Issue Papers 

Team II – Foreign Schools 

Issue #1: United States Generally Accepted Accounting Principles (U.S. GAAP) 

financial statements .......................................................................................................... 2

Issue #2: Compliance audits ............................................................................................ 6

Issue #3: Definition of a foreign school .......................................................................... 9

Issue #4: Non-profit status for foreign schools ............................................................ 11

Issue #5: Public foreign schools and financial responsibility ..................................... 12

Issue #6: Consolidation of select Title IV requirements on a countrywide basis ..... 15

Issue #7: Deferments for eligible non-citizens ............................................................. 16

Issue #8: Non-degree programs .................................................................................... 17

Issue #9: New eligibility criteria for foreign medical schools .................................... 19

Issue #10: Clinical sites of foreign medical schools in other countries...................... 24

Issue #11: Basic science locations of foreign medical schools in other countries ..... 26

Issue #12: Eligibility requirements for foreign veterinary schools ........................... 28

Issue #13: Eligibility requirements for foreign nursing schools ................................ 30

Issue #14: Foreign medical and veterinary schools certified separately from larger 

school ................................................................................................................................ 34
2 

Issue #1: United States Generally Accepted Accounting Principles 

(U.S. GAAP) financial statements 

Origin: HEOA/Public/ED

Statutory cites: Section 487(c)(1)(A)(i) of the HEA

Regulatory cites: §668.23

Tentative agreement: 

Summary of issue: Under §668.23(a)(2), an annual submission of 

both a compliance audit and an audited financial statement is 

required of all institutions participating in the student financial 

assistance programs authorized by Title IV of the HEA. Section 

668.23(d)(1) requires that an institution’s financial statements 

must be prepared on an accrual basis in accordance with U.S. 

generally accepted accounting principles (U.S. GAAP), and audited by 

an independent auditor in accordance with U.S. generally accepted 

government auditing standards (U.S. GAGAS), and other guidance 

contained in the Office of Management and Budget Circular A–133, 

―Audits of Institutions of Higher Education and Other Nonprofit 

Organizations‖; Office of Management and Budget Circular A–128, 

―Audits of State and Local Governments‖; or in audit guides 

developed by, and available from, the Department of Education's 

Office of Inspector General, whichever is applicable. 

Regulations in place permit a foreign school whose enrolled students 

received less than $500,000 (in U.S. dollars) in FFEL Program funds 

per fiscal year to have its required audited financial statements 

prepared according to the generally accepted accounting principles 

and auditing standards of the school's home country. 

The HEOA gives the Secretary the authority to modify the financial 

and compliance audit requirements for foreign schools and the 

authority to waive the audit requirements for foreign schools that 

receive less than $500,000 in FFEL Program funds in the preceding 

year. 

On May 15, 2009, the Department published a Dear Colleague Letter 

(GEN-09-06) announcing that the Secretary was waiving the annual 

financial statement audit requirement for foreign schools whose 

enrolled students received less than $500,000 in FFEL Program funds 

during the award year preceding the audit period. The waiver 

applies to any financial statement audit for such a foreign school 

due on or after August 14, 2008, the effective date of the amendment 

to this provision by the HEOA, and renders unnecessary the 

regulation providing for submission of audits prepared under home 

country standards. 

Should the Department modify the financial audit requirements for 

foreign schools whose enrolled students received $500,000 or more in 

FFEL Program funds and, if so, how? 

Current Regulatory Language:

§668.15 Factors of financial responsibility.

(h) Foreign institutions. The Secretary makes a determination of 

financial responsibility for a foreign institution on the basis of 

financial statements submitted under the following requirements—
3 

(1) If the institution received less than $500,000 U.S. in title IV, 

HEA program funds during its most recently completed fiscal year, 

the institution must submit its audited financial statement for that 

year. For purposes of this paragraph, the audited financial 

statements may be prepared under the auditing standards and 

accounting principles used in the institution's home country; or

(2) If the institution received $500,000 U.S. or more in title IV, 

HEA program funds during its most recently completed fiscal year, 

the institution must submit its audited financial statement in 

accordance with the requirements of §668.23, and satisfy the general 

standards of financial responsibility contained in this section, or 

qualify under an alternate standard of financial responsibility 

contained in this section.

* * * * *

§668.23 Compliance audits and audited financial statements. 

(a) General (1) Independent auditor. For purposes of this section, 

the term ―independent auditor‖ refers to an independent certified 

public accountant or a government auditor. To conduct an audit under 

this section, a government auditor must meet the Government Auditing 

Standards qualification and independence standards, including 

standards related to organizational independence.

(2) Institutions. An institution that participates in any Title IV, 

HEA program must at least annually have an independent auditor 

conduct a compliance audit of its administration of that program and 

an audit of the institution's general purpose financial statements.

* * *

(4) Submission deadline. Except as provided by the Single Audit Act, 

Chapter 75 of title 31, United States Code, an institution must 

submit annually to the Secretary its compliance audit and its 

audited financial statements no later than six months after the last 

day of the institution's fiscal year.

(5) Audit submission requirements. In general, the Secretary 

considers the compliance audit and audited financial statement 

submission requirements of this section to be satisfied by an audit 

conducted in accordance with the Office of Management and Budget 

Circular A–133, ―Audits of Institutions of Higher Education and 

Other Nonprofit Organizations‖; Office of Management and Budget 

Circular A–128, ―Audits of State and Local Governments‖, or the 

audit guides developed by and available from the Department of 

Education's Inspector General, whichever is applicable to the 

entity, and provided that the Federal student aid functions 

performed by that entity are covered in the submission. (Both OMB 

circulars are available by calling OMB's Publication Office at (202) 

395–7332, or they can be obtained in electronic form on the OMB Home 

Page (http://www.whitehouse.gov). 
4 

* * * * *

(d) Audited financial statements (1) General. To enable the 

Secretary to make a determination of financial responsibility, an 

institution must, to the extent requested by the Secretary, submit 

to the Secretary a set of financial statements for its latest 

complete fiscal year, as well as any other documentation the 

Secretary deems necessary to make that determination. Financial 

statements submitted to the Secretary must be prepared on an accrual 

basis in accordance with generally accepted accounting principles, 

and audited by an independent auditor in accordance with generally 

accepted government auditing standards, and other guidance contained 

in the Office of Management and Budget Circular A–133, ―Audits of 

Institutions of Higher Education and Other Nonprofit Organizations‖; 

Office of Management and Budget Circular A–128, ―Audits of State and 

Local Governments‖; or in audit guides developed by, and available 

from, the Department of Education's Office of Inspector General , 

whichever is applicable. As part of these financial statements, the 

institution must include a detailed description of related entities 

based on the definition of a related entity as set forth in the 

Statement of Financial Accounting Standards (SFAS) 57. The 

disclosure requirements under this provision extend beyond those of 

SFAS 57 to include all related parties and a level of detail that 

would enable to Secretary to readily identify the related party. 

