Some non-Federal negotiators
                                                   disability who requires an                              require test publishers to report to the               expressed the opinion that once a test
                                                   accommodation in the test’s                             Department on implementation of their                  administrator was decertified, he or she
                                                   administration to report to the test                    decertification process. The Department                should not be able to be recertified, and
                                                   publisher or the State the nature of the                seeks to address this problem in                       that the Department should keep a list
                                                   disability and the accommodations that                  proposed § 668.150(b)(6), which would                  of decertified test administrators. The
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                                                   were provided (see proposed                             require test publishers and States to                  discussion of this topic at negotiated
                                                   § 668.150(b)(17)).                                      immediately notify the test                            rulemaking caused the Department to
                                                      Reasons: Many of the requirements                    administrator, the Secretary, and the                  examine options for the appropriate
                                                   we propose to add to the required                       institutions where the test administrator              length of time for decertification, the
                                                   provisions in agreements between the                    previously administered approved tests,                impact of a decertification by one test
                                                   Secretary and test publishers (and,                     when the test publisher or the State                   publisher or State on the certification of
                                                   under the proposed regulations, States)                 decertifies a test administrator.                      that test administrator by other test
                                                   are based on recommendations the                           The decertification of test                         publishers or States, and the extent of
                                                   Department received from the                            administrators and the draft regulatory                notifications.


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                                                   34844                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                      The Department’s position is that the                that a test publisher or State                         § 668.151(d)(3) to ensure that it is
                                                   decertification process should not be                   immediately report to the Secretary any                consistent with the changes reflected in
                                                   any more complicated than necessary.                    credible information indicating that a                 proposed § 668.151(b)(2) and
                                                   As there is no provision for a third party              test has been compromised. Proposed                    § 668.152(b)(2). We are proposing to
                                                   to appeal a decertification, we do not                  paragraph (b)(16) of § 668.150 would                   remove § 668.152(d)(6) because the
                                                   believe it is appropriate for a test                    require that test publishers and States                requirement is covered in proposed
                                                   administrator who is decertified by one                 immediately report to the Department’s                 § 668.150(b)(14).
                                                   test publisher to be decertified forever—               Office of Inspector General any credible                   Finally, in proposed § 668.151(g)(4),
                                                   without the ability to be certified by any              information indicating that a test                     we would require institutions to keep a
                                                   test publisher again.                                   administrator or institution may have                  record of each individual who took an
                                                      Therefore, we propose a number of                    engaged in fraud or other criminal                     ATB test and the name and address of
                                                   regulatory changes to ensure that States                misconduct.                                            the test administrator who administered
                                                   and test publishers have rigorous                         Finally, in proposed § 668.150(b)(17),               the test and any identifier assigned to
                                                   certification and decertification                       we would require that test                             the test administrator by the test
                                                   processes. Specifically, we would                       administrators notify test publishers                  publisher or the State. If the individual
                                                   require, at the front end of the                        (and States) if they provide any                       who took the test has a disability and is
                                                   certification process, that a test                      accommodations to individuals with                     unable to be evaluated by the use of an
                                                   publisher (or State) obtain a statement                 disabilities. We believe that adding this              approved ATB test, or requested or
                                                   from potential test administrators                      requirement is appropriate because it                  required a testing accommodation, the
                                                   indicating that they are not currently                  would allow test publishers and States                 institution would be required, under
                                                   decertified and agreeing that they will                 to take this information into account                  proposed § 668.151(g)(5), to maintain
                                                   notify the test publisher or State if they              when norming tests in the future.                      documentation of the individual’s
                                                   become decertified by another entity                                                                           disability and of the testing
                                                                                                           Administration of Tests (§ 668.151)
                                                   (see proposed § 668.150(b)(2)). We                                                                             arrangements provided.
                                                   would then provide, under proposed                          Current regulations: Current § 668.151                 We would also make minor technical
                                                   § 668.150(b)(3)(iii), that a decertified test           requires institutions to select a test                 and conforming changes throughout this
                                                   administrator would not be able to get                  administrator to give approved tests and               section.
                                                   a new certification again until three                   to use results from an approved test                       Reasons: The minor changes reflected
                                                   years after his or her decertification. We              publisher or assessment center. This                   in proposed § 668.151(a) would be made
                                                   believe that these provisions would                     provision also describes the conditions                to make the provision consistent with
                                                   address the potential problem of having                 under which a test is considered to be                 other changes in the proposed
                                                   a decertified test administrator obtain                 independently administered.                            regulations. Specifically, we remove the
                                                   certification from another test publisher                   Proposed regulations: Proposed                     reference to § 668.143 because we are
                                                   and getting certified.                                  § 668.151(a) would largely mirror the                  not including that provision in the
                                                      In the case of a test administrator who              language in current § 668.151(a), except               proposed regulations, and we refer to
                                                   has been certified by more than one test                that, in paragraph (a)(1), we would                    ‘‘test administrator’’ because, by
                                                   publisher (or State) but then is                        remove the reference to tests approved                 definition, a test administrator must be
                                                   decertified by one test publisher (or                   under § 668.143 and we would refer to                  certified (see proposed definition of test
                                                   State), we would not require the                        ‘‘test administrator’’, rather than                    administrator in § 668.142).
                                                   immediate and automatic decertification                 ‘‘certified test administrator.’’ As                       In proposed § 668.151(b)(2), we would
                                                   of the test administrator by other test                 discussed elsewhere in this preamble,                  add a requirement to address the need
                                                   publishers (or States). Instead, as                     we have moved much of the language                     to maintain tests in a secure location.
                                                   reflected in proposed § 668.150(b)(5),                  from current § 668.151(b) to the                       This topic generated a great deal of
                                                   we would require that other test                        definition of the term independent test                discussion during the negotiated
                                                   publishers re-evaluate the qualifications               administrator in proposed § 668.142. As                rulemaking sessions. After the second
                                                   of the test administrator to determine                  revised, proposed § 668.151(b)(1) would                negotiated rulemaking session, the
                                                   whether it is appropriate to continue the               retain the current provision that the                  Department proposed draft language
                                                   test administrator’s certification.                     Secretary considers a test to be                       that would have required test publishers
                                                      The Department is proposing this                     independently administered if it is                    to maintain tests at a secure location,
                                                   approach to avoid the problem of one                    given at an assessment center by a test                somewhere other than at the institution
                                                   entity’s actions having an inappropriate                administrator who is an employee of the                at which the tests are being
                                                   negative impact on another entity. It is                center. In proposed § 668.151(b)(2), we                administered.
                                                   conceivable that the cause for                          would add language to provide that the                     Those non-Federal negotiators who
                                                   decertification by one test publisher or                Secretary also considers a test to be                  had expressed the belief that tests
                                                   State would be unlikely to arise at a                   independently administered if it is                    should not be kept at an institution,
                                                   different test publisher or State because               given by an independent test                           unless the institution had an assessment
                                                   of different procedures. Also, in the                   administrator (defined in § 668.142)                   center, were supportive of this proposal.
                                                   context of test publishers, this approach               who maintains tests at a secure location               Some of the other non-Federal
                                                   would avoid the potential for one test                  and submits the test for scoring by the                negotiators identified a number of
                                                   publisher being able to affect the                      test publisher or the State or, for a                  potential problems with this proposal.
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                                                   services of a competitor.                               computer-based test, a record of the test              For example, they explained that it is
                                                      The third problem identified by GAO                  scores, within two business days of                    common practice for test publishers to
                                                   (i.e., the fact that the current regulations            administering the test.                                ship cartons of tests to the institutions
                                                   do not require any follow-up on test                        Proposed § 668.151(c) and (d) would                where the tests will be administered,
                                                   score irregularities or corrective action)              largely track current § 668.151(c) and (d)             whether the tests are being administered
                                                   is addressed by a number of proposed                    except that we would update these                      at a test assessment center or by an
                                                   provisions. In addition to proposed                     paragraphs so that they would apply to                 independent test administrator. In
                                                   § 668.150(b)(7), which we discussed                     both States and test publishers. In                    addition, we were informed that many,
                                                   earlier, § 668.150(b)(15) would require                 addition, we would revise proposed                     if not most tests approved for ATB are


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                            34845

                                                   used for placement and other purposes                   described in § 668.144(c)(18) and(d)(9),               as applicable, on a weekly basis. Under
                                                   and not used solely for the                             as well as other accommodations                        proposed § 668.152(b)(2)(i) and (b)(2)(ii),
                                                   determination of individuals’ eligibility               requested or required by the individual                copies of completed tests or reports
                                                   for title IV, HEA programs. Some non-                   with a disability in accordance with                   listing test-takers’ scores would be
                                                   Federal negotiators noted that, in fact, it             § 668.153(b). Requiring the name,                      required to include the name and
                                                   is also possible that tests may be far                  address and any assigned identifier for                address of the test administrator who
                                                   more secure if they are located at an                   each test administered would enable the                administered the test and any identifier
                                                   institution where the facilities are                    test publisher or State to identify all                assigned to the test administrator by the
                                                   monitored. Independent test                             tests administered by a test                           test publisher or the State.
                                                   administrators may not have access to                   administrator and facilitate the
                                                   secure locations apart from the                         notification of test takers should the test               Reasons: In proposed § 668.152(a), we
                                                   institutions at which they give tests. For              publisher or the State determine that the              would clarify that assessment centers
                                                   this reason, some non-Federal                           test was improperly administered.                      are also required to comply with the
                                                   negotiators urged the Department not to                 Requiring documentation of disabilities                provisions of § 668.153. With respect to
                                                   require that tests be maintained in a                   that necessitate testing accommodation,                individuals whose native language is
                                                   secure location other than the                          and of the testing arrangements                        not English, the test assessment center
                                                   institution at which they would be                      provided, would provide important                      would be required to use the
                                                   administered.                                           information for two reasons. First,                    appropriate test, depending on the type
                                                      The language in proposed                             collection of the information would                    of program in which an individual plans
                                                   § 668.151(b)(2) is consistent with the                  help emphasize that testing                            to enroll, and whether the classes are
                                                   Department’s position that all ATB tests                accommodations may be provided only                    conducted in English or in the
                                                   must be kept at a secure location.                      to individuals with documentation of a                 individual’s native language. With
                                                   However, we also understand that if                     disability who require testing                         respect to individuals with disabilities,
                                                   some of the tests are used for multiple                 accommodations. We would encourage                     the assessment center would be required
                                                   purposes, it is difficult to prohibit the               test administrators to work with an                    to maintain documentation of an
                                                   delivery of these tests to an institution.              institution’s disability support services
                                                   Therefore, the Department is                                                                                   individual’s disability, and would be
                                                                                                           center, or other institutional or State
                                                   specifically soliciting comments                        staff who have knowledge and                           required to ensure that there is
                                                   regarding proposed § 668.151(b)(2) and                  experience in providing appropriate                    documentation that an individual with
                                                   on other ways the Department can                        testing accommodations to individuals                  a disability requires accommodations,
                                                   ensure that tests can be kept secure.                   with disabilities to ensure that                       such as extra time or a quiet room, for
                                                   Specifically, what does it mean to keep                 appropriate testing accommodations are                 taking an approved test. Under current
                                                   tests at a secure location? Does it mean                provided and are appropriately                         regulations, the presumption is that
                                                   a locked facility to which only the test                documented. Second, providing such                     assessment centers comply with the
                                                   administrator has a key? Should the                     information to the test publisher or State             provisions of § 668.153, but the
                                                   focus be on maintaining a chain of                      would let those entities know that                     proposed regulations would make the
                                                   custody, with adequate safeguards,                      testing accommodations were provided,                  requirement explicit so there is no
                                                   rather than on the location itself? Is                  so that entity can make a determination                misunderstanding.
                                                   there a way to maintain inventory that                  regarding whether to include the score                    In proposed § 668.152(b)(2), we would
                                                   would address the test security issue?                  with scores of other test takers, for                  require assessment centers that score
                                                   As test publishers have a vested interest               whom no testing accommodations were
                                                   in keeping their tests secure, the                                                                             tests to provide on a weekly basis
                                                                                                           provided, for evaluative or norming
                                                   Department is particularly interested in                purposes in the future.                                (rather than an annual basis) the test
                                                   recommendations regarding how best to                                                                          publisher, or the State, as applicable,
                                                   address the security issue in regulations.              Administration of Tests by Assessment                  with all copies of the completed tests
                                                      With regard to the changes reflected                 Centers (§ 668.152)                                    and a report listing, among other things,
                                                   in proposed § 668.151(g), we would be                     Current regulations: Under current                   all test-takers’ scores and institutions to
                                                   adding to the information that an                       § 668.152(a), assessment centers are                   which the scores were sent. We would
                                                   institution must record. The added                      required to follow the requirements for                also revise this section to require
                                                   information that the institution would                  administering tests specified in                       assessment centers to record the name
                                                   be required to maintain for each                        § 668.151(d). If the assessment center                 and address of the test administrator
                                                   individual who took an ATB test would                   scores tests, it must send copies of                   who administered the test and any
                                                   include: (1) the name and address of the                completed tests, or a report listing all               identifier assigned to the test
                                                   test administrator who administered the                 test-takers’ scores, to the test publisher             administrator by the test publisher and
                                                   test and any identifier assigned to the                 on an annual basis (see current                        to maintain this information in the
                                                   test administrator by the test publisher                § 668.152(b)).                                         copies of the completed tests or a report
                                                   or the State; and (2) if the individual                   Proposed regulations: Proposed                       listing all test-takers’ scores and
                                                   who took the test has a disability and is               § 668.152(a) would clarify that                        institutions to which the scores were
                                                   unable to be evaluated by the use of an                 assessment centers are also required to                sent. These changes would enable the
                                                   approved ATB test or the individual                     comply with the provisions of § 688.153                test publisher or State to identify all
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                                                   requested or required a testing                         (Administration of tests for individuals               tests administered by a test
                                                   accommodation, documentation of the                     whose native language is not English or
                                                                                                                                                                  administrator and to facilitate the
                                                   individual’s disability and of the testing              for individuals with disabilities), if
                                                                                                                                                                  notification of test takers should the test
                                                   arrangements that is provided in                        applicable.
                                                   accordance with § 668.153(b). This                        Under proposed § 668.152(b)(2),                      publisher or the State determine that the
                                                   proposed provision is intended to                       assessment centers that score tests                    test was improperly administered.
                                                   encompass documentation of                              would be required to provide copies of                    We also propose minor technical and
                                                   accommodations provided through the                     completed tests or lists of test-takers’               conforming changes throughout this
                                                   use of accessible technologies, as                      scores to the test publisher or the State,             section.


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                                                   34846                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   Administration of Tests for Individuals                 disability and requires accommodations                 Institutional Accountability (§ 668.154)
                                                   Whose Native Language Is Not English                    for taking an approved test. If an                       Current regulations: Current § 668.154
                                                   or for Individuals With Disabilities                    individual with a disability requires                  limits institutional liability for title IV,
                                                   (§ 668.153)                                             accommodations—such as extra time or                   HEA program funds disbursed to a
                                                     Current regulations: Current § 668.153                a quiet room—for taking an approved                    student whose eligibility is determined
                                                   describes the requirements governing                    test, or is unable to be evaluated by the              under subpart J of part 668 only if the
                                                   the administration of tests for students                use of an approved ATB test, the test
                                                                                                                                                                  institution used a test administrator
                                                   whose native language is not English or                 administrator would be required to
                                                                                                                                                                  who: (1) was not independent of the
                                                   for persons with disabilities.                          ensure that there is documentation to
                                                                                                                                                                  institution at the time the test was
                                                     Current § 668.153(a) specifies the                    support the alternative arrangements.
                                                                                                                                                                  given, (2) compromised the testing
                                                   requirements that apply to the tests that               Proposed § 668.153(b)(4), which lists
                                                                                                                                                                  process, or (3) was unable to
                                                   must be used for students whose native                  potential sources of such
                                                                                                                                                                  demonstrate that the student received a
                                                   language is not English and those                       documentation, would be expanded to
                                                                                                                                                                  passing score on an approved test.
                                                                                                           include a record of the disability from
                                                   requirements differ depending on                                                                                 Proposed regulations: Proposed
                                                                                                           a local or State educational agency, or
                                                   whether the student is enrolled in (1) a                                                                       § 668.154 would largely track current
                                                                                                           other government agency, such as the
                                                   program conducted entirely in his or her                                                                       § 668.154, except that it would provide
                                                                                                           Social Security Administration or a
                                                   native language, (2) a program that is                                                                         for institutional liability if institutions
                                                                                                           vocational rehabilitation agency that
                                                   taught in English with an English as a                                                                         used a test that was not administered
                                                                                                           identifies the disability and may include
                                                   Second Language (ESL) component; or                                                                            independently in accordance with
                                                                                                           a diagnosis as well as recommended
                                                   (3) a program that is taught in English                                                                        § 668.151(b). In addition, in proposed
                                                                                                           testing accommodations.
                                                   without an ESL component, or the                           Reasons: We propose to refer to                     § 668.154(b), we would clarify that an
                                                   student does not enroll in the ESL                      ‘‘individuals who are enrolled, or who                 institution would be liable if it or an
                                                   component if the institution offers such                plan to enroll’’, instead of ‘‘students who            employee of the institution
                                                   a component.                                            are enrolled’’, throughout this section                compromised the test in any way.
                                                     Current § 668.153(b) specifies the                    because it is common for individuals to                  Reasons: We propose to amend
                                                   requirements that apply to the tests that               take ATB tests prior to enrollment.                    § 668.154(a) to provide that an
                                                   must be used for students with a                           We propose to make the changes                      institution would be liable if the
                                                   documented impairment. Under this                       reflected in proposed § 668.153(a)(2) to               institution used a test that was not
                                                   provision, an institution must use a test               address a problem with the current                     administered independently, in
                                                   described in § 668.148(a)(3) or                         regulations, which require non-native                  accordance with § 668.151(b). In making
                                                   § 668.149(a) for students with a                        English speakers who enroll in a                       this change, we would clarify that ATB
                                                   documented impairment. The                              program that is taught in English and                  tests must be administered
                                                   institution must document that a                        that has an ESL component to take                      independently, whether in an
                                                   student is disabled and unable to be                    either an ESL test or an ATB test in the               assessment center or by an independent
                                                   evaluated by the use of a conventional                  student’s native language. Testing such                test administrator in order to preserve
                                                   test.                                                   an individual in his or her native                     the integrity of the testing process.
                                                     Proposed regulations: In addition to                  language does not demonstrate that the                   In addition, we propose to provide
                                                   reflecting a number of technical and                    individual has the ability to benefit from             that an institution would be held
                                                   conforming changes, proposed § 668.153                  a program taught in English. Rather, for               responsible if either the institution or an
                                                   would clarify that this section applies to              these individuals, it is necessary first to            employee of the institution
                                                   individuals whose native language is                    determine how proficient they are in                   compromises the testing process to
                                                   not English or individuals with                         English. Therefore, proposed                           promote accountability.
                                                   disabilities who are enrolled or who                    § 668.153(a)(2) would require
                                                   plan to enroll at an institution (i.e., not                                                                    Transitional Rule for the 1996–97
                                                                                                           individuals who wish to enroll in such
                                                   only students).                                                                                                Award Year (§ 668.155)
                                                                                                           a program to first take an English
                                                     Proposed § 668.153(a)(1) and (a)(3)                   language proficiency assessment to                        Current regulations: Current § 668.155
                                                   would remain largely unchanged from                     determine appropriate placement in the                 contains a transitional rule for the 1996–
                                                   the current regulations. Under proposed                 ESL component. Before such students                    97 award year.
                                                   § 668.153(a)(2), an individual whose                    could begin a program taught in English,                  Proposed regulations: The proposed
                                                   native language is not English who is                   they would be required to take a regular               regulations would remove current
                                                   enrolled or plans to enroll in a program                ATB test in English.                                   § 668.155 and reserve that section for
                                                   taught in English with an ESL                              Finally, we would revise                            future use.
                                                   component would now be required to                      § 668.153(b)(3) to require that test                      Reason: We propose to remove the
                                                   take an English language proficiency                    administrators ensure that there is                    transitional rule for 1996–97 because it
                                                   assessment approved under § 668.148(b)                  adequate documentation to support                      is outdated.
                                                   and, before beginning the portion of the                determinations that a test-taker is an
                                                   program taught in English, a test                       individual with a disability and requires              Approved State Process (§ 668.156)
                                                   approved under § 668.146.                               accommodations for taking an approved                    Current regulations: Current § 668.156
                                                     Proposed § 668.153(b) would be                        test or is unable to be evaluated by the               provides the requirements for the
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                                                   revised by removing references to an                    use of an approved ATB test. The                       Department’s approval of a State process
                                                   individual’s impairment and, in its                     examples of documentation that would                   that serves as an alternative to the
                                                   place, using the term individual with a                 be added to § 668.153(b)(4) are provided               requirement for passage of a test
                                                   disability, which would be defined in                   to assist institutions in understanding                approved under subpart J of part 668.
                                                   proposed § 668.142. The substantive                     what kinds of documentation are                          Proposed regulations: Proposed
                                                   changes reflected in paragraph (b) of                   appropriate for supporting a                           § 668.156 would remain largely
                                                   proposed § 668.153 relate to the                        determination that an individual has a                 unchanged from current § 668.156. The
                                                   documentation necessary to support the                  disability and requires accommodations                 one change, in proposed § 668.156(e),
                                                   determination that an individual has a                  for taking an approved test.                           would specify that an approved State


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                           34847

                                                   process would become effective on the                   student is eligible, and presuming that                draft proposed regulations shifting the
                                                   date the Secretary approves the process                 those funds were disbursed, the student                liability to students, but that draft was
                                                   or six months after the State submits the               would have a credit balance under                      rejected by other non-Federal
                                                   process for approval if the Secretary                   § 668.164(e). The amount the institution               negotiators for two reasons. First, these
                                                   neither approves nor disapproves the                    would provide to the student for books                 negotiators believed that a student
                                                   process.                                                and supplies would be the lesser of the                should not be responsible for repaying
                                                      Reason: The change clarifies that the                presumed credit balance or the amount                  a debt under the title IV, HEA programs
                                                   effective date of a State process is the                needed by the student, as determined by                because a student could be precluded
                                                   date the process has been deemed to be                  the institution. In determining the                    from enrolling again at a postsecondary
                                                   approved. We made this change to                        amount needed by the student, the                      institution if the student did not repay
                                                   clarify what the effective date of a                    institution may use the actual costs of                the debt or make satisfactory
                                                   process is when the Secretary                           books and supplies or the allowance for                arrangements to repay it. Second, some
                                                   affirmatively approves it.                              books and supplies used in the student’s               of the non-Federal negotiators were
                                                                                                           cost of attendance for the payment                     aware of predatory practices at some
                                                   Disbursements (§§ 668.164(i),                           period.                                                institutions where students were
                                                   685.102(b), 685.301(e), 686.2(b), and                      Reasons: Although the current                       promised an advance of funds simply
                                                   686.37(b))                                              regulations permit institutions to                     for enrolling in programs at those
                                                   Provisions for Books and Supplies                       disburse Federal Pell Grant and other                  institutions, and these negotiators
                                                                                                           title IV, HEA program funds in a manner                believed that shifting the liability to
                                                      Statute: Section 401(e) of the HEA
                                                                                                           that best meets the needs of students,                 students would exacerbate these
                                                   provides that an institution may credit
                                                                                                           we have identified situations where                    practices.
                                                   a student’s account with Federal Pell
                                                                                                           low-cost institutions delay disbursing                    Some of the non-Federal negotiators
                                                   Grant funds to pay for the cost of tuition
                                                                                                           funds for an extended time, or make                    noted that some public institutions must
                                                   and fees, and for institutionally owned
                                                                                                           partial disbursements to cover costs for               request funds from a State office (unlike
                                                   housing, room, and board. For other                     only tuition and fees. As a result of
                                                   goods and services provided by the                                                                             other institutions that have direct
                                                                                                           these practices, students either have to               control of funds) and cautioned against
                                                   institution, the student may elect to                   pay for books and supplies that would
                                                   have his or her account credited with                                                                          adopting any regulations that would
                                                                                                           otherwise be paid by title IV, HEA                     make it administratively difficult, if not
                                                   Federal Pell Grant funds to pay those                   program funds by obtaining loans, or do
                                                   costs. In all other respects, section                                                                          impossible, for these institutions to
                                                                                                           without the books and supplies needed                  comply with disbursement timelines.
                                                   401(e) provides that payments of                        at the beginning of the term or
                                                   Federal Pell Grant funds are made in                                                                           These non-Federal negotiators suggested
                                                                                                           enrollment period until the institution
                                                   accordance with regulations                                                                                    that an advance or voucher for books
                                                                                                           makes the funds available. The
                                                   promulgated by the Secretary. The HEA                                                                          and supplies could be issued early in
                                                                                                           proposed regulations would reduce
                                                   does not address the issue of crediting                                                                        the payment period only if the
                                                                                                           these disbursement delays at some
                                                   student accounts for the other title IV,                                                                       institution determined that the student
                                                                                                           institutions and enable students to
                                                   HEA programs.                                                                                                  was eligible and otherwise qualified for
                                                                                                           obtain their books and supplies in a
                                                      Current regulations: Section                                                                                title IV, HEA program funds before the
                                                                                                           timely manner.
                                                   668.164(b) provides that an institution                    During the negotiated rulemaking                    beginning of the payment period, and
                                                   must disburse title IV, HEA program                     sessions, some of the non-Federal                      this suggestion is reflected in the
                                                   funds (except for FWS funds) on a                       negotiators stated that many institutions              proposed regulation.
                                                   payment period basis. Section                           advance funds (institutional funds or                     The committee agreed to adopt
                                                   668.164(d) reflects the statutory                       title IV, HEA program funds) or issue                  proposed § 668.164(i), believing it
                                                   requirements for crediting a student’s                  vouchers, or other credit vehicles, that               provided an appropriate balance
                                                   account with Federal Pell Grant funds,                  students use to obtain books and                       between the need for students to be able
                                                   but provides that those requirements                    supplies. The negotiators noted that if a              to purchase or obtain books and
                                                   also apply to ACG, National SMART                       student to whom the institution                        supplies early in the payment period
                                                   Grant, TEACH Grant, FSEOG, Federal                      provided the advance or voucher does                   and the administrative needs of
                                                   Perkins Loan, Direct Loan, and FFEL                     not begin classes, the institution risks               institutions.
                                                   program funds. In addition,                             losing the amount advanced. For                        Reporting Disbursements, Adjustments,
                                                   §§ 686.33(a), 690.76(a), and 691.76(a),                 example, if the institution advanced                   and Cancellations
                                                   provide that for each payment period,                   Federal Pell Grant funds to a student,
                                                   an institution may pay Federal Pell                     e.g., made a disbursement directly to the                 Statute: None.
                                                   Grants, ACGs, National SMART Grants,                    student, and the institution could not                    Current regulations: Sections
                                                   and TEACH Grants to a student in a                      show that the student began attendance                 685.301(e) and 686.37(a) require an
                                                   time and manner that best meets the                     in the payment period, under                           institution to submit a record to the
                                                   student’s needs.                                        § 668.21(a)(1) the institution would be                Department for the initial disbursement
                                                      Proposed regulations: Under                          liable and would have to return those                  of a Direct Loan or TEACH Grant no
                                                   proposed § 668.164(i), an institution                   funds. For this reason, some of the non-               later than 30 days following the date of
                                                   would provide a way for a Federal Pell                  Federal negotiators argued that in                     that disbursement. In addition, an
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                                                   Grant eligible student to obtain or                     exchange for requiring an institution to               institution must submit subsequent
                                                   purchase required books and supplies                    advance funds or issue vouchers early                  records for disbursements, adjustments,
                                                   by the seventh day of a payment period                  in the payment period, and before the                  and cancellations of these program
                                                   under certain conditions. An institution                institution could establish that the                   funds no later than 30 days following
                                                   would have to comply with this                          student began attendance, the student                  the date of those actions. However,
                                                   requirement only if, 10 days before the                 should be liable under § 668.21 for                    § 690.83(a)(2) of the Federal Pell Grant
                                                   beginning of the payment period, the                    returning the funds.                                   regulations provides that an institution
                                                   institution could disburse the title IV,                   In response to these concerns and                   submits Payment Data in accordance
                                                   HEA program funds for which the                         suggestions, the Department put forward                with procedures established by the


