59864 Federal Register / Vol. 76, No. 187 / Tuesday, September 27, 2011 / Proposed Rules 

DEPARTMENT OF EDUCATION 

34 CFR Part 600 

RIN 1840–AD10 

[Docket ID ED–2011–OPE–0011] 

Application and Approval Process for 

New Programs 

AGENCY: Office of Postsecondary 

Education, Department of Education. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Secretary proposes to 

amend the regulations for Institutional 

Eligibility under the Higher Education 

Act of 1965, as amended (HEA), to 

streamline the application and approval 

process for new educational programs 

that qualify for student financial 

assistance under title IV of the HEA. 

DATES: We must receive your comments 

on or before November 14, 2011. 

ADDRESSES: Submit your comments 

through the Federal eRulemaking Portal 

or via postal mail, commercial delivery, 

or hand delivery. We will not accept 

comments by fax or by e-mail. To ensure 

that we do not receive duplicate copies, 

please submit your comments only one 

time. In addition, please include the 

Docket ID at the top of your comments. 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov to submit 

your comments electronically. 

Information on using Regulations.gov, 

including instructions for accessing 

agency documents, submitting 

comments, and viewing the docket, is 

available on the site under ‘‘How To Use 

This Site.’’ 

• Postal Mail, Commercial Delivery, 

or Hand Delivery: If you mail or deliver 

your comments about these proposed 

regulations, address them to Jessica 

Finkel, U.S. Department of Education, 

1990 K Street, NW., room 8031, 

Washington, DC 20006–8502. 

Privacy Note: The Department’s 

policy for comments received from 

members of the public (including those 

comments submitted by mail, 

commercial delivery, or hand delivery) 

is to make these submissions available 

for public viewing in their entirety on 

the Federal eRulemaking Portal at 

http://www.regulations.gov. Therefore, 

commenters should be careful to 

include in their comments only 

information that they wish to make 

publicly available on the Internet. 

FOR FURTHER INFORMATION CONTACT: John 

Kolotos, U.S. Department of Education, 

1990 K Street, NW., room 8018, 

Washington, DC 20006–8502. 

Telephone: (202) 502–7762 or by e-mail: 

John.Kolotos@ed.gov. 

If you use a telecommunications 

device for the deaf (TDD) or a text 

telephone (TTY), call the Federal Relay 

Service (FRS), toll free, at 1–800–877– 

8339. 

SUPPLEMENTARY INFORMATION: 

Invitation To Comment 

We invite you to submit comments 

regarding these proposed regulations. 

To ensure that your comments have 

maximum effect in developing the final 

regulations, we urge you to identify 

clearly the specific section or sections of 

the proposed regulations that each of 

your comments addresses and to arrange 

your comments in the same order as the 

proposed regulations. Please do not 

submit comments outside the scope of 

the specific proposals in this notice of 

proposed rulemaking (NPRM). We will 

not respond to comments that do not 

specifically relate to the proposed 

regulations. 

We invite you to assist us in 

complying with the specific 

requirements of Executive Order 12866 

and Executive Order 13563 and their 

overall direction to Federal agencies to 

reduce regulatory burden where 

possible. Please let us know of any 

further ways we could reduce potential 

costs or increase potential benefits 

while preserving the effective and 

efficient administration of the 

Department’s student aid regulations. 

During and after the comment period, 

you may inspect all public comments 

about these proposed regulations by 

accessing Regulations.gov. You may also 

inspect the comments, in person, in 

room 8031, 1990 K Street, NW., 

Washington, DC, between the hours of 

8:30 a.m. and 4:00 p.m., Washington, 

DC time, Monday through Friday of 

each week except Federal holidays. 

Assistance to Individuals with 

Disabilities in Reviewing the 

Rulemaking Record: On request, we will 

provide an appropriate accommodation 

or auxiliary aid to an individual with a 

disability who needs assistance to 

review the comments or other 

documents in the public rulemaking 

record for these proposed regulations. If 

you want to schedule an appointment 

for this type of accommodation or 

auxiliary aid, please contact the person 

listed under FOR FURTHER INFORMATION

CONTACT. 

Negotiated Rulemaking and 

Background of These Proposed 

Regulations 

Section 492 of the HEA requires the 

Secretary, before publishing any 

proposed regulations for programs 

authorized by title IV of the HEA, to 

obtain public involvement in the 

development of the proposed 

regulations. After obtaining advice and 

recommendations from the public, 

including individuals and 

representatives of groups involved in 

the Federal student financial assistance 

programs, the Secretary must subject the 

proposed regulations to a negotiated 

rulemaking process. All proposed 

regulations that the Department 

publishes on which the negotiators 

reached consensus must conform to 

final agreements resulting from that 

process unless the Secretary reopens the 

process or provides a written 

explanation to the participants stating 

why the Secretary has decided to depart 

from the agreements. Further 

information on the negotiated 

rulemaking process can be found at: 

http://www2.ed.gov/policy/highered/ 

leg/hea08/index.html#neg-reg. 

Between November, 2009 and 

January, 2010, the Department held 

three negotiated rulemaking sessions 

aimed at improving integrity in the title 

IV, HEA programs. As a result of these 

discussions, during which consensus 

was not reached, the Department 

published two notices of proposed 

rulemaking, one on June 18, 2010 (June 

18th NPRM) and one on July 26, 2010 

(July 26th NPRM). The July 26th NPRM 

focused specifically on the issue of 

‘‘gainful employment’’ and the June 

18th NPRM covered the remaining 

Program Integrity issues. After 

considering public comments on the 

June 18th NPRM, the Department 

published final regulations on October 

29, 2010 (75 FR 66832) (Program 

Integrity Issues), which included 

requirements for institutions to disclose 

and report information about gainful 

employment programs. After 

considering comments on the July 26th 

NPRM related to new programs, the 

Department published final regulations 

on October 29, 2010 (75 FR 66665) 

(Gainful Employment—New Programs), 

which included requirements for 

institutions to notify the Department 

before offering a new educational 

program that provides training leading 

to gainful employment in a recognized 

occupation (gainful employment 

program). Through this notification 

process, the Department may advise an 

institution that it must obtain approval 

to establish the eligibility of an 

additional gainful employment program 

for purposes of the title IV, HEA 

programs. 

The Department established the 

notification requirement out of concern 

that some institutions might attempt to 

circumvent the proposed gainful 

employment standards in § 668.7(a)(1) 

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of the July 26th NPRM by adding new 

programs before those standards could 

take effect. The Department explained 

that the notification process 

requirements, referred to as ‘‘interim 

requirements,’’ were intended to remain 

in effect until the final regulations that 

established eligibility measures for 

gainful employment programs would 

take effect. Specifically, we stated that 

with regard to approving additional 

programs, ‘‘[w]e intend to establish 

performance-based requirements in 

subsequent regulations’’ and that 

‘‘[u]ntil those subsequent regulations 

take effect, institutions must comply 

with the interim requirements in [the 

Gainful Employment—New Programs 

final] regulations’’ (75 FR 66671). 

We published the final regulations 

establishing the gainful employment 

eligibility measures on June 13, 2011 (76 

FR 34386) (Gainful Employment—Debt 

Measures). In those regulations, the 

Department established measures for 

gainful employment programs that are 

intended to identify the worst 

performing programs. For gainful 

employment programs that fail those 

measures, an institution will be required 

to provide warnings to enrolled and 

prospective students for up to three 

years or until the programs lose 

eligibility for title IV, HEA funds. Under 

these measures, institutions may also 

choose to voluntarily discontinue a 

failing program. 

The Gainful Employment—Debt 

Measures final regulations also place 

restrictions on when an institution may 

reestablish the eligibility of an ineligible 

program or a failing program that was 

voluntarily discontinued, or establish 

the eligibility of a new program that is 

substantially similar to an ineligible 

program. However, we do not believe 

that when these new provisions go into 

effect on July 1, 2013, the notification 

process for all new gainful employment 

programs established in the Gainful 

Employment—New Programs final 

regulations will be needed and therefore 

are seeking input from the public on 

this issue through these proposed 

regulations. 

In this NPRM, among other changes, 

we propose to eliminate the notification 

process for new gainful employment 

programs by amending the Gainful 

Employment—New Programs final 

regulations to establish a smaller group 

of gainful employment programs for 

which an institution must obtain 

approval from the Department. We 

believe that with these changes, these 

proposed regulations will significantly 

reduce burden on institutions and the 

Department while still ensuring the 

effectiveness of the debt measures 

established in the Gainful 

Employment—Debt Measures final 

regulations. 

The Department used the negotiated 

rulemaking process to discuss its 

proposal to define eligibility for gainful 

employment programs using metrics. 

Following the completion of the 

negotiated rulemaking sessions, the 

Department published the July 26th 

NPRM and received over 90,000 

comments in response to those 

proposed regulations. These proposed 

regulations arise from those discussions, 

proposals, and comments submitted, 

and, per the Department’s stated goal in 

the Gainful Employment—New 

Programs final regulations, would 

establish a simplified process for 

institutions to establish the eligibility of 

new gainful employment programs now 

that the gainful employment measures 

have been finalized. The discussions 

about new programs during negotiated 

rulemaking, and the comments received 

on the July 26th NPRM, were focused on 

the nature of the requirements that 

would be in place at the conclusion of 

the rulemaking process. For these 

reasons, the Department has determined 

that it is not necessary to conduct 

additional negotiations to discuss the 

proposed requirements regarding the 

approval of new gainful employment 

programs. The Department is publishing 

new proposed regulations and 

requesting additional public comment 

because the proposed changes will 

modify the Gainful Employment—New 

Programs final regulations that require 

institutions to provide notice to the 

Department for all new gainful 

employment programs. 

