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[Federal Register Volume 76, Number 71 (Wednesday, April 13, 2011)]
[Rules and Regulations]
[Pages 20534-20536]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-8747]

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DEPARTMENT OF EDUCATION

34 CFR Parts 600, 602, 603, 668, 682, 685, 686, 690, and 691

[Docket ID ED-2010-OPE-0004]
RIN 1840-AD02

Program Integrity Issues

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Final regulations; correction.

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SUMMARY: On October 29, 2010, the Department of Education published in 
the Federal Register (75 FR 66832) final regulations for improving 
integrity in the programs authorized under title IV of the Higher 
Education Act of 1965, as amended (HEA), by amending the regulations 
for Institutional Eligibility Under the HEA, the Secretary's 
Recognition of Accrediting Agencies, the Secretary's Recognition 
Procedures for State Agencies, the Student Assistance General 
Provisions, the Federal Family Education Loan (FFEL) Program, the 
William D. Ford Federal

[[Page 20535]]

Direct Loan Program, the Teacher Education Assistance for College and 
Higher Education (TEACH) Grant Program, the Federal Pell Grant Program, 
and the Academic Competitiveness Grant (AGC) and National Science and 
Mathematics Access to Retain Talent Grant (National Smart Grant) 
Programs. This document makes several corrections to the October 29 
final regulations, including in the preamble discussion and the 
regulatory text.

DATES: Effective July 1, 2011, except that the corrections to Sec.  
668.58 are effective July 1, 2012.

FOR FURTHER INFORMATION CONTACT: Marty Guthrie, U.S. Department of 
Education, 1990 K Street, NW., room 8042, Washington, DC 20006-8014. 
Telephone: (202) 219-7031 or via the Internet at: [email protected].
    If you use a telecommunications device for the deaf (TDD), call the 
Federal Relay Service (FRS), toll free, at 1-800-877-8339.
    Individuals with disabilities can obtain this document in an 
accessible format (e.g., braille, large print, audiotape, or computer 
diskette) on request to the contact listed in this section.

SUPPLEMENTARY INFORMATION: 

Electronic Access to This Document

    You may view this document, as well as all other Department of 
Education documents published in the Federal Register, in text or Adobe 
Portable Document Format (PDF), on the Internet at the following site: 
http://www.ed.gov/news/fedregister/index.html. To use PDF, you must 
have Adobe Acrobat Reader, which is available free at this site.

    Note:  The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available via the Federal Digital System at: http://www.gpo.gov/fdsys.

Corrections to Preamble Discussion

    1. On page 66857, in the third column, in the fourth full paragraph 
labeled as the Discussion section, the words ``enrolled in payment 
periods or assigned to the 2011-12 and subsequent award years'' are 
corrected to read ``enrolled in payment periods assigned to the 2011-12 
and subsequent award years''.
    2. On page 66858, in the first column, in the second paragraph 
labeled as Discussion, the last sentence of that paragraph is corrected 
by adding the words ``do not'' between the words ``regulations'' and 
``require'', so that the sentence reads: ``While these final 
regulations do not require the creation of a State licensing agency, a 
State may choose to rely on such an agency to legally authorize 
institutions to offer postsecondary education in the State for purposes 
of Federal program eligibility.''
    3. On page 66862, the chart and its notes are removed and the 
following corrected chart and notes are added in their place to clarify 
the items in the third column labeled ``Approval or licensure process'' 
that correspond to Business entities and Charitable organizations and 
to correct the third bulleted note:

                Meets State Authorization Requirements *
------------------------------------------------------------------------
                                                         Approval or
        Legal entity           Entity description     licensure process
------------------------------------------------------------------------
Educational institution.....  A public, private     The institution must
                               nonprofit, or for-    comply with any
                               profit institution    applicable State
                               established by name   approval or
                               by a State through    licensure process
                               a charter, statute,   and be approved or
                               or other action       licensed by name,
                               issued by an          and may be exempted
                               appropriate State     from such
                               agency or State       requirement based
                               entity as an          on its
                               educational           accreditation, or
                               institution           being in operation
                               authorized to         at least 20 years,
                               operate educational   or use both
                               programs beyond       criteria.
                               secondary
                               education,
                               including programs
                               leading to a degree
                               or certificate.
Business....................  A for-profit entity   The State must have
                               established by the    a State approval or
                               State on the basis    licensure process,
                               of an authorization   and the institution
                               or license to         must comply with
                               conduct commerce or   the State approval
                               provide services.     or licensure
                                                     process and be
                                                     approved or
                                                     licensed by name.
                                                    An institution in
                                                     this category may
                                                     not be exempted
                                                     from State approval
                                                     or licensure based
                                                     on accreditation,
                                                     years in operation,
                                                     or a comparable
                                                     exemption.
Charitable organization.....  A nonprofit entity    The State must have
                               established by the    a State approval or
                               State on the basis    licensure process,
                               of an authorization   and the institution
                               or license for the    must comply with
                               public interest or    the State approval
                               common good.          or licensure
                                                     process and be
                                                     approved or
                                                     licensed by name.
                                                    An institution in
                                                     this category may
                                                     not be exempted
                                                     from State approval
                                                     or licensure based
                                                     on accreditation,
                                                     years in operation,
                                                     or a comparable
                                                     exemption.
------------------------------------------------------------------------
* Notes:
 Federal, tribal, and religious institutions are exempt from
  these requirements.
 A State must have a process, applicable to all institutions
  except tribal and Federal institutions, to review and address
  complaints directly or through referrals.
 The chart does not take into account requirements related to
  State reciprocity.

    4. On page 66862, in the first column, under the heading 
Institutions considered legally authorized under amended Sec.  600.9, 
the fourth bullet is corrected by adding the words ``by name'' prior to 
the period of the first sentence so that it reads: ``A nonprofit 
institution has a State charter as a postsecondary institution by 
name.''
    5. On page 66865, in the second column, the words ``by name'' are 
removed from the eighth line in the column so the affected sentence 
reads: ``We have amended proposed Sec.  600.9 to provide that, if an 
institution is an entity that is established by name as an educational 
institution by the State and the State further requires compliance with 
applicable State approval or licensure requirements for the institution 
to qualify as legally authorized by the State for Federal program 
purposes, the State may exempt the institution from the State approval 
or licensure requirements based on the institution's accreditation by 
one or more accrediting agencies

[[Page 20536]]