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                                                   34848                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   Secretary through publication in the                    HEA, as amended by the HEOA,                           IV, HEA program funds if they can
                                                   Federal Register.                                       particularly related to programs that                  prove their ability to benefit from the
                                                     Proposed regulations: The proposed                    prepare students for gainful                           planned education by taking
                                                   regulations in §§ 685.301(e) and                        employment, incentive compensation,                    Department-approved ability to benefit
                                                   686.37(b) would adopt the current                       satisfactory academic progress policies,               tests or completing college coursework.
                                                   Federal Pell Grant reporting                            and verification of information on                     The current regulations specify the
                                                   requirements. Also, the definition of the               student aid applications which require                 criteria and procedures for approval of
                                                   term ‘‘Payment Data’’ would be added to                 the development of new or revised                      ATB tests, the requirements for
                                                   the Direct Loan and TEACH Grant                         policies and disclosures for institutions              independent administration of approved
                                                   program regulations in §§ 685.102(b)                    participating in Federal student                       tests, the requirements for maintaining
                                                   and 686.2(b), respectively.                             assistance programs. These regulations                 the Secretary’s approval of ATB tests,
                                                     Reasons: The proposed regulations                     also would implement changes made by                   and the procedures for the Secretary’s
                                                   would harmonize the reporting                           the HEOA to provisions related to                      approval of alternate State processes.
                                                   requirements for the Federal Pell Grant,                ability to benefit options.                               As discussed in the ability to benefit
                                                   TEACH Grant, and Direct Loan                               Many regulatory provisions were                     section of this NPRM, the proposed
                                                   programs and provide flexibility to the                 included in this NPRM because of the                   regulations would update the
                                                   Secretary to modify the requirements to                 length of time since they had been                     procedures and requirements related to
                                                   take advantage of changing technology                   updated or the provisions’ relationship                the administration and suitability of
                                                   and improved business processes.                        to significant developments, such as the               ability to benefit tests to ensure the
                                                                                                           Department’s FAFSA simplification                      security of the test, perform an analysis
                                                   Executive Order 12866                                   initiative. In the following areas, the                of test irregularities, take corrective
                                                   Regulatory Impact Analysis                              Secretary has exercised limited                        action when test irregularities occur,
                                                                                                           discretion in including topics in these                report the names of decertified test
                                                      Under Executive Order 12866, the                     proposed regulations:                                  administrators to the Secretary, and to
                                                   Secretary must determine whether the                       Definition of High School Diploma                   handle testing of non-native speakers of
                                                   regulatory action is ‘‘significant’’ and                (§ 668.16(p)): The proposed regulations                English and individuals with
                                                   therefore subject to the requirements of                would require institutions to                          disabilities. Several defined terms
                                                   the Executive Order and subject to                      demonstrate the capability to adequately               would be modified or added to clarify
                                                   review by the OMB. Section 3(f) of                      administer the program by developing                   the regulations, including the terms
                                                   Executive Order 12866 defines a                         and following procedures to evaluate                   assessment center, independent test
                                                   ‘‘significant regulatory action’’ as an                 the validity of a student’s high school                administrator, test, test administrator,
                                                   action likely to result in a rule that may              completion. A high school diploma is                   and test publisher.
                                                   (1) have an annual effect on the                        an essential factor in determining an                     The proposed regulations related to
                                                   economy of $100 million or more, or                     institution’s participation in or a                    application for test approval would
                                                   adversely affect a sector of the economy,               student’s eligibility for assistance under             consolidate requirements for test
                                                   productivity, competition, jobs, the                    the title IV, HEA programs, but the term               publishers and States submitting tests
                                                   environment, public health or safety, or                is not defined anywhere in the HEA or                  for approval because the processes have
                                                   State, local or tribal governments or                   its implementing regulations. Under                    common elements. Under the proposed
                                                   communities in a material way (also                     proposed § 668.16(p), institutions would               regulations, test publishers and States
                                                   referred to as an ‘‘economically                        have to verify a student’s high school                 would be required to show that their
                                                   significant’’ rule); (2) create serious                 completion if the institution or the                   tests are normed using a contemporary
                                                   inconsistency or otherwise interfere                    Secretary has reason to believe a                      sample that is representative of people
                                                   with an action taken or planned by                      student’s diploma is not valid or is not               with a high school diploma instead of
                                                   another agency; (3) materially alter the                from an entity that provides secondary                 people beyond the age of compulsory
                                                   budgetary impacts of entitlement grants,                school education. This proposed                        school attendance. They would be
                                                   user fees, or loan programs or the rights               provision is not intended to create a                  required to submit a description of their
                                                   and obligations of recipients thereof; or               requirement to collect high school                     test administrator certification process
                                                   (4) raise novel legal or policy issues                  diplomas from all students. Rather, it                 that indicates how they will determine
                                                   arising out of legal mandates, the                      allows operational flexibility so                      that a test administrator has the
                                                   President’s priorities, or the principles               institutions can choose the best                       necessary training, knowledge, skills,
                                                   set forth in the Executive order.                       approach to make inquiries when                        and integrity to test students in
                                                      Pursuant to the terms of the Executive               warranted. To assist in this process, the              accordance with requirements. Finally,
                                                   order, we have determined this                          Department is working to implement                     they would be required to describe how
                                                   proposed regulatory action will have an                 changes in the FAFSA. Specifically,                    they will determine that the test
                                                   annual effect on the economy of more                    beginning in 2011–2012, students will                  administrator has the ability and
                                                   than $100 million. Therefore, this action               be required to list the name of their                  facilities to keep their tests secure
                                                   is ‘‘economically significant’’ and subject             secondary school and the State that                    against disclosure or release.
                                                   to OMB review under section 3(f)(1) of                  issued their diploma when completing                      In addition, the proposed regulations
                                                   Executive Order 12866.                                  their FAFSA. In addition, the                          would implement a new ability to
                                                   Notwithstanding this determination, we                  Department plans to issue guidance to                  benefit option added by the HEOA that
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                                                   have assessed the potential costs and                   institutions on developing and                         allows students to satisfactorily
                                                   benefits—both quantitative and                          following procedures for evaluating the                complete six credit hours or 225 clock
                                                   qualitative—of this regulatory action                   validity of high school diplomas                       hours of college work applicable to a
                                                   and have determined that the benefits                   through the Federal Student Aid                        degree or certificate offered by the
                                                   justify the costs.                                      Handbook or other means.                               institution to prove ability to benefit. As
                                                                                                              Ability to Benefit (§§ 668.32 and                   described in the Reasons section related
                                                   Need for Federal Regulatory Action                      668.141 through 668.156): Students                     to this provision, the Department took
                                                     These proposed regulations are                        without a high school diploma or its                   into consideration extensive discussions
                                                   needed to implement provisions of the                   equivalent may become eligible for title               at the negotiated rulemaking sessions in


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                           34849

                                                   developing this proposed regulatory                     so that paragraph (a) describes the                    statements related to the cost of the
                                                   provision. One issue discussed was                      actions the Secretary may take if the                  program and financial aid that is
                                                   whether the hours needed to be earned                   Secretary determines that an eligible                  available to students. Proposed § 668.73
                                                   need to be within the program in which                  institution has engaged in substantial                 would expand the categories to include
                                                   the student planned to enroll and for                   misrepresentation. These actions would                 the cost of the program and the
                                                   which the student applied to receive                    include revocation of the participation                institution’s refund policy if a student
                                                   title IV, HEA program funds. Some                       agreement, limitations on title IV, HEA                does not complete the program; the
                                                   negotiators believed that, if the                       participation, denial of participation                 availability of any financial assistance
                                                   coursework were not earned in the                       applications, or initiation of                         offered to students, including a
                                                   program the student planned to enroll,                  proceedings against the institution.                   student’s loan repayment responsibility
                                                   it might not be rigorous enough, and the                   The proposed regulations would                      regardless of program completion or
                                                   provision would not be effective as a                   provide additional guidance to                         subsequent employment; and the
                                                   means of demonstrating the student’s                    institutions to ensure that marketing                  student’s right to apply for or reject any
                                                   ability to benefit from the program in                  materials and statements are an accurate               particular type of financial aid or other
                                                   which they intend to enroll. The                        representation of the institution. The                 assistance. The Department agreed with
                                                   Department agreed with other non-                       proposed definition of                                 non-Federal negotiators that students
                                                   Federal negotiators, who contended that                 misrepresentation would restate the                    who enroll in a program should have
                                                   the statutory language did not impose                   current definition of the term (i.e., that             specific knowledge of the cost of the
                                                   this kind of limitation and that students               misrepresentation is any false,                        program, its refund policy, and financial
                                                   often change their mind as to the                       erroneous, or misleading statement                     aid options.
                                                   specific program of enrollment so the                   made not only by the eligible                             Current § 668.73 describes what
                                                   simplest approach to the provision                      institution), but it would also clarify                constitutes misrepresentation related to
                                                   would be best. The Department also                      that the term includes any false,                      the employability of an institution’s
                                                   noted that the proposed provision                       erroneous, or misleading statement                     graduates and these prohibitions would
                                                   would be a financial aid requirement,                   made by one of its representatives, or                 be retained. Proposed § 668.73 would
                                                   not an admissions criterion, and that an                any ineligible institution, organization,              prohibit false statements regarding an
                                                   institution could have a policy that it                 or person with whom the eligible                       institution’s knowledge of current or
                                                   does not admit any students who do not                  institution has an agreement. Moreover,                likely future conditions, compensation,
                                                   have a high school diploma or the                       we would clarify in the definition of                  or employment opportunities for its
                                                   equivalent.                                             misrepresentation that it may be made                  graduates. Misrepresentations relating to
                                                      Finally, the negotiators questioned                  directly or indirectly to a student or a               whether employment is being offered by
                                                   whether a student who established                       member of the public in written, oral,                 the institution or that a talent hunt or
                                                   student eligibility under one of the ATB                visual, or other form.                                 contest is being conducted would also
                                                   provisions could be paid for the                           The proposed amendments in subpart                  be prohibited. In addition, institutions
                                                   payment period in which eligibility was                 F of part 668 would add further detail                 would be prohibited from making false
                                                   established. The Department’s position                  to the categories of misrepresentation                 statements about other requirements
                                                   is that a student who establishes                       described in the current regulations                   that are generally needed in order to be
                                                   eligibility by passing an ATB test during               prohibiting misrepresentation. In                      employed in certain fields. Negotiators
                                                   a payment period may be paid for the                    proposed § 668.72, which describe the                  acknowledged that students need to be
                                                   entire payment period, but that a                       types of false, erroneous, or misleading               informed about employment prospects
                                                   student who establishes eligibility                     statements about an institution’s                      when considering postsecondary
                                                   through coursework may not be paid for                  educational program that would be                      program options, but were concerned
                                                   the payment period during which the                     prohibited as misrepresentations, we                   about the ability to provide accurate
                                                   student took the requisite coursework                   would expand the list of prohibited                    information given the economic
                                                   because eligibility would not be                        misrepresentations to include false,                   environment and timeframes involved.
                                                   established until the payment period                    erroneous, or misleading statements                       Current § 668.75 describes the
                                                   was over.                                               relating to the following: Institutional,              Department’s procedures for reviewing
                                                      Misrepresentation of Information to                  programmatic, or specialized                           allegations or complaints regarding
                                                   Students and Prospective Students                       accreditation; conditions for acceptance               misrepresentation claims. The
                                                   (§§ 668.71 through 668.75): The                         of transfer credits; whether completion                Department proposes removing § 668.75
                                                   Secretary recognizes that choosing a                    of a course of instruction qualifies                   as these procedures have not been used
                                                   college or job training program is an                   students to take licensing examinations                to take enforcement actions against
                                                   increasingly important and high-stakes                  or meet other additional conditions                    institutions for making substantial
                                                   decision for students, and the                          required for employment in the field for               misrepresentations. The Department has
                                                   availability of accurate information                    which the program is represented to                    used its other administrative remedies
                                                   about institutions is crucial. Section 487              prepare students; requirements to                      to take the appropriate actions against
                                                   of the HEA and current regulations                      complete the course of study and                       institutions found to have engaged in
                                                   prohibit any substantial                                conditions that would lead to                          misrepresentation. The proposed
                                                   misrepresentation made by an                            termination of enrollment; the                         regulations would create a new § 668.75
                                                   institution regarding the nature of its                 availability of unsolicited testimonials               that would prohibit an institution from
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                                                   educational program, its financial                      or endorsements; the subject matter,                   suggesting that its participation in title
                                                   charges, or the employability of its                    content of the course of study, and facts              IV, HEA programs represents a
                                                   graduates.                                              about the degree, certificate, or other                Departmental endorsement of the
                                                      The Department proposes to                           completion document; and whether the                   quality of its educational programs.
                                                   strengthen regulatory enforcement                       degree to be given has been authorized                    Incentive Compensation (§ 668.14(b)):
                                                   authority against eligible institutions                 by the appropriate State educational                   Section 487(a)(20) of the HEA requires
                                                   that engage in substantial                              agency.                                                that the title IV, HEA program
                                                   misrepresentations. The proposed                           Current § 668.73 describes prohibited               participation agreement prohibit an
                                                   regulations would restructure § 668.71                  false, erroneous, or misleading                        institution from making any


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                                                   34850                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   commission, bonus, or other incentive                   would require institutions to focus on                   The proposed regulations would
                                                   payments based directly or indirectly on                two questions when evaluating                          clarify what constitutes State
                                                   success in securing enrollments or                      employee bonus or incentive payments:                  authorization for participation in title
                                                   financial aid to any persons or entities                (1) Whether the payment is based on                    IV, HEA programs. According to the
                                                   involved in student recruiting or                       success in securing enrollments; and (2)               Department’s proposal, legal
                                                   admissions activities, or in making                     whether the payment is an award of a                   authorization is represented by a
                                                   decisions about the award of student                    sum of money. If the answer to each                    charter, license, or other document from
                                                   financial assistance. This statutory                    question is yes, the incentive or bonus                a State agency or State entity that
                                                   prohibition does not apply to the                       payment would not be permitted. Non-                   specifically grants the authority to
                                                   recruitment of foreign students residing                Federal negotiators who agreed with the                operate postsecondary educational
                                                   in foreign countries who are not eligible               Department supported the elimination                   programs, including those leading to a
                                                   to receive Federal financial assistance.                of the safe harbors as a way to reduce                 degree or certificate. The State
                                                   Current regulations to implement HEA                    non-compliance and to make the                         authorization must be subject to adverse
                                                   Section 487(a)(20) specify twelve types                 regulations more consistent with the                   action by the State and the State must
                                                   of activities and arrangements that do                  statute. Other non-Federal negotiators                 have a process to review and act on
                                                   not violate the prohibition on incentive                objected that the safe harbors were                    complaints about an institution. An
                                                   payments to an institution’s employees                  needed to explain an unclear law and to                institution would also be considered
                                                   based on success in securing                            provide boundaries so institutions do                  legally authorized in a State if the
                                                   enrollments. The first safe harbor                      not unintentionally run afoul of the                   institution were authorized to offer
                                                   explains the conditions under which an                  regulations. As discussed in the                       programs beyond secondary education
                                                   institution may adjust compensation                     Regulatory Alternatives Considered                     by the Federal Government or an Indian
                                                   without that compensation being                         section below, negotiations about                      Tribe as that term is described in 25
                                                   considered an incentive payment. The                    incentive compensation and safe                        U.S.C. 1802(2) or if it were exempt from
                                                   twelve safe harbors describe the                        harbors did not lead to agreement.                     State authorization as a religious
                                                   conditions under which payments that                      State Authorization as a Component                   institution under the State constitution.
                                                   could potentially be construed as based                                                                        The proposed regulations also would
                                                                                                           of Institutional Eligibility (§§ 600.4(a)(3),
                                                   upon securing enrollments or financial                                                                         require a State to notify students of the
                                                                                                           600.5(a)(4), 600.6(a)(3), and 600.9): To
                                                   aid are nonetheless not covered by the                                                                         contact information for filing
                                                                                                           participate in the title IV, HEA student
                                                   statutory prohibition. As described in                                                                         complaints with an institution’s
                                                                                                           aid programs, an institution must be
                                                   greater detail in the Reasons section                                                                          accreditor and State licensing agency.
                                                                                                           legally authorized to provide a                          Gainful Employment (§§ 600.2, 600.4,
                                                   related to this provision, the safe                     postsecondary educational program
                                                   harbors under the existing regulations                                                                         600.5, 600.6, 668.6, and 668.8): The
                                                                                                           within the State in which it is located.               Department intends to begin collecting
                                                   dealt with adjustments to employee                      Current regulations do not define or
                                                   compensation, enrollments in programs                                                                          information on completers of programs
                                                                                                           describe the statutory requirement that                that, by law, must lead to gainful
                                                   not eligible for title IV, HEA program                  an institution must be legally authorized
                                                   funds, contracts to provide training,                                                                          employment in a recognized
                                                                                                           in a State. State legal authorization can              occupation. The proposed new
                                                   profit-sharing bonus plans,                             be granted through a charter, license, or              requirement would enable the
                                                   compensation based upon program                         other written document issued by an                    Department to further evaluate and
                                                   completion, pre-enrollment activities,                  appropriate agency or State official and               monitor the outcomes of these
                                                   managerial and supervisory employees,                   may be provided by a licensing board or                programs.
                                                   token gifts, profit distributions, Internet-            educational agency. Some States have                     Under proposed § 668.6(a), an
                                                   based activities, and payments to third                 deferred approval of educational                       institution would annually submit
                                                   parties.                                                institutions to accrediting agencies or                information about students who
                                                      The proposed regulations would                       have exempted from State authorization                 complete a program that leads to gainful
                                                   eliminate these safe harbors in response                requirements a subset of institutions.                 employment in a recognized
                                                   to student and advisor complaints about                 Since accrediting agencies generally                   occupation. That information would
                                                   aggressive sales tactics from some                      require that an institution be legally                 include, at a minimum, identifying
                                                   institutions, institutions’ concerns that a             operating in the State, the Department                 information about each student who
                                                   lack of clear guidance made it difficult                was concerned that the checks and                      completed a program, the CIP code for
                                                   to be confident of compliance, and the                  balances provided by the separate                      that program, the date the student
                                                   Department’s experience that                            processes of accreditation and State                   completed the program, and the
                                                   unscrupulous actors routinely rely on                   legal authorization were being                         amounts the student received from
                                                   the safe harbors to circumvent the intent               undermined. The different requirements                 private educational loans and
                                                   of section 487(a)(20) of the HEA. The                   for authorization as an educational                    institutional financing plans. In
                                                   regulations proposed by the Department                  institution allow some institutions to                 addition, under proposed § 668.6(b), an
                                                   would eliminate the safe harbors and                    move from State to State for less                      institution would be required to
                                                   prohibit incentive compensation linked                  oversight. There was also concern over                 disclose on its Web site information
                                                   to enrollments for employees engaged in                 the Department’s existing policy that an               about (1) the occupations that its
                                                   recruitment, admissions, or financial aid               institution was authorized by a State by               programs prepare students to enter,
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                                                   activities. Institutions would be able to               virtue of the State’s decision not to have             along with links to occupational profiles
                                                   make merit-based adjustments that are                   any oversight over the institution. As                 on O*NET, (2) the on-time graduation
                                                   not based on securing enrollments or                    discussed in the Reasons section related               rate of students entering a program, (3)
                                                   the award of financial aid. The                         to this provision, the recent lapse in the             the cost of each program, including
                                                   clarifying remarks about the current safe               existence of California’s Bureau for                   costs for tuition and fees, room and
                                                   harbors in the preamble to this NPRM                    Private Postsecondary and Vocational                   board, and other institutional costs
                                                   describe the potential for non-compliant                Education exemplified the weakness of                  typically incurred by students enrolling
                                                   conduct to be protected by the safe                     this policy in ensuring appropriate                    in the program, such as books and
                                                   harbors. The proposed regulations                       oversight of Federal programs.                         supplies, (4) beginning no later than


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                           34851

                                                   June 30, 2013, the placement rate for                   award credit hours. For programs for                      Finally, the proposed regulations
                                                   students completing each of those                       which the provisions above are not                     would revise the clock-to-credit hour
                                                   programs, as determined under                           appropriate, the institution must                      conversion process. Proposed
                                                   § 668.8(g) or a State-sponsored                         establish reasonable equivalencies as                  § 668.8(l)(1) would modify existing
                                                   workforce data system; and (5) the                      represented by learning outcomes for                   clock hour to credit hour conversion
                                                   median loan debt incurred by students                   the amount of work required in the                     formulas so a semester or trimester
                                                   who completed each program in the                       definition of a credit hour.                           credit hour must include at least 37.5
                                                   preceding three years, identified                          The credit hour was developed as part               clock hours of instruction and a quarter
                                                   separately as title IV, HEA loan debt and               of a process to establish a standard                   hour must include at least 25 clock
                                                   debt from private educational loans and                 measure of faculty workloads, costs of                 hours of instruction. If an institution’s
                                                   institutional financing plans.                          instruction, and rates of educational                  process for determining credit hours has
                                                      Definition of a Credit Hour (§§ 600.2,               efficiencies as well as a measure of                   not been found deficient by the
                                                   602.24, 603.24, and 668.8): Credit hours                student work for transfer students. A                  accrediting or State licensing agency,
                                                   are used to measure degree completion                   standard measure will provide                          then the minimum clock hours of
                                                   and award title IV, HEA aid, but under                  increased assurance that a credit hour                 instruction can be reduced to 30 for
                                                   current regulations there is no                         has the necessary educational content to               semester and trimester programs and 20
                                                   commonly accepted definition of a                       support the amounts of Federal funds                   for quarter programs as long as the
                                                   credit hour. The increased availability                 that are awarded to participants in                    combined instruction and work outside
                                                   of weekend, evening, and distance                       Federal funding programs and that                      the class meets the longer requirements
                                                   education programs complicates the                      students at different institutions are                 described above. With respect to the
                                                   measurement of credit hours by seat                     treated equitably in the awarding of                   definition of an eligible program in
                                                   time in the definitions and conversion                  those funds. During the negotiated                     § 668.8, the proposed regulations
                                                   formulas existing under current                         rulemaking sessions, a few of the non-                 require that institutions demonstrate
                                                   regulations. In current § 668.8(k) and (l),             Federal negotiators were opposed to any                that students enroll in and graduate
                                                   the regulations provide the formula that                proposal to define a credit hour because               from the degree program. The proposed
                                                   certain undergraduate programs must                     they believed that a definition would                  regulations also require a program to use
                                                   use to convert the number of clock                      impinge upon an institution’s ability to               clock hours when accrediting agencies
                                                   hours offered to the appropriate number                 create innovative courses and teaching                 determine that an institution’s policies
                                                   of credit hours, with each semester or                  methods. Other non-Federal negotiators                 and procedures about credit hours are
                                                   trimester hour requiring at least 30 clock              agreed with the Department that the                    deficient or when completing clock
                                                   hours of instruction, and each quarter                  proposed definition of a credit hour                   hours is required for graduates to apply
                                                   hour requiring at least 20 hours of                     would provide sufficient flexibilities for             for a license or authorization to practice
                                                   instruction. An institution must use the                institutions and supported keeping it in               their intended occupation.
                                                   formula to determine if a program is                    the proposed regulations. In response to                  Written Agreements between
                                                   eligible for title IV, HEA purposes                     these concerns, the proposed                           Institutions of Higher Education
                                                   unless (1) the institution offers an                    regulations were changed to allow                      (§§ 668.5 and 668.43): Under current
                                                   undergraduate program in credit hours                   institutions to establish reasonable                   regulations, two or more institutions
                                                   that is at least two academic years in                  equivalent measures of a credit hour in                may enter into agreements for students
                                                   length and leads to an associate degree,                accordance with its accrediting agency’s               to continue receiving title IV, HEA
                                                   a bachelor’s degree, or a professional                  requirements and adopt alternative                     funds when studying away from their
                                                   degree or (2) each course within the                    measures of student work. The proposed                 ‘‘home’’ institution. These agreements fit
                                                   program is acceptable for full credit                   definition of a credit hour does not                   into three categories: (1) consortium
                                                   toward an associate degree, bachelor’s                  change the policy providing funding                    agreements between eligible
                                                   degree, or professional degree offered by               based only on credit hours that are the                institutions; (2) contractual agreements
                                                   the institution, and the degree offered                 direct result of postsecondary student                 between an eligible institution and an
                                                   by the institution requires at least two                work and not Advanced Placement (AP)                   ineligible institution; and (3) study
                                                   academic years of study.                                or International Baccalaureate (IB)                    abroad arrangements, which may
                                                      The proposed regulations would add                   programs, tests or testing out, life                   involve a consortium or contractual
                                                   a definition of a credit hour, amend                    experience, or similar competency                      agreement between two or more
                                                   accrediting agency procedures for                       measures. No agreement was reached on                  institutions. There is no requirement in
                                                   reviewing the assignment of credit                      this issue due to the belief of some non-              either § 668.5 or 668.43 of the current
                                                   hours, and revise the clock-to-credit                   Federal negotiators that a definition                  regulations that institutions provide
                                                   hour conversion formulas. Under the                     would limit an institution’s ability to                information on written arrangements to
                                                   proposed regulations, a credit hour is                  use alternative measures of student                    enrolled or prospective students.
                                                   defined as a unit measuring the amount                  work.                                                     The proposed regulations would
                                                   of work consisting of one hour of                          In addition, the proposed regulations               address issues related to written
                                                   classroom or direct faculty instruction                 require accrediting agencies to review                 agreements between institutions with
                                                   and at least two hours of student work                  an institution’s assignment of credit                  common ownership, restrict agreements
                                                   outside the classroom over a set period                 hours and determine that they comply                   with ineligible institutions, and expand
                                                   of time. The required time period is                    with accepted practice in higher                       student notification requirements
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                                                   fifteen weeks for a semester or trimester               education. Accrediting agencies may                    related to written agreements. The
                                                   credit hour, ten to twelve weeks for a                  use sampling or other methods in                       proposed regulations would redefine the
                                                   quarter hour of credit, and the                         reviews of programs at institutions. The               home institution from the one that
                                                   equivalent amount of work for a                         accrediting agency must take actions to                enrolls the student to the one that grants
                                                   different amount of time. For other                     address deficiencies identified in such a              the degree or certificate. Proposed
                                                   activities that grant credit such as                    review and must inform the Secretary if                § 668.5(a)(2) would specify that if the
                                                   internships, studio work, and laboratory                it finds systemic noncompliance or                     institutions involved in a written
                                                   work, the institution must require at                   significant noncompliance in one or                    agreement are controlled by the same
                                                   least a comparable amount of work to                    more programs at an institution.                       individual, partnership, or corporation,