Summary of Proposed Changes 

These proposed regulations would 

amend the application process for new 

programs by— 

• Limiting the new gainful 

employment programs for which an 

institution must apply to the 

Department to those programs that are 

(1) the same as, or substantially similar 

to, failing programs that the institution 

voluntarily discontinued or programs 

that became ineligible under the debt 

measures for gainful employment 

programs, and (2) programs that are 

substantially similar to failing programs; 

• Specifying that a program is 

substantially similar if it has the same 

credential level and the same first four 

digits of the CIP code as that of a failing 

program, a failing program the 

institution voluntarily discontinued, or 

an ineligible program; 

• Clarifying that there are separate 

application requirements for 

establishing the eligibility of other 

educational programs such as direct 

assessment programs and 

comprehensive transition and 

postsecondary programs; 

• Providing that if the Secretary 

notifies an institution, the institution 

must apply for approval of a new 

educational program; 

• Revising the documentation that 

must be included in an institution’s 

application to establish the eligibility of 

a new gainful employment program; 

• Specifying that the Secretary may 

request additional information from the 

institution prior to making an eligibility 

determination for a new gainful 

employment program; 

• Specifying that the Secretary, in 

making an eligibility determination, will 

take into account whether the processes 

used and determinations made by the 

institution to offer the program are 

sufficient and will consider the 

performance of the institution’s other 

gainful employment programs; and 

• Specifying that if the Secretary 

denies the eligibility of a new gainful 

employment program, the Secretary will 

inform an institution of the reasons for 

the denial and the institution may 

request that the Secretary reconsider the 

determination. 

Significant Proposed Regulations 

Part 600 Institutional Eligibility Under 

the Higher Education Act of 1965, as 

Amended 

We discuss substantive issues under 

the sections of the proposed regulations 

to which they pertain. Generally, we do 

not address proposed regulatory 

changes that are technical or otherwise 

minor in effect. 

Classification of Instructional Programs 

(CIP) Code 

Statute: Section 481 of the HEA (20 

U.S.C. 1088) provides definitions for the 

General Provisions Relating to Student 

Financial Assistance Programs. It does 

not provide a definition of Classification 

of instructional programs or CIP. 

Current regulations: The classification 

of instructional programs (CIP) code is 

described under current 

§ 600.10(c)(2)(i). 

Proposed regulations: We propose to 

relocate the current description of the 

CIP to § 600.2, Definitions. Under this 

section, the CIP would be defined as ‘‘a 

taxonomy of instructional program 

classifications and descriptions 

developed by the U.S. Department of 

Education’s National Center for 

Education Statistics.’’ 

Reasons: This is merely a technical 

change that would include the 

definition of the term Classification of 

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59866 Federal Register / Vol. 76, No. 187 / Tuesday, September 27, 2011 / Proposed Rules 

instructional programs or CIP among the 

definitions of other terms used in part 

600 of the title IV, HEA program 

regulations. 

New Educational Programs 

Statute: With regard to eligibility for 

funds under title IV of the HEA, section 

481 of the HEA defines an eligible 

program (20 U.S.C. 1088(b)), and section 

498 of the HEA provides for the 

eligibility of institutions of higher 

education (20 U.S.C. 1099c). 

Current regulations: Under current 

§ 600.10(c)(1), an institution that 

intends to add a gainful employment 

program, as provided under 34 CFR 

668.8(c)(3) or (d), must notify the 

Department at least 90 days before the 

first day of class for that program. The 

institution may proceed to offer the 

program described in its notice to the 

Secretary, unless the Department 

advises the institution that the program 

must be approved under 

§ 600.20(c)(1)(v). Except for direct 

assessment programs under 34 CFR 

668.10, or pursuant to a requirement 

included in an institution’s program 

participation agreement (PPA) under 34 

CFR 668.14, an institution does not have 

to apply to the Department for approval 

to add any other type of educational 

program. 

Under § 600.20(c)(2), an institution 

that wishes to expand the scope of its 

eligibility by increasing its level of 

program offerings (e.g., adding graduate 

degree programs when it previously 

offered only baccalaureate degree 

programs) must apply to the Secretary 

for approval of that expanded scope. 

Under 34 CFR 668.10(b), an 

institution that offers a direct 

assessment program must apply to the 

Secretary to establish the eligibility of 

that program for title IV, HEA program 

funds. 

Under 34 CFR 668.13(c)(4)(ii), the 

Secretary may condition the provisional 

certification of an institution by 

specifying compliance requirements in 

the institution’s PPA. 

Under 34 CFR 668.14(a), the Secretary 

may condition an institution’s 

participation in the title IV, HEA 

programs by specifying compliance 

requirements in the institution’s PPA. 

We note that the Secretary may specify 

compliance requirements regardless of 

whether the institution is provisionally 

certified under 34 CFR 668.13(c). 

Under 34 CFR 668.232, an institution 

that offers a comprehensive transition 

and postsecondary program must apply 

to the Secretary to establish the 

eligibility of that program for title IV, 

HEA program funds. 

Proposed regulations: In proposed 

§ 600.10(c)(1), we specify that an 

institution would not have to apply to 

the Secretary for approval of a new 

educational program unless the 

institution is required to obtain the 

Secretary’s approval under the 

provisions in § 600.20(c)(2), 

§ 600.20(d)(2), 34 CFR 668.10(b), 34 CFR 

668.14(a)(1), or 34 CFR 668.232, or the 

Secretary notifies the institution that it 

must apply for approval. 

Instead of subjecting all gainful 

employment programs to a notice 

process or a notice and approval 

process, we propose in § 600.10(c)(1), by 

reference to § 600.20(d)(2), to limit 

required approvals to new gainful 

employment programs that are the same 

as or substantially similar to programs 

that performed poorly under the debt 

measures in 34 CFR 668.7(a). As 

discussed more fully under the heading 

Application requirements, in proposed 

§ 600.20(d) an institution would have to 

obtain the Department’s approval only if 

a gainful employment program (1) is the 

same as, or substantially similar to, a 

failing program that the institution 

voluntarily discontinued under 34 CFR 

668.7(l)(1) or a program that became 

ineligible under 34 CFR 668.7(i), or (2) 

is substantially similar to a failing 

program under 34 CFR 668.7(h). 

Reasons: The changes we are 

proposing in § 600.10(c)(1)(i), would 

clarify the approval provisions that 

apply to new programs by providing 

references for existing approval 

requirements in one regulatory 

provision. We are proposing in 

§ 600.10(c)(1)(ii) that institutions must 

apply for approval of new programs if 

the Secretary notifies them they must do 

so, in order to ensure that the Secretary 

has sufficient discretion to assess 

whether a new program would serve 

students effectively. For example, the 

Secretary would have the discretion to 

notify an institution that it must apply 

for approval for a new program due to 

material audit or program review 

deficiencies such as late or unmade 

refunds, verification issues, failure to 

provide timely notices of significant 

events, or other conditions that 

adversely affect its administrative or 

financial capability, including the 

performance of its gainful employment 

programs under the debt measures in 34 

CFR 668.7. 

Our proposed approach in 

§ 600.10(c)(1) and § 600.20(d)(2) is 

consistent with the approach taken in 

the Gainful Employment—Debt 

Measures final regulations in that both 

sets of regulations focus on poorly 

performing gainful employment 

programs. Moreover, by publishing 

these proposed regulations we are 

carrying out the commitment made in 

the Gainful Employment—New 

Programs final regulations (75 FR 

66669), to establish performance-based 

standards for approving new programs. 

Compared to the current regulations for 

new programs, this performance-based 

approach would decrease burden for 

institutions and the Department by 

eliminating the notice and approval 

process for many new gainful 

employment programs. We believe that 

this tailored program approval process 

would protect student borrowers while 

reducing institutional costs and burden. 

Application requirements. 

Statute: With regard to eligibility for 

funds under title IV of the HEA, section 

481 of the HEA defines an eligible 

program (20 U.S.C. 1088(b)), and section 

498 of the HEA provides for the 

eligibility of institutions of higher 

education (20 U.S.C. 1099c). 

Current regulations: Under the current 

procedures in § 600.20(d)(1), an 

institution must notify the Department 

of its intent to offer an additional 

educational program, or submit an 

application requesting approval to 

expand the institution’s eligibility. The 

institution must provide, in a format 

prescribed by the Secretary, all the 

information and documentation 

requested by the Department to make a 

determination of the program’s 

eligibility or institutional certification. 

For a new gainful employment program, 

an institution must notify the 

Department at least 90 days before the 

first day of class for that program. 

Unless the Department alerts the 

institution at least 30 days before the 

first day of class that the program must 

be approved for title IV, HEA program 

purposes, the institution may disburse 

title IV, HEA program funds to students 

enrolled in the program. However, if an 

institution does not notify the 

Department before the 90-day period, it 

must obtain the Department’s approval 

before disbursing title IV, HEA program 

funds to students in the program. In any 

case, whenever a new gainful 

employment program must be approved, 

the Department treats the institution’s 

notice as an application for that 

program. The Department may approve 

the institution’s application or request 

more information prior to making a 

determination of whether to approve or 

deny the eligibility of the new 

educational program. 

In reviewing the institution’s 

application, the Department takes into 

account the following factors: 

(1) The institution’s demonstrated 

financial responsibility and 

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administrative performance in operating 

its existing programs. 

(2) Whether the additional program is 

one of several new programs that will 

replace similar programs currently 

provided by the institution, as opposed 

to supplementing or expanding the 

current programs provided by the 

institution. 

(3) Whether the number of additional 

programs being added is inconsistent 

with the institution’s historic program 

offerings, growth, and operations. 

(4) Whether the process and 

determination by the institution to offer 

the additional program is sufficient. 

If the Department denies an 

application from an institution to offer 

a new education program, the 

Department explains how the institution 

failed to demonstrate that the program 

is likely to lead to gainful employment 

in a recognized occupation. The 

institution may respond to the reasons 

for the denial, and request that the 

Department reconsider its 

determination. The Department bases its 

determination to deny an application on 

factors (2), (3) and (4). 

Under § 600.20(d)(2), whenever an 

institution notifies the Department of its 

intent to offer an additional gainful 

employment program, the institution 

must include in its notice: 

• A description of how the institution 

determined the need for the program 

and how the program was designed to 

meet local market needs, or for an 

online program, regional or national 

market needs. The description must 

contain any wage analysis the 

institution may have performed, 

including any consideration of Bureau 

of Labor Statistics (BLS) data related to 

the program; 

• A description of how the program 

was reviewed or approved by, or 

developed in conjunction with, business 

advisory committees, program integrity 

boards, public or private oversight or 

regulatory agencies, and businesses that 

would likely employ graduates of the 

program; 

• Documentation that the program 

has been approved by its accrediting 

agency or is otherwise included in the 

institution’s accreditation by its 

accrediting agency, or comparable 

documentation if the institution is a 

public postsecondary vocational 

institution approved by a recognized 

State agency for the approval of public 

postsecondary vocational education in 

lieu of accreditation; and 

• The date of the first day of class of 

the new program. 

Proposed regulations: In 

§ 600.20(d)(1) we propose to eliminate 

the current notice requirements in favor 

of a more streamlined approach under 

which an institution would simply 

apply to establish the eligibility of a 

gainful employment program. 

