§ 668.83 Emergency action. ( a ) Under an emergency action, the Secretary may— ( 1 ) Withhold Title IV, HEA program funds from a participating institution or its students, or from a third-party servicer, as applicable;
( 2 ) ( i ) Withdraw the authority of the institution or servicer, as applicable, to commit, disburse, deliver, or cause the commitment, disbursement, or delivery of Title IV, HEA program funds; or
( ii ) Withdraw the authority of the institution or servicer, as applicable, to commit, disburse, deliver, or cause the commitment, disbursement, or delivery of Title IV, HEA program funds except in accordance with a particular procedure; and
( 3 ) ( i ) Withdraw the authority of the servicer to administer any aspect of any institution's participation in any Title IV, HEA program; or
( ii ) Withdraw the authority of the servicer to administer any aspect of any institution's participation in any Title IV, HEA program except in accordance with a particular procedure.
( b ) ( 1 ) An initiating official begins an emergency action against an institution or third-party servicer by sending the institution or servicer a notice by registered mail, return receipt requested. In an emergency action against a third-party servicer, the official also sends the notice to each institution that contracts with the servicer. The official also may transmit the notice by other, more expeditious means if practical.
( 2 ) The emergency action takes effect on the date the initiating official mails the notice to the institution or servicer, as applicable.
( 3 ) The notice states the grounds on which the emergency action is based, the consequences of the emergency action, and that the institution or servicer, as applicable, may request an opportunity to show cause why the emergency action is unwarranted.
( c ) ( 1 ) An initiating official takes emergency action against an institution or third-party servicer only if that official— ( i ) Receives information, determined by the official to be reliable, that the institution or servicer, as applicable, is violating any statutory provision of or applicable to Title IV of the HEA, any regulatory provision prescribed under that statutory authority, or any applicable special arrangement, agreement, or limitation entered into under the authority of statutes applicable to Title IV of the HEA;
( ii ) Determines that immediate action is necessary to prevent misuse of Title IV, HEA program funds; and
( iii ) Determines that the likelihood of loss from that misuse outweighs the importance of awaiting completion of any proceeding that may be initiated to limit, suspend, or terminate, as applicable— ( A ) The participation of the institution in one or more Title IV, HEA programs; or
( B ) The eligibility of the servicer to contract with any institution to administer any aspect of the institution's participation in a Title IV, HEA program.
( 2 ) Examples of violations of a Title IV, HEA program requirement that cause misuse and the likely loss of Title IV, HEA program funds include— ( i ) Causing the commitment, disbursement, or delivery by any party of Title IV, HEA program funds in an amount that exceeds— ( A ) The amount for which students are eligible; or
( B ) The amount of principal, interest, or special allowance payments that would have been payable to the holder of a Federal Stafford or Federal PLUS loan if a refund allocable to that loan had been made in the amount and at the time required;
( ii ) Using, offering to make available, or causing the use or availability of Title IV, HEA program funds for educational services if— ( A ) The institution, servicer, or agents of the institution or servicer have made a substantial misrepresentation as described in §§ 668.72, 668.73, or 668.74 related to those services;
( B ) The institution lacks the administrative or financial ability to provide those services in full; or
( C ) The institution, or servicer, as applicable, lacks the administrative or financial ability to make all required payments under § 668.22; and
( iii ) Engaging in fraud involving the administration of a Title IV, HEA program. Examples of fraud include— ( A ) Falsification of any document received from a student or pertaining to a student's eligibility for assistance under a Title IV, HEA program;
( B ) Falsification, including false certifications, of any document submitted by the institution or servicer to the Secretary;
( C ) Falsification, including false certifications, of any document used for or pertaining to— ( 1 ) The legal authority of an institution to provide postsecondary education in the State in which the institution is located; or
( 2 ) The accreditation or preaccreditation of an institution or any of the institution's educational programs or locations;
( D ) Falsification, including false certifications, of any document submitted to a guaranty agency under the Federal Stafford Loan or Federal PLUS programs or an independent auditor;
( E ) Falsification of any document submitted to a third-party servicer by an institution or to an institution by a third-party servicer pertaining to the institution's participation in a Title IV, HEA program; and
( F ) Falsification, including false certifications, of any document pertaining to the performance of any loan collection activity, including activity that is not required by the HEA or applicable program regulations.
( 3 ) If the Secretary begins an emergency action against a third-party servicer, the Secretary may also begin an emergency action against any institution under whose contract a third-party servicer commits the violation.