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                                                   34852                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   the institution that grants the degree                  information; (2) removing and refining                 institution would be required to
                                                   must provide more than 50 percent of                    definitions related to the FAFSA                       complete an applicant’s verification
                                                   the educational program. This would                     application; (3) codifying current policy              before it could exercise its authority to
                                                   address concerns that such agreements                   that an institution must complete                      change the applicant’s cost of
                                                   could be used to circumvent regulations                 verification before exercising any                     attendance or data items to calculate the
                                                   governing cohort default rates and ‘‘90–                authority under professional judgment;                 expected family contribution.
                                                   10’’ provisions. For contractual                        (4) removing the 30 percent cap on the                 Applicants may be excluded from
                                                   agreements between an eligible                          number of applicants selected by the                   verification if they do not receive aid
                                                   institution and an ineligible institution,              Secretary that an institution must verify              under title IV, HEA programs for
                                                   the proposed regulations would add a                    in order to move towards a more                        reasons outside of verification
                                                   restriction that the ineligible institution             targeted verification system; (5)                      questions, only receive unsubsidized
                                                   has not had its certification to                        restructuring the exclusions from                      aid, or transfer from another institution
                                                   participate in title IV, HEA programs                   verification section; (6) requiring any                where verification was already
                                                   revoked or had its application for re-                  changes to a student’s dependency                      performed as proven by a letter with
                                                   certification denied. The proposed                      status be updated throughout the award                 ISIR number from that institution. The
                                                   regulations also would limit the portion                year, including changes in marital                     specific items to be verified under the
                                                   of the education program that the                       status; (7) replacing the five items that              proposed regulations would be
                                                   ineligible institution could provide to                 an institution currently verifies with a               published by the Secretary in the
                                                   less than 50 percent. The proposed                      targeted verification process that is                  Federal Register for each award year.
                                                   regulations would also require                          specific to each applicant selected as                 The regulations would also allow for
                                                   institutions to provide information                     described in a Federal Register notice                 information to be verified as having
                                                   about written agreements to students.                   published annually by the Secretary; (8)               come from the IRS instead of requiring
                                                   This information would need to include                  codifying the Department’s IRS Data                    an applicant’s tax form.
                                                   the portion of the program the home                     Retrieval Process, which allows an                        Satisfactory Academic Progress
                                                   institution is not providing, estimated                 applicant to import income and other                   (§§ 668.16(e), 668.32(f), 668.34): To be
                                                   additional costs that would be incurred,                data from the IRS into an online FAFSA;                eligible for Federal financial aid under
                                                   the method of delivery for the portion                  (9) updating the IRS deadline granted                  title IV of the HEA, students must make
                                                   of education outside the home                           for extension filers; (10) clarifying when             satisfactory academic progress (‘‘SAP’’)
                                                   institution, and the name and locations                 an institution is required to reverify the             and institutions must have a published
                                                   of the other institutions. During                       AGI and taxes paid by an applicant and                 policy to monitor that progress. As
                                                   negotiations, the Department explained                  his or her spouse or parents for                       detailed in the Satisfactory Academic
                                                   that the proposed disclosure                            individuals with an IRS tax filing                     Progress section of this preamble, the
                                                   requirements would apply to blanket,                    extension; (11) expanding the                          SAP policy must include grade-based
                                                   existing arrangements between or                        information a tax preparer must provide                and time-related standards, must apply
                                                   among institutions and not to                           on the copy of the filer’s return that has             consistently to students within
                                                   individual, student-initiated written                   been signed by the preparer; (12)                      categories, must be as strict for title IV,
                                                   arrangements, or internships and                        describing in an annual Federal                        HEA aid recipients as for non-recipients
                                                   externships.                                            Register notice other documentation                    in the same educational program, must
                                                     Verification of Information Included                                                                         describe the circumstances under which
                                                                                                           that an applicant must provide for the
                                                   on Student Aid Applications (§§ 668.52                                                                         a student may appeal a determination
                                                                                                           information that is selected for
                                                   through 668.61): Under current                                                                                 that the student is not making
                                                                                                           verification; (13) allowing interim
                                                   regulations, institutions are required to                                                                      satisfactory academic progress, and
                                                                                                           disbursements when changes to an
                                                   verify the application information of up                                                                       must require an institution to review a
                                                                                                           applicant’s FAFSA information would
                                                   to 30 percent of Federal financial aid                                                                         student’s academic progress at the end
                                                                                                           not change the amount the applicant
                                                   applicants selected by the Secretary in                                                                        of each year, at a minimum. The
                                                                                                           would receive under a title IV, HEA;
                                                   a given award year. Institutions have                                                                          proposed regulations would restructure
                                                                                                           (14) requiring all corrections to be
                                                   expressed concern that this verification                                                                       the satisfactory academic progress
                                                                                                           submitted to the Secretary for
                                                   process is overly complicated and                                                                              requirements so that § 668.16(e) would
                                                                                                           reprocessing; (15) removing all                        be revised to include only the
                                                   invasive for applicants’ families.
                                                     Current subpart E of part 668 governs                 allowable tolerances; (16) applying the                requirement that an institution
                                                   the verification and updating of the                    cash management procedures for                         establish, publish, and apply
                                                   FAFSA information used to calculate an                  proceeds received from a Subsidized                    satisfactory academic progress
                                                   applicant’s expected family contribution                Stafford Loan or Direct Subsidized Loan                standards. The remainder of § 668.16(e)
                                                   (EFC) as part of the determination of an                on behalf of an applicant; and (17)                    would be moved to proposed § 668.34
                                                   applicant’s need for student financial                  describing the liability of an institution             so that that provision would contain all
                                                   assistance. These proposed regulations                  that disburses title IV, HEA aid to an                 of the required elements of a satisfactory
                                                   would implement statutory changes to                    applicant without receiving a corrected                academic progress policy as well as how
                                                   Part F of the HEA made by the HEOA                      SAR or ISIR within an established                      an institution would implement such a
                                                   and further align these regulations with                deadline.                                              policy.
                                                   enhancements that have been made to                        The proposed verification regulations                  All of the policy elements in the
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                                                   the application processing system.                      would align the verification process                   current regulations under §§ 668.16(e)
                                                   Based on the Department’s review of                     with the effort to simplify the FAFSA                  and 668.34 would be combined in
                                                   current policies and procedures, the                    and make it flexible enough to                         proposed § 668.34. The timing
                                                   changes reflected in these proposed                     accommodate future changes while still                 provisions would maintain the
                                                   regulations would remove obsolete                       ensuring that students who receive                     maximum timeframe of 150 percent of
                                                   definitions, procedures, and references                 Federal aid funds are eligible.                        the published length of the educational
                                                   to programs and would include: (1)                      Institutions would be required to                      program whether measured in credit
                                                   Describing institutional and applicant                  establish procedures that are consistent               hours or clock hours (reflected in
                                                   responsibilities for updating FAFSA                     with these provisions. For example, an                 current § 668.16(e)(2)(ii)(A)). SAP


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                           34853

                                                   policies would need to describe how the                 terms and conditions, such as taking a                 a program with courses taken
                                                   institution treats withdrawals, course                  reduced course load or enrolling in                    concurrently over the full term. As a
                                                   repetitions, and transfers from another                 specific courses.                                      result of this policy, a student who
                                                   institution. For educational programs                      Recent questions from institutions                  attends a week or two of a fifteen week
                                                   greater than two academic years,                        and reviews of institutional satisfactory              term and completes a module will not
                                                   students must have a GPA of ‘‘C’’ or its                academic progress policies have                        be determined to have withdrawn, so
                                                   equivalent at the end of the second year                suggested that it is possible for an                   the student or the institution can keep
                                                   or have academic standing that is                       institution to have a policy that meets                aid intended to cover fifteen weeks.
                                                   consistent with the institution’s                       all of the current regulatory criteria, but               The proposed regulations offer an
                                                   graduation requirements. The proposed                   due to use of automatic probationary                   opportunity to review this policy. Under
                                                   regulations would not require                           periods, permits students to receive aid               the proposed regulations, students
                                                   institutions to permit students to                      for as long as 24 months even though                   would be considered withdrawn as
                                                   appeal. An institution that permits                     they are not meeting the institution’s                 follows: In programs measured in credit
                                                   appeals, however, would be required to                  satisfactory progress standards. The                   hours, if the student does not complete
                                                   describe the appeals process in its                     proposed regulations are designed to                   all the days in the payment period or
                                                   satisfactory academic progress policy.                  implement a more structured,                           period of enrollment that the student
                                                   Under proposed § 668.34(a)(9)(ii), a                    comprehensive, and consistent                          was scheduled to complete prior to
                                                   student would be permitted to file an                   approach to development and                            withdrawing. For credit hour programs,
                                                   appeal based on the death of a relative,                implementation of institutional                        the calculation of the percentage of the
                                                   an injury or illness of the student, or                 satisfactory progress policies.                        payment period or period of enrollment
                                                   other special circumstances. Under                         Retaking Coursework (§ 668.2): The                  completed would take into account the
                                                   proposed § 668.34(a)(9)(iii), a student                 proposed regulations would amend the                   total number of calendar days that the
                                                   would be required to submit, as part of                 definition of ‘‘full-time student’’ in                 student was scheduled to complete
                                                   the appeal, information regarding why                   § 668.2 to allow repeated coursework to                prior to withdrawing without regard to
                                                   the student failed to make satisfactory                 count towards a student’s enrollment                   any course completed by the student
                                                   academic progress, and what has                         status in term-based programs.                         that is less than the length of the term.
                                                   changed in the student’s situation that                 Currently, students in term-based credit               In the case of a program that is
                                                   would allow the student to demonstrate                  hour programs may get paid for retaking                measured in clock hours, the student
                                                   satisfactory academic progress at the                   courses as long as the credits are in                  would be considered to have withdrawn
                                                   next evaluation. If an institution does                 addition to and not a replacement for                  if he or she does not complete all of the
                                                   not permit appeals, the satisfactory                    previously earned credits, and the                     clock hours in the payment period or
                                                                                                           student meets the institution’s overall                period of enrollment that the student
                                                   academic policy must describe how a
                                                                                                           satisfactory academic progress                         was scheduled to complete prior to
                                                   student may regain eligibility for
                                                                                                           standards. Non-Federal negotiators                     withdrawing.
                                                   assistance under the title IV, HEA
                                                                                                           expressed concern that institutions were                  Return of Title IV, HEA Program
                                                   programs. Proposed § 668.34(a)(11)
                                                                                                           unable to track this information without               Funds: Taking Attendance (§ 668.22(b)):
                                                   would require that an institution’s
                                                                                                           a burdensome program audit of each                     In order to implement provisions related
                                                   policy provide for notification to
                                                                                                           individual student. The Department                     to the return of funds when a student
                                                   students of the results of an evaluation
                                                                                                           agreed and proposed to amend the                       withdraws, institutions must be able to
                                                   that impacts the student’s eligibility for
                                                                                                           definition of full-time to allow such                  determine the date a student is
                                                   title IV, HEA program funds.
                                                                                                           credits to count toward enrollment                     considered to have withdrawn. Current
                                                      Proposed § 668.34(a)(8) would require                status and eligibility for payment under               regulations specify distinctions between
                                                   institutions that use ‘‘financial aid                   the title IV, HEA programs. Tentative                  institutions required to take attendance
                                                   warning’’ and ‘‘financial aid probation’’               agreement was reached on this issue.                   by an outside agency and those
                                                   statuses in connection with satisfactory                   Return of Title IV, HEA Program                     institutions that are not required to take
                                                   academic progress evaluations to                        Funds: Term-based Programs with                        attendance. For institutions required to
                                                   describe these statuses and how they are                Modules or Compressed Courses                          take attendance, the date of withdrawal
                                                   used in their satisfactory academic                     (§ 668.22(a) and (f)): Current regulations             is determined from attendance records.
                                                   progress policies. The term financial aid               related to the return of title IV, HEA                 For other institutions, the date of
                                                   warning would be defined as a status                    program funds when a student                           withdrawal may be the date the student
                                                   conferred automatically and without                     withdraws do not address the issue of                  initiated the withdrawal process, the
                                                   action by a student, while the term                     student withdrawals from programs                      date the student provided official notice
                                                   financial aid probation would be                        with courses in modules or compressed                  of intent to withdraw, the midpoint of
                                                   defined as a status conferred after a                   courses. Under current regulations,                    the payment period if the student gave
                                                   student has submitted an appeal that                    when a student withdraws from an                       no notice of withdrawal, or, in lieu of
                                                   has been granted. In order to encourage                 institution, the institution must                      the above, the last day of the student’s
                                                   institutions to provide additional                      determine the amount of title IV, HEA                  attendance at an academically-related
                                                   support to students in a timely manner,                 aid the student has earned for the period              activity. The lack of precision for a
                                                   the proposed regulations would permit                   the student attended. For term based                   withdrawal date for these institutions
                                                   institutions that review student progress               programs with several courses offered                  potentially allows the abuse of Federal
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                                                   at the end of each payment period to                    concurrently for the length of the term,               funds.
                                                   place students on financial aid warning                 the student may remain in one course                      The proposed regulations would
                                                   for one payment period. Proposed                        and not be considered as withdrawn.                    require that if an institution has
                                                   § 668.34(a)(8)(ii) would make clear that                Department policy equates the                          attendance records, as required by an
                                                   an institution with a satisfactory                      completion of one course or module,                    outside entity or the institution itself,
                                                   academic progress policy that includes                  within a term in which a student is                    the attendance records should be used
                                                   the use of the financial aid probation                  expected to continue attendance in                     for the withdrawal date. Current
                                                   status could require that a student on                  additional coursework, to the                          nonregulatory guidance regarding an
                                                   financial aid probation fulfill specific                completion of one traditional course in                institution that is required to take


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                                                   34854                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   attendance, or requires that attendance                 payment period under certain                           proposed provisions. Moreover, the
                                                   be taken, for a limited period of time,                 conditions. The proposed regulations                   Department clarified that the following
                                                   such as for the first two weeks of                      would limit the required early payment                 activities would not necessarily be
                                                   courses or up until a ‘‘census date’’                   of anticipated credit balances to Federal              prohibited under the proposed
                                                   would be incorporated. These proposed                   Pell Grant-eligible students who have                  regulations: the use of volume-driven
                                                   provisions would specify that an                        met all disbursement requirements 10                   shared services, contracts for financial
                                                   institution must use its attendance                     days before the first day of class for the             aid services based on a headcount basis,
                                                   records to determine a withdrawal date                  payment period, and apply only if the                  third party Internet marketing activities
                                                   for a student who withdraws during that                 student will have a title IV, HEA credit               paid based on clicks and not
                                                   limited period, and a student who                       balance. The proposed language gives                   enrollments, and token gifts for contacts
                                                   subsequently stops attending during the                 institutions the flexibility to determine              not linked to enrollments.
                                                   payment period would be treated as a                    the method by which they provide                          The Department agreed to include a
                                                   student for whom the institution was                    funds to students, which can include a                 definition of the term commission,
                                                   not required to take attendance. The                    book voucher or crediting books to the                 bonus, or other incentive payment in the
                                                   proposed regulations would also                         student’s institutional account. The                   proposed § 668.14(b)(22)(iii)(A) that is
                                                   incorporate current guidance that if an                 proposed regulations would not change                  unambiguous in prohibiting payment of
                                                   institution is required to take                         existing liability if the student never                any money or item of value on the basis
                                                   attendance, or requires that attendance                 begins attendance in any classes,                      of direct or indirect success in securing
                                                   be taken, on a specified date to meet a                 leaving it with the institutions and not               enrollments or the award of financial
                                                   census reporting requirement, the                       the students.                                          aid.
                                                   institution is not considered to take                      The following section addresses the                    Several negotiators were concerned
                                                   attendance.                                             alternatives that the Secretary                        that under the proposed regulations,
                                                      Non-Federal negotiators pointed out                  considered in developing these                         institutions would be prohibited from
                                                   that having to determine a more exact                   proposed regulations. These alternatives               paying merit-based increases to their
                                                   date of withdrawal, as opposed to                       are also discussed in more detail in the               financial aid or admissions personnel.
                                                   assuming a 50 percent point, would be                   Reasons sections of this preamble                      The Department contends that an
                                                   more burdensome. They also noted that                   related to the specific regulatory                     institution could use a variety of
                                                   attendance does not necessarily                         provisions.                                            standard evaluative factors as the basis
                                                   accurately reflect academic activity, and                                                                      for such an increase; however, it would
                                                                                                           Regulatory Alternatives Considered                     not be permitted to consider the
                                                   also stated that they cannot ensure that
                                                   faculty members will keep accurate and                     Definition of High School Diploma                   employee’s success in securing student
                                                   up-to-date attendance records. The                      (§ 668.16(p)): Initially, the Secretary                enrollments or the award of financial
                                                   Department recognizes these concerns,                   proposed regulatory language that that                 aid or related institutional goals based
                                                   but maintains that the best date                        would have required institutions to                    on that success among those factors.
                                                   available should be used to determine                   maintain three listings of secondary                   One negotiator felt strongly that it was
                                                   the amount of time that a student was                   schools (schools that are acceptable,                  critical to use the word ‘‘solely,’’ or some
                                                   in attendance to support the fair                       schools that are unacceptable, and                     other modifier, to limit the prohibition
                                                   treatment of students and avoid the                     schools that require further evaluation)               in proposed § 668.14(b)(22)(i). This
                                                   potential for fraud and abuse of Federal                based on regulatory criteria for                       negotiator said that the use of the word
                                                   funds.                                                  determining the acceptability of their                 solely, or some other modifier, would be
                                                      Disbursements of Title IV, HEA                       credential for title IV, HEA program                   consistent with the use of that term
                                                   Program Funds (§ 668.164(i)): As                        purposes. Non-Federal negotiators                      solely in the first safe harbor reflected
                                                   described in the preamble to this NPRM,                 objected that K–12 issues should be                    in current § 668.14(b)(22)(ii)(A). As
                                                   current regulations provide that an                     handled at the State level and that                    discussed earlier in this preamble, given
                                                   institution must disburse title IV, HEA                 requiring institutions to maintain such                the Department’s experience with how
                                                   program funds (except for FWS funds)                    lists was too great an administrative                  the first safe harbor in current
                                                   on a payment period basis and establish                 burden. Based on these concerns, the                   § 668.14(b)(22) has been abused, the
                                                   requirements for crediting a student’s                  Department agreed to assume                            Department does not believe that such
                                                   account with Federal Pell Grant funds.                  responsibility for establishing and                    a construction is warranted. In addition,
                                                   Those requirements also apply to ACG,                   maintaining a list of valid secondary                  some negotiators advocated strongly for
                                                   National SMART Grant, TEACH Grant,                      schools, and tentative agreement was                   an institution’s ability to pay bonuses
                                                   FSEOG, Federal Perkins Loan, Direct                     reached on this provision.                             on the basis of students who complete
                                                   Loan, and FFEL program funds. Current                      Incentive Compensation (§ 668.14(b)):               their program. The Department believes
                                                   regulations permit institutions to                      As discussed in the Incentive                          that these regulations must clearly
                                                   disburse Pell Grants in a manner that                   Compensation section of the preamble,                  reinforce the statutory provision and
                                                   best meets the needs of the student, and                non-Federal negotiators proposed and                   exclude the possibility of basing any
                                                   the proposed regulations would add                      counter-proposed draft regulatory                      portion of an adjustment on success in
                                                   provisions to specifically limit delays in              language related to incentive                          securing student enrollments or
                                                   disbursements.                                          compensation for the Department to                     financial aid awards. No agreement was
                                                      Students who do not receive Pell                     consider. In turn, the Department                      reached on incentive compensation.
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                                                   Grants in a timely manner may resort to                 addressed some of the isues raised in                     State Authorization as a Component
                                                   taking loans or using personal funds, go                the negotiations. For example, the                     of Institutional Eligibility (§§ 600.4(a)(3),
                                                   without needed items such as books, or                  Department made clear that any                         600.5(a)(4), 600.6(a)(3), and 600.9): The
                                                   withdraw from school for financial                      individuals who are engaged in any                     Department clarified aspects of this
                                                   reasons. The proposed regulations will                  student recruitment or admissions                      provision in response to concerns
                                                   require institutions to provide a way for               activity or in making decisions about                  expressed by non-Federal negotiators.
                                                   a Federal Pell Grant eligible student to                the award of student financial aid—                    Federal or Indian Tribe authorization
                                                   obtain or purchase required books and                   including those in supervisory                         was included, and the ability of State
                                                   supplies by the seventh day of a                        positions—would be impacted by these                   entities other than State Agencies such


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                           34855