Under proposed § 600.20(d)(2), an 

institution that seeks to establish the 

eligibility of a gainful employment 

program must submit an application to 

the Department only if that program (1) 

is the same as, or substantially similar 

to, a failing program that was 

voluntarily discontinued by the 

institution under 34 CFR 668.7(l)(1) or 

a program that became ineligible for title 

IV, HEA program funds under 34 CFR 

668.7(i), or (2) is substantially similar to 

a program designated as a failing 

program under 34 CFR 668.7(h) for any 

one of the two most recent fiscal years 

(FYs). For this purpose, a program is 

substantially similar if it has the same 

credential level and the same first four 

digits of the CIP code as that of a failing 

program, a failing program the 

institution voluntarily discontinued, or 

an ineligible program. In proposed 

§ 600.20(d)(3), while we are not 

proposing to change the core 

requirements under current 

§ 600.20(d)(2)(i), (d)(2)(ii), (d)(2)(iii), or 

(d)(2)(iv), we would augment those 

requirements by having the institution 

include in its application: 

• A wage analysis of the new program 

performed by or on behalf of the 

institution. This wage analysis would 

need to include supporting 

documentation based on the best data 

that is reasonably available to the 

institution; 

• Compared to the failing or ineligible 

program, a description of the 

enhancements or modifications the 

institution made to improve the new 

program’s performance under the 

gainful employment standards in 34 

CFR 668.7(a); and 

• The CIP code and credential level of 

the new program, along with a 

description of how the institution 

determined that CIP code. 

We would relocate the approval 

provisions in current 

§ 600.20(d)(1)(ii)(E) and (F) to proposed 

§ 600.20(d)(4) and amend those 

provisions. Under this section, the 

Department would determine whether 

to approve the eligibility of a new 

program by taking into account (1) the 

institution’s demonstrated financial 

responsibility and administrative 

capability in operating its existing 

programs, (2) whether the processes 

used and determinations made by the 

institution to offer the new program, as 

described by the institution in its 

application, are sufficient, and (3) the 

performance under 34 CFR 668.7 of the 

institution’s other gainful employment 

programs. Before making that 

determination, the Department may 

request additional information from the 

institution. If the Department denies the 

institution’s eligibility for a new gainful 

employment program, we inform the 

institution of the reasons for the denial 

and the institution may request that we 

reconsider our determination. 

These proposed regulations reflect the 

approach taken in the Gainful 

Employment—Debt Measures final 

regulations under which the Department 

identifies failing programs under the 

debt measures for gainful employment 

programs and uses those measures over 

time to determine if a program becomes 

ineligible or when it may apply to 

regain eligibility. Thus, we are 

proposing to require institutions to 

submit applications for approval for 

new programs that are substantially 

similar to failing programs that they 

offer and failing programs that they 

voluntarily discontinued. Consequently, 

in proposed § 600.20(d)(2) an institution 

must apply for approval of a new 

program if it is (1) substantially similar 

to a program designated as a failing 

program for any one of the two most 

recent fiscal years, (2) the same as or 

substantially similar to a failing program 

the institution voluntarily discontinued, 

or, (3) the same or substantially similar 

to an ineligible program that the 

institution offered. We note that under 

34 CFR 668.7(l) of the Gainful 

Employment—Debt Measures final 

regulations, an institution must delay 

submitting an application for two or 

three years if it seeks to (1) Reestablish 

the eligibility of a program that became 

ineligible under the debt measures, (2) 

reestablish the eligibility of a failing 

program that the institution voluntarily 

discontinued, or (3) establish the 

eligibility of a program substantially 

similar to an ineligible program. For 

clarity, we are restating these 

requirements in proposed 

§ 600.20(d)(2)(iii). Under these proposed 

regulations, an institution would not 

have to delay submitting an application 

for a program that is substantially 

similar to a failing program that an 

institution offers or substantially similar 

to a failing program that the institution 

voluntarily discontinued. 

Reasons: Because we will use the debt 

measures under 34 CFR 668.7 to 

identify the gainful employment 

programs that are subject to approval, it 

is no longer necessary to screen all 

potential program applications through 

the current notice process. Therefore, 

we are proposing to revise the 

application requirements in 

§ 600.20(d)(2). We note that the 

Department will obtain an updated 

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59868 Federal Register / Vol. 76, No. 187 / Tuesday, September 27, 2011 / Proposed Rules 

listing of all gainful employment 

programs, including new programs, 

under the annual reporting 

requirements in 34 CFR 668.6. Using 

that information, the Department will be 

able to monitor whether an institution 

obtained any needed approvals for new 

programs. 

With regard to the provision in 

proposed § 600.20(d)(2)(i)(B), that an 

institution must apply for approval of a 

program that is substantially similar to 

a program designated as a failing 

program for any one of the two most 

recent fiscal years, we note that this 

approach parallels the approach for 

ineligible programs under 34 CFR 

668.7(i). Under that section, a program 

becomes ineligible if it fails the debt 

measures under 34 CFR 668.7(a) for 

three out of the four most recent fiscal 

years. For example, a program becomes 

ineligible if it fails the first and second 

FYs, passes the third FY, but fails the 

fourth FY. This approach prevents a 

program that generally fails the debt 

measures from remaining eligible by 

simply passing the measures in one 

year. Likewise, under the approach 

proposed in these regulations, an 

institution would have to apply for 

approval of a program that is 

substantially similar to a program 

designated as a failing program under 34 

CFR 668.7(h) for any one of the two 

most recent fiscal years. 

Our proposal to require a wage 

analysis in § 600.20(d)(3)(v) stems, in 

part, from comments received on the 

July 26th NPRM regarding the proposal 

under which an institution would have 

to submit employer affirmations and 

enrollment projections when obtaining 

approval of a new program. The 

Department deferred addressing those 

comments in the Gainful Employment— 

New Programs final regulations. For the 

benefit of the reader, we summarize 

those comments in the following 

discussion and respond to them to 

provide context and our reasons for the 

proposed regulations regarding wage 

analysis. 

Several of the commenters supported 

the employer affirmation requirements 

as a borrower protection, but suggested 

that the Department should also require 

(1) Employers to specify the location of 

anticipated job vacancies, (2) employers 

to identify the number of current or 

expected job vacancies and whether the 

vacancies are for full-time, part-time, or 

temporary jobs, (3) that affirmations 

apply to time periods related to the 

length of the program, (4) that 

employers may not provide affirmations 

to several different institutions if the 

employer does not have jobs for the 

graduates from all those institutions, 

and (5) a standardized form to ensure 

that employer affirmations are clear and 

uniform. 

Many other commenters, however, 

objected to the requirement to provide 

employer affirmations, stating that such 

a process would be costly and 

cumbersome to implement for both 

institutions and the Department and 

that the proposal requiring employer 

affirmations was too vague. Some 

commenters were concerned that 

employers would not be qualified to 

assess the quality of an institution’s 

curriculum and that employers would 

be unwilling to affirm job openings or 

expected demand because of the 

liability risks of making such an 

affirmation and uncertainty about future 

economic conditions. Several 

commenters objected to the requirement 

that employers cannot be affiliated with 

the institution to which they provide 

the affirmation. The commenters stated 

that, as a common business practice, 

many schools work closely with 

employers that hire their students, and 

that such a prohibition would, in many 

cases, eliminate an institution’s ability 

to offer new gainful employment 

programs. Finally, several commenters 

suggested that the Department rely on 

BLS data instead of employer 

affirmations to evaluate expected 

demand because it is readily available 

and institutions can confirm demand 

before spending substantial sums for the 

development of an additional program. 

With regard to enrollment projections, 

several commenters asked the 

Department to clarify the enrollment 

projection requirement in proposed 

§ 668.7(g)(1)(ii) of the July 26th NPRM. 

Specifically, the commenters asked how 

an institution would determine 

projected enrollment, how the 

Department would use the projections, 

and whether an institution would be 

able to update its projections. Another 

commenter stated that rather than the 

Department attempting to control the 

number of individuals entering an 

occupation by limiting the students who 

enroll in a particular program, students 

should have the option of choosing a 

program as long as the program satisfies 

the standards of quality established by 

the institution’s accrediting agency. 

Although we believe that employer 

affirmations can be useful in evaluating 

whether a program is designed to meet, 

or historically met, employer and 

student needs and market demand, in 

view of the comments that the 

affirmations could be costly or difficult 

to obtain, or that some employers are 

not qualified to assess the quality of a 

program’s curriculum, we are not 

proposing in these regulations that 

institutions obtain employer 

affirmations. Instead, we propose that 

an institution must submit a wage 

analysis whenever it seeks to reestablish 

the eligibility of an ineligible program or 

a failing program that it voluntarily 

discontinued, or to establish the 

eligibility of a substantially similar 

program. The wage analysis would need 

to include supporting documentation 

based on the best data that is reasonably 

available to the institution. 

We believe the following elements 

should be included in a wage analysis 

based on the best data reasonably 

available to the institution: 

(1) The typical first-year annual 

earnings of students who would 

complete the program and the typical 

earnings of those students after a few 

years of employment; 

(2) The short- and long-term market 

demand for jobs or occupations 

stemming from the training provided by 

the program; 

(3) A sample of the types and names 

of the businesses or employers most 

likely to employ the program’s 

graduates; and 

(4) The amount of tuition and fees the 

institution will charge for the program 

and the typical loan debt a student 

would incur in completing the program. 

Data that may be reasonably available 

to the institution could include BLS 

data or data provided by businesses or 

employers consulted in developing the 

program. However, if the institution 

uses BLS data we expect the institution 

to show how the BLS data correlates to, 

or sufficiently represents, the likely 

earnings of its program graduates and 

the likely demand for jobs or 

occupations stemming from the 

program. We invite comments on the 

proposed wage analysis requirement, 

and are particularly interested in 

comments on the elements to be 

included in the wage analysis and the 

types of data that we should require to 

support these elements. We believe that 

a wage analysis is a necessary part of the 

institution’s due diligence in developing 

or revising a previously ineligible or a 

failing program that it voluntarily 

discontinued, or a substantially similar 

program, because it supports an overall 

eligibility determination that, due to the 

program improvements, there is a 

reasonable expectation that the program 

will satisfy the debt measures. 

We also reject the suggestion by some 

commenters that asking an institution to 

provide enrollment projections for an 

additional program is tantamount to 

controlling enrollment in that program. 

