WReier-Aviles on DSKGBLS3C1PROD with RULES266832 Federal Register / Vol. 75, No. 209 / Friday, October 29, 2010 / Rules and RegulationsDEPARTMENT OF EDUCATION34 CFR Parts 600, 602, 603, 668, 682,685, 686, 690, and 691[Docket ID ED–2010–OPE–0004]RIN 1840–AD02Program Integrity IssuesAGENCY: <strong>Office</strong> <strong>of</strong> <strong>Postsecondary</strong><strong>Education</strong>, <strong>Department</strong> <strong>of</strong> <strong>Education</strong>.ACTION: Final regulations.SUMMARY: The Secretary is improvingintegrity in the programs authorizedunder title IV <strong>of</strong> the Higher <strong>Education</strong>Act <strong>of</strong> 1965, as amended (HEA), byamending the regulations forInstitutional Eligibility Under the HEA,the Secretary’s Recognition <strong>of</strong>Accrediting Agencies, the Secretary’sRecognition Procedures for StateAgencies, the Student AssistanceGeneral Provisions, the Federal Family<strong>Education</strong> Loan (FFEL) Program, theWilliam D. Ford Federal Direct LoanProgram, the Teacher <strong>Education</strong>Assistance for College and Higher<strong>Education</strong> (TEACH) Grant Program inpart 686, the Federal Pell GrantProgram, and the AcademicCompetitiveness Grant (AGC) andNational Science and MathematicsAccess to Retain Talent Grant (NationalSmart Grant) Programs.DATES: These regulations are effectiveJuly 1, 2011 with the exception <strong>of</strong> therevision <strong>of</strong> subpart E <strong>of</strong> part 668,Verification and Updating <strong>of</strong> StudentAid Application Information. Revisedsubpart E <strong>of</strong> part 668 is effective July 1,2012. The incorporation by reference <strong>of</strong>certain publications listed in the rule isapproved by the Director <strong>of</strong> the FederalRegister as <strong>of</strong> July 1, 2011.FOR FURTHER INFORMATION CONTACT: Forinformation related to the provisions onhigh school diplomas and verification <strong>of</strong>information on the Free Application forFederal Student Aid (FAFSA),Jacquelyn Butler. Telephone: (202) 502–7890 or via the Internet at:Jacquelyn.Butler@ed.gov.For information related to the return<strong>of</strong> title IV, HEA funds calculationprovisions for term-based modules ortaking attendance, Jessica Finkel orWendy Macias. Telephone: (202) 502–7647 or via the Internet at:Jessica.Finkel@ed.gov. Telephone: (202)502–7526 or via the Internet at:Wendy.Macias@ed.gov.For information related to theprovisions on retaking coursework,Vanessa Freeman. Telephone: (202)502–7523 or via the Internet at:Vanessa.Freeman@ed.gov.For information on the provisionsrelated to incentive compensation,Marty Guthrie. Telephone: (202) 219–7031 or via the Internet at:Marty.Guthrie@ed.gov.For information related to theprovisions on satisfactory academicprogress, Marty Guthrie or MariannaDeeken. Telephone: (202) 219–7031 orvia the Internet at:Marty.Guthrie@ed.gov. Telephone: (206)615–2583 or via the Internet at:Marianna.Deeken@ed.gov.For information related to theprovisions on ability to benefit, DanKlock. Telephone: (202) 377–4026 or viathe Internet at Dan.Klock@ed.gov.For information related to gainfulemployment in a recognizedoccupation, John Kolotos. Telephone:(202) 502–7762 or via the Internet at:John.Kolotos@ed.gov.For information related to theprovisions for written agreementsbetween institutions, CarneyMcCullough. Telephone: (202) 502–7639 or via the Internet at:Carney.McCullough@ed.gov.For information related to theprovisions on misrepresentation, CarneyMcCullough or Vanessa Freeman.Telephone: (202) 502–7639 or via theInternet at: Carney.McCullough@ed.gov.Telephone: (202) 502–7523 or via theInternet at: Vanessa.Freeman@ed.gov.For information related to theprovisions on timeliness and method <strong>of</strong>disbursement, Harold McCullough.Telephone: (202) 377–4030 or via theInternet at: Harold.McCullough@ed.gov.For information related to theprovisions related to the definition <strong>of</strong>credit hour, Fred Sellers. Telephone:(202) 502–7502 or via the Internet at:Fred.Sellers@ed.gov.For information related to provisionson State authorization, Fred Sellers.Telephone: (202) 502–7502 or via theInternet at: Fred.Sellers@ed.gov.If you use a telecommunicationsdevice for the deaf (TDD), call theFederal Relay Service (FRS), toll free, at1–800–877–8339.Individuals with disabilities canobtain this document in an accessibleformat (e.g., braille, large print,audiotape, or computer diskette) onrequest to one <strong>of</strong> the contact personslisted under FOR FURTHER INFORMATIONCONTACT.SUPPLEMENTARY INFORMATION: On June18, 2010, the Secretary published anotice <strong>of</strong> proposed rulemaking (NPRM)for program integrity issues in theFederal Register (75 FR 34806).In the preamble to the NPRM, theSecretary discussed on pages 34808through 34848 the major regulationsVerDate Mar2010 14:10 Oct 28, 2010 Jkt 223001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 E:\FR\FM\29OCR2.SGM 29OCR2proposed in that document tostrengthen and improve theadministration <strong>of</strong> programs authorizedunder the HEA. These proposedregulations included the