                                                   as State legislatures and State                         either public or private, non-profit                   Benefits
                                                   Constitutions to grant authorization was                institutions to be covered by the                         Benefits provided in these proposed
                                                   made explicit. Provisions concerning                    proposed language as such institutions                 regulations include updated
                                                   monitoring the quality of educational                   are not owned or controlled by other                   administrative procedures for the
                                                   programs and financial responsibility                   entities and generally act autonomously.               Federal student aid programs; a
                                                   were removed as unnecessarily                              Return of Title IV, HEA Program
                                                                                                                                                                  definition and process to determine the
                                                   duplicative of Federal or accrediting                   Funds: Term-based Programs with
                                                                                                                                                                  validity of a student’s high school
                                                   agency actions. The Reasons section of                  Modules or Compressed Courses
                                                                                                                                                                  diploma; enhanced reliability and
                                                   the preamble details the development of                 (§ 668.22(a) and (f)): During the
                                                                                                                                                                  security of ATB tests; an additional
                                                   this provision. Some negotiators                        negotiation sessions, non-Federal
                                                                                                                                                                  option for students to prove ability to
                                                   remained concerned that these proposed                  negotiators expressed concern that the
                                                                                                                                                                  benefit by successfully completing
                                                   regulations would allow States to                       proposed regulations would penalize
                                                                                                                                                                  college coursework; increased clarity
                                                   continue to rely on an institution’s                    students and burden institutions with a
                                                                                                           significant increase in the number of                  about incentive compensation for
                                                   status with an outside entity for State                                                                        employees at institutions of higher
                                                   legal authorization and that there would                return to title IV, HEA funds
                                                                                                           calculations. The non-Federal                          education; reporting of information on
                                                   no longer be a requirement that a State                                                                        program completers for programs
                                                   review an institution’s fiscal viability.               negotiators presented three options to
                                                                                                           address their concerns. The first option               leading to gainful employment,
                                                   No agreement was reached on this                                                                               including costs, debt levels, graduation
                                                   provision.                                              was to exclude students who completed
                                                                                                           the same enrollment status for which                   rates, and placement rates; the
                                                      Written Agreements between                                                                                  establishment of minimum standards for
                                                                                                           they were originally paid title IV, HEA
                                                   Institutions of Higher Education                                                                               credit hours; greater transparency for
                                                                                                           aid. The second option was to exclude
                                                   (§§ 668.5 and 668.43): During negotiated                                                                       borrowers participating in the programs
                                                                                                           students who completed 50 percent of
                                                   rulemaking, the Department’s initial                                                                           offered under written agreements
                                                                                                           the credits that were awarded and 50
                                                   proposal was to require accrediting or                                                                         between institutions; greater detail
                                                                                                           percent of the projected enrollment
                                                   State agency review of written                                                                                 about misrepresentation in marketing
                                                                                                           time. The third option was to only apply
                                                   agreements between institutions of                                                                             and recruitment materials; a more
                                                                                                           the proposed regulations to compressed
                                                   higher education if the portion of an                                                                          structured and consistent approach to
                                                                                                           coursework that was shorter than a ‘‘to-
                                                   educational program provided under the                  be-determined’’ percent of the payment                 the development and implementation of
                                                   written arrangement with another                        period; the non-Federal negotiators did                satisfactory academic progress policies;
                                                   eligible institution, or with a consortium              not reach agreement as to what the                     updated and simplified procedures for
                                                   of eligible institutions, were more than                appropriate percentage should be. The                  verifying FAFSA applicant information;
                                                   50 percent. Subsequently, several non-                  Department appreciates the concerns                    updated regulations related to the return
                                                   Federal negotiators explained that,                     expressed by the non-Federal                           of title IV, HEA funds when a student
                                                   contrary to the Department’s initial                    negotiators, but continues to believe that             withdraws; harmonization of Direct
                                                   understanding, it was not common                        the proposed changes are necessary to                  Loan and Teach Grant disbursement
                                                   practice for accrediting agencies to                    ensure the equitable application of these              procedures with other title IV, HEA
                                                   review a significant portion of written                 provisions for all students, regardless of             programs; and revised disbursement
                                                   arrangements, even those between or                     the academic calendar of the programs                  requirements to ensure Federal Pell
                                                   among eligible institutions. After                      that students are attending.                           Grant recipients can access funds in a
                                                   hearing concerns about increased                           Disbursements of Title IV, HEA                      timely manner. It is difficult to quantify
                                                   workloads and impeded development of                    Program Funds (§ 668.164(i)): Some                     benefits related to the new institutional
                                                   innovative programs, the Department                     non-Federal negotiators stated that                    and other third-party requirements, as
                                                   agreed to reconsider its draft regulatory               many institutions advance funds or                     there is little specific data available on
                                                   language and to focus the proposed                      issue vouchers that students use to                    the effect of the provisions on
                                                   changes more narrowly on the types of                   obtain books and supplies, and that                    borrowers, institutions, or the Federal
                                                   institutions and situations where                       under current regulations, the                         taxpayer. The Department is interested
                                                   problems had been identified. The                       institution risks losing the amount                    in receiving comments or data that
                                                   Department subsequently proposed                        advanced if the student does not begin                 would support a more rigorous analysis
                                                   limiting the portion of an educational                  classes. For this reason, these non-                   of the impact of these provisions.
                                                   program that could be provided under a                  Federal negotiators argued that in                        As discussed in greater detail under
                                                   written arrangement between two                         exchange for requiring an institution to               Net Budget Impacts, these proposed
                                                   eligible for-profit institutions under                  advance funds or issue vouchers early                  provisions result in net costs to the
                                                   common ownership or control to 25                       in the payment period before the                       government of $0.0 million over 2011–
                                                   percent. After negotiations about the                   institution could establish student                    2015.
                                                   appropriate percentage and the                          attendance, the student should be liable
                                                   institutions to which it should apply,                                                                         Costs
                                                                                                           for returning the funds. In response to
                                                   the Department agreed to revise the                     this concern, the Department drafted                     Several of the proposed regulations
                                                   proposed language to refer to eligible                  regulatory language to shift liability for             would require regulated entities to
                                                   institutions that are owned or controlled               this debt to students, but the proposal                develop new disclosures and other
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                                                   by the same individual, partnership or                  was rejected. Other negotiators objected               materials, as well as accompanying
                                                   corporation and to specify that the                     that student liability for this debt might             dissemination processes. Institutions
                                                   institution that grants the degree or                   preclude reenrollment or exacerbate                    would also be required to update
                                                   certificate must provide 50 percent or                  predatory practices at some institutions               existing policies and procedures related
                                                   more of the educational program. When                   where students were promised an                        to satisfactory academic progress. Other
                                                   presenting this draft regulatory language               advance of funds simply for enrolling in               proposed regulations generally would
                                                   to the negotiated rulemaking committee,                 programs. As a result of these                         require discrete changes in specific
                                                   the Federal negotiator explained that it                negotiations, the proposed regulations                 parameters associated with existing
                                                   is not the Department’s intention for                   keep liability at the institutional level.             requirements—such as changes to title


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                                                   34856                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   IV, HEA disbursement procedures,                        Department is estimated to increase                    sp/ecsuphst.pdf, is $102,677,320, of
                                                   updated processes for verification of                   overall burden. Other paperwork burden                 which $67.23 million is associated with
                                                   FAFSA application information, clearer                  increases include 729,725 hours related                institutions, $0.18 million with ATB test
                                                   standards for the return of title IV, HEA               to academic reviews and development                    publishers and administrators, and
                                                   program funds following a student’s                     of academic plans under proposed                       $35.28 million with borrowers. For
                                                   withdrawal, and updated definitions                     § 668.34, 425,075 hours related to                     institutions, test publishers, and test
                                                   and processes for confirming the                        calculation of unearned amounts when                   administrators, an hourly rate of $18.63
                                                   validity of a high school diploma                       a student withdraws under proposed                     was used to monetize the burden of
                                                   —rather than wholly new requirements.                   § 668.22, 289,005 hours associated with                these provisions. This was a blended
                                                   Accordingly, entities wishing to                        updating marital and dependency status                 rate based on wages of $15.51 for office
                                                   continue to participate in the title IV,                under proposed § 668.55, 105,377 hours                 and administrative staff and $36.33 for
                                                   HEA programs have already absorbed                      related to the gainful employment                      managers, assuming that office staff
                                                   many of the administrative costs related                reporting and disclosure provisions in                 would perform 85 percent of the work
                                                   to implementing these proposed                          proposed § 668.6, 48,391 hours related                 affected by these regulations. For the
                                                   regulations. Marginal costs over this                   to ATB test administration and                         gainful employment provision, an
                                                   baseline are primarily due to new                       reporting under proposed §§ 668.151                    hourly rate of $20.71 was used to reflect
                                                   procedures that, while possibly                         and 668.152, 67,870 hours associated                   increased management time to establish
                                                   significant in some cases, are an                       with disclosure of information about an                new data collection procedures
                                                   unavoidable cost of continued program                   institution’s written agreements in                    associated with that provision. For
                                                   participation.                                          proposed § 668.43, 54,337 hours related                students, the first quarter 2010 median
                                                      The Department would welcome                         to disbursement of funds to Pell Grant                 weekly earnings for full-time wage and
                                                   comment on the analysis presented                       recipients for books and supplies under                salary workers were used. This was
                                                   here. We also welcome analyses that                     proposed § 668.164, 21,982 hours                       weighted to reflect the age profile of the
                                                   others have done on this proposal                       related to the development of a high                   student loan portfolio, with half at the
                                                   which we will consider as we assess the                 school diploma validation process and                  $457 per week of the 20 to 24 age
                                                   impact of the proposed regulation as we                 the validation of questionable diplomas                bracket and half at the $691 per week
                                                   prepare to publish it in final form later               under proposed § 668.16, and 18,349                    of the 25 to 34 year old bracket. This
                                                   this year.                                              hours related to clock hour to credit                  resulted in a $16.40 hourly wage rate to
                                                      In assessing the potential impact of                 hour conversion and the inclusion of                   use in monetizing the burden on
                                                   these proposed regulations, the                         outside work for program eligibility                   students.
                                                   Department recognizes that certain                      under proposed § 668.8. For ATB test                      Given the limited data available, the
                                                   provisions are likely to increase                       publishers and administrators, the                     Department is particularly interested in
                                                   workload for some program                               increased burden of 9,454 hours comes                  comments and supporting information
                                                   participants. This additional workload                  from the reporting, recordkeeping, test                related to possible burden stemming
                                                   is discussed in more detail under the                   anomaly analysis and other                             from any additional workload expected
                                                   Paperwork Reduction Act of 1995                         requirements in proposed §§ 668.144,                   under the proposed regulations.
                                                   section of this preamble. Additional                    668.150, and 668.151. The increased                    Estimates included in this NPRM will
                                                   workload would normally be expected                     burden on students is concentrated in                  be reevaluated based on any information
                                                   to result in estimated costs associated                 the FAFSA verification and status                      received during the public comment
                                                   with either the hiring of additional                    updating processes with 1,604,800                      period.
                                                   employees or opportunity costs related                  hours under proposed §§ 668.55, 668.56,
                                                   to the reassignment of existing staff from                                                                     Net Budget Impacts
                                                                                                           and 668.59, with additional burden
                                                   other activities. In total, these proposed              associated with the withdrawal process                    The proposed regulations are
                                                   changes are estimated to increase                       under § 668.22 and satisfactory                        estimated to have a net budget impact
                                                   burden on entities participating in the                 academic progress policies under                       of $0.0 million over FY 2011–2015.
                                                   Federal Student Assistance programs by                  § 668.34.                                              Consistent with the requirements of the
                                                   5,756,506 hours. Of this increased                         Thus, for the specific information                  Credit Reform Act of 1990, budget cost
                                                   burden, 3,596,111 hours are associated                  collections listed in the Paperwork                    estimates for the student loan programs
                                                   with institutions, 9,454 hours with ATB                 Reduction Act section of this notice, the              reflect the estimated net present value of
                                                   test publishers and ATB test                            total cost estimates are as follows: For               all future non-administrative Federal
                                                   administrators. An additional 2,150,941                 Information Collection 1845–0041, the                  costs associated with a cohort of loans.
                                                   hours are associated with borrowers,                    total cost will be $65,913,938, for                    (A cohort reflects all loans originated in
                                                   generally reflecting the time required to               Information Collection 1845–NEW2, the                  a given fiscal year.)
                                                   read new disclosures or submit required                 total cost attributable to these regulatory               These estimates were developed using
                                                   information.                                            changes will be $18,750,120, for                       the Office of Management and Budget’s
                                                      As detailed in the Paperwork                         Information Collection 1845–0022, the                  (OMB) Credit Subsidy Calculator. (This
                                                   Reduction Act of 1995 section of this                   total cost will be $13,900,328, for                    calculator will also be used for re-
                                                   NPRM, the additional paperwork                          Information Collection 1845–NEW1, the                  estimates of prior-year costs, which will
                                                   burden is attributable to several                       total cost attributable to the regulatory              be performed each year beginning in FY
                                                   provisions, with the greatest additional                changes will be $2,182,885, for                        2009). The OMB calculator takes
srobinson on DSKHWCL6B1PROD with PROPOSALS2




                                                   burden coming from the revised FAFSA                    Information Collection 1845–0049, the                  projected future cash flows from the
                                                   verification process. Of the 3.6 million                total cost will be $1,097,588, and for                 Department’s student loan cost
                                                   hours of additional burden associated                   Information Collection 1845–NEW3, the                  estimation model and produces
                                                   with institutions, 1.8 million relate to                total cost attributable to these regulatory            discounted subsidy rates reflecting the
                                                   FAFSA verification. While the average                   changes will be $1,012,461.                            net present value of all future Federal
                                                   number of items to be verified is                          The monetized cost of this additional               costs associated with awards made in a
                                                   expected to decrease, the growth in the                 burden, using wage data developed                      given fiscal year. Values are calculated
                                                   number of applicants and the                            using Bureau of Labor Statistics                       using a ‘‘basket of zeros’’ methodology
                                                   requirement to submit all changes to the                available at http://www.bls.gov/ncs/ect/               under which each cash flow is


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                              34857

                                                   discounted using the interest rate of a                   In developing these estimates, a wide                    The Secretary invites comments on
                                                   zero-coupon Treasury bond with the                      range of data sources were used,                        how to make these proposed regulations
                                                   same maturity as that cash flow. To                     including data from the National                        easier to understand, including answers
                                                   ensure comparability across programs,                   Student Loan Data System; operational                   to questions such as the following:
                                                   this methodology is incorporated into                   and financial data from Department of                      • Are the requirements in the
                                                   the calculator and used government-                     Education systems, including especially                 proposed regulations clearly stated?
                                                   wide to develop estimates of the Federal                the Fiscal Operations Report and                           • Do the proposed regulations contain
                                                   cost of credit programs. Accordingly,                   Application to Participate (FISAP); and                 technical terms or other wording that
                                                   the Department believes it is the                       data from a range of surveys conducted                  interferes with their clarity?
                                                   appropriate methodology to use in                       by the National Center for Education                       • Does the format of the proposed
                                                   developing estimates for these proposed                 Statistics such as the 2008 National                    regulations (grouping and order of
                                                   regulations. That said, however, in                     Postsecondary Student Aid Survey, the                   sections, use of headings, paragraphing,
                                                   developing the following Accounting                     1994 National Education Longitudinal                    etc.) aid or reduce their clarity?
                                                   Statement, the Department consulted                     Study, and the 1996 Beginning                              • Would the proposed regulations be
                                                   with OMB on how to integrate our                        Postsecondary Student Survey. Data                      easier to understand if we divided them
                                                   discounting methodology with the                        from other sources, such as the U.S.                    into more (but shorter) sections? (A
                                                   discounting methodology traditionally                   Census Bureau, were also used. Data on                  ‘‘section’’ is preceded by the symbol ‘‘§ ’’
                                                   used in developing regulatory impact                    administrative burden at participating                  and a numbered heading; for example,
                                                   analyses.                                               schools, accreditors, test administrators,              § 601.30.)
                                                      Absent evidence on the impact of                     and third-party servicers are extremely                    • Could the description of the
                                                   these proposed regulations on student                   limited; accordingly, as noted earlier in               proposed regulations in the
                                                   behavior, budget cost estimates were                    this discussion, the Department is                      ‘‘Supplementary Information’’ section of
                                                   based on behavior as reflected in                       particularly interested in receiving                    this preamble be more helpful in
                                                   various Department data sets and                        comments in this area.                                  making the proposed regulations easier
                                                   longitudinal surveys listed under                         Elsewhere in this SUPPLEMENTARY                       to understand? If so, how?
                                                   Assumptions, Limitations, and Data                      INFORMATION section we identify and                        • What else could we do to make the
                                                   Sources. Program cost estimates were                    explain burdens specifically associated                 proposed regulations easier to
                                                   generated by running projected cash                     with information collection                             understand?
                                                   flows related to each provision through                 requirements. See the heading                              To send any comments that concern
                                                   the Department’s student loan cost                      Paperwork Reduction Act of 1995.                        how the Department could make these
                                                   estimation model. Student loan cost
                                                                                                           Accounting Statement                                    proposed regulations easier to
                                                   estimates are developed across five risk
                                                                                                                                                                   understand, see the instructions in the
                                                   categories: Two-year proprietary                          As required by OMB Circular A–4                       ADDRESSES section of this preamble.
                                                   institutions, two-year public and private               (available at http://
                                                   not-for-profit institutions, freshman and               www.Whitehouse.gov/omb/Circulars/                       Regulatory Flexibility Act Certification
                                                   sophomores at four-year institutions,                   a004/a-4.pdf), in Table 2, we have                         The Secretary certifies that these
                                                   juniors and seniors at four-year                        prepared an accounting statement                        proposed regulations would not have a
                                                   institutions, and graduate students. Risk               showing the classification of the                       significant economic impact on a
                                                   categories have separate assumptions                    expenditures associated with the                        substantial number of small entities.
                                                   based on the historical pattern of                      provisions of these proposed                            These proposed regulations would affect
                                                   behavior—for example, the likelihood of                 regulations. This table provides our best               institutions that participate in title IV,
                                                   default or the likelihood to use statutory              estimate of the changes in Federal
                                                   deferment or discharge benefits—of                                                                              HEA programs, ATB test publishers, and
                                                                                                           student aid payments as a result of these               individual students and loan borrowers.
                                                   borrowers in each category.                             proposed regulations. Expenditures are
                                                      The Department estimates no                                                                                  The U.S. Small Business Administration
                                                                                                           classified as transfers from the Federal                Size Standards define for-profit
                                                   budgetary impact for most of the
                                                                                                           government to student loan borrowers.                   institutions as ‘‘small businesses’’ if they
                                                   proposed regulations included in this
                                                   NPRM as there is no data indicating that                                                                        are independently owned and operated
                                                   the provisions will have any impact on                        TABLE 2—ACCOUNTING STATEMENT:                     and not dominant in their field of
                                                   the volume or composition of Federal                          CLASSIFICATION OF ESTIMATED EX-                   operation with total annual revenue
                                                   student aid programs.                                         PENDITURES                                        below $7,000,000, and defines non-
                                                                                                                                [In millions]                      profit institutions as small organizations
                                                   Assumptions, Limitations, and Data                                                                              if they are independently owned and
                                                   Sources                                                          Category                    Transfers          operated and not dominant in their field
                                                     Impact estimates provided in the                                                                              of operation, or as small entities if they
                                                   preceding section reflect a baseline in                 Annualized Monetized          $0                        are institutions controlled by
                                                   which the changes implemented in                          Transfers                                             governmental entities with populations
                                                   these proposed regulations do not exist.                From Whom To                  Federal Government        below 50,000.
                                                                                                             Whom?                         to Student Loan
                                                   Costs have been quantified for five                                                                                Data from the Integrated
                                                                                                                                           Borrowers.
                                                   years. In general, these estimates should                                                                       Postsecondary Education Data System
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                                                   be considered preliminary; they will be                                                                         (IPEDS) indicate that roughly 4,379
                                                                                                           Clarity of the Regulations
                                                   reevaluated in light of any comments or                                                                         institutions participating in the Federal
                                                   information received by the Department                    Executive Order 12866 and the                         student assistance programs meet the
                                                   prior to the publication of the final                   Presidential memorandum on ‘‘Plain                      definition of ‘‘small entities.’’ The
                                                   regulations. The final regulations will                 Language in Government Writing’’                        following table provides the distribution
                                                   incorporate this information in a revised               require each agency to write regulations                of institutions and students by revenue
                                                   analysis.                                               that are easy to understand.                            category and institutional control.




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                                                   34858                                Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                                                                            Public                                    Private NFP                                      Proprietary                                          Tribal
                                                         Revenue category                                              No. of                                         No. of                                         No. of                                               No. of
                                                                                            No. of schools                               No. of schools                                 No. of schools                                 No. of schools
                                                                                                                      students                                       students                                       students                                             students

                                                   $0 to $500,000 ..................                      43                2,124                       103               13,208                       510               38,774        ........................     ........................
                                                   $500,000 to $1 million .......                         44                7,182                        81                9,806                       438               61,906                              1                        137
                                                   $1 million to $3 million ......                        98               29,332                       243               65,614                       745              217,715                              3                        555
                                                   $3 million to $5 million ......                        75               65,442                       138               60,923                       303              182,362        ........................     ........................
                                                   $5 million to $7 million ......                        49               73,798                        99               62,776                       224              185,705                              5                     2,525
                                                   $7 million to $10 million ....                         78              129,079                       110               84,659                       228              235,888                              9                     4,935
                                                   $10 million and above .......                       1,585           18,480,000                     1,067            4,312,010                       383            1,793,951                            14                    18,065

                                                        Total ...........................              1,972           18,786,957                     1,841            4,608,996                      2,831           2,716,301                           32                     26,217



                                                     Approximately two-thirds of these                                        impose some new costs as described                                          addressed in this NPRM modify existing
                                                   institutions are for-profit schools subject                                below. The impact of the proposed                                           regulations and requirements. For
                                                   to the disclosure and reporting                                            regulations on individuals is not subject                                   example, the proposed regulations on
                                                   requirements related to programs                                           to the Regulatory Flexibility Act.                                          FAFSA verification would change the
                                                   leading to gainful employment                                                As discussed in the preamble to this                                      number of items to be verified but
                                                   described in this NPRM. Other affected                                     NPRM, the proposed program integrity                                        would not require the creation of a new
                                                   small institutions include small                                           regulations are being developed to                                          process. The following table
                                                   community colleges and tribally                                            update administrative procedures for                                        summarizes the estimated total hours,
                                                   controlled schools. For these                                              the Federal student aid programs and to                                     costs, and requirements applicable to
                                                   institutions, the new disclosure and                                       ensure that funds are provided to
                                                                                                                                                                                                          small entities from these provisions.
                                                   administrative requirements imposed                                        students at eligible programs and
                                                   under the proposed regulations could                                       institutions. Many of the provisions

                                                                                                                                                                                                       OMB Control
                                                                                                                                                                         Reg. section                                                   Hours                            Costs
                                                                                                                                                                                                          No.

                                                                                                                                                                                          668.6          1845–NEW1                            82,637                      1,711,818
                                                   Annual submission of private loan, CIP, and identifying data for
                                                     completers by program ..........................................................................                                 668.6(a)        ........................                34,999                         725,001
                                                   Report CIP codes for all attendees ...........................................................                    ..............................   ........................                37,138                         769,317
                                                   Disclose occupational information, graduation rates, program placement
                                                     rates, and program costs .......................................................................                                668.6(b)         ........................                10,500                         217,500
                                                                                                                                                                                       668.8                1845–0022                         12,035                         224,250
                                                   Determine if program is affected, evaluate amount of outside student
                                                     work that should be included, and perform credit to clock hour con-
                                                     version ....................................................................................................    ..............................   ........................   ........................         ........................
                                                                                                                                                                                        668.16              1845–0022                         14,418                         268,650
                                                   Develop a high school diploma validity process .......................................                                           668.16(p)         ........................                13,106                         244,208
                                                   Verify questionable diplomas .....................................................................                               668.16(p)         ........................                  1,312                          24,443
                                                                                                                                                                                        668.22              1845–0022                       278,807                       5,195,005
                                                   Establish withdrawal date and calculate percentage of payment period
                                                     or period of enrollment completed .........................................................                     ..............................   ........................   ........................         ........................
                                                                                                                                                                                        668.34            1845–NEW2                         478,627                       8,918,250
                                                   Review proposed regulations and implement changes to ensure compli-
                                                     ance ........................................................................................................                 668.34(a)          ........................               11,234                         209,316
                                                   Perform academic reviews at the end of each payment period ...............                                                      668.34(c)          ........................              137,282                       2,557,972
                                                   Develop academic plan for students who do not achieve satisfactory
                                                     academic progress when reviewed at end of payment period ..............                                                       668.34(c)          ........................              120,123                       2,238,249
                                                   Perform academic reviews at institutions that do so annually ..................                                                 668.34(d)          ........................              111,994                       2,086,777
                                                   Develop academic plan for students who do not achieve satisfactory
                                                     academic progress when reviewed annually .........................................                                             668.34(d)         ........................                97,995                     1,825,936
                                                                                                                                                                                        668.43            1845–NEW2                           44,516                       829,465
                                                   Disclose information about written agreements ........................................                            ..............................   ........................                43,930                       818,552
                                                   Make contact information for filing complaints to accreditor and State
                                                     approval or licensing agency available to enrolled and prospective
                                                     students ..................................................................................................                    668.43(b)         ........................                     586                         10,914
                                                                                                                                                                                        668.55              1845–0041                       189,558                       3,532,041
                                                   Update household size throughout award year ........................................                              ..............................   ........................              170,603                       3,178,843
                                                   Update marrital status throughout award year ..........................................                           ..............................   ........................                18,956                         353,198
                                                                                                                                                                                        668.57              1845–0041                       401,411                       7,479,487
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                                                   Review verification responses for acceptable documentation ..................                                     ..............................   ........................   ........................         ........................
                                                                                                                                                                                        668.59              1845–0041                       802,822                     14,958,975
                                                   Removes tolerances and requires institutions to report all changes to
                                                     applicants’ FAFSA information resulting from verification .....................                                 ..............................   ........................   ........................         ........................
                                                   Recalculate applicant’s EFC if information changes from verification ......                                       ..............................   ........................   ........................         ........................
                                                                                                                                                                                      668.151               1845–0049                         28,313                         527,548
                                                   Keep records of individuals who take ATB tests and details about the
                                                     administrator ...........................................................................................               668.151(g)(4)            ........................                25,279                         471,024
                                                   Keep documentation of individual’s disability and testing arrangements
                                                     provided ..................................................................................................             668.151(g)(5)            ........................                  3,034                          56,524



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                                                                                      Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                                                                                 34859

                                                                                                                                                                                                    OMB Control
                                                                                                                                                                      Reg. section                                                   Hours                      Costs
                                                                                                                                                                                                       No.

                                                                                                                                                                                   668.152              1845–0049                            3,427                    63,857
                                                   Maintain the scored ATB tests and collect and submit copies of com-
                                                    pleted ATB tests or a listing to the test publisher or State weekly .......                                   ..............................   ........................   ........................   ........................
                                                                                                                                                                                   668.164             1845–NEW3                           35,640                   664,073
                                                   Provide a way for Pell Grant recipients to obtain or purchase required
                                                     books and supplies by the 7th day of a payment period under certain
                                                     conditions ...............................................................................................   ..............................   ........................   ........................   ........................