This information may be useful when 

evaluating whether a program is 

supposed to replace an existing program 

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over time, and provides some measure 

of the relative impact that program 

would have compared to the size of the 

institution and other programs it offers. 

Nevertheless, in view of the comments 

that providing estimated enrollment 

data may be complicated, we are not 

proposing this requirement in these 

regulations. However, the Department 

may request, as needed, additional 

information from an institution about its 

enrollment projections on a case-by-case 

basis. 

With regard to the other application 

requirements in proposed 

§ 600.20(d)(3)(vi) and (vii), the 

Department needs assurance from an 

institution that (1) the enhancements 

and modifications it made to a failing or 

ineligible program are likely to improve 

the new program’s performance under 

the debt measures in 34 CFR 668.7(a), 

and (2) it assigned the correct CIP code 

to the new program. We are proposing 

these regulations because we are 

concerned that an institution may 

attempt to circumvent the two- or threeyear ineligibility period for a failing 

program that it voluntarily discontinued 

by portraying that program in its 

application as a substantially similar 

program. 

With regard to the eligibility 

determination provisions in proposed 

§ 600.20(d)(4), we note that most of 

these provisions are the same as those 

in the current regulations under 

§ 600.20(d)(1)(ii)(E) and (F). The 

primary difference is in proposed 

§ 600.20(d)(4)(i)(B), under which we 

would take into account the 

performance of an institution’s other 

gainful employment programs under the 

debt measures in § 668.7(a) in 

determining whether to approve the 

institution’s application for a new 

program. We believe that it would be 

useful to consider the performance 

history of the institution’s programs, 

particularly since the debt measures 

under § 668.7(a) will not be calculated 

for the new program for at least three or 

four years. Moreover, we believe that an 

institution’s performance history is an 

important component in determining 

whether to approve the eligibility of a 

new gainful employment program 

because it provides an understanding of 

the program in context, and thus, allows 

for a more informed determination. 

Executive Orders 12866 and 13563 

Regulatory Impact Analysis 

Under Executive Order 12866, the 

Secretary must determine whether the 

regulatory action is ‘‘significant’’ and 

therefore subject to the requirements of 

the Executive Order and subject to 

review by the Office of Management and 

Budget (OMB). Section 3(f) of Executive 

Order 12866 defines a ‘‘significant 

regulatory action’’ as an action likely to 

result in regulations that may (1) Have 

an annual effect on the economy of $100 

million or more, or adversely affect a 

sector of the economy, productivity, 

competition, jobs, the environment, 

public health or safety, or State, local, 

or tribal governments or communities in 

a material way (also referred to as 

‘‘economically significant’’ regulations); 

(2) create serious inconsistency or 

otherwise interfere with an action taken 

or planned by another agency; (3) 

materially alter the budgetary impacts of 

entitlement grants, user fees, or loan 

programs or the rights and obligations of 

recipients thereof; or (4) raise novel 

legal or policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in the Executive 

order. 

It has been determined that this 

regulatory action is a significant 

regulatory action subject to review by 

OMB under section 3(f)(4) of Executive 

Order 12866. 

In accordance with the Executive 

order, the Department has assessed the 

potential costs and benefits of this 

regulatory action. The potential costs 

associated with this regulatory action 

are those resulting from statutory 

requirements and those we have 

determined as necessary for 

administering this program effectively 

and efficiently. Elsewhere in this 

SUPPLEMENTARY INFORMATION section we 

identify and explain burdens 

specifically associated with information 

collection requirements. See the 

heading 

Paperwork Reduction Act of 1995 

In assessing the potential costs and 

benefits of this regulatory action, we 

have determined that the benefits of the 

regulatory action justify the costs. 

The Department has also reviewed 

these regulations pursuant to Executive 

Order 13563, published on January 21, 

2011 (76 FR 3821). Executive Order 

13563 is supplemental to and explicitly 

reaffirms the principles, structures, and 

definitions governing regulatory review 

established in Executive Order 12866. 

To the extent permitted by law, agencies 

are required by Executive Order 13563 

to: (1) Propose or adopt regulations only 

upon a reasoned determination that 

their benefits justify their costs 

(recognizing that some benefits and 

costs are difficult to quantify); (2) tailor 

their regulations to impose the least 

burden on society, consistent with 

obtaining regulatory objectives, taking 

into account, among other things, and to 

the extent practicable, the costs of 

cumulative regulations; (3) select, in 

choosing among alternative regulatory 

approaches, those approaches that 

maximize net benefits (including 

potential economic, environmental, 

public health and safety, and other 

advantages; distributive impacts; and 

equity); (4) the extent feasible, specify 

performance objectives, rather than 

specifying the behavior or manner of 

compliance that regulated entities must 

adopt; and (5) identify and assess 

available alternatives to direct 

regulation, including providing 

economic incentives to encourage the 

desired behavior, such as user fees or 

marketable permits, or providing 

information upon which choices can be 

made by the public. 

We emphasize as well that Executive 

Order 13563 requires agencies ‘‘to use 

the best available techniques to quantify 

anticipated present and future benefits 

and costs as accurately as possible.’’ In 

its February 2, 2011, memorandum (M– 

11–10) on Executive Order 13563, 

improving regulation and regulatory 

review, the Office of Information and 

Regulatory Affairs has emphasized that 

such techniques may include 

‘‘identifying changing future 

compliance costs that might result from 

technological innovation or anticipated 

behavioral changes.’’ 

We are issuing these regulations only 

after making a reasoned determination 

that their benefits justify their costs and 

we selected, in choosing among 

alternative regulatory approaches, those 

approaches that maximize net benefits. 

Based on this analysis and for the 

additional reasons stated in the 

preamble, the Department believes that 

these final regulations are consistent 

with the principles in Executive Order 

13563. 

Need for Federal Regulatory Action 

Executive Order 12866 emphasizes 

that ‘‘Federal agencies should 

promulgate only such regulations as are 

required by law, are necessary to 

interpret the law, or are made necessary 

by compelling public need, such as 

material failures of private markets to 

protect or improve the health and safety 

of the public, the environment, or the 

well-being of the American people.’’ 

When the Gainful Employment—New 

Programs final regulations were 

published, the final gainful employment 

debt measures had not been established. 

The Department specified at that time 

that it intended to establish 

performance-based requirements with 

regard to approving additional programs 

once regulations for the gainful 

employment debt measures were 

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finalized. Those debt measures have 

now been finalized through the Gainful 

Employment—Debt Measures final 

regulations. Thus, these proposed 

regulations are necessary to ensure that 

the procedures for establishing new 

gainful employment programs are 

aligned with those measures and our 

intent to target the worst-performing 

programs, while allowing innovation 

and expansion by institutions with a 

track record of establishing successful 

programs. 

Regulatory Alternatives Considered 

As part of an extensive rulemaking 

process over the last two years, the 

Department considered a number of 

alternatives to these proposed 

regulations. 

July 26th NPRM 

In the July 26th NPRM, the 

Department proposed a requirement that 

would require an institution to submit 

employer affirmations and enrollment 

projections in order to demonstrate the 

need for and value of the program to be 

established. We received a number of 

comments opposing our proposal. These 

comments noted that the fact that some 

programs prepare students for 

nationwide opportunities could make it 

difficult for institutions to obtain 

nonaffiliated employer affirmations. The 

commenters expressed concern that the 

proposed process would hamper the 

development of innovative programs 

related to emerging fields of 

employment. Commenters also said that 

they believed that employers would be 

reluctant to offer affirmations for fear of 

it being construed as a commitment to 

hire. With regard to enrollment 

projections, several commenters asked 

the Department to clarify the enrollment 

projection requirement in proposed 

§ 668.7(g)(1)(ii) of the July 26th NPRM. 

Specifically, the commenters asked how 

an institution would determine 

projected enrollment, how the 

Department would use the projections, 

and whether an institution would be 

able to update its projections. Another 

commenter stated that rather than the 

Department attempting to control the 

number of individuals entering an 

occupation by limiting the students who 

enroll in a particular program, students 

should have the option of choosing a 

program as long as the program satisfies 

the standards of quality established by 

the institution’s accrediting agency. 

Gainful Employment—New Programs 

In the Gainful Employment—New 

Programs final regulations, we 

established a process for institutions to 

notify the Department before enrolling 

students in a new gainful employment 

program. We took this action out of 

concern that some institutions might 

attempt to circumvent the proposed 

gainful employment standards in the 

July 26th NPRM by adding new 

programs before those standards could 

take effect. These provisions were 

intended to serve as interim 

requirements until the final gainful 

employment debt measures could be 

finalized. In those regulations, we also 

indicated that we would defer our 

consideration of the comments 

regarding employer affirmations until 

we finalized the debt measures 

regulations. 

Under the Gainful Employment—New 

Programs final regulations, institutions 

must notify the Department within 

certain time limits before starting new 

gainful employment programs. The 

notice must describe or document: (1) 

How the institution determined the 

need for the new program and how the 

program was designed to meet local 

market needs, or for an online program, 

regional or national market needs by, for 

example, consulting BLS data or State 

labor data systems or consulting with 

State workforce agencies; (2) how the 

program was reviewed or approved by, 

or developed in conjunction with, 

business advisory committees, program 

integrity boards, public or private 

oversight or regulatory agencies, and 

businesses that would likely employ 

graduates of the program; (3) that the 

program has been approved by its 

accrediting agency or is otherwise 

included in the institution’s 

accreditation by its accrediting agency, 

or comparable documentation if the 

institution is a public postsecondary 

vocational institution approved by a 

recognized State agency for the approval 

of public postsecondary vocational 

education in lieu of accreditation; (4) 

how the program would be offered in 

connection with, or in response to, an 

initiative by a governmental entity; and 

(5) any wage analysis it may have 

performed, including any consideration 

of BLS wage data that is related to the 

new program. 

With the publication of the Gainful 

Employment—Debt Measures final 

regulations, and as discussed elsewhere 

in our discussion of these proposed 

regulations, we no longer believe that 

the notification process is necessary and 

are therefore proposing a streamlined 

approval process that targets only the 

worst-performing programs. 