Such information may include, but is not limited to, the name, 

location and a description of the related entity including the 

nature and amount of any transactions between the related party and 

the institution, financial or otherwise, regardless of when they 

occurred.

(2) Submission of additional financial statements. To the extent 

requested by the Secretary in determining whether an institution is 

financially responsible, the Secretary may also require the 

submission of audited consolidated financial statements, audited 

full consolidating financial statements, audited combined financial 

statements or the audited financial statements of one or more 

related parties that have the ability, either individually or 

collectively, to significantly influence or control the institution, 

as determined by the Secretary.

(3) Audited financial statements for foreign institutions. A foreign 

institution must submit—

(i) Audited financial statements prepared in accordance with the 

generally accepted accounting principles of the institution's home 

country, if the institution received less than $500,000 U.S. in 

Title IV, HEA program funds during its most recently completed 

fiscal year; or

(ii) Audited financial statements translated to meet the 

requirements of paragraph (d) of this section, if the institution 

received $500,000 U.S. or more in Title IV, HEA program funds during 

its most recently completed fiscal year.

* * * * *
5 

Statutory Language with changes from the HEOA: 

SEC. 487. [20 U.S.C. 1094] PROGRAM PARTICIPATION AGREEMENTS.

* * * * *

(c) AUDITS; FINANCIAL RESPONSIBILITY; ENFORCEMENT OF STANDARDS.—(1) 

Notwithstanding any other provisions of this title, the Secretary 

shall prescribe such regulations as may be necessary to provide for—

(A)(i) except as provided in clauses (ii) and (iii), a financial 

audit of an eligible institution with regard to the financial 

condition of the institution in its entirety, and a compliance audit 

of such institution with regard to any funds obtained by it under 

this title or obtained from a student or a parent who has a loan 

insured or guaranteed by the Secretary under this title, on at least 

an annual basis and covering the period since the most recent audit, 

conducted by a qualified, independent organization or person in 

accordance with standards established by the Comptroller General for 

the audit of governmental organizations, programs, and functions, 

and as prescribed in regulations of the Secretary, the results of 

which shall be submitted to the Secretary and shall be available to 

cognizant guaranty agencies, eligible lenders, State agencies, and 

the appropriate State agency notifying the Secretary under subpart 1 

of part H, except that the Secretary may modify the requirements of 

this clause with respect to institutions of higher education that 

are foreign institutions, and may waive such requirements with 

respect to a foreign institution whose students receives less than 

$500,000 in loans under this title during the award year preceding 

the audit period; 

(ii) with regard to an eligible institution which is audited under 

chapter 75 of title 31, United States Code, deeming such audit to 

satisfy the requirements of clause (i) for the period covered by 

such audit; or

(iii) at the discretion of the Secretary, with regard to an eligible 

institution (other than an eligible institution described in section 

102(a)(1)(C)) that has obtained less than $200,000 in funds under 

this title during each of the 2 award years that precede the audit 

period and submits a letter of credit payable to the

Secretary equal to not less than 1⁄2 of the annual potential 

liabilities of such institution as determined by the

Secretary, deeming an audit conducted every 3 years to satisfy the 

requirements of clause (i), except for the award year immediately 

preceding renewal of the institution’s eligibility under section 

498(g);

(B) in matters not governed by specific program provisions, the 

establishment of reasonable standards of financial responsibility 

and appropriate institutional capability for the administration by 

an eligible institution of a program of student financial aid under 

this title, including any matter the Secretary deems necessary to 

the sound administration of the financial aid programs, such as the 

pertinent actions of any owner, shareholder, or person exercising 

control over an eligible institution;
6 

Issue #2: Compliance audits 

Origin: HEOA/Public/ED

Statutory cites: Section 487(c)(1)(A)(i) of the HEA

Regulatory cites: §668.23

Tentative agreement: 

Summary of issue: Under §668.23(a)(2), an annual submission of 

both a compliance audit and an audited financial statement is 

required of all institutions participating in the student financial 

assistance programs authorized by Title IV of the HEA. 

The HEOA gives the Secretary the authority to modify the financial 

and compliance audit requirements for foreign schools and the 

authority to waive the audit requirements for foreign schools that 

receive less than $500,000 in FFEL Program funds in the preceding 

year. 

The current Inspector General’s Audit Guide concerning compliance 

audits for foreign schools includes an Alternative Compliance 

Engagement which may be used by foreign schools whose enrolled 

students received less than the $500,000 threshold in FFEL Program 

funds. 

Should the Department modify or waive the compliance audit 

requirements for foreign schools and, if so, how?

Current Regulatory Language:

§668.23 Compliance audits and audited financial statements. 

(a) General (1) Independent auditor. For purposes of this section, 

the term ―independent auditor‖ refers to an independent certified 

public accountant or a government auditor. To conduct an audit under 

this section, a government auditor must meet the Government Auditing 

Standards qualification and independence standards, including 

standards related to organizational independence.

(2) Institutions. An institution that participates in any Title IV, 

HEA program must at least annually have an independent auditor 

conduct a compliance audit of its administration of that program and 

an audit of the institution's general purpose financial statements.

* * *

(4) Submission deadline. Except as provided by the Single Audit Act, 

Chapter 75 of title 31, United States Code, an institution must 

submit annually to the Secretary its compliance audit and its 

audited financial statements no later than six months after the last 

day of the institution's fiscal year.

(5) Audit submission requirements. In general, the Secretary 

considers the compliance audit and audited financial statement 

submission requirements of this section to be satisfied by an audit 

conducted in accordance with the Office of Management and Budget 

Circular A–133, ―Audits of Institutions of Higher Education and 

Other Nonprofit Organizations‖; Office of Management and Budget 
7 

Circular A–128, ―Audits of State and Local Governments‖, or the 

audit guides developed by and available from the Department of 

Education's Inspector General, whichever is applicable to the 

entity, and provided that the Federal student aid functions 

performed by that entity are covered in the submission. (Both OMB 

circulars are available by calling OMB's Publication Office at (202) 

395–7332, or they can be obtained in electronic form on the OMB Home 

Page (http://www.whitehouse.gov). 

(b) Compliance audits for institutions. (1) An institution's 

compliance audit must cover, on a fiscal year basis, all Title IV, 

HEA program transactions, and must cover all of those transactions 

that have occurred since the period covered by the institution's 

last compliance audit.