recognized by the Secretary or based upon the institution being in 
operation for at least 20 years.''
    6. On page 66873, in the first column, under the paragraph labeled 
as (2), the sentence is corrected by adding the words ``or entity'' 
between the words ``person'' and ``based'', so that the sentence reads: 
``Whether the commission, bonus, or other incentive payment is provided 
to any person or entity based in any part, directly or indirectly, upon 
success in securing enrollments or the award of financial aid, which 
are defined as activities engaged in for the purpose of the admission 
or matriculation of students for any period of time or the award of 
financial aid.''
    7. On page 66876, in the third column, under the paragraph labeled 
as (2), the sentence is corrected by adding the words ``or entity'' 
between the words ``person'' and ``based'', so that the sentence reads: 
``Whether the commission, bonus, or other incentive payment is provided 
to any person or entity based in any part, directly or indirectly, upon 
success in securing enrollments or the award of financial aid, which 
are defined as activities engaged in for the purpose of the admission 
or matriculation of students for any period of time or the award of 
financial aid.''
    8. On page 66878, in the first column, in the paragraphs labeled as 
the Discussion section, in the third paragraph, the sentence is 
corrected by adding the words ``or entity'' after the word ``person'' 
and deleting the words ``who is'', so that the sentence reads: ``For 
this reason, we are making a change to Sec.  668.14(b)(22)(ii) to 
provide that institutions may make payments, including profit-sharing 
payments, so long as they are not provided to any person or entity 
engaged in student recruitment or admission activity or in making 
decisions regarding the award of title IV, HEA program funds.''
    9. On page 66878, in the paragraph labeled Changes that begins at 
the bottom of the first column, the sentence is corrected by adding the 
words ``or entity'' after the word ``person'' and deleting the words 
``who is'', so that the sentence reads: ``We have revised Sec.  
668.14(b)(22)(ii) to clarify that, notwithstanding the ban in Sec.  
668.14(b)(22)(i), eligible institutions, organizations that are 
contractors to eligible institutions, and other entities may make 
profit-sharing payments, so long as such payments are not provided to 
any person or entity engaged in student recruitment or admission 
activity or in making decisions regarding the award of title IV, HEA 
program funds.''
    10. On page 66895, in the third column, in the first paragraph, the 
words ``or a second disbursement of Pell Grant funds,'' are removed so 
that the sentence reads: ``If the student has not begun attendance in 
enough courses to establish a half-time enrollment status, the 
institution may not make a first disbursement of a Direct Loan to the 
student (34 CFR 685.303(b)(2)(i)), although the funds are included as 
aid that could have been disbursed in the Return of Title IV Funds 
calculation.''
    11. On page 66916, the paragraph labeled Discussion that begins at 
the bottom of the second column and ends in the third column is removed 
and the following corrected Discussion is added in its place to read as 
follows:
    ``Discussion: As noted elsewhere in this preamble, the Department 
enforces its regulations, including those in subpart F of part 668 
within a rule of reasonableness. We strongly believe that the concerns 
voiced by many commenters have ignored this fact. For this reason, we 
agree to limit the reach of the ban on making substantial 
misrepresentations to statements made by any ineligible institution, 
organization, or person with whom the eligible institution has an 
agreement to provide educational programs or those that provide 
marketing, advertising, recruiting, or admissions services. We have 
done this by narrowing the language in Sec.  668.71(b) and the 
definition of the term misrepresentation. As a result, statements made 
by students through social media outlets will generally not be covered 
by these misrepresentation regulations. Also, statements made by 
entities that have agreements with the institution to provide services, 
such as food service, other than educational programs, marketing, 
advertising, recruiting, or admissions services will generally not be 
covered by these misrepresentation regulations.''
    12. On page 66917, in the third column, the third paragraph is 
corrected to read as follows:
    ``With regard to the commenters who stated that the `capacity, 
likelihood, or tendency to deceive or confuse' language will be 
confusing, in general, we have no reason to believe that this language 
will have any such effect. However, we recognize that the word 
`capacity' is subject to a broad range of interpretations, so we have 
revised the regulations to state that a misleading statement is one 
that has the tendency or likelihood to deceive or confuse.''
    13. On page 66918, in the first column, the Changes paragraph 
incorrectly indicated that no changes were made to Sec.  668.71(c). 
That paragraph is corrected to read as follows:
    ``Changes: We have revised Sec.  668.71(c) to state that a 
misleading statement is one that has the tendency or likelihood to 
deceive or confuse.''

Corrections to Regulatory Text

Sec.  668.8  [Corrected]

0
14. On page 66950, in the second column, the introductory text of Sec.  
668.8(l)(2) is corrected by adding the word ``not'' between the words 
``has'' and ``identified''.

Sec.  668.14  [Corrected]

0
15. On page 66950, in the third column, Sec.  668.14(b)(22)(ii)(B) is 
corrected by:
0
(A) Adding the words ``or entity'' after the word ``person''.
0
(B) Removing the words ``who is''.

Sec.  668.58  [Corrected]

0
16. On page 66957, in the first column, Sec.  668.58(a)(1)(iii) is 
corrected by removing the word ``certified''.

0
17. On page 66957, in the second column, Sec.  668.58(a)(2)(iii)(B) is 
corrected by removing the words ``Subsidized Stafford Loan or''.

0
18. On page 66957, in the second column, Sec.  668.58(a)(3)(ii)(C) is 
corrected by removing the words ``Subsidized Stafford Loan or''.

    Dated: April 7, 2011.
Eduardo M. Ochoa,
Assistant Secretary for Postsecondary Education.
[FR Doc. 2011-8747 Filed 4-12-11; 8:45 am]
BILLING CODE 4000-01-P
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