following:• Requiring institutions to developand follow procedures to evaluate thevalidity <strong>of</strong> a student’s high schooldiploma if the institution or theSecretary has reason to believe that thediploma is not valid or was not obtainedfrom an entity that provides secondaryschool education;• Expanding eligibility for title IV,HEA program assistance to studentswho demonstrate they have the abilityto benefit by satisfactorily completingsix credits <strong>of</strong> college work, or theequivalent amounts <strong>of</strong> coursework, thatare applicable toward a degree orcertificate <strong>of</strong>fered by an institution;• Amending and adding definitions<strong>of</strong> terms related to ability to benefittesting, including ‘‘assessment center,’’‘‘independent test administrator,’’‘‘individual with a disability,’’ ‘‘test,’’‘‘test administrator,’’ and ‘‘testpublisher’’;• Consolidating into a singleregulatory provision the approvalprocesses for ability to benefit testsdeveloped by test publishers and States;• Establishing requirements underwhich test publishers and States mustprovide descriptions <strong>of</strong> processes foridentifying and handling test scoreabnormalities, ensuring the integrity <strong>of</strong>the testing environment, and certifyingand decertifying test administrators;• Requiring test publishers and Statesto describe any accommodationsavailable for individuals withdisabilities, as well as the process a testadministrator would use to identify andreport to the test publisher instances inwhich these accommodations wereused;• Revising the test approvalprocedures and criteria for ability tobenefit tests, including proceduresrelated to the approval <strong>of</strong> tests forspeakers <strong>of</strong> foreign languages andindividuals with disabilities;• Revising the definitions andprovisions that describe the activitiesthat constitute substantialmisrepresentation by an institution <strong>of</strong>the nature <strong>of</strong> its educational program, itsfinancial charges, or the employability<strong>of</strong> its graduates;• Removing the ‘‘safe harbor’’provisions related to incentivecompensation for any person or entityengaged in any student recruitment oradmission activity, including makingdecisions regarding the award <strong>of</strong> title IV,HEA program assistance;• Clarifying what is required for aninstitution <strong>of</strong> higher education, a
Federal Register / Vol. 75, No. 209 / Friday, October 29, 2010 / Rules and Regulations66833WReier-Aviles on DSKGBLS3C1PROD with RULES2proprietary institution <strong>of</strong> highereducation, and a postsecondaryvocational institution to be consideredlegally authorized by the State;• Defining a credit hour andestablishing procedures that certaininstitutional accrediting agencies musthave in place to determine whether aninstitution’s assignment <strong>of</strong> a credit houris acceptable;• Modifying provisions to clarifywhether and when an institution mustaward student financial assistance basedon clock or credit hours and thestandards for credit-to-clock-hourconversions;• Modifying the provisions related towritten arrangements between two ormore eligible institutions that are ownedor controlled by the same person orentity so that the percentage <strong>of</strong> theeducational program that may beprovided by the institution that does notgrant the degree or certificate under thearrangement may not exceed 50 percent;• Prohibiting written arrangementsbetween an eligible institution and anineligible institution that has had itscertification to participate in title IV,HEA programs revoked or itsapplication for recertification denied;• Expanding provisions related to theinformation that an institution with awritten arrangement must disclose to astudent enrolled in a program affectedby the arrangement, including, forexample, the portion <strong>of</strong> the educationalprogram that the institution that grantsthe degree or certificate is not providing;• Revising the definition <strong>of</strong>unsubsidized student financial aidprograms to include TEACH Grants,Federal PLUS Loans, and Direct PLUSLoans;• Codifying current policy that aninstitution must complete verificationbefore the institution may exercise itspr<strong>of</strong>essional judgment authority;• Eliminating the 30 percentverification cap;• Retaining the ability <strong>of</strong> institutionsto select additional applicants forverification;• Replacing the five verification itemsfor all selected applicants with atargeted selection from items includedin an annual Federal Register noticepublished by the Secretary;• Allowing interim disbursementswhen changes to an applicant’s FAFSAinformation would not change theamount that the student would receiveunder a title IV, HEA program;• Codifying the <strong>Department</strong>’s IRSData Retrieval System Process, whichallows an applicant to import incomeand other data from the IRS into anonline FAFSA;• Requiring the processing <strong>of</strong> changesand corrections to an applicant’s FAFSAinformation;• Modifying the provisions related toinstitutional satisfactory academicprogress