( d ) ( 1 ) Except as provided in paragraph (d)(2) of this section, after an emergency action becomes effective, an institution or third-party servicer, as applicable, may not— ( i ) Make or increase awards or make other commitments of aid to a student under the applicable Title IV, HEA program;
( ii ) Disburse either program funds, institutional funds, or other funds as assistance to a student under that Title IV, HEA program;
( iii ) In the case of an emergency action pertaining to participation in the Federal Stafford Loan or Federal PLUS programs— ( A ) Certify an application for a loan under that program;
( B ) Deliver loan proceeds to a student under that program; or
( C ) Retain the proceeds of a loan made under that program that are received after the emergency action takes effect; or
( iv ) In the case of an emergency action against a third-party servicer, administer any aspect of any institution's participation in any Title IV, HEA program.
( 2 ) If the initiating official withdraws, by an emergency action, the authority of the institution or servicer to commit, disburse, deliver, or cause the commitment, disbursement, or delivery of Title IV, HEA program funds, or the authority of the servicer to administer any aspect of any institution's participation in any Title IV, HEA program, except in accordance with a particular procedure specified in the notice of emergency action, the institution or servicer, as applicable, may not take any action described in paragraph (d)(1) of this section except in accordance with the procedure specified in the notice.
( e ) ( 1 ) Upon request by the institution or servicer, as applicable, the Secretary provides the institution or servicer, as soon as practicable, with an opportunity to show cause that the emergency action is unwarranted or should be modified.
( 2 ) An opportunity to show cause consists of an opportunity to present evidence and argument to a show-cause official. The initiating official does not act as the show-cause official for any emergency action that the initiating official has begun. The show-cause official is authorized to grant relief from the emergency action. The institution or servicer may make its presentation in writing or, upon its request, at an informal meeting with the show-cause official.
( 3 ) The show-cause official may limit the time and manner in which argument and evidence may be presented in order to avoid unnecessary delay or the presentation of immaterial, irrelevant, or repetitious matter.
( 4 ) The institution or servicer, as applicable, has the burden of persuading the show-cause official that the emergency action imposed by the notice is unwarranted or should be modified because— ( i ) The grounds stated in the notice did not, or no longer, exist;
( ii ) The grounds stated in the notice will not cause loss or misuse of Title IV, HEA program funds; or
( iii ) The institution or servicer, as applicable, will use procedures that will reliably eliminate the risk of loss from the misuse described in the notice.
( 5 ) The show-cause official continues, modifies, or revokes the emergency action promptly after consideration of any argument and evidence presented by the institution or servicer, as applicable, and the initiating official.
( 6 ) The show-cause official notifies the institution or servicer, as applicable, of that official's determination promptly after the completion of the show-cause meeting or, if no meeting is requested, after the official receives all the material submitted by the institution in opposition to the emergency action. In the case of a notice to a third-party servicer, the official also notifies each institution that contracts with the servicer of that determination. The show-cause official may explain that determination by adopting or modifying the statement of reasons provided in the notice of emergency action.
( f ) ( 1 ) An emergency action does not extend more than 30 days after initiated unless the Secretary initiates a limitation, suspension, or termination proceeding under this part or under 34 CFR part 600 against the institution or servicer, as applicable, within that 30-day period, in which case the emergency action continues until a final decision is issued in that proceeding, as provided in § 668.91(c), as applicable.
( 2 ) Until a final decision is issued by the Secretary in a proceeding described in paragraph (f)(1) of this section, any action affecting the emergency action is at the sole discretion of the initiating official, or, if a show- cause proceeding is conducted, the show-cause official.
( 3 ) If an emergency action extends beyond 180 days by virtue of paragraph (f)(1) of this section, the institution or servicer, as applicable, may then submit written material to the show-cause official to demonstrate that because of facts occurring after the later of the notice by the initiating official or the show-cause meeting, continuation of the emergency action is unwarranted and the emergency action should be modified or ended. The show-cause official considers any written material submitted and issues a determination that continues, modifies, or revokes the emergency action.
( g ) The expiration of an emergency action, or its modification or revocation by the show-cause official, does not bar subsequent emergency action on a ground other than one specifically identified in the notice imposing the prior emergency action. Separate grounds may include violation of an agreement or limitation imposed or resulting from the prior emergency action.
(Authority: 20 U.S.C. 1094)
[59 FR 22445, Apr. 29, 1994, as amended at 60 FR 34432, June 30, 1995; 63 FR 40626, July 29, 1998; 64 FR 59042, Nov. 1, 1999; 82 FR 6257, Jan. 19, 2017]