Benefits 

We are establishing a process for 

institutions to apply to the Department 

for approval of new programs that are 

(1) the same as, or substantially similar 

to, failing programs that the institution 

voluntarily discontinued or programs 

that became ineligible under the debt 

measures for gainful employment 

programs, and (2) programs that are 

substantially similar to failing programs, 

in part, to ensure that institutions do not 

circumvent the debt measures we 

recently established in the Gainful 

Employment—Debt Measures final 

regulations. These proposed regulations 

clarify and streamline the review and 

approval process for new gainful 

employment programs by eliminating 

the requirement that institutions submit 

information for all new gainful 

employment programs in order to obtain 

approval, and narrowing the scope of 

new programs for which an institution 

must submit an application for 

approval. This streamlined process 

should reduce the administrative 

burden on institutions and the 

Department and allow institutions with 

a strong track record of establishing 

programs that perform well on the 

gainful employment debt measures to 

continue to innovate and expand their 

program offerings without having to 

notify the Department each time they 

offer a new program. 

We also see as a key benefit of our 

proposal that institutions would have to 

demonstrate, in applying for approval of 

a new program, how they enhanced or 

modified the ineligible or failing 

program to improve the program’s 

performance under the debt measures. 

We believe that over time, this should 

result in increased quality in the pool of 

programs from which students can 

choose to attend. 

Costs 

The main costs of these proposed 

regulations derive from the 

administrative and paperwork burden 

associated with applying for approval of 

a new program. Much of the information 

required to be included in an 

application for new program eligibility 

would be generated as a school reaches 

its decision to develop a new program. 

Accordingly, many entities wishing to 

continue to participate in the title IV, 

HEA programs have already absorbed 

many of the administrative costs that 

would be related to implementing these 

proposed regulations, and additional 

costs would primarily be due to 

documenting the program development 

process. Other institutions may have to 

establish a program development 

process, but the regulations allow 

flexibility in meeting the core 

requirements. 

In assessing the potential economic 

impact of these regulations, the 

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Department recognizes that compliance 

with the proposed regulations may 

result in an increased workload for 

some institutions but overall, when 

compared to the burden outlined in the 

July 26th NPRM and the burden 

outlined in the Gainful Employment— 

New Programs final regulations, there 

will be a net reduction in burden. 

Additional costs would normally be 

expected to result from either the hiring 

of additional employees or opportunity 

costs related to the reassignment of 

existing staff from other activities. 

In the July 26th NPRM, we estimated 

that the burden to institutions of 

researching and establishing new 

programs would be 8,450 hours, or 

$175,000 per year. In the Gainful 

Employment—New Programs final 

regulations, we estimated that the 

burden on institutions in complying 

with the notification process would be 

3,591 hours, or $91,032 per year. 

As described in the Paperwork 

Reduction Act of 1995 section of this 

preamble, following issuance of the 

Gainful Employment—New Programs 

final regulations, the Department 

continued to review the estimates of 

new programs that would be subject to 

the notice requirement in those 

regulations. Based on that analysis and 

specifically, an increase in the estimated 

number of new program applications, 

we have revised the estimated burden of 

the Gainful Employment—New 

Programs final regulations from 3,591 

hours to 12,343 hours. Based on a wage 

rate of $25.35, this results in a revised 

estimate of $312,895 for complying with 

the Gainful Employment—New 

Programs final regulations. 

The changes proposed in this NPRM 

are expected to reduce burden by 7,068 

hours to an estimated 5,275 hours, 

primarily by restricting the application 

requirement to programs that are the 

same as or substantially similar to 

failing programs voluntarily 

discontinued or ineligible programs, or 

the same as a failing program under 34 

CFR 668.7(h). Thus, the estimated cost 

is also reduced to $133,721. 

Given the limited data available, the 

Department is particularly interested in 

comments and supporting information 

related to possible burden stemming 

from these proposed regulations. 

Estimates included in this notice will be 

reevaluated based on any information 

received during the public comment 

period. 

Net Budget Impacts 

The proposed regulations are not 

estimated to have a net budget impact 

as the changes in the process for 

establishing new programs is not 

expected to change the demand for 

programs. While the process to establish 

new programs will be easier for 

institutions with a track record of 

successful programs, it is only in their 

interest to establish new programs if the 

new programs will pass the gainful 

employment debt measures. Program 

expansion and contraction occur on a 

regular basis and the change in the 

process to establish eligibility is not 

expected to affect capacity in a way that 

would impact the Federal student aid 

programs. 

Assumptions, Limitations, and Data 

Sources 

In developing these estimates, a wide 

range of data sources was used, 

including data from the National 

Student Loan Data System (NSLDS); 

operational and financial data from 

Department of Education systems; and 

data from a range of surveys conducted 

by the National Center for Education 

Statistics (NCES) such as the 2007–2008 

National Postsecondary Student Aid 

Study (NPSAS), the 2008–09 Integrated 

Postsecondary Education Data System 

(IPEDS), and the 2009 follow-up to the 

2004 Beginning Postsecondary Students 

Longitudinal Study (BPS). Data from 

other sources, such as the U.S. Census 

Bureau and the Missouri Department of 

Higher Education, were also used. The 

estimates for the number of programs 

affected were derived from the estimates 

described in the Gainful Employment— 

Debt Measures final regulations. Data on 

administrative burden at participating 

institutions are extremely limited; 

accordingly, the Department is 

interested in receiving comments in this 

area. As additional data become 

available, the Department may update 

these estimates. 

We identify and explain burdens 

specifically associated with information 

collection requirements in the 

Paperwork Reduction Act of 1995 

section of the preamble. 

Accounting Statement 

As required by OMB Circular A–4 

(available at http:// 

www.whitehouse.gov/sites/default/files/ 

omb/assets/omb/circulars/a004/a-4.pdf, 

in Table A as follows, we have prepared 

an accounting statement showing the 

classification of the expenditures 

associated with the provisions of these 

regulations. This table provides our best 

estimate of the changes in Federal 

student aid payments as a result of these 

regulations. Expenditures are classified 

as transfers from the Federal student aid 

programs to students. 

TABLE A—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES

[In millions] 

Category Costs 

Reduction in Cost of Paperwork Burden ................................................................................................................................. ($.13). 

Category .................................................................................................................................................................................. Transfers. 

Annualized Monetized Transfers ............................................................................................................................................. $0. 

From Whom To Whom? .......................................................................................................................................................... N/A. 

Clarity of the Regulations 

Executive Order 12866 and the 

Presidential memorandum on ‘‘Plain 

Language in Government Writing’’ 

require each agency to write regulations 

that are easy to understand. 

The Secretary invites comments on 

how to make these proposed regulations 

easier to understand, including answers 

to questions such as the following: 

• Are the requirements in the 

proposed regulations clearly stated? 

• Do the proposed regulations contain 

technical terms or other wording that 

interferes with their clarity? 

• Does the format of the proposed 

regulations (grouping and order of 

sections, use of headings, paragraphing, 

etc.) aid or reduce their clarity? 

• Would the proposed regulations be 

easier to understand if we divided them 

into more (but shorter) sections? (A 

‘‘section’’ is preceded by the symbol 

‘‘§ ’’ and a numbered heading; for 

example, § 600.2 Definitions.) 

• Could the description of the 

proposed regulations in the 

SUPPLEMENTARY INFORMATION section of 

this preamble be more helpful in 

making the proposed regulations easier 

to understand? If so, how? 

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59872 Federal Register / Vol. 76, No. 187 / Tuesday, September 27, 2011 / Proposed Rules 

• What else could we do to make the 

proposed regulations easier to 

understand? 

To send any comments that concern 

how the Department could make these 

proposed regulations easier to 

understand, see the instructions in the 

ADDRESSES section of this preamble. 

Regulatory Flexibility Act Certification 

The Secretary certifies that these 

proposed regulations would not have a 

significant economic impact on a 

substantial number of small entities. 

These regulations would affect 

institutions that participate in title IV, 

HEA programs and loan borrowers. The 

definition of ‘‘small entity’’ in the 

Regulatory Flexibility Act encompasses 

‘‘small businesses,’’ ‘‘small 

organizations,’’ and ‘‘small 

governmental jurisdictions.’’ The 

definition of ‘‘small business’’ comes 

from the definition of ‘‘small business 

concern’’ under section 3 of the Small 

Business Act as well as regulations 

issued by the U.S. Small Business 

Administration (SBA). The SBA defines 

a ‘‘small business concern’’ as one that 

is ‘‘organized for profit; has a place of 

business in the U.S.; operates primarily 

within the U.S. or makes a significant 

contribution to the U.S. economy 

through payment of taxes or use of 

American products, materials or labor 

* * *’’ ‘‘Small organizations,’’ are 

further defined as any ‘‘not-for-profit 

enterprise that is independently owned 

and operated and not dominant in its 

field.’’ The definition of ‘‘small entity’’ 

also includes ‘‘small governmental 

jurisdictions,’’ which includes ‘‘school 

districts with a population less than 

50,000.’’ 

Data from the Integrated 

Postsecondary Education Data System 

(IPEDS) indicate that roughly 4,379 

institutions participating in the Federal 

student assistance programs meet the 

definition of ‘‘small entities.’’ The 

following table provides the distribution 

of institutions and students by revenue 

category and institutional control. 

Approximately two-thirds of these 

institutions are for-profit schools that 

would be subject to these proposed 

regulations. Other affected small 

institutions include small community 

colleges and tribally controlled schools. 

The impact of the regulations on 

individuals is not subject to the 

Regulatory Flexibility Act. 

We estimated in the Gainful 

Employment—Debt Measures final 

regulations that approximately 3 percent 

of programs at small entities across all 

sectors would fail the measures at least 

once. The changes to the process for 

establishing new gainful employment 

programs that we are proposing in this 

NPRM would eliminate the notice 

requirement for the vast majority of 

programs at small entities because most 

gainful employment programs offered at 

those institutions are expected to pass 

the gainful employment measures. For 

institutions that choose to pursue 

establishing the title IV, HEA eligibility 

for a new program associated with a 

program that failed the gainful 

employment measures, the proposed 

regulations consolidate the notice and 

application process from the Gainful 

Employment—New Programs 

regulations and build on existing 

processes for determining if the 

Department will approve the new 

program. 

As detailed in the Paperwork 

Reduction Act of 1995 section of this 

preamble, institutions would only have 

to apply to establish gainful 

employment programs that are the same 

as or substantially similar to programs 

that are ineligible or that have been 

voluntarily withdrawn or programs that 

are substantially similar to failing 

programs. There are no explicit growth 

limitations or employer verification 

requirements. The estimated total hours, 

costs, and requirements applicable to 

small entities from these provisions on 

an annual basis are 3,165 hours and 

$80,233, based on a wage rate of $25.35. 

This represents a decrease from the 

revised estimated burden associated 

with the Gainful Employment—New 

Programs regulations of 7,406 hours and 

$187,737. 