                                                      To assess overall burden imposed on                                   institution’s administrative capabilities.                                 comments from small institutions and
                                                   institutions meeting the definition of                                   For example, the requirement to                                            other affected entities as to whether they
                                                   small entities, the Department                                           distribute funds to Pell Grant recipients                                  believe the proposed changes would
                                                   developed a methodology using IPEDS                                      for books and supplies within 7 days of                                    have a significant economic impact on
                                                   data and the percentage of institutions                                  the start of the payment period allows                                     them and, if so, requests evidence to
                                                   with revenues below $7 million and all                                   institutions to use book vouchers or a                                     support that belief.
                                                   non-profit institutions, allocating                                      credit to the student’s account. The
                                                                                                                            Department has also tried to allow more                                    Paperwork Reduction Act of 1995
                                                   approximately 66 percent of the
                                                   paperwork burden to small institutions.                                  time to establish procedures for new                                         Sections 668.6, 668.8, 668.16, 668.22,
                                                   Using this methodology, the Department                                   data collections, such as the placement                                    668.34, 668.43, 668.55, 668.56, 668.57,
                                                   estimates that the proposed regulations                                  rate information required in the data                                      668.59, 668.144, 668.150, 668.151,
                                                   would increase total burden hours for                                    collection related to gainful                                              668.152, and 668.164 contain
                                                   these schools by 2.37 million, or                                        employment. While these timing                                             information collection requirements.
                                                   roughly 541 hours per institution.                                       provisions are available to all                                            Under the Paperwork Reduction Act of
                                                   Monetized using salary data from the                                     institutions, they should help small                                       1995 (44 U.S.C. 3507(d)), the
                                                   Bureau of Labor Statistics, this burden                                  institutions have time for the necessary                                   Department has submitted a copy of
                                                   is $44.4 million and $10,133,                                            adjustments. Granting such extensions                                      these sections to OMB for its review.
                                                   respectively. If calculated using the                                    to all institutions is simpler to
                                                                                                                                                                                                       Section 668.6—Gainful Employment
                                                   distribution of students from 2007–08,                                   administer and provides additional
                                                   the share of the burden allocated to                                     certainty to institutions that will not                                      The proposed regulations would
                                                   small institutions would be much lower                                   have to anticipate if their revenues will                                  impose new requirements on certain
                                                   at approximately 21 percent, resulting                                   fall below the small business threshold                                    programs that by law must, for purposes
                                                   in an estimated burden of 186 hours and                                  to get more time for compliance.                                           of the title IV, HEA programs, prepare
                                                   $3,510 per institution. Even the more                                    Approximately 60 percent of the                                            students for gainful employment in a
                                                   conservative estimate of $10,133                                         paperwork burden associated with these                                     recognized occupation. For public and
                                                   represents 1 percent or less of the                                      regulations comes in OMB 1845–0041                                         private nonprofit institutions, a program
                                                   midpoint revenue for all but the lowest                                  from updating FAFSA application                                            that does not lead to a degree would be
                                                   revenue category, for which it is 4                                      information and reporting all changes                                      subject to the eligibility requirement
                                                   percent of midpoint revenue.                                             resulting from verification. These                                         that the program lead to gainful
                                                      For institutions, an hourly rate of                                   updated requirements will help ensure                                      employment in a recognized
                                                   $18.63 was used to monetize the burden                                   eligible students receive aid. As detailed                                 occupation, while a program leading to
                                                   of these provisions. This was a blended                                  in the Paperwork Reduction Act section                                     a degree, including a two-academic-year
                                                   rate based on wages of $15.51 for office                                 of this NPRM, the increase in burden                                       program fully transferrable to a
                                                   and administrative staff and $36.33 for                                  associated with the FAFSA acceptable                                       baccalaureate degree, would not be
                                                   managers, assuming that office staff                                     documentation provision is largely                                         subject to this eligibility requirement.
                                                   would perform 85 percent of the work                                     driven by the increase in student                                          For proprietary institutions, all eligible
                                                   affected by these regulations. For the                                   applicants since the burden was last                                       degree and nondegree programs would
                                                   gainful employment provision, an                                         calculated. The number of verifications                                    be required to lead to gainful
                                                   hourly rate of $20.71 was used to reflect                                is estimated to have increased from 3.0                                    employment in a recognized
                                                   increased management time to establish                                   million in 2002–03 to 5.1 million in                                       occupation, except for a liberal arts
                                                   new data collection procedures                                           2008–09. Without the regulatory change                                     baccalaureate program under section
                                                   associated with that provision. These                                    estimated to reduce the number of items                                    102(b)(1)(A)(ii) of the HEA.
                                                   rates are the same as those used for all                                 to be verified, the paperwork burden on                                      The institution would be required
                                                   institutions in the costs section of this                                small institutions in OMB 1845–0041                                        under proposed § 668.6(a) to submit
                                                   analysis, reflecting the fact that the                                   would increase by an additional 267,607                                    annually, information that would
                                                   primary cost of meeting the paperwork                                    hours. Based on these estimates, the                                       include, at a minimum, identifying
                                                   burden is in additional labor and wages                                  Department believes the proposed new                                       information about each student who
                                                   at small institutions should not be                                      requirements do not impose significant                                     completed a program, the CIP code for
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                                                   systematically higher than those at all                                  new costs on these institutions.                                           that program, the date the student
                                                   institutions. The Department welcomes                                       No alternative provisions were                                          completed the program, and the
                                                   comments from institutions regarding                                     considered that would target small                                         amounts the student received from
                                                   the costs of meeting the additional                                      institutions with exemptions or                                            private educational loans and
                                                   burdens described in the Paperwork                                       additional time for compliance.                                            institutional financing plans. We
                                                   Reduction Act section of this NPRM.                                      Additional time or flexibility was                                         estimate that it will take the affected
                                                      Where possible, the Department has                                    granted to all institutions based on the                                   2,086 proprietary institutions, on
                                                   allowed institutions flexibility to                                      nature of the provision and the data                                       average, 10 hours to meet these
                                                   establish processes to comply that fit the                               requested. The Secretary invites                                           reporting requirements for their


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                                                   34860                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   occupational training programs for a                    separately as title IV, HEA loan debt and              semester or trimester hour or 20 clock
                                                   total estimated increase in burden of                   debt from private educational loans and                hours for a quarter hour.
                                                   20,860 hours. We estimate that it will                  institutional financing plans.                            In determining whether there is
                                                   take the affected 238 private non-profit                  We estimate that, on average,                        outside work that a student must
                                                   institutions, on average, 10 hours to                   institutions would take 3 hours per                    perform, the analysis would need to
                                                   meet these reporting requirements for                   institution to obtain the required                     take into account differences in
                                                   their occupational training programs for                disclosure information and to provide                  coursework and educational activities
                                                   a total estimated increase in burden of                 that information on the institution’s                  within the program. Some portions of a
                                                   2,380 hours. We estimate that it will                   Web sites. We estimate that 2,086                      program may require student work
                                                   take the affected 2,139 public                          proprietary institutions would take 3                  outside of class that justifies the
                                                   institutions, on average, 10 hours to                   hours per institution to collect and post              application of proposed § 668.8(l)(2). In
                                                   meet these reporting requirements for                   the proposed disclosures which would                   addition, the application of proposed
                                                   their occupational training programs for                increase burden by 6,258 hours. We                     § 668.8(l)(2) could vary within a
                                                   a total estimated increase in burden of                 estimate that 238 private non-profit                   program depending on variances in
                                                   21,390 hours.                                           institutions would take 3 hours per                    required student work outside of class
                                                      Collectively, we estimate that burden                institution to collect and post the                    for different portions of the program.
                                                   for institutions to meet these proposed                 proposed disclosures which would                       Other portions of the program may not
                                                   reporting requirements in accordance                    increase burden by 714 hours. We                       have outside work, and proposed
                                                   with procedures established by the                      estimate that 2,139 public institutions                § 668.8(l)(1) would need to be applied.
                                                   Secretary would increase by 44,630                      would take 3 hours per institution to                  Of course, an institution applying only
                                                   hours in OMB Control Number 1845–                       collect and post the proposed                          proposed § 668.8(l)(1) to a program
                                                   NEW1.                                                   disclosures which would increase                       eligible for conversion from clock hours
                                                      We estimate that over the first three-               burden by 6,417 hours.                                 to credit hours, without an analysis of
                                                   year reporting period that there would                    Collectively, we estimate that these                 the program’s coursework, would be
                                                   be 591,966 graduates from these                         proposed disclosures would result in an                considered compliant with the
                                                   occupational training programs. We                      increase in burden to institutions by                  requirements of proposed § 668.8(l).
                                                   estimate that the proposed reporting for                13,389 hours in OMB Control Number                        Proposed § 668.8(k)(1)(ii) would
                                                   an estimated 278,224 graduates from                     1845–NEW1.                                             modify a provision in current
                                                   proprietary institutions would average 5                  In total, the proposed regulatory                    regulations to provide that a program is
                                                   minutes (.08 hours) per graduate,                       changes reflected in § 668.6 would                     not subject to the conversion formula in
                                                   increasing burden by 22,258 hours. We                   increase burden by a total of 105,377                  § 668.8(l) where each course within the
                                                   estimate that the proposed reporting for                hours in OMB Control Number 1845–                      program is acceptable for full credit
                                                   the estimated 29,598 graduates from                     NEW1.                                                  toward a degree that is offered by the
                                                   private non-profit institutions would                   Section 668.8—Eligible Program                         institution and that this degree requires
                                                   average 5 minutes (.08 hours) per                                                                              at least two academic years of study.
                                                   graduate, increasing burden by 2,368                      Under proposed § 668.8(l)(1), we                     Additionally, under proposed
                                                   hours. We estimate that the proposed                    would revise the method of converting                  § 668.8(k)(1)(ii), the institution would be
                                                   reporting for 284,144 graduates from                    clock hours to credit hours to use a ratio             required to demonstrate that students
                                                   public institutions would average 5                     of the minimum clock hours in an                       enroll in, and graduate from, the degree
                                                   minutes (.08 hours) per graduate,                       academic year to the minimum credit                    program.
                                                   increasing burden by 22,732 hours.                      hours in an academic year, i.e., 900                      Proposed § 668.8(k)(2)(i) would
                                                      Collectively, burden associated with                 clock hours to 24 semester or trimester                provide that a program is considered to
                                                   the proposed disclosures (including the                 hours or 36 quarter hours. Thus, a                     be a clock-hour program if the program
                                                   reporting of Department provided                        semester or trimester hour would be                    must be measured in clock hours to
                                                   median loan debt information) for each                  based on at least 37.5 clock hours, and                receive Federal or State approval or
                                                   graduate would increase for institutions                a quarter hour would be based on at                    licensure, or if completing clock hours
                                                   by 47,358 hours in OMB Control                          least 25 clock hours. Proposed                         is a requirement for graduates to apply
                                                   Number 1845–NEW1.                                       § 668.8(l)(2) would create an exception                for licensure or the authorization to
                                                      Finally, under proposed § 668.6(b) an                to the conversion ratio in proposed                    practice the occupation that the student
                                                   institution would be required to                        § 668.8(l)(1) if neither an institution’s              is intending to pursue. Under proposed
                                                   disclose on its Web site information                    designated accrediting agency nor the                  § 668.8(k)(2)(ii) and (iii), the program
                                                   about (1) the occupations that its                      relevant State licensing authority for                 would also be considered to be offered
                                                   programs prepare students to enter,                     participation in the title IV, HEA                     in clock hours if the credit hours
                                                   along with links to occupational profiles               programs determines there are any                      awarded for the program are not in
                                                   on O*NET, (2) the on-time graduation                    deficiencies in the institution’s policies,            compliance with the definition of a
                                                   rate of students entering a program, (3)                procedures, and practices for                          credit hour in proposed § 600.2, or if the
                                                   the cost of each program, including                     establishing the credit hours that the                 institution does not provide the clock
                                                   costs for tuition and fees, room and                    institution awards for programs and                    hours that are the basis for the credit
                                                   board; other institutional costs typically              courses, as defined in proposed § 600.2.               hours awarded for the program or each
                                                   incurred by students enrolling in the                   Under the exception provided by                        course in the program and, except as
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                                                   program, such as books and supplies, (4)                proposed § 668.8(l)(2), an institution                 provided in current § 668.4(e), requires
                                                   beginning no later than June 30, 2013,                  would be permitted to combine                          attendance in the clock hours that are
                                                   the placement rate for students                         students’ work outside of class with the               the basis for the credit hours awarded.
                                                   completing each of these programs, as                   clock-hours of instruction in order to                 The proposed regulations on which
                                                   determined under § 668.8(g) or a State-                 meet or exceed the numeric                             tentative agreement was reached would
                                                   sponsored workforce data system, and                    requirements established in proposed                   not include the provision in proposed
                                                   (5) the median loan debt incurred by                    § 668.8(l)(1). However, under proposed                 § 668.8(k)(2)(iii) that, except as provided
                                                   students who completed each program                     § 668.8(l)(2), the institution would need              in current § 668.4(e), an institution must
                                                   in the preceding three years, identified                to use at least 30 clock hours for a                   require attendance in the clock hours


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                           34861

                                                   that are the basis for the credit hours                 place to collect high school diplomas                  that the student was scheduled to
                                                   awarded.                                                and make determinations about their                    complete prior to withdrawing.
                                                      Proposed § 668.8(k)(3) would provide                 validity.                                                 The proposed change to
                                                   that proposed § 668.8(k)(2)(i) would not                  We estimate that burden would                        § 668.22(f)(2)(i) would clarify that, for
                                                   apply if a limited portion of the program               increase for each institution by 3.5                   credit hour programs, in calculating the
                                                   includes a practicum, internship, or                    hours for the development of a high                    percentage of the payment period or
                                                   clinical experience component that                      school diploma validity process. We                    period of enrollment completed, it is
                                                   must include a minimum number of                        estimate that 2,086 proprietary                        necessary to take into account the total
                                                   clock hours due to a State or Federal                   institutions would on average take 3.5                 number of calendar days that the
                                                   approval or licensure requirement.                      hours to develop the proposed                          student was scheduled to complete
                                                      We estimate that on average, for each                procedures to evaluate the validity of                 prior to withdrawing without regard to
                                                   affected program it would take 30                       high school completions which would                    any course completed by the student
                                                   minutes for an institution to make the                  increase burden by 7,301 hours. We                     that is less than the length of the term.
                                                   determination of whether the program is                 estimate that 1,731 private non-profit                    These proposed regulations would
                                                   an affected program, to evaluate the                    institutions would on average take 3.5                 affect all programs with courses that are
                                                   amount of outside student work that                     hours to develop the proposed                          less than the length of a term, including,
                                                   should be included as proposed and to                   procedures to evaluate the validity of                 for example, a semester-based program
                                                   perform the clock hour to credit hour                   high school completion which would                     that has a summer nonstandard term
                                                   conversion. We further estimate that of                 increase burden by 6,059 hours. We                     with two consecutive six-week sessions
                                                   the 4,587 institutions of higher                        estimate that 1,892 public institutions                within the term.
                                                   education with less than 2-year                         would on average take 3.5 hours to                        We estimate that approximately
                                                   programs, that on average, each                         develop the proposed procedures to                     425,075 students in term-based
                                                   institution has approximately 8 non-                    evaluate the validity of high school                   programs with modules or compressed
                                                   degree programs of study for a total of                 completion which would increase                        courses will withdraw prior to
                                                   36,696 affected programs. We estimate                   burden by 6,622 hours.                                 completing more than 60 percent of
                                                   that there are 16,513 affected programs                   Additionally, we estimate that the                   their program of study. We estimate that
                                                   at proprietary institutions times .5 hours              validity of approximately 4,000 high                   on average, the burden per individual
                                                   which would increase burden by 8,257                    school diplomas per year would be                      student who withdraws prior to the 60
                                                   hours. We estimate that there are 1,835                 questioned and, therefore, require                     percent point of their term-based
                                                   affected programs at private non-profit                 additional verification that is estimated              program to be 45 minutes (.75 hours)
                                                   institutions times .5 hours which would                 to take .5 hours per questionable                      per affected individual which would
                                                   increase burden by 918 hours. We                        diploma. We estimate that proprietary                  increase burden for the estimated
                                                   estimate that there are 18,348 affected                 institutions would have 2,000                          425,075 students by 318,806 hours in
                                                   programs at public institutions times .5                questionable diplomas times .5 hours                   OMB Control Number 1845–0022. Of
                                                   hours which would increase burden by                    per diploma equals 1,000 hours of                      these 425,075 withdrawals, we estimate
                                                   9,174 hours.                                            increased burden. We estimate that                     that 50 percent of the withdrawals
                                                      Collectively, the proposed regulatory                private non-profit institutions would                  (212,538) would occur at proprietary
                                                   changes reflected in § 668.8 would                      have 600 questionable diplomas times .5                institutions and would increase burden
                                                   increase burden by 18,349 hours in                      hours per diploma equals 300 hours of                  by 1 hour per withdrawal increasing
                                                   OMB Control Number 1845–0022.                           increased burden. We estimate that                     burden by 212,538 hours. We estimate
                                                                                                           public institutions would have 1,400                   that 10 percent of the withdrawals
                                                   Section 668.16—Standards of                                                                                    (42,508) would occur at private non-
                                                                                                           questionable diplomas times .5 hours
                                                   Administrative Capability                                                                                      profit institutions and would increase
                                                                                                           per diploma equals 700 hours of
                                                      Under the proposed regulations, the                  increased burden.                                      burden by 1 hour per withdrawal
                                                   elements of the institution’s satisfactory                Collectively, the proposed regulatory                increasing burden by 42,508 hours. We
                                                   academic progress plan would be                         changes reflected in § 668.16 would                    estimate that 40 percent of the
                                                   moved from current § 668.16(e) to                       increase burden by 21,982 hours in                     withdrawals (170,029) would occur at
                                                   proposed § 668.34. We would also                        OMB Control Number 1845–0022.                          public institutions and would increase
                                                   update these provisions. As a result, the                                                                      burden by 1 hour per withdrawal
                                                   estimated burden upon institutions                      Section 668.22—Treatment of Title IV,
                                                                                                                                                                  increasing burden by 170,029 hours.
                                                   associated with measuring academic                      HEA Program Funds When a Student
                                                                                                                                                                  Collectively, we estimate that burden
                                                   progress currently in OMB Control                       Withdraws
                                                                                                                                                                  will increase by 743,881 hours in OMB
                                                   Number 1845–0022 of 21,000 hours                          The proposed changes to                              Control Number 1845–0022, of which
                                                   would be administratively removed                       § 668.22(a)(2) would clarify when a                    318,806 hours is for individuals and
                                                   from this collection and transferred to                 student is considered to have                          425,075 hours is for institutions.
                                                   OMB Control Number 1845–NEW2.                           withdrawn from a payment period or
                                                      Under proposed § 668.16(p), an                       period of enrollment. In the case of a                 Section 668.34—Satisfactory Progress
                                                   institution would be required to develop                program that is measured in credit                       The proposed regulations would
                                                   and follow procedures to evaluate the                   hours, the student would be considered                 restructure the satisfactory academic
                                                   validity of a student’s high school                     to have withdrawn if he or she does not                progress requirements. Proposed
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                                                   completion if the institution or the                    complete all the days in the payment                   § 668.16(e) (Standards of administrative
                                                   Secretary has reason to believe that the                period or period of enrollment that the                capability) would be revised to include
                                                   high school diploma is not valid or was                 student was scheduled to complete                      only the requirement that an institution
                                                   not obtained from an entity that                        prior to withdrawing. In the case of a                 establish, publish, and apply
                                                   provides secondary school education.                    program that is measured in clock                      satisfactory academic progress standards
                                                   The burden associated with this                         hours, the student would be considered                 that meet the requirements of § 668.34.
                                                   proposed requirement would be                           to have withdrawn if he or she does not                The remainder of current § 668.16(e)
                                                   mitigated by the fact that many                         complete all of the clock hours in the                 would be moved to proposed § 668.34
                                                   institutions already have processes in                  payment period or period of enrollment                 such that it, alone, would describe all of


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                                                   34862                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   the required elements of a satisfactory                 action by the student. Proposed                        burden by 5,676 hours. Collectively, the
                                                   academic progress policy as well as how                 § 668.34(a)(8)(ii) would make clear that               proposed regulatory changes reflected in
                                                   an institution would implement such a                   an institution with a satisfactory                     § 668.34(a) would increase burden by
                                                   policy. The references in paragraph                     academic progress policy that includes                 17,127 hours.
                                                   § 668.32(e) would be updated to                         the use of the financial aid probation                   Proposed § 668.34(c) and (d) would
                                                   conform the section with the changes                    status could require that a student on                 specify that an institution’s policy may
                                                   proposed to §§ 668.16(e) and 668.32.                    financial aid probation fulfill specific               provide for disbursement of title IV,
                                                      Proposed § 668.34(a) would specify                   terms and conditions, such as taking a                 HEA program funds to a student who
                                                   the elements an institution’s satisfactory              reduced course load or enrolling in                    has not met an institution’s satisfactory
                                                   academic policy must contain to be                      specific courses.                                      academic standards in certain
                                                   considered a reasonable policy. Under                      Proposed § 668.34(a)(9) would require               circumstances. Of the 17 million
                                                   the proposed regulations, institutions                  an institution that permits a student to               applicants in 2008–2009, we estimate
                                                   would continue to have flexibility in                   appeal a determination that the student                that 90 percent (or 15,300,000
                                                   establishing their own policies;                        is not making satisfactory academic                    individuals) would begin attendance.
                                                   institutions that choose to measure                     progress to describe the appeal process                We estimate that of the 15,300,000
                                                   satisfactory academic progress more                     in its policy. The policy would need to                individuals that begin attendance, that
                                                   frequently than at the minimum                          contain specified elements. Proposed                   90 percent (or 13,770,000 individuals)
                                                   required intervals would have                           § 668.34(a)(9)(i) would require an                     would persist at least through the end
                                                   additional flexibility (see proposed                    institution to describe how a student                  of the initial payment period and
                                                   § 668.34(a)(3)).                                        may re-establish his or her eligibility to             therefore the institution would evaluate
                                                      All of the policy elements in the                    receive assistance under the title IV,                 the student’s satisfactory academic
                                                   current regulations under § 668.16(e)                   HEA programs. Under proposed                           progress consistent with the provision
                                                   and § 668.34 would be combined in                       § 668.34(a)(9)(ii), a student would be                 of proposed § 668.34. We estimate that
                                                   proposed § 668.34. In addition,                         permitted to file an appeal based on the               38 percent of the institutions would
                                                   proposed § 668.34(a)(5) would make                      death of a relative, an injury or illness              evaluate their students at the end of
                                                   explicit the requirement that                           of the student, or other special                       each payment period under proposed
                                                   institutions specify the pace at which a                circumstances. Under proposed                          § 668.34(c), therefore 13,770,000
                                                   student must progress through his or her                § 668.34(a)(9)(iii), a student would be                individuals times 38 percent equals
                                                   educational program to ensure that the                  required to submit, as part of the appeal,             5,232,600 individuals that would be
                                                   student will complete the program                       information regarding why the student                  evaluated more than annually. We
                                                   within the maximum timeframe, and                       failed to make satisfactory academic                   estimate that 62 percent of institutions
                                                   provide for measurement of a student’s                  progress, and what has changed in the                  would evaluate their students once per
                                                   pace at each evaluation. Under                          student’s situation that would allow the               academic year under proposed
                                                   proposed § 668.34(a)(6), institutional                  student to demonstrate satisfactory                    § 668.34(d), therefore, 13,770,000
                                                   policies would need to describe how a                   academic progress at the next                          individuals times 62 percent equals
                                                   student’s GPA and pace of completion                    evaluation.                                            8,537,400 individuals that would be
                                                   are affected by transfers of credit from                   Proposed § 668.34(a)(10) would                      evaluated annually.
                                                   other institutions. This provision would                require the satisfactory academic                        Proposed § 668.34(c) would permit an
                                                   also require institutions to count credit               progress policy of an institution that                 institution that measures satisfactory
                                                   hours from another institution that are                 does not permit students to appeal a                   academic progress at the end of each
                                                   accepted toward a student’s educational                 determination that they are not making                 payment period to have a policy that
                                                   program as both attempted and                           satisfactory academic progress to                      would permit a student who is not
                                                   completed hours.                                        describe how a student may regain                      making satisfactory academic progress
                                                      Proposed § 668.34(a)(7) would                        eligibility for assistance under the title             to be placed automatically on financial
                                                   provide that, except as permitted in                    IV, HEA programs.                                      aid warning, a newly defined term. We
                                                   § 668.34(c) and (d), the policy requires                   Proposed § 668.34(a)(11) would                      estimate as a result, the burden
                                                   that, at the time of each evaluation, if                require that an institution’s policy                   associated with an academic progress
                                                   the student is not making satisfactory                  provide for notification to students of                measurement at the end of each
                                                   academic progress, the student is no                    the results of an evaluation that impacts              payment period, and when required,
                                                   longer eligible to receive the title IV,                the student’s eligibility for title IV, HEA            developing an academic plan for the
                                                   HEA assistance.                                         program funds.                                         student, would increase burden. We
                                                      Proposed § 668.34(a)(8) would require                   We estimate that, on average,                       estimate that proprietary institutions,
                                                   institutions that use ‘‘financial aid                   institutions would take 3 hours per                    which comprise 37 percent of the total
                                                   warning’’ and ‘‘financial aid probation’’               institution to review the proposed                     number of institutions of higher
                                                   statuses (concepts that would be defined                regulations in § 668.34(a) and                         education, times 5,232,600 individuals
                                                   in proposed § 668.34(b)) in connection                  implement any proposed changes to                      equals 1,936,062 individuals at
                                                   with satisfactory academic progress                     insure compliance. We estimate that                    proprietary institutions that would
                                                   evaluations to describe these statuses                  2,086 proprietary institutions would                   require an academic review more than
                                                   and how they are used in their                          take 3 hours per institution to review                 once per academic year. 1,936,062 times
                                                   satisfactory academic progress policies.                and implement the proposed regulations                 an average of 2 reviews per academic
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                                                   Proposed § 668.34(a)(8)(i) would specify                increasing burden by 6,258 hours. We                   year, equals 3,872,124 satisfactory
                                                   that a student on financial aid warning                 estimate that 1,731 private non-profit                 academic progress reviews. Since these
                                                   may continue to receive assistance                      institutions would take 3 hours per                    academic progress reviews are generally
                                                   under the title IV, HEA programs for one                institution to review and implement the                highly automated, we estimate that, on
                                                   payment period despite a determination                  proposed regulations increasing burden                 average, each review will take 1.2
                                                   that the student is not making                          by 5,193 hours. We estimate that 1,892                 minutes (.02 hours) and will increase
                                                   satisfactory academic progress.                         public institutions would take 3 hours                 burden by 77,442 hours. We estimate
                                                   Financial aid warning status may be                     per institution to review and implement                that private non-profit institutions,
                                                   assigned without an appeal or other                     the proposed regulations increasing                    which comprise 30 percent of the total