policies and the impact thesepolicies have on a student’s eligibilityfor title IV, HEA program assistance;• Expanding the definition <strong>of</strong> fulltimestudent to allow, for a term-basedprogram, repeated coursework taken inthe program to count towards a full-timeworkload;• Clarifying when a student isconsidered to have withdrawn from apayment period or period <strong>of</strong> enrollmentfor the purpose <strong>of</strong> calculating a return<strong>of</strong> title IV, HEA program funds;• Clarifying the circumstances underwhich an institution is required to takeattendance for the purpose <strong>of</strong>calculating a return <strong>of</strong> title IV, HEAprogram funds;• Modifying the provisions fordisbursing title IV, HEA program fundsto ensure that certain students canobtain or purchase books and suppliesby the seventh day <strong>of</strong> a payment period;• Updating the definition <strong>of</strong> the termrecognized occupation to reflect currentusage;• Establishing requirements forinstitutions to submit information onstudents who attend or completeprograms that prepare students forgainful employment in recognizedoccupations; and• Establishing requirements forinstitutions to disclose on their Web siteand in promotional materials toprospective students, the on-timecompletion rate, placement rate, medianloan debt, program cost, and otherinformation for programs that preparestudents for gainful employment inrecognized occupations.Implementation Date <strong>of</strong> TheseRegulationsSection 482(c) <strong>of</strong> the HEA requiresthat regulations affecting programsunder title IV <strong>of</strong> the HEA be publishedin final form by November 1 prior to thestart <strong>of</strong> the award year (July 1) to whichthey apply. However, that section alsopermits the Secretary to designate anyregulation as one that an entity subjectto the regulation may choose toimplement earlier and to specify theconditions under which the entity mayimplement the provisions early.The Secretary has not designated any<strong>of</strong> the provisions in these finalregulations for early implementation. Asindicated in the DATES section, theregulations contained in subpart E <strong>of</strong>part 668, Verification and Updating <strong>of</strong>Student Aid Application Informationare effective July 1, 2012.VerDate Mar2010 14:10 Oct 28, 2010 Jkt 223001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 E:\FR\FM\29OCR2.SGM 29OCR2While the Secretary has designatedamended § 600.9(a) and (b) as beingeffective July 1, 2011, we recognize thata State may be unable to provideappropriate State authorizations to itsinstitutions by that date. We areproviding that the institutions unable toobtain State authorization in that Statemay request a one-year extension <strong>of</strong> theeffective date <strong>of</strong> these final regulationsto July 1, 2012, and if necessary, anadditional one-year extension <strong>of</strong> theeffective date to July 1, 2013. To receivean extension <strong>of</strong> the effective date <strong>of</strong>amended § 600.9(a) and (b) forinstitutions in a State, an institutionmust obtain from the State anexplanation <strong>of</strong> how a one-year extensionwill permit the State to modify itsprocedures to comply with amended§ 600.9.Analysis <strong>of</strong> Comments and ChangesThe regulations in this documentwere developed through the use <strong>of</strong>negotiated rulemaking. Section 492 <strong>of</strong>the HEA requires that, before publishingany proposed regulations to implementprograms under title IV <strong>of</strong> the HEA, theSecretary must obtain publicinvolvement in the development <strong>of</strong> theproposed regulations. After obtainingadvice and recommendations, theSecretary must conduct a negotiatedrulemaking process to develop theproposed regulations. The negotiatedrulemaking committee did not reachconsensus on the proposed regulationsthat were published on June 18, 2010.The Secretary invited comments on theproposed regulations by August 2, 2010.Approximately 1,180 parties submittedcomments, a number <strong>of</strong> which weresubstantially similar. An analysis <strong>of</strong> thecomments and <strong>of</strong> the changes in theregulations since publication <strong>of</strong> theNPRM follows.We group major issues according tosubject, with appropriate sections <strong>of</strong> theregulations referenced in parentheses.We discuss other substantive issuesunder the sections <strong>of</strong> the regulations towhich they pertain. Generally, we donot address minor, nonsubstantivechanges, recommended changes that thelaw does not authorize the Secretary tomake, or comments pertaining tooperational processes. We also do notaddress comments pertaining to issuesthat were not within the scope <strong>of</strong> theNPRM.General CommentsComment: We received a significantnumber <strong>of</strong> comments that expressedsupport for the Secretary’s proposedregulations. Many <strong>of</strong> the commentersnoted that the proposed regulationswould protect taxpayer investments in
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