The proposed regulations are unlikely 

to conflict with or duplicate existing 

Federal regulations. 

Alternatives Considered 

No alternative provisions were 

considered that would target small 

institutions with exemptions or 

additional time for compliance as this 

provision builds on existing industry 


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practices. The Secretary invites 

comments from small institutions and 

other affected entities as to whether they 

believed the proposed changes would 

have a significant economic impact on 

them and requests evidence to support 

that belief. 

Paperwork Reduction Act of 1995 

As part of its continuing effort to 

reduce paperwork and respondent 

burden, the Department conducts a 

preclearance consultation program to 

provide the general public and Federal 

agencies with an opportunity to 

comment on proposed and continuing 

collections of information in accordance 

with the Paperwork Reduction Act of 

1995 (PRA) (44 U.S.C. 3506(c)(2)(A)). 

This helps ensure that the public 

understands the Department’s collection 

instructions; respondents can provide 

the requested data in the desired format; 

reporting burden (time and financial 

resources) is minimized; collection 

instruments are clearly understood; and 

the Department can properly assess the 

impact of collection requirements on 

respondents. 

Proposed § 600.20 contains 

information collection requirements. 

Under the Paperwork Reduction Act of 

1995 (44 U.S.C. 3507(d)), the 

Department has submitted a copy of this 

section to OMB for its review. 

A Federal agency cannot conduct or 

sponsor a collection of information 

unless OMB approves the collection 

under the PRA and the corresponding 

information collection instrument 

displays a currently valid OMB control 

number. Notwithstanding any other 

provision of law, no person is required 

to comply with, or is subject to penalty 

for failure to comply with, a collection 

of information if the collection 

instrument does not display a currently 

valid OMB control number. 

In the final regulations we will 

display the control number assigned by 

OMB to any information collection 

requirement in these proposed 

regulations and adopted in the final 

regulations. 

Estimating the Number of New Gainful 

Employment Programs 

Since the publication of the Gainful 

Employment—New Program final 

regulations, we have continued to 

analyze the number of gainful 

employment programs that have been 

submitted to the Department for 

approval. We now estimate, based on 

the following information, that 

institutions will submit a total of 4,527 

new gainful employment programs to 

the Department for approval annually. 

With respect to nondegree programs, 

in 2009, there were 4,852 new gainful 

employment nondegree programs 

submitted to the Department by 

institutions. In 2010, there were 3,318 

new gainful employment nondegree 

programs submitted to the Department 

for approval. We have averaged these 

two numbers to estimate the annual 

number of new gainful employment 

nondegree programs established by 

institutions to be 4,085 (4,852 plus 

3,318 equals 8,170, which we then 

divided by 2). The total number of new 

gainful employment nondegree 

programs by institutional type is 540 

new nondegree programs at proprietary 

institutions; 433 new nondegree 

programs at private nonprofit 

institutions; and 3,112 new nondegree 

programs at public institutions. 

With respect to degree programs, we 

do not currently maintain records 

concerning the number of new gainful 

employment degree programs that are 

established by institutions on an annual 

basis. Previously, we have only required 

that institutions report new degree 

programs periodically at the time of 

recertification. We determined from a 

review of the June 13, 2011 Gainful 

Employment—Debt Measures final 

regulations (76 FR 34386, June 13, 2011) 

that 55 percent of the gainful 

employment programs at proprietary 

institutions are nondegree programs, 

and that 45 percent are degree programs. 

As described earlier, we estimate that 

proprietary institutions will seek to 

establish 540 new gainful employment 

nondegree programs on an annual basis. 

If the 540 new nondegree programs 

make up 55 percent of the total number 

of new nondegree programs at 

proprietary institutions, then the total 

number of new programs established by 

such institutions would be 982 (540 

divided by 0.55 equals 982). Therefore, 

we estimate that proprietary institutions 

will seek to establish a total of 442 new 

gainful employment degree programs on 

an annual basis (982 minus 540 equals 

442). 

The sum of the number of new gainful 

employment nondegree programs 

established annually (4,085) and new 

gainful employment degree programs 

established annually (442) is 4,527. 

Thus, we estimate that institutions will 

be establishing a total of 4,527 new 

gainful employment programs annually. 

Proposed § 600.20—Application 

procedures for establishing, 

reestablishing, maintaining, or 

expanding program eligibility and 

institutional eligibility and certification. 

The proposed regulations eliminate 

the current notice requirements in favor 

of a more streamlined approach under 

which an institution would simply 

apply to establish the eligibility of 

certain new gainful employment 

programs rather than all new gainful 

employment programs. As a result, there 

will be fewer submissions for approval 

of new programs under these proposed 

regulations, as compared to the current 

notification requirements that apply to 

all new gainful employment programs. 

Section 600.20(d)(2) 

In proposed § 600.20(d)(2), an 

institution that seeks to establish the 

eligibility of a gainful employment 

program must submit an application to 

the Department, except as provided 

under § 600.10(c)(1), only if that 

program (1) is the same as, or 

substantially similar to, a failing 

program that was voluntarily 

discontinued by the institution under 34 

CFR 668.7(l)(1) or a program that 

became ineligible for title IV, HEA 

program funds under 34 CFR 668.7(i), or 

(2) is substantially similar to a failing 

program designated as a failing program 

under 34 CFR 668.7(h) for any one of 

the two most recent fiscal years. For this 

purpose, a program is substantially 

similar if it has the same credential level 

and the same first four digits of the CIP 

code as that of a failing program, a 

failing program the institution 

voluntarily discontinued, or an 

ineligible program. The application and 

eligibility determination requirements 

are set forth in § 600.20(d)(3) and (d)(4), 

respectively. 

Section 600.20(d)(3) 

Proposed § 600.20(d)(3) specifies the 

information that an institution that 

seeks to establish the eligibility of a 

program that leads to gainful 

employment under § 600.20(d)(2) must 

include in its application. In this 

proposed regulation, we are retaining 

the core requirements for information to 

be reported about new programs under 

current § 600.20(d)(2)(i), (d)(2)(ii), 

(d)(2)(iii), and (d)(2)(iv), and we propose 

to augment those requirements by 

having the institution include the 

following additional information in its 

application: (1) A wage analysis of the 

new program performed by or on behalf 

of the institution (§ 600.20(d)(3)(v)); (2) 

compared to the failing or ineligible 

program, a description of the 

enhancements or modifications the 

institution made to improve the new 

program’s performance under the 

gainful employment standards in 

§ 668.7(a) (§ 600.20(d)(3)(vi)); and (3) the 

CIP code and credential level of the new 

program, along with a description of 

how the institution determined that CIP 

code (§ 600.20(d)(3)(vii)). 

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59874 Federal Register / Vol. 76, No. 187 / Tuesday, September 27, 2011 / Proposed Rules 

In the Gainful Employment—New 

Programs final regulations, we estimated 

that the burden associated with 

notifying the Department about a new 

gainful employment program would be 

an average of 2.5 hours. With respect to 

the application requirements under the 

proposed regulations, we anticipate a 

small additional amount of burden 

associated with the collection of a wage 

analysis of the new program under 

proposed § 600.20(d)(3)(v), a description 

of the enhancements or modifications 

the institution made to improve the new 

program’s performance under proposed 

§ 600.20(d)(3)(vi), and the requirement 

that an application include the CIP 

code, the credential level, and a 

description of how the institution 

determined the CIP code under 

proposed § 600.20(d)(3)(vii). As a result 

of these proposed changes, we expect 

the per unit burden for each submission 

to increase from an average of 2.5 hours 

to 3 hours per submission. 

We are estimating the application 

burden for new gainful employment 

programs based upon the type of 

institution and the type of program. We 

begin this analysis by adjusting the 

number of programs in each group to 

remove the programs that are exempt 

from the debt measures under 

§ 668.7(d)(2) (i.e., programs with 30 or 

fewer borrowers or completers), because 

those programs cannot trigger an 

application requirement for an 

institution (the remaining programs are 

ones to which the debt measures apply). 

We then determine how many of those 

remaining programs will fail the debt 

measures at least once. We estimate that 

this is the number of new programs that 

would need to submit an application to 

the Secretary for approval under 

proposed § 600.20(d)(2). 

We estimate that the number of 

programs that fail the debt measures at 

least once will be comparable to the 

number of new programs that are the 

same as or substantially similar to 

failing programs that an institution 

voluntarily discontinued or ineligible 

programs, or substantially similar to 

failing programs because we believe 

schools will generally aim to modify or 

replace programs that fail. We 

understand that some institutions may 

already have other programs that are 

providing better outcomes under the 

debt measures and therefore may not 

replace a program that was less 

successful under those measures. We 

also believe that some institutions may 

decide to focus on establishing new 

gainful employment programs that are 

not substantially similar to a program 

that did not perform well on the debt 

measures. In these cases, an institution 

would not be required to obtain 

approval of the new program under 

proposed § 600.20. On the other side of 

this equation, however, we also believe 

that some institutions will seek to offer 

new programs that are the same as or 

substantially similar to failing programs 

the institution voluntarily discontinued 

or were determined ineligible or 

substantially similar to failing programs. 

In these cases, an institution would be 

required to obtain the Secretary’s 

approval under proposed § 600.20. On 

balance, we believe that for every 

gainful employment program that fails 

the debt measures at least once, there 

will be a new program established that 

will need to obtain approval under the 

application requirements. We are using 

this same estimate across all types of 

affected entities (proprietary 

institutions, private nonprofit 

institutions, and public institutions). 

The amount of burden we are estimating 

for each of these sectors under these 

proposed regulations follows. 

Nondegree Programs—Proprietary 

Institutions. Based on the Gainful 

Employment—Debt Measures final 

regulations analysis in Table 9–A (76 FR 

34386, 34474) (Table 9–A), we estimate 

that there are 7,213 existing gainful 

employment nondegree programs at 

proprietary institutions (13,114 total 

gainful employment programs times 55 

percent that are nondegree programs 

equals 7,213 nondegree programs). 

Based upon the Gainful Employment— 

Debt Measures final regulations analysis 

in Table 1 (76 FR 34386, 34457) (Table 

1), we project that 39.5 percent of 

existing nondegree programs at 

proprietary institutions will be exempt 

from the debt measures because they 

have 30 or fewer borrowers or 

completers and that the remaining 60.5 

percent of the gainful employment 

nondegree programs will be subject to 

the debt measures; therefore, 4,364 

nondegree programs (7,213 times 0.605 

equals 4,364) will be subject to the debt 

measures. Table 9–A indicates that 18 

percent of proprietary nondegree 

programs will fail or become ineligible 

for a total of 786 programs (4,364 times 

0.18 equals 786). Therefore, for the 

reasons discussed previously, we 

estimate that proprietary institutions 

would apply for approval for 786 new 

gainful employment nondegree 

programs under proposed § 600.20(d). 