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                         34863

                                                   number of institutions of higher                        time at two times within the academic                  current OMB Control Number 1845–
                                                   education, times 5,232,600 individuals                  year, increasing burden by 67,762 hours.               0022 to OMB Control Number 1845–
                                                   equals 1,569,780 individuals at private                    We estimate that private non-profit                 NEW2.
                                                   non-profit institutions that would                      institutions, which comprise 30 percent                  We estimate that proprietary
                                                   require an academic review. 1,569,780                   of the total number of institutions of                 institutions, which comprise 37 percent
                                                   times an average of 2 reviews per                       higher education, times 5,232,600                      of the total number of institutions of
                                                   academic year, equals 3,139,560                         individuals equals 1,569,780                           higher education, times 8,537,400
                                                   satisfactory academic progress reviews.                 individuals at private non-profit                      individuals equals 3,158,838
                                                   Since these academic progress reviews                   institutions that would require the                    individuals at proprietary institutions
                                                   are generally highly automated, we                      development of an academic plan as a                   that would require an academic review.
                                                   estimate that, on average, each review                  result of not progressing academically.                Since the academic progress reviews are
                                                   will take 1.2 minutes (.02 hours) and                   1,569,780 individuals times 7 percent                  generally highly automated, we estimate
                                                   will increase burden by 62,791 hours.                   (we estimate who would not                             that, on average, each review will take
                                                   We estimate that public institutions,                   academically progress), equals 109,885                 1.2 minutes (.02 hours) and will
                                                   which comprise 33 percent of the total                  individuals who would need to work                     increase burden by 63,177 hours. We
                                                   number of institutions of higher                        with their institutions to develop an                  estimate that private non-profit
                                                   education, times 5,232,600 individuals                  academic plan. We estimate that each                   institutions, which comprise 30 percent
                                                   equals 1,726,758 individuals at public                  academic plan would take, on average,                  of the total number of institutions of
                                                   institutions that would require an                      15 minutes (.25 hours) of staff time at                higher education, times 8,537,400
                                                   academic review. 1,726,758 times an                     two times within the academic year,                    individuals equals 2,561,220
                                                   average of 2 reviews per academic year,                 increasing burden by 54,943 hours.                     individuals at private non-profit
                                                   equals 3,453,516 satisfactory academic                     We estimate that public institutions,               institutions that would require an
                                                   progress reviews. Since these academic                  which comprise 33 percent of the total                 academic review. Since the academic
                                                   progress reviews are generally highly                   number of institutions of higher                       progress reviews are generally highly
                                                   automated, we estimate that, on average,                education, times 5,232,600 individuals                 automated, we estimate that, on average,
                                                   each review will take 1.2 minutes (.02                  equals 1,726,758 individuals at public                 each review will take 1.2 minutes (.02
                                                   hours) and will increase burden by                      institutions that would require the                    hours) and will increase burden by
                                                   69,070 hours.                                           development of an academic plan as a                   51,224 hours. We estimate that public
                                                     Collectively, we estimate that the                    result of not progressing academically.                institutions, which comprise 33 percent
                                                   burden for institutions would increase                  1,726,758 individuals times 7 percent                  of the total number of institutions of
                                                   by 209,303 hours, in OMB Control                        (we estimate who would not                             higher education, times 8,537,400
                                                   Number 1845–NEW2.                                       academically progress), equals 120,873                 individuals equals 2,817,342
                                                     As a result of the proposed                           individuals who would need to work                     individuals at public institutions that
                                                   satisfactory academic progress reviews                  with their institutions to develop an                  would require an academic review.
                                                   conducted by the institutions, we                       academic plan. We estimate that each                   Since the academic progress reviews are
                                                   estimate that 7 percent of the 5,232,600                academic plan would take, on average,                  generally highly automated, we estimate
                                                   enrolled students (at institutions that                 15 minutes (.25 hours) of staff time at                that, on average, each review will take
                                                   review academic progress more often                     two times within the academic year,                    1.2 minutes (.02 hours) and will
                                                   than annually) or 366,282 would not                     increasing burden by 60,437 hours.                     increase burden by 56,347 hours.
                                                   successfully achieve satisfactory                          Collectively, we estimate that the                    Collectively, we estimate that the
                                                   academic progress and therefore the                     burden for institutions would increase                 burden for institutions would increase
                                                   institution would work with each                        by 183,142 hours, in OMB Control                       by 170,748 hours, in OMB Control
                                                   student to develop an academic plan                     Number 1845–NEW2.                                      Number 1845–NEW2.
                                                   which would increase burden for the                        Under proposed § 668.34(d), at an                     As a result of the proposed
                                                   individual and the institutions. We                     institution that measures satisfactory                 satisfactory academic progress reviews
                                                   estimate that under proposed                            academic progress annually, or less                    conducted by the institutions, we
                                                   § 668.34(c), that 366,282 students                      frequently than at the end of each                     estimate that 7 percent of the 8,537,400
                                                   would, on average, take 10 minutes (.17                 payment period, a student who has been                 enrolled students (at institutions that
                                                   hours) to establish an academic plan                    determined not to be making                            review academic progress annually) or
                                                   and re-evaluate the plan a second time                  satisfactory academic progress would be                597,618 would not successfully achieve
                                                   within the academic year (2 times per                   able to receive title IV, HEA program                  satisfactory academic progress and
                                                   academic year), increasing burden to                    funds only after filing an appeal and                  therefore the institution would work
                                                   individuals by 124,536 hours.                           meeting one of two conditions: (1) the                 with each student to develop an
                                                     We estimate that proprietary                          institution has determined that the                    academic plan which would increase
                                                   institutions, which comprise 37 percent                 student should be able to meet                         burden for the individual and the
                                                   of the total number of institutions of                  satisfactory progress standards after the              institutions. We estimate that under
                                                   higher education, times 5,232,600                       subsequent payment period, or (2) the                  proposed § 668.34(d), that 597,618
                                                   individuals equals 1,936,062                            institution develops an academic plan                  students would, on average, take 10
                                                   individuals at proprietary institutions                 with the student that, if followed, will               minutes (.17 hours) to establish an
                                                   that would require the development of                   ensure that the student is able to meet                academic plan, increasing burden to
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                                                   an academic plan as a result of not                     the institution’s satisfactory academic                individuals by 101,595 hours.
                                                   progressing academically. 1,936,062                     progress standards by a specific point in                We estimate that proprietary
                                                   individuals times 7 percent (we estimate                time.                                                  institutions, which comprise 37 percent
                                                   who would not academically progress),                      Because the proposed regulations                    of the total number of institutions of
                                                   equals 135,524 individuals who would                    would transfer the elements of an                      higher education, times 8,537,400
                                                   need to work with their institutions to                 institution’s satisfactory academic                    individuals equals 3,158,838
                                                   develop an academic plan. We estimate                   policy from § 668.16(e) to § 668.34, we                individuals at proprietary institutions
                                                   that each academic plan would take, on                  are transferring the current burden                    that would require the development of
                                                   average, 15 minutes (.25 hours) of staff                estimate of 21,000 hours from the                      an academic plan as a result of not


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                                                   34864                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   progressing academically. 3,158,838                     paragraph (a), but it would be modified                Federal, or tribal approval or licensing.
                                                   individuals times 7 percent (we estimate                to make it consistent with the definition              The Department proposes in § 668.43(b)
                                                   who would not academically progress),                   of an ‘‘educational program’’ in 34 CFR                that the institution must also provide its
                                                   equals 211,119 individuals who would                    600.2. Proposed new § 668.5(a)(2) would                students or prospective students with
                                                   need to work with their institutions to                 specify that if a written arrangement is               contact information for filing
                                                   develop an academic plan. We estimate                   between two or more eligible                           complaints with its accreditor and State
                                                   that each academic plan would take, on                  institutions that are owned or controlled              approval or licensing entity.
                                                   average, 15 minutes (.25 hours) of staff                by the same individual, partnership, or                   We estimate that of the 2,086
                                                   time, increasing burden by 55,280                       corporation, the institution that grants               proprietary institutions that 1,919 (or 92
                                                   hours.                                                  the degree or certificate must provide                 percent) would have to begin providing
                                                     We estimate that private non-profit                   more than 50 percent of the educational                contact information for filing
                                                   institutions, which comprise 30 percent                 program. These clarifications are also                 complaints with accreditors, approval or
                                                   of the total number of institutions of                  intended to ensure that the institution                licensing agencies. We estimate that the
                                                   higher education, times 8,537,400                       enrolling the student has all necessary                other 8 percent are already providing
                                                   individuals equals 2,561,220                            approvals to offer an educational                      this information. We estimate that on
                                                   individuals at private non-profit                       program in the format in which it is                   average, this disclosure would take 10
                                                   institutions that would require the                     being provided, such as through                        minutes (.17 hours) per disclosure and
                                                   development of an academic plan as a                    distance education when the other                      increase burden to proprietary
                                                   result of not progressing academically.                 institution is providing instruction                   institutions by 326 hours. We estimate
                                                   2,561,220 individuals times 7 percent                   under a written agreement using that                   that of the 1,731 private non-profit
                                                   (we estimate who would not                              method of delivery. Proposed                           institutions that 1,593 (or 92 percent)
                                                   academically progress), equals 179,285                  § 668.5(c)(1) would expand the list of                 would have to begin providing contact
                                                   individuals who would need to work                      conditions that would preclude an                      information for filing complaints with
                                                   with their institutions to develop an                   arrangement between an eligible                        accreditors, approval or licensing
                                                   academic plan. We estimate that each                    institution and an ineligible institution.             agencies. We estimate that the other 8
                                                   academic plan would take, on average,                   Proposed §§ 668.5(e) and 668.43 would                  percent are already providing this
                                                   15 minutes (.25 hours) of staff time,                   require an institution that enters into a              information. We estimate that on
                                                   increasing burden by 44,821 hours.                      written arrangement to provide a                       average, this disclosure would take 10
                                                     We estimate that public institutions,                 description of the arrangement to                      minutes (.17 hours) per disclosure and
                                                   which comprise 33 percent of the total                  enrolled and prospective students.                     increase burden to private non-profit
                                                   number of institutions of higher                          We estimate that 104 proprietary                     institutions by 271 hours. We estimate
                                                   education, times 8,537,400 individuals                  institutions would enter into an average               that of the 1,892 public institutions that
                                                   equals 2,817,342 individuals at public                  of 1 written arrangement per institution               1,740 (or 92 percent) would have to
                                                   institutions that would require the                     and that, on average, the burden                       begin providing contact information for
                                                   development of an academic plan as a                    associated with the proposed collection                filing complaints with accreditors,
                                                   result of not progressing academically.                 of information about written agreements                approval or licensing agencies. We
                                                   2,817,342 individuals times 7 percent                   and its disclosure would take 30                       estimate that the other 8 percent are
                                                   (we estimate who would not                              minutes (.5 hours) per arrangement,                    already providing this information. We
                                                   academically progress), equals 197,214                  increasing burden by 52 hours. We                      estimate that on average, this disclosure
                                                   individuals who would need to work                      estimate that 1,731 private non-profit                 would take 10 minutes (.17 hours) per
                                                   with their institutions to develop an                   institutions would enter into an average               disclosure and increase burden to
                                                   academic plan. We estimate that each                    of 50 written arrangements per                         proprietary institutions by 296 hours.
                                                   academic plan would take, on average,                   institution and that, on average, the                     Collectively, we estimate that burden
                                                   15 minutes (.25 hours) of staff time,                   burden associated with the proposed                    would increase for institutions in their
                                                   increasing burden by 49,304 hours.                      collection of information about written                reporting of the contact information for
                                                     Collectively, we estimate that the                    agreements and its disclosure would                    filing complaints to accreditors and
                                                   burden for institutions would increase                  take 30 minutes (.5 hours) per                         approval or licensing agencies by 893
                                                   by 149,405 hours, in OMB Control                        arrangement, increasing burden by                      hours in OMB Control Number 1845–
                                                   Number 1845–NEW2.                                       43,275 hours. We estimate that 1,892                   0022.
                                                     In total, the proposed regulatory                     public institutions would enter into an                   In total, the proposed regulatory
                                                   changes reflected in § 668.34 would                     average of 25 written arrangements per                 changes reflected in § 668.43 would
                                                   increase burden by a total of 955,855                   institution and that, on average, the                  increase burden by 67,870 hours in
                                                   hours in OMB Control Number 1845–                       burden associated with the proposed                    OMB Control Number 1845–0022.
                                                   NEW2; however when the 21,000 hours                     collection of information about written
                                                                                                                                                                  Section 668.55—Updating Information
                                                   of burden currently in OMB 1845–0022                    agreements and its disclosure would
                                                   are administratively transferred from                   take 30 minutes (.5 hours) per                            Proposed § 668.55 would require an
                                                   OMB 1845–0022 to OMB 1845–NEW2,                         arrangement, increasing burden by                      applicant to update all changes in
                                                   the grand total of burden hours under                   23,650 hours.                                          dependency status that occur
                                                   this section would increase to 976,855                    Collectively, we estimate that burden                throughout the award year, including
                                                   in OMB 1845–NEW2.                                       would increase for institutions in their               changes in the applicant’s household
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                                                                                                           reporting of the details of written                    size and the number of those household
                                                   Section 668.43—Institutional                            agreements by 66,977 hours in OMB                      members attending postsecondary
                                                   Information                                             Control Number 1845–0022.                              educational institutions. We estimate
                                                      The Department proposes to revise                      Currently, the Department requires                   that 1,530,000 individuals would
                                                   current § 668.5(a) by revising and                      that an institution must make available                update their household size or the
                                                   redesignating paragraph (a) as paragraph                for review to any enrolled or                          number of household members
                                                   (a)(1) and adding a new paragraph (a)(2).               prospective student upon request, a                    attending postsecondary educational
                                                   Proposed § 668.5(a)(1) would be based                   copy of the documents describing the                   institutions and that, on average,
                                                   on the language that is in current                      institution’s accreditation and its State,             reporting would take 5 minutes (.08


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                            34865

                                                   hours) per individual, increasing burden                each updated record would take 10                      supporting data would decrease from
                                                   by 122,400 hours.                                       minutes (.17 hours) to review each                     the current average of 12 minutes (.20
                                                      We estimate that proprietary                         updated record thereby increasing                      hours) per individual to 7 minutes (.12
                                                   institutions would receive updated                      burden by 9,537 hours.                                 hours), thus further reducing burden on
                                                   household size or the updated number                      Collectively, we estimate that burden                the individual applicant.
                                                   of household members attending                          would increase for individuals and                        For example, when we consider the
                                                   postsecondary educational institutions                  institutions in their reporting updated                estimated 5.1 million 2008–2009
                                                   from 566,100 applicants. We estimate                    marital status information by 42,500                   applicants selected for verification at an
                                                   that each updated record would take 10                  hours in OMB Control Number 1845–                      average of 12 minutes (.20 hours) to
                                                   minutes (.17 hours) to review each                      0041.                                                  collect and submit information,
                                                   updated record thereby increasing                         Proposed § 668.55 would also include                 including supporting documentation for
                                                   burden by 96,237 hours. We estimate                     a number of other changes to remove                    the five required data elements (which
                                                   that private non-profit institutions                    language that implements the marital                   is the estimated amount of time that is
                                                   would receive updated household size                    status exception in the current                        associated with the requirements in
                                                   or the updated number of household                      regulations, including removing current                current § 668.56(a)), the requirements in
                                                   members attending postsecondary                         § 668.55(a)(3) and revising § 668.55(b).               that section would yield a total burden
                                                   educational institutions from 459,000                     In total, the proposed regulatory                    of 1,020,000 hours added to OMB
                                                   applicants. We estimate that each                       changes reflected in § 668.55 would                    Control Number 1845–0041. However,
                                                   updated record would take 10 minutes                    increase burden by 425,005 hours in                    under proposed § 668.56(b), where the
                                                   (.17 hours) to review each updated                      OMB Control Number 1845–0041.                          number of verification data elements
                                                   record thereby increasing burden by                     Section 668.56—Information To Be                       would be reduced to an average of three,
                                                   78,030 hours. We estimate that public                   Verified                                               the estimated 5.1 million individuals
                                                   institutions would receive updated                                                                             selected for verification multiplied by
                                                   household size or the updated number                       The Department proposes to eliminate
                                                                                                           from the regulations the five items that               the reduced average of 7 minutes (.12
                                                   of household members attending                                                                                 hours) would yield an increase of
                                                   postsecondary educational institutions                  an institution currently is required to
                                                                                                           verify for all applicants selected for                 612,000 hours in burden. Therefore,
                                                   from 504,900 applicants. We estimate                                                                           with the proposed changes to this
                                                   that each updated record would take 10                  verification. Instead, pursuant to
                                                                                                           proposed § 668.56(a), for each award                   section, we would expect the burden to
                                                   minutes (.17 hours) to review each                                                                             be 408,000 hours less than under the
                                                   updated record thereby increasing                       year, the Secretary would specify in a
                                                                                                           Federal Register notice the FAFSA                      current regulations.
                                                   burden by 85,833 hours.
                                                                                                           information and documentation that an                     As a result, for OMB reporting
                                                      Collectively, we estimate that burden
                                                   would increase for individuals and                      institution and an applicant may be                    purposes, we estimate that the
                                                   institutions in their reporting updated                 required to verify. The Department                     individuals, as a group, would have an
                                                   household size and the updated number                   would then specify on an individual                    increase in burden by 612,000 hours in
                                                   of household members attending                          student’s SAR and ISIR what                            OMB Control Number 1845–0041
                                                   postsecondary educational institutions                  information must be verified for that                  (rather than 1,020,000 hours).
                                                   by 382,500 hours in OMB Control                         applicant.                                             Section 668.57—Acceptable
                                                   Number 1845–0041, of which 122,400                         Currently under OMB Control                         Documentation
                                                   hours is for individuals and 260,100                    Number 1845–0041, there are 1,022,384
                                                   hours is for institutions.                              hours of burden associated with the                       We propose to make a number of
                                                      The Department also proposes                         verification regulations of which                      technical and conforming changes
                                                   changes resulting from a change in the                  1,010,072 hours of burden are a result                 throughout § 668.57. We also propose to
                                                   applicant’s marital status, regardless of               of the data gathering and submission by                make the following substantive changes
                                                   whether the applicant is selected for                   each individual applicant selected for                 described in this section.
                                                   verification. We estimate that 170,000                  verification. This estimate was based                     Proposed § 668.57(a)(2) would allow
                                                   individuals would update their marital                  upon the number of applicants in the                   an institution to accept, in lieu of an
                                                   status and that on average that reporting               2002–2003 award year. Since then, the                  income tax return or an IRS form that
                                                   would take 5 minutes (.08 hours) per                    number of applicants has grown                         lists tax account information, the
                                                   individual, increasing burden by 13,600                 significantly to 17.4 million applicants               electronic importation of data obtained
                                                   hours.                                                  for the 2008–2009 award year, of which                 from the IRS into an applicant’s online
                                                      We estimate that proprietary                         we would project 5.1 million individual                FAFSA.
                                                   institutions would receive updated                      applicants to be selected for verification.               We also propose to amend
                                                   marital status information from 62,900                     The projected number of items to be                 § 668.57(a)(4)(ii)(A) to accurately reflect
                                                   applicants. We estimate that each                       verified under the proposed regulations                that, upon application, the IRS grants a
                                                   updated record would take 10 minutes                    is expected to be reduced from the                     six-month extension beyond the April
                                                   (.17 hours) to review each updated                      current five required data elements to an              15 deadline rather than the four-month
                                                   record thereby increasing burden by                     average of three items per individual.                 extension currently stated in the
                                                   10,693 hours. We estimate that private                  This projected reduction in items to be                regulations.
                                                   non-profit institutions would receive                   verified would result in a reduction of                   Under proposed § 668.57(a)(5), an
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                                                   updated marital status information from                 burden per individual applicant. Also,                 institution may require an applicant
                                                   51,000 applicants. We estimate that                     as a result of collecting information to               who has been granted an extension to
                                                   each updated record would take 10                       verify applicant data on this smaller                  file his or her income tax return to
                                                   minutes (.17 hours) to review each                      average number of data elements (three                 provide a copy of that tax return once
                                                   updated record thereby increasing                       items instead of five items), the average              it has been filed. If the institution
                                                   burden by 8,670 hours. We estimate that                 amount of time for the individual                      requires the applicant to submit the tax
                                                   public institutions would receive                       applicant to review verification form                  return, under this proposed provision, it
                                                   updated marital status information from                 instructions, gather the data, respond on              would need to re-verify the AGI and
                                                   56,100 applicants. We estimate that                     a form and submit a form and the                       taxes paid of the applicant and his or


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                                                   34866                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   her spouse or parents when the                            We estimate that for 2,086 proprietary                  As proposed, both individuals
                                                   institution receives the return.                        institutions times 7 minutes (.12 hours)               (students) and institutions would be
                                                      Proposed § 668.57(a)(7) would clarify                equals 226,440 hours of increased                      making corrections to FAFSA
                                                   that an applicant’s income tax return                   burden. We estimate that for 1,731                     information as a result of the
                                                   that is signed by the preparer or                       private non-profit institutions times 7                verification process. We estimate that 30
                                                   stamped with the preparer’s name and                    minutes (.12 hours) equals 183,600                     percent of the 17,000,000 applicants or
                                                   address must also include the preparer’s                hours of increased burden. We estimate                 5,100,000 individuals (students) would
                                                   Social Security number, Employer                        that for 1,892 public institutions times               be selected for verification. Of those
                                                   Identification Number or the Preparer                   7 minutes (.12 hours) equals 201,960                   5,100,000 individuals, students would
                                                   Tax Identification Number.                              hours of increased burden.                             submit, on average, 1.4 changes in
                                                      Proposed § 668.57(b) and (c) would                     As a result, for OMB reporting                       FAFSA information as a result of
                                                   remain substantively unchanged.                         purposes, collectively there would be a                verification for 7,140,000 changes which
                                                      We would delete current § 668.57(d)                  projected increase of 612,000 hours of                 would take an average of 7 minutes (.12
                                                   regarding acceptable documentation for                  burden for institutions in OMB Control                 hours) per change, increasing burden to
                                                   untaxed income and benefits and                         Number 1845–0041.                                      individuals by 856,800 hours.
                                                   replace it with new proposed                                                                                      We estimate that of the 5,100,000
                                                   § 668.57(d). This new section would                     Section 668.59—Consequences of a
                                                                                                                                                                  individuals selected for verification,
                                                   provide that, if an applicant is selected               Change in FAFSA Information
                                                                                                                                                                  that institutions would submit, on
                                                   to verify other information specified in                   We propose to amend § 668.59 by                     average 2.0 changes per individual in
                                                   an annual Federal Register notice, the                  removing all allowable tolerances and                  FAFSA information as a result of
                                                   applicant must provide the                              requiring instead that an institution                  verification for 10,200,000 changes. We
                                                   documentation specified for that                        submit to the Department all changes to                estimate that 3,774,000 changes to
                                                   information in the Federal Register                     an applicant’s FAFSA information                       FAFSA information as a result of
                                                   notice.                                                 resulting from verification for those                  verification would occur at proprietary
                                                      Currently under OMB Control                          applicants receiving assistance under                  institutions which would take an
                                                   Number 1845–0041, there are 1,022,384                   any of the subsidized student financial                average of 7 minutes (.12 hours) per
                                                   hours of burden associated with the                     assistance programs (see proposed                      change, increasing burden by 452,880
                                                   verification regulations, of which 12,312               § 668.59(a)).                                          hours. We estimate that 3,060,000
                                                   hours are attributable to institutions of                  Under proposed § 668.59(b), for the                 changes to FAFSA information as a
                                                   higher education to establish their                     Federal Pell Grant program, once the                   result of verification would occur at
                                                   verification policies and procedures.                   applicant provides the institution with                private non-profit institutions which
                                                   Under proposed § 668.57, we estimate                    the corrected SAR or ISIR, the                         would take an average of 7 minutes (.12
                                                   that, on average, institutions will take 7              institution would be required to                       hours) per change, increasing burden by
                                                   minutes (.12 hours) per applicant                       recalculate the applicant’s Federal Pell               367,200 hours. We estimate that
                                                   selected for verification to review and                 Grant and disburse any additional                      3,366,000 changes to FAFSA
                                                   take appropriate action based upon the                  funds, if additional funds are payable. If             information as a result of verification
                                                   information provided by the applicant,                  the applicant’s Federal Pell Grant would               would occur at public institutions
                                                   which in some cases may mean                            be reduced as a result of verification, the            which would take an average of 7
                                                   correcting applicant data or having the                 institution would be required to                       minutes (.12 hours) per change,
                                                   applicant correct his or her data. Under                eliminate any overpayment by adjusting                 increasing burden by 403,920 hours.
                                                   current § 668.57, when we consider the                  subsequent disbursements or                               Collectively, the proposed regulatory
                                                   significant increase to 17.4 million                    reimbursing the program account by                     changes reflected in § 668.59 would
                                                   applicants in the 2008–2009 award year,                 requiring the applicant to return the                  increase for individuals and institutions
                                                   of which 5.1 million would be selected                  overpayment or making restitution from                 by 2,080,800 hours in OMB Control
                                                   for verification at an average of 12                    its own funds (see proposed                            Number 1845–0041.
                                                   minutes (.20 hours) per verification                    § 668.59(b)(2)(ii)).
                                                   response received from applicants by                       Proposed § 668.59(c) would provide                  Section 668.144—Application for Test
                                                   the institutions for review, the total                  that, for the subsidized student financial             Approval
                                                   increase in burden would have been                      assistance programs, excluding the                        We propose to clarify and expand the
                                                   1,020,000 additional hours. However,                    Federal Pell Grant Program, if an                      requirements in current §§ 668.143 and
                                                   under proposed § 668.57, both the                       applicant’s FAFSA information changes                  668.144 and to include all of the
                                                   average number of items to be verified                  as a result of verification, the institution           requirements for test approval in one
                                                   would be reduced from five items to                     must recalculate the applicant’s EFC                   section, proposed § 668.144. Paragraphs
                                                   three items, as well as the average                     and adjust the applicant’s financial aid               (a) and (b) of proposed § 668.144 would
                                                   amount of time to review would                          package on the basis of the EFC on the                 describe the general requirement for test
                                                   decrease from 12 minutes (.20 hours) to                 corrected SAR or ISIR.                                 publishers and States to submit to the
                                                   7 minutes (.12 hours). Therefore, under                    With the exception of minor technical               Secretary any test they wish to have
                                                   the proposed regulations, the burden to                 edits, proposed § 668.59(d), which                     approved under subpart J of part 668.
                                                   institutions would be 612,000 burden                    describes the consequences of a change                 Paragraph (c) of proposed § 668.144
                                                   hours (that is, 5.1 million multiplied by               in an applicant’s FAFSA information,                   would describe the information that a
srobinson on DSKHWCL6B1PROD with PROPOSALS2