(2) The compliance audit required under this section must be 

conducted in accordance with—

(i) The general standards and the standards for compliance audits 

contained in the U.S. General Accounting Office's (GAO's) Government 

Auditing Standards. (This publication is available from the 

Superintendent of Documents, U.S. Government Printing Office, 

Washington, DC 20402); and

(ii) Procedures for audits contained in audit guides developed by, 

and available from, the Department of Education's Office of 

Inspector General.

(3) The Secretary may require an institution to provide a copy of 

its compliance audit report to guaranty agencies or eligible lenders 

under the FFEL programs, State agencies, the Secretary of Veterans 

Affairs, or nationally recognized accrediting agencies.

* * * * *

Statutory Language with changes from the HEOA: 

SEC. 487. [20 U.S.C. 1094] PROGRAM PARTICIPATION AGREEMENTS.

* * * * *

(c) AUDITS; FINANCIAL RESPONSIBILITY; ENFORCEMENT OF STANDARDS.—(1) 

Notwithstanding any other provisions of this title, the Secretary 

shall prescribe such regulations as may be necessary to provide for—

(A)(i) except as provided in clauses (ii) and (iii), a financial 

audit of an eligible institution with regard to the financial 

condition of the institution in its entirety, and a compliance audit 

of such institution with regard to any funds obtained by it under 

this title or obtained from a student or a parent who has a loan 

insured or guaranteed by the Secretary under this title, on at least 

an annual basis and covering the period since the most recent audit, 

conducted by a qualified, independent organization or person in 

accordance with standards established by the Comptroller General for 

the audit of governmental organizations, programs, and functions, 

and as prescribed in regulations of the Secretary, the results of 

which shall be submitted to the Secretary and shall be available to 
8 

cognizant guaranty agencies, eligible lenders, State agencies, and 

the appropriate State agency notifying the Secretary under subpart 1 

of part H, except that the Secretary may modify the requirements of 

this clause with respect to institutions of higher education that 

are foreign institutions, and may waive such requirements with 

respect to a foreign institution whose students receives less than 

$500,000 in loans under this title during the award year preceding 

the audit period; 

(ii) with regard to an eligible institution which is audited under 

chapter 75 of title 31, United States Code, deeming such audit to 

satisfy the requirements of clause (i) for the period covered by 

such audit; or

(iii) at the discretion of the Secretary, with regard to an eligible 

institution (other than an eligible institution described in section 

102(a)(1)(C)) that has obtained less than $200,000 in funds under 

this title during each of the 2 award years that precede the audit 

period and submits a letter of credit payable to the

Secretary equal to not less than 1⁄2 of the annual potential 

liabilities of such institution as determined by the

Secretary, deeming an audit conducted every 3 years to satisfy the 

requirements of clause (i), except for the award year immediately 

preceding renewal of the institution’s eligibility under section 

498(g);

(B) in matters not governed by specific program provisions, the 

establishment of reasonable standards of financial responsibility 

and appropriate institutional capability for the administration by 

an eligible institution of a program of student financial aid under 

this title, including any matter the Secretary deems necessary to 

the sound administration of the financial aid programs, such as the 

pertinent actions of any owner, shareholder, or person exercising 

control over an eligible institution;

 
9 

Issue #3: Definition of a foreign school 

Origin: ED

Statutory cites: Section 102(a)(1)(C) of the HEA

Regulatory cites: §600.52, §600.54, §682.200

Tentative agreement: 

Summary of issue: A foreign institution is defined as an 

institution that is not located in a State. A State is defined in 

§600.2 as a State of the Union, American Samoa, the Commonwealth of 

Puerto Rico, the District of Columbia, Guam, the Virgin Islands, the 

Commonwealth of the Northern Mariana Islands, the Republic of the 

Marshall Islands, the Federated States of Micronesia, and the 

Republic of Palau. A foreign institution is eligible to apply to 

participate in the FFEL program if it is comparable to an eligible 

institution of higher education located in the United States. An 

eligible foreign institution is considered to be comparable, in 

part, if it is legally authorized by an appropriate authority to 

provide an educational program beyond secondary education in the 

country where the institution is physically located. The Department 

has not explicitly regulated to say what makes a foreign institution 

―foreign‖ except that the institution may not be located in a State. 

We would like to further define what makes a foreign institution 

―foreign‖ and consider whether additional requirements are necessary 

to ensure comparability. 

Current Regulatory Language:

§600.52 Definitions. 

The following definitions apply to this subpart E:

* * * * *

Foreign institution: An institution that is not located in a State.

* * * * *

§600.54 Criteria for determining whether a foreign institution is 

eligible to apply to participate in the FFEL programs. 

The Secretary considers a foreign institution to be comparable to an 

eligible institution of higher education in the United States and 

eligible to apply to participate in the FFEL programs if the foreign 

institution is a public or private nonprofit educational institution 

that—

(a) Admits as regular students only persons who—

(1) Have a secondary school completion credential; or

(2) Have the recognized equivalent of a secondary school completion 

credential;

(b) Is legally authorized by an appropriate authority to provide an 

eligible educational program beyond the secondary school level in 

the country in which the institution is located; and

(c) Provides an eligible education program—
10 

(1) For which the institution is legally authorized to award a 

degree that is equivalent to an associate, baccalaureate, graduate, 

or professional degree awarded in the United States; 

(2) That is at least a two-academic-year program acceptable for full 

credit toward the equivalent of a baccalaureate degree awarded in 

the United States; or

(3) That is equivalent to at least a one-academic-year training 

program in the United States that leads to a certificate, degree, or 

other recognized educational credential and prepares students for 

gainful employment in a recognized occupation.

§682.200 Definitions. 

* * * * *

(b)(1) The following definitions also apply to this part: 

* * * 

Foreign school. A school not located in a State.

* * * * *
11 

Issue #4: Non-profit status for foreign schools 

Origin: ED

Statutory cites: Section 102(a)(2)(A) of the HEA

Regulatory cites: §600.2, §600.54

Tentative agreement: 

Summary of issue: Except for a foreign medical, veterinary or 

nursing school, to participate in the FFEL/Direct Loan program, a 

foreign institution must be a public or private nonprofit 

educational institution. Section 668.2 defines a nonprofit 

institution as an institution that– 

 is owned and operated by one or more nonprofit corporations or 

associations, no parts of the net earnings of which benefits any 

private shareholder or individual; 

 is legally authorized to operate as a nonprofit organization by 

each State in which it is physically located; and

 is determined by the U.S. Internal Revenue Service to be an 

organization to which contributions are tax-deductible in 

accordance with section 501(c)(3) of the Internal Revenue Code 

(26 U.S.C. 501(c)(3)).

The Department would like to develop a comparable definition 

specifically for foreign schools. 

Current Regulatory Language:

§600.2 Definitions. 