We estimate that on average, each 

application would take 3 hours to 

prepare and submit to the Department; 

therefore, the total amount of burden for 

proprietary institutions to submit 

applications for new gainful 

employment nondegree programs would 

equal 2,358 hours under OMB control 

number 1845–0012. 

Nondegree Programs—Private 

Nonprofit Institutions. 

Based on the analysis in Table 9–A, 

we estimate that there are 2,790 existing 

gainful employment nondegree 

programs at private nonprofit 

institutions (5,073 total gainful 

employment programs times 55 percent 

that are nondegree programs equals 

2,790 nondegree programs). Based upon 

the analysis in Table 1, we project that 

75.6 percent of these programs will be 

exempt from the debt measures because 

they have 30 or fewer borrowers or 

completers and that 24.4 percent of 

these programs will be subject to the 

debt measures. Therefore, 681 gainful 

employment nondegree programs at 

private nonprofit institutions (2,790 

times 0.244 equals 681) will be subject 

to the debt measures. Table 9–A 

indicates that 5 percent of these 

programs will fail or become ineligible 

for a total of 34 programs (681 times 

0.05 equals 34). Therefore, for the 

reasons discussed previously, we 

estimate that private nonprofit 

institutions would apply for approval 

for 34 new gainful employment 

nondegree programs under proposed 

§ 600.20(d)(2). 

We estimate that, on average, each 

application would take 3 hours to 

prepare and submit to the Department; 

therefore, the total burden for private 

nonprofit institutions to submit 

applications for new gainful 

employment nondegree would equal 

102 hours under OMB control 1845– 

0012. 

Nondegree Programs—Public 

Institutions. 

Based upon the analysis in Table 9– 

A, we estimate that there are 20,470 

existing gainful employment nondegree 

programs at public institutions (37,218 

total gainful employment programs 

times 55 percent that are nondegree 

programs equals 20,470 nondegree 

programs). Based upon the analysis in 

Table 1, we project that 68.1 percent of 

these programs will be exempt from the 

debt measures because they have 30 or 

fewer borrowers or completers and that 

the remaining 31.9 percent of these 

programs will be subject to the debt 

measures; therefore, 6,530 nondegree 

programs at public institutions (20,470 

times 0.319 equals 6,530) will be subject 

to the debt measures. 

Table 9–A indicates that 3 percent of 

gainful employment nondegree 

programs at public institutions will fail 

or become ineligible for a total of 196 

programs (6,530 times 0.03 equals 196). 

Therefore, for the reasons discussed 

previously, we estimate that public 

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institutions would apply for approval 

for 196 gainful employment nondegree 

programs under proposed § 600.20(d)(2). 

We estimate that, on average, each 

application would take 3 hours to 

prepare and submit to the Department; 

therefore, the total amount of burden for 

public institutions to submit 

applications for new gainful 

employment nondegree programs would 

equal 588 hours under OMB control 

number 1845–0012. 

Collectively, we project that the 

annual burden for the submission of 

applications for new gainful 

employment nondegree programs under 

proposed § 600.20(d) would be 3,048 

hours under OMB 1845–0012. 

Degree Programs. 

Based upon the analysis in Table 9– 

A, we estimate that there are 5,901 

existing gainful employment degree 

programs at proprietary institutions 

(13,114 total gainful employment 

programs at proprietary institutions 

times 45 percent that are degree 

programs equals 5,901 degree 

programs). Based upon the analysis in 

Table 1, we project that 39.5 percent 

will be exempt from the debt measures 

because they have 30 or fewer borrowers 

or completers and that the remaining 

60.5 percent of these programs will be 

subject to the debt measures; therefore, 

3,570 degree programs (5,901 times 

0.605 equals 3,570) will be subject to the 

debt measures. 

Table 9–A indicates that 18 percent of 

degree programs at proprietary schools 

will fail or become ineligible for a total 

of 643 programs (3,570 times 0.18 

equals 643). Therefore, for the reasons 

described previously, we estimate that 

proprietary institutions would apply for 

approval for 643 new gainful 

employment degree programs under 

proposed § 600.20(d)(2). 

As indicated previously, given the 

additional items that an institution must 

include in its application, we have 

adjusted the amount of burden per 

submission; therefore, we estimate that 

the average amount of time to prepare 

and submit the application would 

increase from 1.75 hours, as described 

in the Gainful Employment—New 

Programs final regulations, to 2.25 hours 

per submission under these proposed 

regulations. 

We estimate that the burden for 

institutions to submit individual 

applications for 643 new degree 

programs would be 1,447 hours (643 

individual submissions times 2.25 hours 

per submission equals 1,447 hours) 

under OMB control number 1845–0012. 

Collectively, we estimate that the 

annual burden on proprietary 

institutions for gainful employment 

degree program submissions under 

proposed § 600.20(d) would be 1,447 

hours under OMB control number 

1845–0012. 

Section 600.20(d)(4)(ii) 

The proposed regulations in 

§ 600.20(d)(4)(ii) provide that the 

Secretary may request additional 

information from an institution that has 

submitted an application for approval of 

a new program before making an 

eligibility determination. Therefore, we 

have estimated the amount of reporting 

burden associated with providing the 

additional information. As we did with 

our analysis of the burden under 

proposed § 600.20(d)(3), we provide the 

following sector-by-sector analysis of 

the burden for nondegree programs 

under the provisions of 

§ 600.20(d)(4)(ii). 

Nondegree Programs—Proprietary 

Institutions. 

As noted previously, we estimate that 

proprietary institutions would apply for 

approval for 786 new gainful 

employment nondegree programs under 

proposed § 600.20(d). We further 

estimate that of those 786 new 

programs, the Secretary will request 

additional information for 24 percent. 

We estimate that for 10 percent of the 

applications, the request will be for 

minor clarifications and would likely be 

resolved through a phone call or e-mail 

to institutional staff. The additional 

increase in burden associated with these 

minor clarifications would average an 

additional 0.5 hours per contact for a 

total increase of 40 hours under OMB 

control number 1845–0012 (786 

applications times 0.1 equals 79 

requests for minor clarifications, times 

0.5 hours per request equals 40 hours). 

We estimate that for 14 percent of the 

applications, an institution would have 

to submit substantive additional 

information in response to the 

Secretary’s request. The additional 

increase in burden associated with 

responding to a request for additional 

substantive information would average 

an additional 3 hours per request for a 

total increase of 330 hours under OMB 

control number 1845–0012 (786 

applications times 0.14 equals 110 

requests for substantive additional 

information, times 3 hours per request 

equals 330 hours). 

Nondegree programs—Private 

Nonprofit Institutions. 

As noted previously, we estimate that 

private nonprofit institutions would 

apply for approval for 34 new gainful 

employment nondegree programs under 

proposed § 600.20(d)(2). We further 

estimate that of those 34 new programs, 

the Secretary will request additional 

information for 24 percent. We estimate 

that for 10 percent of the applications, 

the request will be for minor 

clarifications and would likely be 

resolved through a phone call or e-mail 

to institutional staff. The additional 

increase in burden associated with these 

minor clarifications would average an 

additional 0.5 hours per contact for a 

total increase of 2 hours under OMB 

control number 1845–0012 (34 

applications times 0.10 equals 3 

requests for minor clarifications times 

0.5 hours per request equals 2 hours). 

We estimate that for 14 percent of the 

applications, an institution would have 

to submit substantive additional 

information in response to the 

Secretary’s request. The additional 

increase in burden associated with 

responding to a request for additional 

substantive information would average 

an additional 3 hours per request for a 

total increase of 15 hours under OMB 

control number 1845–0012 (34 

applications times 0.14 equals 5 

requests for substantive additional 

information, times 3 hours per request 

equals 15 hours). 

Nondegree Programs—Public 

Institutions. 

As noted previously, we estimate that 

public institutions would apply for 

approval for 196 new gainful 

employment nondegree programs under 

proposed § 600.20(d)(2). We further 

estimate that of those 196 new 

programs, the Secretary will request 

additional information for 24 percent. 

We estimate that for 10 percent of the 

applications, the request will be for 

minor clarifications and would likely be 

resolved through a phone call or e-mail 

to institutional staff. The additional 

increase in burden associated with these 

minor clarifications would average an 

additional 0.5 hours per contact for a 

total increase of 10 hours under OMB 

control number 1845–0012 (196 

applications times 0.10 equals 20 

requests for minor clarifications, times 

0.5 hours per request equals 10 hours). 

We estimate that for 14 percent of the 

applications, an institution would have 

to submit additional substantive 

information in response to the 

Secretary’s request. The additional 

increase in burden associated with 

responding to a request for additional 

substantive information would average 

an additional 3 hours per request for a 

total increase of 81 hours under OMB 

control number 1845–0012 (196 

applications times 0.14 equals 27 

requests for substantive additional 

information, times 3 hours per request 

equals 81 hours). 

Collectively, we estimate that the 

annual burden hours associated with 

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59876 Federal Register / Vol. 76, No. 187 / Tuesday, September 27, 2011 / Proposed Rules 

the submission of additional 

information after being contacted by the 

Department regarding new gainful 

employment nondegree programs would 

be 478 hours under OMB control 

number 1845–0012. 

Degree Programs. 

As stated previously, we estimate that 

proprietary institutions would apply for 

approval of 643 new gainful 

employment degree programs under 

proposed § 600.20(d)(2). We further 

estimate that of those 643 new 

programs, the Secretary will request 

additional information for 24 percent. 

We estimate that for 10 percent of the 

applications, the request will be for 

minor clarifications and would likely be 

resolved through a phone call or e-mail 

to institutional staff. The additional 

increase in burden associated with these 

minor clarifications would average an 

additional 0.5 hours per contact for a 

total increase of 32 hours under OMB 

control number 1845–0012 (643 

applications times 0.10 equals 64 

requests for minor clarifications, times 

0.5 hours per request equals 32 hours). 