                                                   7 minutes (.12 hours))—rather than                      would be substantively the same as                     test publisher must include with its
                                                   1,020,000 burden hours (i.e., 5.1 million               current § 668.59(d).                                   application for approval of a test.
                                                   applicants multiplied by 12 minutes                        Finally, we would remove current                    Paragraph (d) of proposed § 668.144
                                                   (.20 hours)). Thus, as compared to the                  § 668.59(e), the provision that requires               would describe the information a State
                                                   burden under the current regulations,                   an institution to refer to the Department              must include with its application when
                                                   using the number of applicants from                     unresolved disputes over the accuracy                  it submits a test to the Secretary for
                                                   2008–2009—17.4 million—there would                      of information provided by the                         approval.
                                                   be 408,000 fewer burden hours for                       applicant if the applicant received funds                 Proposed § 668.144(c)(16) would
                                                   institutions.                                           on the basis of that information.                      require test publishers to include in


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                           34867

                                                   their applications a description of their               of test irregularities; and information on             or State, which would increase burden
                                                   test administrator certification process.               when and how the Secretary, test                       by 642 hours.
                                                   In proposed § 668.144(c)(17), we would                  administrator, and institutions will be                   • We estimate that it would take each
                                                   require test publishers to include in                   notified if a test administrator is                    test publisher or State 1 hour per test
                                                   their applications, a description of the                decertified (see proposed                              submission to develop its process to
                                                   test anomaly analysis the test publisher                § 668.144(c)(17) (test publishers) and                 obtain a certification statement from
                                                   will conduct and submit to the                          § 668.144(d)(8) (States)). We estimate                 each prospective test administrator,
                                                   Secretary. Finally, proposed                            that test publishers and States would,                 which would increase burden by 8
                                                   § 668.144(c)(18) would require test                     on average, take 75 hours to develop its               hours. We estimate that the review of
                                                   publishers to include in their                          test anomaly process, to establish its test            the submitted written certifications by
                                                   applications a description of the types                 anomaly analysis (where it explains its                the test publishers or States for the
                                                   of accommodations available for                         test irregularity detection process                    3,774 test administrators would take, on
                                                   individuals with disabilities, including                including its decertification of test                  average, 5 minutes (.08 hours) per
                                                   a description of the process used to                    administrator process) and to establish                certification form, which would
                                                   identify and report when                                its reporting process to the Secretary.                increase burden by 302 hours.
                                                   accommodations for individuals with                     We estimate that the burden associated                 Immediately notifying the test
                                                   disabilities were provided.                             with 8 ATB tests would increase for the                administrator, the Secretary, and
                                                      Proposed § 668.144(d) would be                       proprietary test publishers by 600 hours.              institutions when the test administrator
                                                   added to describe what States must                         Under proposed § 668.144(c)(18) and                 is decertified (see proposed
                                                   include in their test submissions to the                (d)(9) respectively, both test publishers
                                                                                                                                                                  § 668.150(b)(6)). We estimate that 1
                                                   Secretary. While this provision would                   and States would be required to
                                                                                                                                                                  percent of the 3,774 test administrators
                                                   replace the content in current § 668.143,               describe the types of accommodations
                                                                                                                                                                  would be decertified. We estimate that
                                                   its language would be revised to be                     available for individuals with
                                                                                                                                                                  it would take test publishers and States,
                                                   parallel, where appropriate, to the test                disabilities, and the process for a test
                                                                                                                                                                  on average, 1 hour per decertification to
                                                   publisher submission requirements in                    administrator to identify and report to
                                                                                                                                                                  provide all of the proposed
                                                   current § 668.144. In addition to                       the test publisher when
                                                                                                                                                                  notifications, which would increase
                                                   paralleling most of the current                         accommodations for individuals with
                                                                                                                                                                  burden for proprietary test publishers by
                                                   requirements for test publisher test                    disabilities were provided. We estimate
                                                                                                                                                                  38 hours. Reviewing test results of tests
                                                   submissions, proposed § 668.144(d)                      that test publishers and States would,
                                                   would also include the new                              on average, take 1 hour to develop and                 administered by a decertified test
                                                   requirements proposed to be added to                    describe to the Secretary the types of                 administrator and immediately
                                                   the test publisher submissions. A                       accommodations available to                            notifying affected institutions and
                                                   description of those new provisions                     individuals with disabilities, to describe             students (see proposed § 668.150(b)(7)).
                                                   follows:                                                the process the test administrator would               We estimate that 481,763 ATB tests
                                                      Both test publishers and States would                use to support the identification of the               would be taken for title IV, HEA
                                                   be required to submit a description of                  disability and to develop the process to               purposes annually. Of the annual total
                                                   their test administrator certification                  report when accommodations would be                    of ATB tests provided, we estimate that
                                                   process that indicates how the test                     used. We estimate that the burden                      1 percent will be improperly
                                                   publisher or State, as applicable, will                 associated with 8 ATB tests would                      administered and that 4,818 individuals
                                                   determine that a test administrator has                 increase for the proprietary test                      would be contacted, which would take,
                                                   the necessary training, knowledge,                      publishers by 8 hours.                                 on average, 15 minutes (.25 hours) per
                                                   skills, and integrity to test students in                  Collectively, the proposed regulatory               individual. We estimate that burden
                                                   accordance with requirements and how                    changes in § 668.144 would increase                    would increase by 1,205 hours. We
                                                   the test publisher or the State will                    burden for test publishers by 628 hours                estimate that it would take test
                                                   determine that the test administrator has               in OMB 1845–0049.                                      publishers and States, on average, 5
                                                   the ability and facilities to keep its test                                                                    hours per ATB test submitted, to
                                                   secure against disclosure or release (see               Section 668.150—Agreement Between                      develop the process to determine when
                                                   proposed § 668.144(c)(16) (test                         the Secretary and a Test-Publisher or a                ATB tests have been improperly
                                                   publishers) and § 668.144(d)(7) (States)).              State                                                  administered, which for 8 approved
                                                      We estimate that test publishers and                   Proposed § 668.150 would provide                     ATB tests would increase burden by 40
                                                   States would, on average, take 2.5 hours                that States, as well as test publishers,               hours. We estimate that test publishers
                                                   to develop its process to establish that                must enter into agreements with the                    and States would, on average, take 20
                                                   a test administrator has the necessary                  Secretary in order to have their tests                 minutes (.33 hours) for each of the 4,818
                                                   training, knowledge, skills and integrity               approved.                                              estimated improperly administered ATB
                                                   to administer ability-to-benefit (ATB)                    We would also revise this section to                 tests to make the proposed notifications
                                                   tests and report that process to the                    require both test publishers and States                to institutions, students and prospective
                                                   Secretary. We estimate that the burden                  to comply with a number of new                         students, which would increase burden
                                                   associated with 8 ATB tests would                       requirements that would be added to the                by 1,590 hours. Reporting to the
                                                   increase for the proprietary test                       agreement with the Secretary. These                    Secretary if a test publisher or the State
                                                   publishers by 20 hours.                                 requirements would include:                            certifies a previously decertified test
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                                                      The proposed regulations would                         • Requiring the test administrators                  administrator after the three-year
                                                   require both test publishers and States                 that they certify to provide them with                 decertification period (see proposed
                                                   to submit a description of the test                     certain information about whether they                 § 668.150(b)(8)). We estimate that of the
                                                   anomaly analysis they will conduct that                 have been decertified (see proposed                    3,774 test administrators that 1 percent
                                                   includes how they will identify                         § 668.150(b)(2)). We estimate that 3,774               or 38 test administrators would be
                                                   potential test irregularities and make a                individuals (test administrators) would                decertified. Of the 38 decertified test
                                                   determination that test irregularities                  take, on average, 10 minutes (.17 hours)               administrators, we estimate that 2
                                                   have occurred; an explanation of                        to access, read, complete and submit the               percent or 1 previously de-certified test
                                                   corrective action to be taken in the event              written certification to a test publisher              administrator would be re-certified after


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                                                   34868                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                   a three-year period and therefore                       the ATB test takers would be                           arrangements provided. Census data
                                                   reported to the Secretary. We estimate                  individuals with disabilities that would               indicate that 12 percent of the U.S.
                                                   the burden for test publishers for this                 need accommodations for the ATB test.                  population is severely disabled. We
                                                   reporting would be 1 hour. We project                   We estimate that it would take 5                       estimate that 12 percent of the ATB test
                                                   that it will be very rare that a decertified            minutes (.08 hours) to report the nature               population (481,763 ATB test takers) or
                                                   test administrator will seek re-                        of the disability and any                              57,812 of the ATB test takers would be
                                                   certification after the three-year                      accommodation that the test                            individuals with disabilities that would
                                                   decertification period.                                 administrator made for the test taker,                 need accommodations for the ATB test.
                                                      • Providing copies of test anomaly                   increasing burden by 4,625 hours.                      We estimate that it would take 5
                                                   analysis every 18 months instead of                       We estimate that, on average, test                   minutes (.08 hours) to collect and
                                                   every 3 years (see proposed                             publishers and States would take 2                     maintain documentation of the
                                                   § 668.150(b)(13)). We estimate that it                  hours per ATB test to develop the                      individual’s disability and of the testing
                                                   would take test publishers or States, on                process for having test administrators                 accommodations provided to the test
                                                   average, 75 hours to conduct its test                   report the nature of the test taker’s                  taker. We estimate that proprietary
                                                   anomaly analysis and report the results                 disability and any accommodations                      institutions will provide 36 percent or
                                                   to the Secretary every 18 months as                     provided, times 8 tests would increase                 20,812 tests times 5 minutes (.08 hours),
                                                   proposed. We estimate the burden on                     burden for proprietary ATB test                        increasing burden by 1,665 hours. We
                                                   test publishers for the submission of the               publishers by 16 hours.                                estimate that private non-profit
                                                   8 test anomaly analysis every 18 months                   Collectively, the proposed changes                   institutions will provide 31 percent or
                                                   would be 600 hours.                                     reflected in § 668.150 would increase                  17,922 tests times 5 minutes (.08 hours),
                                                      • Reporting to the Secretary any                     burden by 10,031 hours in OMB Control                  increasing burden by 1,434 hours. We
                                                   credible information indicating that a                  Number 1845–0049.                                      estimate that public institutions will
                                                   test has been compromised (see                                                                                 provide 33 percent or 19,078 tests times
                                                                                                           Section 668.151—Administration of
                                                   proposed § 668.150(b)(15)). We estimate                                                                        5 minutes (.08 hours), increasing burden
                                                                                                           Tests
                                                   that 481,763 ATB tests for title IV, HEA                                                                       by 1,526 hours. Collectively, the
                                                   purposes would be given on an annual                      Proposed § 668.151(g)(4), would                      proposed regulatory changes reflected in
                                                   basis. Of that total number ATB tests                   require institutions to keep a record of               § 668.151 would increase burden by
                                                   provided, we estimate that 482 ATB                      each individual who took an ATB test                   43,166 hours in OMB Control Number
                                                   tests will be compromised. On average,                  and the name and address of the test                   1845–0049.
                                                   we estimate that test publishers would                  administrator who administered the test
                                                   take 1 hour per test to collect the                     and any identifier assigned to the test                Section 668.152—Administration of
                                                   credible information to make the                        administrator by the test publisher or                 Tests by Assessment Centers
                                                   determination that a test would be                      the State.                                                Proposed § 668.152(a) would clarify
                                                   compromised and report it to the                          We estimate that 481,763 ATB tests                   that assessment centers are also required
                                                   Secretary. We estimate that burden                      for title IV, HEA purposes would be                    to comply with the provisions of
                                                   would increase by 482 hours. Reporting                  given on an annual basis. We estimate                  § 688.153 (Administration of tests for
                                                   to the Office of Inspector General of the               that proprietary institutions would                    individuals whose native language is
                                                   Department of Education any credible                    provide 36 percent of those ATB tests or               not English or for individuals with
                                                   information indicating that a test                      173,445 tests and that, on average, the                disabilities), if applicable.
                                                   administrator or institution may have                   amount of time to record the test takers                  Under proposed § 668.152(b)(2),
                                                   engaged in fraud or other criminal                      name and address as well as the test                   assessment centers that score tests
                                                   misconduct (see proposed                                administrators identifiers would be 5                  would be required to provide copies of
                                                   § 668.150(b)(16)). We estimate that                     minutes (.08 hours) per test, increasing               completed tests or lists of test-takers’
                                                   481,763 ATB tests for title IV, HEA                     burden by 13,876 hours. We estimate                    scores to the test publisher or the State,
                                                   purposes would be given on an annual                    that private non-profit institutions                   as applicable, on a weekly basis. Under
                                                   basis. Of that total number ATB tests                   would provide 31 percent of those ATB                  proposed § 668.152(b)(2)(i) and (b)(2)(ii),
                                                   provided, we estimate that 482 ATB                      tests or 149,347 tests and that, on                    copies of completed tests or reports
                                                   tests will be compromised. On average,                  average, the amount of time to record                  listing test-takers’ scores would be
                                                   we estimate that test publishers would                  the test takers name and address as well               required to include the name and
                                                   take 1 hour per test to collect the                     as the test administrators identifiers                 address of the test administrator who
                                                   credible information to make the                        would be 5 minutes (.08 hours) per test,               administered the test and any identifier
                                                   determination that a test would be                      increasing burden by 11,948 hours. We                  assigned to the test administrator by the
                                                   compromised and report it to the U.S.                   estimate that public institutions would                test publisher or the State.
                                                   Department of Education’s Office of the                 provide 33 percent of those ATB tests or                  We estimate that of the 3,774 ATB test
                                                   Inspector General. We estimate that                     158,962 tests and that, on average, the                administrators approximately one-third
                                                   burden would increase by 482 hours.                     amount of time to record the test takers               (.3328 times 3,774) or 1,256 of the ATB
                                                      • Requiring a test administrator who                 name and address as well as the test                   test administrators are at test assessment
                                                   provides a test to an individual with a                 administrators identifiers would be 5                  centers. Of the 1,256 test assessment
                                                   disability who requires an                              minutes (.08 hours) per test, increasing               centers, we estimate that 18 percent or
                                                   accommodation in the test’s                             burden by 12,717 hours.                                226 test assessment centers are at
srobinson on DSKHWCL6B1PROD with PROPOSALS2




                                                   administration to report to the test                      • If the individual who took the test                private non-profit institutions and 82
                                                   publisher or the State the nature of the                has a disability and is unable to be                   percent or 1,030 test assessment centers
                                                   disability and the accommodations that                  evaluated by the use of an approved                    are at public institutions. We estimate
                                                   were provided (see proposed                             ATB test, or the individual requested or               that 92 percent of the ATB tests
                                                   § 668.150(b)(17)). Census data indicate                 required a testing accommodation, the                  provided at test assessment centers are
                                                   that 12 percent of the U.S. population is               institution would be required, under                   scored by the test administrators and
                                                   severely disabled. We estimate that 12                  proposed § 668.151(g)(5), to maintain                  therefore, under the proposed
                                                   percent of the ATB test population                      documentation of the individual’s                      regulations, the institution would be
                                                   (481,763 ATB test takers) or 57,812 of                  disability and of the testing                          required to maintain the scored ATB


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                                                                                 Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                               34869

                                                   tests, to collect and submit copies of the                  and supplies would be the lesser of the                  would take 5 minutes (.08 hours) per
                                                   completed ATB tests or a listing to the                     presumed credit balance or the amount                    recipient, increasing burden by 14,414
                                                   test publisher or State on a weekly basis,                  needed by the student, as determined by                  hours. We estimate that the 1,523
                                                   while the other 8 percent will not be                       the institution. In determining the                      private non-profit institutions
                                                   impacted by these proposed regulations.                     amount needed by the student, the                        participating in the Federal Pell Grant
                                                   We estimate that, on average, it would                      institution could use the actual costs of                program would take, on average 3 hours
                                                   take 5 minutes (.08 hours) per week for                     books and supplies or the allowance for                  per institution to analyze and make
                                                   the test assessment center (institution)                    books and supplies used in the student’s                 programming change needed to identify
                                                   to collect and submit the proposed                          cost of attendance for the payment                       these recipients with presumed credit
                                                   information on a weekly basis. For 226                      period.                                                  balances, increasing burden by 4,569
                                                   test assessment centers at private non-                                                                              hours. Additionally, we estimate that
                                                                                                                 We estimate that of the 6,321,678
                                                   profit institutions times 5 minutes (.08                                                                             private non-profit institutions would be
                                                                                                               Federal Pell Grant recipients in the
                                                   hours) times 52 weeks per year equals                                                                                required to disburse the presumed
                                                                                                               2008–2009 award year, that
                                                   940 hours of increased burden. For the                                                                               credit balance to 28 percent of the
                                                                                                               approximately 30 percent or 1,896,503
                                                   1,030 test assessment centers at public                                                                              474,126 at proprietary institutions
                                                                                                               would have or did have a title IV, HEA
                                                   institutions times 5 minutes (.08 hours)                                                                             (132,755 recipients) which on average,
                                                                                                               credit balance. Of that number of
                                                   times 52 weeks per year equals 4,285                                                                                 would take 5 minutes (.08 hours) per
                                                                                                               Federal Pell Grant recipients, we
                                                   hours of increased burden.                                                                                           recipient, increasing burden by 10,620
                                                     Collectively, the proposed regulatory                     estimate that 25 percent or 474,126
                                                                                                               Federal Pell Grant recipients would                      hours. We estimate that the 1,883 public
                                                   changes reflected in § 668.152 would
                                                   increase burden by 5,225 hours in OMB                       have a presumed credit balance 10 days                   institutions participating in the Federal
                                                   Control Number 1845–0049.                                   prior to the beginning of the payment                    Pell Grant program would take, on
                                                                                                               period, and as proposed, that the                        average 3 hours per institution to
                                                   Section 668.164—Disbursing Funds                            institution would have to provide a way                  analyze and make programming change
                                                      Under proposed § 668.164(i), an                          for those recipients to either obtain or                 needed to identify these recipients with
                                                   institution would provide a way for a                       purchase their books and supplies                        presumed credit balances, increasing
                                                   Federal Pell Grant eligible student to                      within 7 days of the beginning of the                    burden by 5,469 hours. Additionally, we
                                                   obtain or purchase required books and                       payment period. We estimate that the                     estimate that proprietary institutions
                                                   supplies by the seventh day of a                            2,063 proprietary institutions                           would be required to disburse the
                                                   payment period under certain                                participating in the Federal Pell Grant                  presumed credit balance to 34 percent
                                                   conditions. An institution would have                       program would take, on average 3 hours                   of the 474,126 at proprietary institutions
                                                   to comply with this requirement only if,                    per institution to analyze and make                      (161,203 recipients) which on average,
                                                   10 days before the beginning of the                         programming change needed to identify                    would take 5 minutes (.08 hours) per
                                                   payment period, the institution could                       these recipients with presumed credit                    recipient, increasing burden by 12,896
                                                   disburse the title IV, HEA program                          balances, increasing burden by 6,189                     hours.
                                                   funds for which the student is eligible,                    hours. Additionally, we estimate that                      Collectively, the proposed regulatory
                                                   and presuming that those funds were                         proprietary institutions would be                        changes reflected in § 668.164 would
                                                   disbursed, the student would have a                         required to disburse the presumed                        increase burden by 54,337 hours in
                                                   title IV, HEA credit balance under                          credit balance to 38 percent of the                      OMB Control Number 1845–NEW3.
                                                   § 668.164(e). The amount the institution                    474,126 at proprietary institutions
                                                   would provide to the student for books                      (180,168 recipients) which on average,                   Collection of Information

                                                     Regulatory                                                      Information collection                                                    Collection
                                                      section

                                                   668.6 ............    This proposed regulatory section would require institutions to submit annually information                 OMB 1845–NEW1. This would be
                                                                           that would include identifying information about each student who completed a program                     a new collection. A separate 60-
                                                                           that prepares a student for gainful employment, the CIP code for that program, the date                   day Federal Register notice will
                                                                           the student completed the program, and the amounts the student received from private                      be published to solicit comment.
                                                                           educational loans and institutional financing programs. Institutions would have to disclose               The   burden      increases   by
                                                                           on their Web site information about the occupations that its programs prepare students                    105,377 hours.
                                                                           to enter, information from DOL’s O-Net data about the job tasks and expected salaries.
                                                                           In addition, the institution would also have to report the costs for tuition and fees, room
                                                                           and board, and other associated institutional costs typically incurred by students enrolling
                                                                           in these programs; graduation rates; placement rates; and median debt rate information
                                                                           about title IV, HEA loans and private loan as provided by the Department to the institu-
                                                                           tion.
                                                   668.8 ............    This proposed regulatory section provides for a new conversion ratio when converting clock                 OMB 1845–0022. The burden in-
                                                                           hours to credit hours. As proposed, this section would include an exemption for affected                  creases by 18,349 hours.
                                                                           institutions if the accrediting agency, or the State approval agency finds that there are no
                                                                           deficiencies in the institutions policies and procedures for these conversions. Under the
                                                                           exception, the institution would use a lower ratio and could consider student’s outside
srobinson on DSKHWCL6B1PROD with PROPOSALS2




                                                                           work in the total hours being converted to credit hours. Burden would increase for propri-
                                                                           etary, not-for profit and public institutions when they measure whether certain programs
                                                                           when converted from clock hours to credit hours have sufficient credit hours to receive
                                                                           title VI, HEA funds.




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                                                   34870                        Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                     Regulatory                                                     Information collection                                                    Collection
                                                      section

                                                   668.16 ..........    This proposed regulatory section would be streamlined by moving most of the elements of                    OMB 1845–0022 and OMB 1845–
                                                                          satisfactory academic progress (SAP) from this section to proposed § 668.34. Under this                   NEW2. The burden hours attrib-
                                                                          proposal, the required elements of SAP would be expanded to provide greater institu-                      utable to SAP in OMB 1845–
                                                                          tional flexibility Burden would increase for proprietary, not-for profit and public institutions          0022 would be administratively
                                                                          to develop a high school diploma validity process and would increase when certain diplo-                  transferred to OMB 1845–
                                                                          mas are verified.                                                                                         NEW2. Additionally, the burden
                                                                                                                                                                                    increases by 21,982 hours in
                                                                                                                                                                                    OMB 1845–0022.
                                                   668.22 ..........    This proposed regulatory section would consider a student to have withdrawn if the student                 OMB 1845–0022. The burden in-
                                                                          does not complete all the days in the payment period or period of enrollment that the                     creases by 743,881 hours.
                                                                          student was scheduled to complete prior to withdrawing. Burden would increase for indi-
                                                                          viduals, proprietary, not-for profit and public institutions when students in term-based pro-
                                                                          grams with modules or compressed courses withdraw before completing more than 60
                                                                          percent of the payment period or period of enrollment for which a calculation would be
                                                                          performed to determine the earned and unearned portions of title IV, HEA program as-
                                                                          sistance.
                                                   668.34 ..........    This proposed regulatory section would restructure and expand the satisfactory academic                    OMB 1845–NEW2. This would be
                                                                          progress requirements by allowing for more frequent measuring of SAP. Burden would                        a new collection. A separate 60-
                                                                          increase for individuals and proprietary, not-for profit and public institutions for institutions         day Federal Register notice will
                                                                          to measure academic progress and when academic plans or alternatives would be pro-                        be published to solicit comment.
                                                                          vided to students who do not meet the institution’s academic standards.                                   The   burden      increases   by
                                                                                                                                                                                    976,855 hours.
                                                   668.43 ..........    This proposed regulatory section would require that for institutions that enter into written ar-           OMB 1845–0022. The burden in-
                                                                          rangements with other institutions to provide for a portion of its programs’ training by the              creases by 67,870 hours.
                                                                          institution that is not providing the degree or certificate, the institution providing the de-
                                                                          gree or certificate must provide a variety of disclosures to enrolled and prospective stu-
                                                                          dents about the written arrangements. Burden would increase for proprietary, not-for
                                                                          profit and public institutions for reporting the details of written arrangements with other in-
                                                                          stitutions offering a portion of a student’s program of study.
                                                   668.55 ..........    This proposed regulatory provision would require that all updated applicant data information               OMB 1845–0041. The burden in-
                                                                          as a result of verification be reported to the Secretary via the Central Processing Sys-                  creases by 425,005 hours.
                                                                          tem. This also would cover changes made as a result of a dependent student becoming
                                                                          married during the award year, such change in status due to marriage had previously
                                                                          been prohibited.
                                                   668.56 ..........    This proposed regulation changes from the current five mandatory items included in the                     OMB 1845–0041. The burden in-
                                                                          verification process to a more flexible list of items that will be selected on an individual-             creases by 612,000 hours.
                                                                          ized basis. For example, there is no need to verify data that can be obtained directly
                                                                          from the IRS. Burden would increase for individuals; however, the average number of
                                                                          data elements to be verified is expected to be reduced.
                                                   668.57 ..........    This proposed regulatory provision would modify the requirements related to acceptable                     OMB 1845–0041. The burden in-
                                                                          documentation required as a part of the verification process. It would allow for the impor-               creases by 612,000 hours.
                                                                          tation of data obtained directly from the IRS that has been unchanged and would provide
                                                                          other flexibilities that would reduce burden; however, due to the large increase in appli-
                                                                          cants, there would be an overall increase in burden.
                                                   668.59 ..........    This proposed provision would eliminate all allowable tolerances and require an institution                OMB 1845–0041. The burden in-
                                                                          to submit to the Department all changes to an applicant’s FAFSA as a result of                            creases by 2,080,800 hours.
                                                                          verification. Burden would increase for proprietary, not-for profit and public institutions
                                                                          that would recalculate title IV, HEA awards as a result of data changes due to verification.
                                                   668.144 ........     This proposed regulatory section would amend and expand the required elements that a                       OMB 1845–0049. The burden in-
                                                                          test publisher or a State must submit to the Secretary for approval.                                      creases by 628 hours.
                                                   668.150 ........     This proposed provision would amend and expand the provisions of the agreement be-                         OMB 1845–0049. The burden in-
                                                                          tween the Secretary and the ability to benefit test (ATB) publishers or a State. The ex-                  creases by 10,031 hours.
                                                                          panded requirements would include requiring test administrators to certify that they have
                                                                          not been decertified, notification requirements when a test administrator is decertified,
                                                                          and providing test anomaly studies every eighteen months rather than every 36 months.
                                                                          Burden would increase for individuals, proprietary, not-for profit and public institutions for
                                                                          the collection and maintenance of certifications, for required notifications, and for submis-
                                                                          sion of test anomaly studies.
                                                   668.151 ........     This proposed provision would require independent test administrators to submit completed                  OMB 1845–0049. The burden in-
                                                                          tests for scoring to the test publisher or the State in no more than two business days fol-               creases by 43,166 hours.
                                                                          lowing the test. Institutions would be required to maintain a record of each individual who
                                                                          takes an ATB test and information about the test administrator. When the test taker has
srobinson on DSKHWCL6B1PROD with PROPOSALS2




                                                                          a disability, it would be the institution’s responsibility to maintain documentation of the in-
                                                                          dividual’s disability and any accommodation provided the individual.
                                                   668.152 ........     This proposed provision would require that test assessment centers provide either copies                   OMB 1845–0049. The burden in-
                                                                          of the completed tests or lists of the test takers’ scores, including the test administrator’s            creases by 5,225 hours.
                                                                          name, address, and any other test administrator identifier to the test publisher or State,
                                                                          as applicable, on a weekly basis.