* * * * *

Nonprofit institution: An institution that—

(1) Is owned and operated by one or more nonprofit corporations or 

associations, no part of the net earnings of which benefits any 

private shareholder or individual;

(2) Is legally authorized to operate as a nonprofit organization by 

each State in which it is physically located; and

(3) Is determined by the U.S. Internal Revenue Service to be an 

organization to which contributions are tax-deductible in accordance 

with section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 

501(c)(3)).

* * * * *
12 

 

Issue #5: Public foreign schools and financial responsibility 

Origin: ED

Statutory cites: Section 498(c)(3)(B) of the HEA

Regulatory cites: §668.171(c)

Tentative agreement: 

Summary of issue: Section 668.171(c) provides that an institution 

is financially responsible if the institution—

 Notifies the Secretary that it is designated as a public 

institution by the State, local or municipal government entity, 

tribal authority, or other government entity that has the legal 

authority to make that designation; and

 Provides a letter from an official of that State or other 

government entity confirming that the institution is a public 

institution. 

In addition, the institution may not be in violation of any past 

performance requirement. 

Should the Department develop a financial responsibility provision

specifically for public foreign schools?

 

Current Regulatory Language:

§668.171 General. 

(a) Purpose. To begin and to continue to participate in any Title 

IV, HEA program, an institution must demonstrate to the Secretary 

that it is financially responsible under the standards established 

in this subpart. As provided under section 498(c)(1) of the HEA, the 

Secretary determines whether an institution is financially 

responsible based on the institution's ability to—

(1) Provide the services described in its official publications and 

statements;

(2) Administer properly the Title IV, HEA programs in which it 

participates; and

(3) Meet all of its financial obligations.

(b) General standards of financial responsibility. Except as 

provided under paragraphs (c) and (d) of this section, the Secretary 

considers an institution to be financially responsible if the 

Secretary determines that—

(1) The institution's Equity, Primary Reserve, and Net Income ratios 

yield a composite score of at least 1.5, as provided under §668.172 

and appendices A and B to this subpart;

(2) The institution has sufficient cash reserves to make required 

returns of unearned Title IV HEA program funds, as provided under 

§668.173;
13 

(3) The institution is current in its debt payments. An institution 

is not current in its debt payments if—

(i) It is in violation of any existing loan agreement at its fiscal 

year end, as disclosed in a note to its audited financial statements 

or audit opinion; or

(ii) It fails to make a payment in accordance with existing debt 

obligations for more than 120 days, and at least one creditor has 

filed suit to recover funds under those obligations; and

(4) The institution is meeting all of its financial obligations, 

including but not limited to—

(i) Refunds that it is required to make under its refund policy, 

including the return of Title IV, HEA program funds for which it is 

responsible under §668.22; and

(ii) Repayments to the Secretary for debts and liabilities arising 

from the institution's participation in the Title IV, HEA programs.

(c) Public institutions. The Secretary considers a public 

institution to be financially responsible if the institution—

(1)(i) Notifies the Secretary that it is designated as a public 

institution by the State, local or municipal government entity, 

tribal authority, or other government entity that has the legal 

authority to make that designation; and

(ii) Provides a letter from an official of that State or other 

government entity confirming that the institution is a public 

institution; and

(2) Is not in violation of any past performance requirement under 

§668.174.

(d) Audit opinions and past performance provisions. Even if an 

institution satisfies all of the general standards of financial 

responsibility under paragraph (b) of this section, the Secretary 

does not consider the institution to be financially responsible if—

(1) In the institution's audited financial statements, the opinion 

expressed by the auditor was an adverse, qualified, or disclaimed 

opinion, or the auditor expressed doubt about the continued 

existence of the institution as a going concern, unless the 

Secretary determines that a qualified or disclaimed opinion does not 

have a significant bearing on the institution's financial condition; 

or

(2) As provided under the past performance provisions in §668.174 

(a) and (b)(1), the institution violated a Title IV, HEA program 

requirement, or the persons or entities affiliated with the 

institution owe a liability for a violation of a Title IV, HEA 

program requirement.
14 

(e) Administrative actions. If the Secretary determines that an 

institution is not financially responsible under the standards and 

provisions of this section or under an alternative standard in 

§668.175, or the institution does not submit its financial and 

compliance audits by the date permitted and in the manner required 

under §668.23, the Secretary may—

(1) Initiate an action under subpart G of this part to fine the 

institution, or limit, suspend, or terminate the institution's 

participation in the Title IV, HEA programs; or

(2) For an institution that is provisionally certified, take an 

action against the institution under the procedures established in 

§668.13(d).

* * * * *
15 

Issue #6: Consolidation of select Title IV requirements on a 

countrywide basis

Origin: ED

Statutory cites: 

Regulatory cites: To be determined

Tentative agreement: 

Summary of issue: To ease administrative burden, are there any 

Title IV requirements that can be met by a country or other 

government entity for several foreign schools at once? For example, 

should the regulations allow proof of legal authorization of all 

public institutions in a country at once? Should this provision 

also be written to conform to suggested changes that would allow a 

country to meet the financial responsibility requirements for an 

institution? 

Current Regulatory Language: To be determined.

 
16 

Issue #7: Deferments for eligible non-citizens 

Origin: ED

Statutory cites: Section 484(a)(5) of the HEA

Regulatory cites: §668.33(a) and §682.210(b)(1)(i)

Tentative agreement: 

Summary of issue: 

This issue is more limited in scope than originally thought. The 

Department will recommend removing it from the agenda. 

Current Regulatory Language:

§668.33 Citizenship and residency requirements. 

(a) Except as provided in paragraph (b) of this section, to be 

eligible to receive Title IV, HEA program assistance, a student 

must—

(1) Be a citizen or national of the United States; or

(2) Provide evidence from the U.S. Immigration and Naturalization 

Service that he or she—

(i) Is a permanent resident of the United States; or

(ii) Is in the United States for other than a temporary purpose with 

the intention of becoming a citizen or permanent resident;

* * * * *

§682.210 Deferment. 

* * * * *

(b) Authorized deferments. (1) Deferment is authorized for a FFEL 

borrower during any period when the borrower is—

(i) Except as provided in paragraph (c)(5) of this section, engaged 

in full-time study at a school, or at a school that is operated by 

the Federal Government (e.g., the service academies), unless the 

borrower is not a national of the United States and is pursuing a 

course of study at a school not located in a State;

(ii) Engaged in a course of study under an eligible graduate 

fellowship program;

(iii) Engaged in a rehabilitation training program for disabled 

individuals;
17 

Issue #8: Non-degree programs 

Origin: ED

Statutory cites: 

Regulatory cites: §600.54(c), §668.8(k) and (l), §668.9

Tentative agreement: 

Summary of issue: Section 600.54 provides that, in order to be 

eligible, a foreign institution must provide an eligible educational 

program that leads to a degree that is equivalent to a U.S. degree, 

or be at least a two-academic year program acceptable for full 

credit toward the equivalent of a U.S. baccalaureate degree, or be 

equivalent to at least a one academic year training program that 

leads to a certificate or diploma and prepares students for gainful 

employment in a recognized occupation. 