We estimate that for 14 percent of the 

applications, an institution would have 

to submit substantive additional 

information in response to the 

Secretary’s request. The additional 

increase in burden associated with 

responding to a request for additional 

substantive information request would 

average an additional 3 hours per 

request for a total increase of 270 hours 

under OMB control number 1845–0012 

(643 applications times 0.14 equals 90 

requests for substantive additional 

information, times 3 hours per request 

equals 270 hours). 

Collectively, we estimate that the 

annual burden hours associated with 

the submission of additional 

information after being contacted by the 

Department regarding new degree 

programs would be 302 hours under 

OMB control number 1845–0012. 

In total, the proposed regulations in 

§ 600.20(d) would result in a reduction 

in burden under OMB 1845–0012 to 

5,275 hours. This is because we have 

revised the currently approved burden 

of 3,591 hours under OMB 1845–0012 to 

12,343 hours of burden. To attain this 

result, we multiplied 4,085 nondegree 

programs by 2.5 hours per program, 

which equals 10,213 hours. To this 

figure, we added 774 hours of burden 

(442 degree programs times 1.75 hours 

per program) for a sum of 10,987 hours 

of burden. To this sum we added the 

burden associated with the reporting of 

additional information for 10 percent of 

the 4,527 new programs (452 programs), 

which we estimated would be 1,356 

hours (452 times 3). This results in 

12,343 hours of burden. The revision 

was due to the use of more recent data 

regarding new gainful employment 

nondegree program applications for 

2009 and 2010. Under these proposed 

regulations to streamline and limit the 

scope of affected programs, the burden 

associated with the application process 

will decrease by 7,068 hours under 

OMB control number 1845–0012. 

COLLECTION OF INFORMATION

Regulatory 

section Information collection Collection 

600.20 ............... The currently approved burden for this section has been revised based upon 

newer data which increases the burden from the currently approved 3,591 

hours to 12,343 hours. This proposed regulatory section streamlines the application requirement for new gainful employment programs and limits the need to 

submit an application to new programs that are the same as or substantially 

similar to failing programs that are voluntarily discontinued by the institution or 

programs that became ineligible, or programs that are substantially similar to a 

failing program. The proposed regulations also require institutions to provide additional information about a new program when requested by the Secretary.

OMB 1845–0012. 

The burden has been revised from 3,591 

hours to 12,343 hours based upon 

new nondegree program applications 

received in 2009 and 2010. These proposed regulations would result in a decrease in burden to 5,275 hours, a decrease of 7,068 hours. 

Assessment of Educational Impact 

In accordance with section 411 of the 

General Education Provisions Act, 20 

U.S.C. 1221e–4, the Secretary 

particularly requests comments on 

whether these proposed regulations 

would require transmission of 

information that any other agency or 

authority of the United States gathers or 

makes available. 

Accessible Format: Individuals with 

disabilities can obtain this document in 

an accessible format (e.g., braille, large 

print, audiotape, or compact disc) on 

request to the program contact person 

listed under FOR FURTHER INFORMATION

CONTACT. 

Electronic Access to This Document: 

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. At this 

site you can view this document, as well 

as all other documents of this 

Department published in the Federal 

Register, in text or Adobe Portable 

Document Format (PDF). To use PDF 

you must have Adobe Acrobat Reader, 

which is available free at the site. 

You may also access documents of the 

Department published in the Federal 

Register by using the article search 

feature at: http:// 

www.federalregister.gov. Specifically, 

through the advanced search feature at 

this site, you can limit your search to 

documents published by the 

Department. You may also view this 

document in text or PDF at the 

following site: http://www2.ed.gov/ 

about/offices/list/ope/policy.html. 

(Catalog of Federal Domestic Assistance 

Numbers: 84.007 FSEOG; 84.032 Federal 

Family Education Loan Program; 84.033 

Federal Work-Study Program; 84.037 Federal 

Perkins Loan Program; 84.063 Federal Pell 

Grant Program; 84.069 LEAP; 84.268 William 

D. Ford Federal Direct Loan Program; 84.375 

Academic Competitiveness Grant (ACG); 

84.376 National Science and Mathematics 

Access to Retain Talent (National SMART); 

84.379 TEACH Grant Program) 

List of Subjects in 34 CFR Part 600 

Colleges and universities, Foreign 

relations, Grant programs—education, 

Loan programs—education, Reporting 

and recordkeeping requirements, 

Selective Service System, Student aid, 

Vocational education. 

Dated: September 20, 2011. 

Arne Duncan, 

Secretary of Education. 

For the reasons discussed in the 

preamble, the Secretary proposes to 

amend part 600 of title 34 of the Code 

of Federal Regulations as follows: 

PART 600—INSTITUTIONAL 

ELIGIBILITY UNDER THE HIGHER 

EDUCATION ACT OF 1965, AS 

AMENDED 

1. The authority citation for part 600 

continues to read as follows: 

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Federal Register / Vol. 76, No. 187 / Tuesday, September 27, 2011 / Proposed Rules 59877 

Authority: 20 U.S.C. 1001, 1002, 1003, 

1088, 1091, 1094, 1099b, and 1099c, unless 

otherwise noted. 

2. Section 600.2 is amended by 

adding, in alphabetical order, the 

definition of ‘‘Classification of 

instructional programs or CIP’’ to read 

as follows: 

§ 600.2 Definitions. 

* * * * * 

Classification of instructional 

programs or CIP: A taxonomy of 

instructional program classifications 

and descriptions developed by the U.S. 

Department of Education’s National 

Center for Education Statistics. 

* * * * * 

3. Section 600.10 is amended by: 

A. Revising paragraph (c)(1). 

B. Removing paragraph (c)(2). 

C. Redesignating paragraph (c)(3) as 

paragraph (c)(2). 

The revision reads as follows: 

§ 600.10 Date, extent, duration, and 

consequence of eligibility. 

* * * * * 

(c) New educational programs. (1) An 

eligible institution that seeks to 

establish the eligibility of an 

educational program after it has been 

designated as an eligible institution by 

the Secretary does not have to apply to 

the Secretary to have that program 

approved unless— 

(i) The institution is required to 

obtain the Secretary’s approval under 

the provisions in § 600.20(c)(2), 

§ 600.20(d)(2), 34 CFR 668.10(b), 34 CFR 

668.14(a)(1), or 34 CFR 668.232; or 

(ii) The Secretary notifies the 

institution that it must apply for 

approval. 

* * * * * 

4. Section 600.20 is amended by: 

A. Revising the section heading. 

B. Revising paragraph (d). 

The revisions read as follows: 

§ 600.20 Application procedures for 

establishing, reestablishing, maintaining, or 

expanding program eligibility or 

institutional eligibility and certification. 

* * * * * 

(d) Application requirements. (1) 

General. To satisfy the requirements of 

paragraphs (a), (b), and (c) of this 

section, an institution must submit an 

application to the Secretary in a format 

prescribed by the Secretary for that 

purpose and provide all the information 

and documentation requested by the 

Secretary to make a determination of its 

eligibility and certification. 

(2) Gainful employment programs. (i) 

Except as provided under § 600.10(c)(1), 

an institution that seeks to establish the 

eligibility of a program that leads to 

gainful employment, as described under 

34 CFR 668.7(a)(2)(i), must apply to the 

Secretary only if the program is— 

(A) The same as, or substantially 

similar to, a program that— 

(1) Was a failing program that was 

voluntarily discontinued by the 

institution under 34 CFR 668.7(l)(1); or 

(2) Became ineligible for title IV, HEA 

program funds under 34 CFR 668.7(i); or 

(B) Substantially similar to a program 

designated as a failing program under 34 

CFR 668.7(h) for any one of the two 

most recent fiscal years. 

(ii) For the purposes of this section, a 

program is substantially similar if it has 

the same credential level and the same 

first four digits of the CIP code as that 

of a failing program, a failing program 

the institution voluntarily discontinued, 

or an ineligible program. 

(iii) An institution that submits an 

application for a gainful employment 

program must obtain the Secretary’s 

approval before providing title IV, HEA 

program funds to students enrolled in 

the program. However, an institution 

may not apply to reestablish the 

eligibility of a failing program that was 

voluntarily discontinued by the 

institution, or a program that is the same 

as or substantially similar to an 

ineligible program, until the ineligibility 

period for that program has expired, as 

provided under 34 CFR 668.7(l)(2). 

(3) Application. An institution that 

seeks to establish the eligibility of a 

program that leads to gainful 

employment under paragraph (d)(2) of 

this section must include in its 

application— 

(i) A description of how the 

institution determined the need for the 

new gainful employment program and 

how the program was designed to meet 

local market needs, or for an online 

program, regional or national market 

needs; 

(ii) A description of how the new 

program was reviewed or approved by, 

or developed in conjunction with, 

business advisory committees, program 

integrity boards, public or private 

oversight or regulatory agencies, and 

businesses that would likely employ 

graduates of the program; 

(iii) Documentation that the new 

program has been approved by its 

accrediting agency or is otherwise 

included in the institution’s 

accreditation by its accrediting agency, 

or comparable documentation if the 

institution is a public postsecondary 

vocational institution approved by a 

recognized State agency for the approval 

of public postsecondary vocational 

education in lieu of accreditation; 

(iv) The date of the first day of class 

of the new program. 

(v) A wage analysis of the new 

program performed by or on behalf of 

the institution. The wage analysis must 

include supporting documentation 

based on the best data that is reasonably 

available to the institution; 

(vi) Compared to the failing or 

ineligible program, a description of the 

enhancements or modifications the 

institution made to improve the new 

program’s performance under the 

gainful employment standards in 34 

CFR 668.7(a); and 

(vii) The CIP code and credential level 

of the new program, along with a 

description of how the institution 

determined that CIP code. 

(4) Eligibility determination. (i) In 

determining whether to approve the 

eligibility of a new gainful employment 

program, the Secretary takes into 

account— 

(A) The institution’s demonstrated 

financial responsibility and 

administrative capability in operating 

its existing programs; 

(B) Based on the information provided 

by the institution under paragraph (d)(3) 

of this section, whether the processes 

used and determinations made by the 

institution to offer the program are 

sufficient; and 

(C) The performance under 34 CFR 

668.7 of the institution’s other gainful 

employment programs. 

(ii) The Secretary may request 

additional information from the 

institution before making an eligibility 

determination. 

(iii) If the Secretary denies the 

institution’s eligibility for a new gainful 

employment program, the Secretary 

informs the institution of the reasons for 

the denial. The institution may request 

that the Secretary reconsider the 

determination. 

* * * * * 

[FR Doc. 2011–24454 Filed 9–26–11; 8:45 am] 

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