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                                                                               Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                                  34871

                                                     Regulatory                                                    Information collection                                                       Collection
                                                      section

                                                   668.164 ........    This proposed provision would require that institutions provide a way for Federal Pell Grant               OMB 1845–NEW3. This would be
                                                                         program recipients to obtain or purchase books and supplies by the seventh day of the                     a new collection. A separate 60-
                                                                         payment period if certain conditions are met and a credit balance or projected credit bal-                day Federal Register notice will
                                                                         ance exists. Burden would increase for proprietary, not-for profit and public institutions to             be published to solicit comment.
                                                                         identify and notify Pell recipients with a presumed credit balance about ways to obtain or                The burden increases by 54,337
                                                                         purchase books and supplies.                                                                              hours.



                                                     If you want to comment on the                           would require transmission of                            34 CFR Part 682
                                                   proposed information collection                           information that any other agency or                       Administrative practice and
                                                   requirements, please send your                            authority of the United States gathers or                procedure, Colleges and universities,
                                                   comments to the Office of Information                     makes available.                                         Loan programs—education, Reporting
                                                   and Regulatory Affairs, OMB, Attention:                                                                            and recordkeeping requirements,
                                                                                                             Electronic Access to This Document
                                                   Desk Officer for U.S. Department of                                                                                Student aid, Vocational education.
                                                   Education. Send these comments by e-                         You can view this document, as well
                                                   mail to OIRA_DOCKET@omb.eop.gov or                        as all other documents of this                           34 CFR Part 685
                                                   by fax to (202) 395–6974. You may also                    Department published in the Federal                        Administrative practice and
                                                   send a copy of these comments to the                      Register, in text or Adobe Portable                      procedure, Colleges and universities,
                                                   Department contact named in the                           Document Format (PDF) on the Internet                    Loan programs—education, Reporting
                                                   ADDRESSES section of this preamble.                       at the following site: http://www.ed.gov/                and recordkeeping requirements,
                                                     We consider your comments on these                      news/fedregister. To use PDF, you must                   Student aid, Vocational education.
                                                   proposed collections of information in—                   have Adobe Acrobat Reader, which is
                                                     • Deciding whether the proposed                                                                                  34 CFR Part 686
                                                                                                             available free at this site.
                                                   collections are necessary for the proper                                                                             Administrative practice and
                                                                                                                Note: The official version of this document           procedure, Colleges and universities,
                                                   performance of our functions, including                   is the document published in the Federal
                                                   whether the information will have                                                                                  Education, Elementary and secondary
                                                                                                             Register. Free Internet access to the official
                                                   practical use;                                            edition of the Federal Register and the Code             education, Grant programs—education,
                                                     • Evaluating the accuracy of our                        of Federal Regulations is available on GPO               Reporting and recordkeeping
                                                   estimate of the burden of the proposed                    Access at: http://www.gpoaccess.gov/nara/                requirements, Student aid.
                                                   collections, including the validity of our                index/html.                                              34 CFR Part 690
                                                   methodology and assumptions;                              (Catalog of Federal Domestic Assistance:
                                                     • Enhancing the quality, usefulness,                                                                               Colleges and universities, Education
                                                                                                             84.007 FSEOG; 84.032 Federal Family
                                                   and clarify of the information we                         Education Loan Program; 84.033 Federal                   of disadvantaged, Grant programs—
                                                   collect; and                                              Work-Study Program; 84.037 Federal Perkins               education, Reporting and recordkeeping
                                                     • Minimizing the burden on those                        Loan Program; 84.063 Federal Pell Grant                  requirements, Student aid.
                                                   who must respond. This includes                           Program; 84.069 LEAP; 84.268 William D.                  34 CFR Part 691
                                                   exploring the use of appropriate                          Ford Federal Direct Loan Program; 84.376
                                                                                                             ACG/SMART; 84.379 TEACH Grant Program)                     Colleges and universities, Elementary
                                                   automated, electronic, mechanical, or                                                                              and secondary education, Grant
                                                   other technological collection                            List of Subjects                                         programs—education, Student aid.
                                                   techniques or other forms of information
                                                   technology; e.g., permitting electronic                   34 CFR Part 600                                            Dated: June 8, 2010.
                                                   submission of responses.                                                                                           Arne Duncan,
                                                                                                               Colleges and universities, Foreign
                                                     OMB is required to make a decision                      relations, Grant programs-education,                     Secretary of Education.
                                                   concerning the collections of                             Loan programs-education, Reporting                         For the reasons discussed in the
                                                   information contained in these                            and recordkeeping requirements,                          preamble, the Secretary proposes to
                                                   proposed regulations between 30 and 60                    Selective Service System, Student aid,                   amend parts 600, 602, 603, 668, 682,
                                                   days after publication of this document                   Vocational education.                                    685, 686, 690, and 691 of title 34 of the
                                                   in the Federal Register. Therefore, to                                                                             Code of Federal Regulations as
                                                   ensure that OMB gives your comments                       34 CFR Part 602                                          previously amended in the Federal
                                                   full consideration, it is important that                    Colleges and universities, Reporting                   Register on October 27, 2009 (74 FR
                                                   OMB receives the comments within 30                       and recordkeeping requirements.                          55414) and October 29, 2009 (74 FR
                                                   days of publication. This does not affect                                                                          55902) as follows:
                                                   the deadline for your comments to us on                   34 CFR Part 603
                                                   the proposed regulations.                                                                                          PART 600—INSTITUTIONAL
                                                                                                               Colleges and universities, Vocational                  ELIGIBILITY UNDER THE HIGHER
                                                   Intergovernmental Review                                  education.                                               EDUCATION ACT OF 1965, AS
                                                     These programs are not subject to                       34 CFR Part 668                                          AMENDED
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                                                   Executive Order 12372 and the
                                                   regulations in 34 CFR part 79.                              Administrative practice and                              1. The authority citation for part 600
                                                                                                             procedure, Aliens, Colleges and                          continues to read as follows:
                                                   Assessment of Educational Impact                          universities, Consumer protection,                         Authority: 20 U.S.C. 1001, 1002, 1003,
                                                     In accordance with section 411 of the                   Grant programs—education, Loan                           1088, 1091, 1094, 1099b, and 1099c, unless
                                                   General Education Provisions Act, 20                      programs—education, Reporting and                        otherwise noted.
                                                   U.S.C. 1221e–4, the Secretary                             recordkeeping requirements, Selective                      2. Section 600.2 is amended by:
                                                   particularly requests comments on                         Service System, Student aid, Vocational                    A. Adding, in alphabetical order, the
                                                   whether these proposed regulations                        education.                                               definition of a Credit hour.


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                                                   34872                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                     B. Revising the definition of                         § 600.5    [Amended]                                     8. Section 602.24 is amended by
                                                   Recognized occupation.                                     4. Section 600.5(a)(4) is amended by                adding a new paragraph (f) to read as
                                                     The addition and revision read as                     adding the words, ‘‘in accordance with                 follows:
                                                   follows:                                                § 600.9’’ immediately after the word                   § 602.24 Additional procedures certain
                                                   § 600.2   Definitions.                                  ‘‘located’’.                                           institutional accreditors must have.
                                                   *      *     *     *     *                              § 600.6    [Amended]                                   *       *     *     *     *
                                                      Credit hour: Except as provided in 34                   5. Section 600.6(a)(3) is amended by                   (f) Credit-hour policies. The
                                                   CFR 668.8(k) and (l), a credit hour is—                 adding the words, ‘‘in accordance with                 accrediting agency, as part of its review
                                                      (1) One hour of classroom or direct                  § 600.9’’ immediately after the word                   of an institution for initial accreditation
                                                   faculty instruction and a minimum of                    ‘‘located’’.                                           or preaccreditation or renewal of
                                                   two hours of out of class student work                                                                         accreditation, must conduct an effective
                                                                                                              6. Section 600.9 is added to subpart
                                                   each week for approximately fifteen                                                                            review and evaluation of the reliability
                                                                                                           A to read as follows:
                                                   weeks for one semester or trimester hour                                                                       and accuracy of the institution’s
                                                   of credit, or ten to twelve weeks for one               § 600.9    State authorization.                        assignment of credit hours.
                                                   quarter hour of credit, or the equivalent                  (a)(1) An institution described under                  (1) The accrediting agency meets this
                                                   amount of work over a different amount                  §§ 600.4, 600.5, and 600.6 is legally                  requirement if—
                                                   of time;                                                authorized by a State through a charter,                  (i) It reviews the institution’s—
                                                      (2) At least an equivalent amount of                 license, approval, or other document                      (A) Policies and procedures for
                                                   work as required in paragraph (1) of this               issued by an appropriate State                         determining the credit hours, as defined
                                                   definition for other academic activities                government agency or State entity that                 in 34 CFR 600.2, that the institution
                                                   as established by the institution                       affirms or conveys the authority to the                awards for courses and programs; and
                                                   including laboratory work, internships,                 institution to operate educational                        (B) The application of the institution’s
                                                   practica, studio work, and other                        programs beyond secondary education,                   policies and procedures to its programs
                                                   academic work leading to the award of                   including programs leading to a degree                 and coursework; and
                                                   credit hours; or                                        or certificate.                                           (ii) Makes a reasonable determination
                                                      (3) Institutionally established
                                                                                                              (2) An institution is considered to                 of whether the institution’s assignment
                                                   reasonable equivalencies for the amount
                                                                                                           meet the provisions of paragraph (a)(1)                of credit hours conforms to commonly
                                                   of work required in paragraph (1) of this
                                                                                                           of this section if the institution is                  accepted practice in higher education.
                                                   definition for the credit hours awarded,
                                                                                                           authorized to offer educational                           (2) In reviewing and evaluating an
                                                   including as represented in intended
                                                                                                           programs beyond secondary education                    institution’s policies and procedures for
                                                   learning outcomes and verified by
                                                                                                           by the Federal Government or, as                       determining credit hour assignments, an
                                                   evidence of student achievement.
                                                                                                           defined in 25 U.S.C. 1802(2), an Indian                accrediting agency may use sampling or
                                                   *      *     *     *     *                              tribe.                                                 other methods in the evaluation,
                                                      Recognized occupation: An                                                                                   sufficient to comply with paragraph
                                                                                                              (3) An institution is considered to be
                                                   occupation that is—                                                                                            (f)(1)(i)(B) of this section.
                                                                                                           legally authorized to offer educational
                                                      (1) Identified by a Standard
                                                                                                           programs beyond secondary education if                    (3) The accrediting agency must take
                                                   Occupational Classification (SOC) code
                                                                                                           it is exempt from State authorization as               such actions that it deems appropriate
                                                   established by the Office of Management
                                                                                                           a religious institution under the State                to address any deficiencies that it
                                                   and Budget or an Occupational
                                                                                                           constitution.                                          identifies at an institution as part of its
                                                   Information Network O* NET–SOC code
                                                                                                              (b) The Secretary considers an                      reviews and evaluations under
                                                   established by the Department of Labor
                                                                                                           institution to be legally authorized by a              paragraph (f)(1)(i) and (ii) of this
                                                   and available at http://
                                                                                                           State under paragraph (a)(1) of this                   section, as it does in relation to other
                                                   online.onetcenter.org or its successor
                                                                                                           section if—                                            deficiencies it may identify, subject to
                                                   site; or
                                                                                                              (1) The authorization is given to the               the requirements of this part.
                                                      (2) Determined by the Secretary in
                                                   consultation with the Secretary of Labor                institution specifically to offer programs                (4) If, following the institutional
                                                   to be a recognized occupation.                          beyond secondary education but not if                  review process under this paragraph (f),
                                                                                                           the authorization is merely of the type                the agency finds systemic
                                                   *      *     *     *     *                                                                                     noncompliance with the agency’s
                                                                                                           required to do business in the State or
                                                      3. Section 600.4 is amended by:                                                                             policies or significant noncompliance
                                                      A. In paragraph (a)(3), adding the                   to operate as an eleemosynary
                                                                                                           organization;                                          regarding one or more programs at the
                                                   words, ‘‘in accordance with § 600.9’’
                                                                                                              (2) The authorization provided to the               institution, the agency must promptly
                                                   immediately after the word ‘‘located’’.
                                                                                                           institution is subject to adverse action               notify the Secretary.
                                                      B. In paragraph (a)(4)(i)(C), removing
                                                   the word ‘‘and’’ that appears after the                 by the State; and                                      *       *     *     *     *
                                                   punctuation ‘‘;’’.                                         (3) The State has a process to review
                                                      C. Adding paragraph (a)(4)(iii).                     and appropriately act on complaints                    PART 603—SECRETARY’S
                                                      The addition reads as follows:                       concerning an institution and enforces                 RECOGNITION PROCEDURES FOR
                                                                                                           applicable State laws.                                 STATE AGENCIES
                                                   § 600.4   Institution of higher education.
                                                                                                           (Authority: 20 U.S.C. 1001 and 1002)                      9. The authority citation for part 603
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                                                     (a) * * *
                                                     (4) * * *                                                                                                    is revised to read as follows:
                                                                                                           PART 602—THE SECRETARY’S
                                                     (iii) That is at least a one academic                 RECOGNITION OF ACCREDITING                               Authority: 20 U.S.C. 1001, 1002,
                                                   year training program that leads to a                                                                          1094(c)(4); 42 U.S.C. 293a(b), 38 U.S.C. 3675,
                                                                                                           AGENCIES                                               unless otherwise noted.
                                                   certificate, or other nondegree
                                                   recognized credential, and prepares                       7. The authority citation for part 602                 10. Section 603.24 is amended by
                                                   students for gainful employment in a                    continues to read as follows:                          redesignating paragraph (c) as paragraph
                                                   recognized occupation; and                                Authority: 20 U.S.C. 1099b, unless                   (d) and adding a new paragraph (c) to
                                                   *      *     *     *      *                             otherwise noted.                                       read as follows:


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                                                                             Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules                                              34873

                                                   § 603.24   Criteria for State agencies.                   13. Section 668.5 is amended by:                       (v) Had its application for certification
                                                   *       *     *    *     *                                A. Revising paragraph (a).                           to participate in the title IV, HEA
                                                      (c) Credit-hour policies. The State                    B. Revising paragraph (c)(1).                        programs denied by the Secretary;
                                                   agency, as part of its review of an                       C. In paragraph (c)(2), adding the                   *     *     *     *     *
                                                   institution for initial approval or                     words ‘‘offered by the institution that                  (e) Information made available to
                                                   renewal of approval, must conduct an                    grants the degree or certificate’’ after the           students. If an institution enters into a
                                                   effective review and evaluation of the                  word ‘‘program’’.                                      written arrangement described in
                                                   reliability and accuracy of the                           D. In paragraph (c)(3)(i), removing the
                                                                                                                                                                  paragraph (a), (b), or (c) of this section,
                                                   institution’s assignment of credit hours.               words ‘‘not more than’’ and adding the
                                                                                                                                                                  the institution must provide the
                                                      (1) The State agency meets this                      words ‘‘or less’’ after the word ‘‘percent’’.
                                                                                                             E. In paragraph (c)(3)(ii)(A), removing              information described in § 668.43(a)(12)
                                                   requirement if—                                                                                                to enrolled and prospective students.
                                                      (i) It reviews the institution’s—                    the words ‘‘not more’’ and adding, in
                                                      (A) Policies and procedures for                      their place, the word ‘‘less’’.                        *     *     *     *     *
                                                   determining the credit hours, as defined                  F. Adding new paragraph (e).                           14. Section 668.6 is added to subpart
                                                   in 34 CFR 600.2, that the institution                     The addition and revisions read as                   A to read as follows:
                                                   awards for courses and programs; and                    follows:
                                                                                                                                                                  § 668.6 Reporting and disclosure
                                                      (B) The application of the institution’s             § 668.5 Written arrangements to provide                requirements for programs that prepare
                                                   policies and procedures to its programs                 educational programs.                                  students for gainful employment in a
                                                   and coursework; and                                        (a) Written arrangements between                    recognized occupation.
                                                      (ii) Makes a reasonable determination                                                                          (a) Reporting requirements. In
                                                                                                           eligible institutions. (1) Except as
                                                   of whether the institution’s assignment                                                                        accordance with procedures established
                                                                                                           provided in paragraph (a)(2) of this
                                                   of credit hours conforms to commonly                                                                           by the Secretary, an institution must
                                                                                                           section, if an eligible institution enters
                                                   accepted practice in higher education.                                                                         report annually for each student who
                                                                                                           into a written arrangement with another
                                                      (2) In reviewing and evaluating an
                                                                                                           eligible institution, or with a consortium             completes a program under § 668.8(c)(3)
                                                   institution’s policies and procedures for
                                                                                                           of eligible institutions, under which the              or (d), information that includes—
                                                   determining credit hour assignments, a
                                                                                                           other eligible institution or consortium                  (1) Information needed to identify the
                                                   State agency may use sampling or other
                                                                                                           provides part of the educational                       student;
                                                   methods in the evaluation, sufficient to
                                                                                                           program to students enrolled in the first                 (2) The Classification of Instructional
                                                   comply with paragraph (c)(1)(i)(B) of
                                                                                                           institution, the Secretary considers that              Program (CIP) code of the program the
                                                   this section.
                                                      (3) The State agency must take such                  educational program to be an eligible                  student completed;
                                                   actions that it deems appropriate to                    program if the educational program                        (3) The date the student completed
                                                   address any deficiencies that it                        offered by the institution that grants the             the program; and
                                                                                                           degree or certificate otherwise satisfies                 (4) The amounts the student received
                                                   identifies at an institution as part of its
                                                                                                           the requirements of § 668.8.                           from private educational loans and
                                                   reviews and evaluations under
                                                                                                              (2) If the written arrangement is                   institutional financing plans.
                                                   paragraph (c)(1)(i) and (ii) of this
                                                                                                           between two or more eligible                              (b) Disclosures. For each program
                                                   section, as it does in relation to other
                                                                                                           institutions that are owned or controlled              offered by an institution under this
                                                   deficiencies it may identify, subject to
                                                                                                           by the same individual, partnership, or                section, on its Web site the institution
                                                   the requirements of this part.
                                                                                                           corporation, the Secretary considers the               must provide prospective students
                                                      (4) If, following the institutional
                                                                                                           educational program to be an eligible                  with—
                                                   review process under this paragraph (c),
                                                                                                           program if—                                              (1) The occupations (by names and
                                                   the agency finds systemic                                  (i) The educational program offered
                                                   noncompliance with the agency’s                                                                                SOC codes) that the program prepares
                                                                                                           by the institution that grants the degree              students to enter, along with links to
                                                   policies or significant noncompliance                   or certificate otherwise satisfies the
                                                   regarding one or more programs at the                                                                          occupational profiles on O*NET or its
                                                                                                           requirements of § 668.8; and                           successor site;
                                                   institution, the agency must promptly                      (ii) The institution that grants the
                                                   notify the Secretary.                                                                                            (2) The on-time graduation rate for
                                                                                                           degree or certificate provides more than               students entering the program;
                                                   *       *     *    *     *                              50 percent of the educational program.                   (3) The cost of the program, including
                                                   PART 668—STUDENT ASSISTANCE                             *       *     *    *      *                            tuition and fees, room and board, and
                                                                                                              (c) * * *                                           other institutional costs that a typical
                                                   GENERAL PROVISIONS                                         (1) The ineligible institution or                   student would incur for enrolling in the
                                                     11. The authority citation for part 668               organization has not—                                  program;
                                                   continues to read as follows:                              (i) Had its eligibility to participate in             (4) Beginning no later than June 30,
                                                                                                           the title IV, HEA programs terminated                  2013, the placement rate for students
                                                     Authority: 20 U.S.C. 1001, 1002, 1003,
                                                   1070g, 1085, 1088, 1091, 1092, 1094, 1099c,             by the Secretary;                                      completing the program, as determined
                                                   and 1099c–1, unless otherwise noted.                       (ii) Voluntarily withdrawn from                     under § 668.8(g) or a State-sponsored
                                                                                                           participation in the title IV, HEA                     workforce data system; and
                                                   § 668.2    [Amended]                                    programs under a termination, show-                      (5) The median loan debt incurred by
                                                      12. Section 668.2 is amended by:                     cause, suspension, or similar type                     students who completed the program
                                                      A. In paragraph (a), adding, in                      proceeding initiated by the institution’s              during the preceding three years. The
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                                                   alphabetical order, the term ‘‘Credit                   State licensing agency, accrediting                    institution must identify separately the
                                                   hour’’.                                                 agency, guarantor, or by the Secretary;                median loan debt from title IV, HEA
                                                      B. In paragraph (b), in the definition                  (iii) Had its certification to participate          program loans, and the median loan
                                                   of Full-time student, adding the words,                 in the title IV, HEA programs revoked                  debt from private educational loans and
                                                   ‘‘including for a term-based program,                   by the Secretary;                                      institutional financing plans.
                                                   repeating any coursework previously                        (iv) Had its application for re-
                                                   taken in the program’’ immediately                      certification to participate in the title IV,          (Approved by the Office of Management and
                                                   before the period in the second                         HEA programs denied by the Secretary;                  Budget under control number 1845–NEW1)
                                                   sentence.                                               or                                                     (Authority: 20 U.S.C 1001(b), 1002(b) and (c))



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                                                   34874                     Federal Register / Vol. 75, No. 117 / Friday, June 18, 2010 / Proposed Rules

                                                      15. Section 668.8 is amended by:                        (ii) The credit hours awarded for the               § 668.14   Program participation agreement.
                                                      A. Revising paragraph (c)(3).                        program are not in compliance with the                 *       *     *     *     *
                                                      B. In paragraph (d)(2)(iii), adding the              definition of a credit hour in 34 CFR                     (b) * * *
                                                   words, ‘‘as provided under § 668.6’’                    600.2; or                                                 (22)(i)(A) It will not provide any
                                                   immediately after the word                                 (iii) The institution does not provide              commission, bonus, or other incentive
                                                   ‘‘occupation.’’                                         the clock hours that are the basis for the             payment based directly or indirectly
                                                      C. In paragraph (d)(3)(iii), adding the              credit hours awarded for the program or                upon success in securing enrollments or
                                                   words, ‘‘as provided under § 668.6’’                    each course in the program and, except                 the award of financial aid, to any person
                                                   immediately after the word                              as provided in § 668.4(e), requires                    or entity who is engaged in any student
                                                   ‘‘occupation.’’                                         attendance in the clock hours that are                 recruitment or admission activity, or in
                                                      D. Revising paragraphs (k) and (l).                  the basis for the credit hours awarded.                making decisions regarding the
                                                      The revisions read as follows:                          (3) The requirements of paragraph                   awarding of title IV, HEA program
                                                   § 668.8   Eligible program.                             (k)(2)(i) of this section do not apply to              funds.
                                                                                                           a program if there is a State or Federal                  (B) The restrictions in paragraph
                                                   *       *    *     *     *
                                                      (c) * * *                                            approval or licensure requirement that a               (b)(22) of this section do not apply to
                                                      (3) Be at least a one-academic-year                  limited component of the program must                  the recruitment of foreign students
                                                   training program that leads to a                        include a practicum, internship, or                    residing in foreign countries who are
                                                   certificate, or other nondegree                         clinical experience component of the                   not eligible to receive Federal student
                                                   recognized credential, and prepares                     program that must include a minimum                    assistance.
                                                   students for gainful emplo