Section 668.8(l), part of the ―clock hour/credit hour conversion‖ 

regulations, provides that an undergraduate non-degree program must 

be reported to the Department in clock-hours and, if appropriate, 

semester, trimester, and quarter credit hours to determine 

eligibility and program length for a clock-credit hour conversion. 

A program where each course within the program is acceptable for 

full credit toward one of the institution’s degree programs, and the 

degree requires at least two years of study, is exempt from using 

the conversion formula. If a school applies the appropriate formula 

and finds that a program is eligible, the converted credit hours are 

used to determine the amount of Title IV funds that a student who is 

enrolled in the program is eligible to receive

(except that a public and private nonprofit hospital-based diploma 

schools of nursing is exempt from using the clock-to-credit hour 

conversion formula to calculate Title IV awards).

Many foreign schools use educational measurements other than 

conventional American semester, trimester, quarter credits and 

clock-hours. How should non-degree programs at foreign schools be 

treated for purposes of Title IV eligibility? 

Current Regulatory Language:

§600.54 Criteria for determining whether a foreign institution is 

eligible to apply to participate in the FFEL programs. 

The Secretary considers a foreign institution to be comparable to an 

eligible institution of higher education in the United States and 

eligible to apply to participate in the FFEL programs if the foreign 

institution is a public or private nonprofit educational institution 

that—

* * *

(c) Provides an eligible education program—

* * *

(3) That is equivalent to at least a one-academic-year training 

program in the United States that leads to a certificate, degree, or 

other recognized educational credential and prepares students for 

gainful employment in a recognized occupation.

§668.8 Eligible program. 

* * * * *
18 

(k) Undergraduate educational program in credit hours. If an 

institution offers an undergraduate educational program in credit 

hours, the institution must use the formula contained in paragraph 

(l) of this section to determine whether that program satisfies the 

requirements contained in paragraph (c)(3) or (d) of this section, 

and the number of credit hours in that educational program for 

purposes of the Title IV, HEA programs, unless—

(1) The program is at least two academic years in length and 

provides an associate degree, a bachelor's degree, a professional 

degree, or an equivalent degree as determined by the Secretary; or

(2) Each course within the program is acceptable for full credit 

toward that institution's associate degree, bachelor's degree, 

professional degree, or equivalent degree as determined by the 

Secretary, provided that the institution's degree requires at least 

two academic years of study.

(l) Formula. For purposes of determining whether a program described 

in paragraph (k) of this section satisfies the requirements 

contained in paragraph (c)(3) or (d) of this section, and the number 

of credit hours in that educational program with regard to the Title 

IV, HEA programs—

(1) A semester hour must include at least 30 clock hours of 

instruction;

(2) A trimester hour must include at least 30 clock hours of 

instruction; and

(3) A quarter hour must include at least 20 hours of instruction.

* * * * *

§668.9 Relationship between clock hours and semester, trimester, 

or quarter hours in calculating Title IV, HEA program assistance.

(a) In determining the amount of Title IV, HEA program assistance 

that a student who is enrolled in a program described in §668.8(k) 

is eligible to receive, the institution shall apply the formula 

contained in §668.8(l) to determine the number of semester, 

trimester, or quarter hours in that program, if the institution 

measures academic progress in that program in semester, trimester, 

or quarter hours.

(b) Notwithstanding paragraph (a) of this section, a public or 

private nonprofit hospital-based school of nursing that awards a 

diploma at the completion of the school's program of education is 

not required to apply the formula contained in §668.8(l) to 

determine the number of semester, trimester, or quarter hours in 

that program for purposes of calculating Title IV, HEA program 

assistance.
19 

Issue #9: New eligibility criteria for foreign medical schools 

Origin: HEOA

Statutory cites: Section 102(a)(2)(A)and (B) of the HEA

Regulatory cites: §600.55

Tentative agreement: 

Summary of issue: Effective July 1, 2010, the HEOA 

 increases the Educational Commission for Foreign Medical 

Graduates (ECFMG) exams pass rate threshold from 60 percent to 75 

percent;

 allows a foreign graduate medical school that was eligible based 

on having a clinical training program approved by a State as of 

July 1, 1992, to continue to be eligible as long as it has 

continuously operated a clinical training program in at least one 

State that approves the program; and

 allows for the promulgation through regulation of new eligibility 

criteria for foreign graduate medical schools that have a 

clinical training program approved by a State prior to January 1, 

2008. Such regulations must be based on the recommendations of 

the National Committee on Foreign Medical Education and 

Accreditation (NCFMEA) report (the report can be viewed at 

http://tinyurl.com/ncfmeaforeignschools). The NCFMEA is a panel

of medical experts which evaluates the medical school accrediting 

agency standards used in the country where medical education is 

provided to determine comparability to the standards of 

accreditation applied to medical schools in the U.S. The 

Department may issue a Notice of Proposed Rulemaking (NPRM) no 

earlier than 180 days after the submission of the report (which 

is due no later than August 14, 2009), and may issue final 

regulations no earlier than one year after the issuance of the 

NPRM. Thus, any new eligibility criteria for foreign graduate 

medical schools will become effective when implementing 

regulations do. However, the regulations must, at a minimum, 

require an ECFMG pass rate of at least 75 percent. The NCFMEA’s 

recommendations concern, among other things, admission 

requirements (Recommendation 1); success in obtaining placement 

in a U.S. medical residence program accredited by the 

Accreditation Council for Graduate Medical Education 

(Recommendation 3); calculation and collection of ECFMG exam pass 

rates (Recommendation 4); publication of the language of 

instruction (Recommendation 10); and publication of cost of 

attendance (Recommendation 14).

Current Regulatory Language:

§600.55 Additional criteria for determining whether a foreign 

graduate medical school is eligible to apply to participate in the 

FFEL programs. 

(a) The Secretary considers a foreign graduate medical school to be 

eligible to apply to participate in the FFEL programs if, in 

addition to satisfying the criteria in §600.54 (except the criterion 

that the institution be public or private nonprofit), the school 

satisfies all of the following criteria:
20 

(1) The school provides, and in the normal course requires its 

students to complete, a program of clinical and classroom medical 

instruction of not less that 32 months in length, that is supervised 

closely by members of the school's faculty and that is provided 

either—

(i) Outside the United States, in facilities adequately equipped and 

staffed to afford students comprehensive clinical and classroom 

medical instruction; or

(ii) In the United States, through a training program for foreign 

medical students that has been approved by all medical licensing 

boards and evaluating bodies whose views are considered relevant by 

the Secretary.

(2) The school has graduated classes during each of the two twelvemonth periods immediately preceding the date the Secretary receives 

the school's request for an eligibility determination.

(3) The school employs for the program described in paragraph (a)(1)

of this section only those faculty members whose academic 

credentials are the equivalent of credentials required of faculty 

members teaching the same or similar courses at medical schools in 

the United States.

(4)(i) The school has been approved by an accrediting body—

(A) That is legally authorized to evaluate the quality of graduate 

medical school educational programs and facilities in the country 

where the school is located; and

(B) Whose standards of accreditation of graduate medical schools—

(1) Have been evaluated by the advisory panel of medical experts 

established by the Secretary; and

(2) Have been determined to be comparable to standards of 

accreditation applied to medical schools in the United States; or

(ii) The school is a public or private nonprofit educational 

institution that satisfies the requirements in §600.4(a)(5)(i).

(5)(i)(A) During the academic year preceding the year for which any 

of the school's students seeks an FFEL program loan, at least 60 

percent of those enrolled as full-time regular students in the 

school and at least 60 percent of the school's most recent 

graduating class were persons who did not meet the citizenship and 

residency criteria contained in section 484(a)(5) of the HEA, 20 

U.S.C. 1091(a)(5); and

(B) For a foreign graduate medical school outside of Canada, at 

least 60 percent of the school's students and graduates who took any 

step of the examinations administered by the Educational Commission 

for Foreign Medical Graduates (ECFMG) (including the ECFMG English 
21 

test) in the year preceding the year for which any of the school's 

students seeks an FFEL program loan received passing scores on the 

exams; or

(ii) The school's clinical training program was approved by a State 

as of January 1, 1992, and is currently approved by that State.

(b) In performing the calculation required in paragraph (a)(5)(i)(B) 

of this section, a foreign graduate medical school shall count as a 

graduate each person who graduated from the school during the three 

years preceding the year for which the calculation is performed.

Statutory Language with Changes from the HEOA: 

SEC. 102. [20 U.S.C. 1002] DEFINITION OF INSTITUTION OF HIGHER 

EDUCATION FOR PURPOSES OF TITLE IV PROGRAMS.

(a) DEFINITION OF INSTITUTION OF HIGHER EDUCATION FOR PURPOSES OF 

TITLE IV PROGRAMS.—

* * * 

(2) INSTITUTIONS OUTSIDE THE UNITED STATES.—

(A) IN GENERAL.—For the purpose of qualifying as an institution 

under paragraph (1)(C), the Secretary shall establish criteria by 

regulation for the approval of institutions outside the United 

States and for the determination that such institutions are 

comparable to an institution of higher education as defined in 

section 101 (except that a graduate medical school, nursing school,

or a veterinary school, located outside the United States shall not 

be required to meet the requirements of section 101(a)(4)). Such 

criteria shall include a requirement that a student attending such 

school outside the United States is ineligible for loans made, 

insured, or guaranteed under part B of Title IV unless—

(i) except as provided in subparagraph (B)(iii)(IV), in the case of 

a graduate medical school located outside the United States--

(I)(aa) at least 60 percent of those enrolled in, and at least 60 

percent of the graduates of, the graduate medical school outside the 

United States were not persons described in section

484(a)(5) in the year preceding the year for which a student is 

seeking a loan under part B of title

IV; and

(bb) at least 6075 percent of the individuals who were students or 

graduates of the graduate medical school outside the United States 

or Canada (both nationals of the United States and others) taking 

the examinations administered by the Educational Commission for 

Foreign Medical Graduates received a passing score in the year 

preceding the year for which a student is seeking a loan under part 

B of Title IV; or

(II) the institution has a clinical training program that was 

approved by a State as of January 1, 1992; or
22 

(II) the institution—

(aa) has or had a clinical training program that was approved by a 

State as of January 1,

1992; and

(bb) continues to operate a clinical training program in at least 

one State that is approved by that State;

(ii) the institution has a clinical training program that was 

approved by a State as of January 1,

1992, or the institution’s students complete their clinical training 

at an approved veterinary school located in the United States.; or

(iii) [foreign nursing school provisions]

(B) ADVISORY PANEL.—

(i) IN GENERAL.—For the purpose of qualifying as an institution 

under paragraph (1)(C) of this subsection, the Secretary shall 

establish an advisory panel of medical experts that shall—

(I) evaluate the standards of accreditation applied to applicant 

foreign medical schools; and

(II) determine the comparability of those standards to standards for 

accreditation applied to United States medical schools.

(ii) SPECIAL RULE.—If the accreditation standards described in 

clause (i) are determined not to be comparable, the foreign medical 

school shall be required to meet the requirements of section 101.

(iii) REPORT.—

(I) IN GENERAL.—Not later than 1 year after the date of enactment of 

the Higher Education

Opportunity Act, the advisory panel described in clause (i) shall 

submit a report to the Secretary and to the authorizing committees 

recommending eligibility criteria for participation in the loan 

programs under part B of Title IV for graduate medical schools that—

(aa) are located outside of the United States;

(bb) do not meet the requirements of subparagraph (A)(i); and

(cc) have a clinical training program approved by a State prior to 

January 1, 2008.

(II) RECOMMENDATIONS.—In the report described in subclause (I), the 

advisory panel’s eligibility criteria shall include recommendations 

regarding the appropriate levels of performance for graduate medical 

schools described in such subclause in the following areas:

(aa) Entrance requirements.
23 

(bb) Retention and graduation rates.

(cc) Successful placement of students in United States medical 

residency programs.

(dd) Passage rate of students on the United States Medical Licensing 

Examination.

(ee) The extent to which State medical boards have assessed the 

quality of such school’s program of instruction, including through 

on-site reviews.

(ff) The extent to which graduates of such schools would be unable 

to practice medicine in 1 or more States, based on the judgment of a 

State medical board.

(gg) Any areas recommended by the Comptroller General of the United 

States under section 1101 of the Higher Education Opportunity Act.

(hh) Any additional areas the Secretary may require.

(III) MINIMUM ELIGIBILITY REQUIREMENT.—In the recommendations 

described in subclause (II), the criteria described in subparagraph 

(A)(i)(I)(bb), as amended by section

102(b) of the Higher Education Opportunity Act, shall be a minimum 

eligibility requirement for a graduate medical school described in 

subclause (I) to participate in the loan programs under part B of 

Title IV.

(IV) AUTHORITY.—The Secretary may—

(aa) not earlier than 180 days after the submission of the report 

described in subclause (I), issue proposed regulations establishing 

criteria for the eligibility of graduate medical schools described 

in such subclause to participate in the loan programs under part B 

of Title IV based on the recommendations of such report; and

(bb) not earlier than one year after the issuance of proposed 

regulations under item (aa), issue final regulations establishing 

such criteria for eligibility.

* * * * *
24 

Issue #10: Clinical sites of foreign medical schools and foreign 

veterinary schools in other countries 

Origin: ED

Statutory cites: Section of the HEA

Regulatory cites: §600.55 and §600.56

Tentative agreement: 

Summary of issue: Clarify whether locations of clinical sites of 

foreign graduate medical schools and foreign veterinary schools 

(other than those located in the U.S., which is permitted by 

statute) must be located in the same country as the home school. 

Current Department guidance is as follows: All portions of the 

graduate medical education program offered to U.S. students must be 

located in a country whose medical school accrediting standards are 

comparable to standards used in the United States, as determined by 

the NCFMEA. In addition, if any component of the clinical training 

program is located in an approved comparable foreign country other 

than the country in which the main campus is located, the 

institution’s medical accrediting agency must have conducted an onsite evaluation and specifically approved the clinical training 

sites in order for students attending the site to be eligible to 

borrow Title IV, HEA program funds. Furthermore, clinical 

instruction offered at a site in a foreign NCFMEA-approved country 

must be offered in conjunction with medical educational programs 

offered to students enrolled in accredited medical schools located 

in that approved foreign country.

Current Regulatory Language:

§600.55 Additional criteria for determining whether a foreign 

graduate medical school is eligible to apply to participate in the 

FFEL programs. 

(a) The Secretary considers a foreign graduate medical school to be 

eligible to apply to participate in the FFEL programs if, in 

addition to satisfying the criteria in §600.54 (except the criterion 

that the institution be public or private nonprofit), the school 

satisfies all of the following criteria:

(1) The school provides, and in the normal course requires its 

students to complete, a program of clinical and classroom medical 

instruction of not less that 32 months in length, that is supervised 

closely by members of the school's faculty and that is provided 

either—

(i) Outside the United States, in facilities adequately equipped and 

staffed to afford students comprehensive clinical and classroom 

medical instruction; or

(ii) In the United States, through a training program for foreign 

medical students that has been approved by all medical licensing 

boards and evaluating bodies whose views are considered relevant by 

the Secretary.
25 

* * * * * 

§600.56 Additional criteria for determining whether a foreign 

veterinary school is eligible to apply to participate in the FFEL 

programs. 

(a) The Secretary considers a foreign veterinary school to be 

eligible to apply to participate in the FFEL programs if, in 

addition to satisfying the criteria in §600.54 (except the criterion 

that the institution be public or private nonprofit), the school 

satisfies all of the following criteria:

(1) The school provides, and in the normal course requires its 

students to complete, a program of clinical and classroom veterinary 

instruction that is supervised closely by members of the school's 

faculty, and that is provided either—

(i) Outside the United States, in facilities adequately equipped and 

staffed to afford students comprehensive clinical and classroom 

veterinary instruction; or

(ii) In the United States, through a training program for foreign 

veterinary students that has been approved by all veterinary 

licensing boards and evaluating bodies whose views are considered 

relevant by the Secretary.

(2) The school has graduated classes during each of the two twelvemonth periods immediately preceding the date the Secretary receives 

the school's request for an eligibility determination.

(3) The school employs for the program described in paragraph (a)(1) 

of this section only those faculty members whose academic 

credentials are the equivalent of credentials required of faculty 

members teaching the same or similar courses at veterinary schools 

in the United States.

(4) For a veterinary school that is neither public nor private nonprofit, the school's students complete their clinical training at an 

approved veterinary school located in the United States.

(b) [Reserved]
26 

Issue #11: Basic science locations of foreign medical schools, 

foreign nursing schools, and foreign veterinary schools in other 

countries

Origin: ED

Statutory cites: Section of the HEA

Regulatory cites: §600.55 and §600.56

Tentative agreement: 

Summary of issue: Clarify whether locations of basic sciences 

classroom medical instruction of foreign graduate medical schools, 

foreign nursing schools, and foreign veterinary schools must be 

located in the same country as the home school. Clarify whether all 

or part of a foreign medical, foreign nursing, or veterinary school 

program can be contracted out, and if so, under what conditions. 

Current Department guidance requires that all portions of the 

graduate medical education program offered to U.S. students must be 

located in a country whose medical school accrediting standards are 

comparable to standards used in the United States, as determined by 

the NCFMEA. No component of the basic sciences classroom medical 

instruction can occur outside of the foreign home country. 

Current Regulatory Language:

§600.55 Additional criteria for determining whether a foreign 

graduate medical school is eligible to apply to participate in the 

FFEL programs. 

(a) The Secretary considers a foreign graduate medical school to be 

eligible to apply to participate in the FFEL programs if, in 

addition to satisfying the criteria in §600.54 (except the criterion 

that the institution be public or private nonprofit), the school 

satisfies all of the following criteria:

(1) The school provides, and in the normal course requires its 

students to complete, a program of clinical and classroom medical 

instruction of not less that 32 months in length, that is supervised 

closely by members of the school's faculty and that is provided 

either—

(i) Outside the United States, in facilities adequately equipped and 

staffed to afford students comprehensive clinical and classroom 

medical instruction; or

(ii) In the United States, through a training program for foreign 

medical students that has been approved by all medical licensing 

boards and evaluating bodies whose views are considered relevant by 

the Secretary.

* * * * *
27 

§600.56 Additional criteria for determining whether a foreign 

veterinary school is eligible to apply to participate in the FFEL 

programs. 

(a) The Secretary considers a foreign veterinary school to be 

eligible to apply to participate in the FFEL programs if, in 

addition to satisfying the criteria in §600.54 (except the criterion 

that the institution be public or private nonprofit), the school 

satisfies all of the following criteria:

(1) The school provides, and in the normal course requires its 

students to complete, a program of clinical and classroom veterinary 

instruction that is supervised closely by members of the school's 

faculty, and that is provided either—

(i) Outside the United States, in facilities adequately equipped and 

staffed to afford students comprehensive clinical and classroom 

veterinary instruction; or

(ii) In the United States, through a training program for foreign 

veterinary students that has been approved by all veterinary 

licensing boards and evaluating bodies whose views are considered 

relevant by the Secretary.

(2) The school has graduated classes during each of the two twelvemonth periods immediately preceding the date the Secretary receives 

the school's request for an eligibility determination.

(3) The school employs for the program described in paragraph (a)(1) 

of this section only those faculty members whose academic 

credentials are the equivalent of credentials required of faculty 

members teaching the same or similar courses at veterinary schools 

in the United States.

(4) For a veterinary school that is neither public nor private nonprofit, the school's students complete their clinical training at an 

approved veterinary school located in the United States.

(b) [Reserved]
28 

Issue #12: Eligibility requirements for foreign veterinary schools 

Origin: ED

Statutory cites: Section 102(a)(2)(A) of the HEA

Regulatory cites: §600.56

Tentative agreement: 

Summary of issue: Section 600.56(a)(3) provides that a foreign 

veterinary school is considered eligible to participate in the FFEL 

programs if, in addition to other requirements, it: 

 provides a program of clinical and classroom veterinary 

instruction that is provided in facilities adequately equipped 

and staffed to afford students comprehensive clinical and 

classroom veterinary instruction;

 employs only those faculty members whose academic credentials are 

the equivalent of credentials required of faculty members 

teaching the same or similar courses at veterinary schools in the 

United States. 

Should the regulations provide guidance on determining what 

constitutes ―adequately equipped and staffed‖ facilities or 

indicators of the equivalency of faculty members’ credentials in 

teaching veterinary courses, or include different standards to 

ensure academic quality? 

Current Regulatory Language:

§600.56 Additional criteria for determining whether a foreign 

veterinary school is eligible to apply to participate in the FFEL 

programs. 

(a) The Secretary considers a foreign veterinary school to be 

eligible to apply to participate in the FFEL programs if, in 

addition to satisfying the criteria in §600.54 (except the criterion 

that the institution be public or private nonprofit), the school 

satisfies all of the following criteria:

(1) The school provides, and in the normal course requires its 

students to complete, a program of clinical and classroom veterinary 

instruction that is supervised closely by members of the school's 

faculty, and that is provided either—

(i) Outside the United States, in facilities adequately equipped and 

staffed to afford students comprehensive clinical and classroom 

veterinary instruction; or

(ii) In the United States, through a training program for foreign 

veterinary students that has been approved by all veterinary 

licensing boards and evaluating bodies whose views are considered 

relevant by the Secretary.

(2) The school has graduated classes during each of the two twelvemonth periods immediately preceding the date the Secretary receives 

the school's request for an eligibility determination.
29 

(3) The school employs for the program described in paragraph (a)(1) 

of this section only those faculty members whose academic 

credentials are the equivalent of credentials required of faculty 

members teaching the same or similar courses at veterinary schools 

in the United States.

(4) For a veterinary school that is neither public nor private nonprofit, the school's students complete their clinical training at an 

approved veterinary school located in the United States.

(b) [Reserved]
30 

Issue #13: Eligibility requirements for foreign nursing schools 

Origin: HEOA

Statutory cites: Section 102(a)(2)(A) of the HEA

Regulatory cites: None

Tentative agreement: 

Summary of issue: The HEOA provides specific standards for 

foreign nursing schools. The provision is effective beginning July 

1, 2010, except that, for nursing schools that were eligible to 

participate on August 13, 2008 (the day before enactment of the 

HEOA) they are effective July 1, 2012.

The HEOA provides that a foreign nursing school, including a forprofit nursing school, may not participate in the FFEL Program 

unless: 

 the school has an agreement with a hospital, or accredited school 

of nursing (as those terms are defined in section 801 of the 

Public Health Service Act (42 United States Code [U.S.C.] 296)), 

located in the United States that requires the students of the

nursing school to complete the students’ clinical training at 

such hospital or accredited school of nursing;

 the school has an agreement with an accredited school of nursing 

located in the United States providing that the students 

graduating from the foreign nursing school also receive a degree 

from the accredited U.S. school of nursing;

 the school certifies only Federal Stafford Loans under section 

428 of the HEA, unsubsidized Federal Stafford Loans under section 

428H of the HEA, or Federal PLUS loans under section 428B of the 

HEA for students attending the institution;

 the school reimburses the Secretary for the cost of any loan 

defaults for current and former students included in the 

calculation of the institution’s cohort default rate during the 

previous fiscal year; and

 not less than 75 percent of the individuals who were students or 

graduates of the nursing school, and who took the National 

Council Licensure Examination for Registered Nurses in the year 

preceding the year for which the institution is certifying a 

Federal Stafford Loan, an unsubsidized Federal Stafford Loan, or 

a Federal PLUS loan, received a passing score on such 

examination.

Current Regulatory Language: None.

Statutory Language with Changes from the HEOA: 

SEC. 102. [20 U.S.C. 1002] DEFINITION OF INSTITUTION OF HIGHER 

EDUCATION FOR PURPOSES OF TITLE IV PROGRAMS.

(a) DEFINITION OF INSTITUTION OF HIGHER EDUCATION FOR PURPOSES OF 

TITLE IV PROGRAMS.—

* * *

(2) INSTITUTIONS OUTSIDE THE UNITED STATES.—
31 

(A) IN GENERAL.—For the purpose of qualifying as an institution 

under paragraph (1)(C), the Secretary shall establish criteria by 

regulation for the approval of institutions outside the United 

States and for the determination that such institutions are 

comparable to an institution of higher education as defined in 

section 101 (except that a graduate medical school, nursing school,

or a veterinary school, located outside the United States shall not

be required to meet the requirements of section 101(a)(4)). Such 

criteria shall include a requirement that a student attending such 

school outside the United States is ineligible for loans made, 

insured, or guaranteed under part B of Title IV unless—

(i) except as provided in subparagraph (B)(iii)(IV), in the case of 

a graduate medical school located outside the United States--

(I)(aa) at least 60 percent of those enrolled in, and at least 60 

percent of the graduates of, the graduate medical school outside the 

United States were not persons described in section

484(a)(5) in the year preceding the year for which a student is 

seeking a loan under part B of title

IV; and

(bb) at least 6075 percent of the individuals who were students or 

graduates of the graduate medical school outside the United States 

or Canada (both nationals of the United States and others) taking 

the examinations administered by the Educational Commission for 

Foreign Medical Graduates received a passing score in the year 

preceding the year for which a student is seeking a loan under part 

B of Title IV; or

(II) the institution has a clinical training program that was 

approved by a State as of January 1, 1992; or

(II) the institution—

(aa) has or had a clinical training program that was approved by a 

State as of January 1,

1992; and

(bb) continues to operate a clinical training program in at least 

one State that is approved by that State;

(ii) the institution has a clinical training program that was 

approved by a State as of January 1, 

1992, or the institution’s students complete their clinical training 

at an approved veterinary school located in the United States.; or

(iii) in the case of a nursing school located outside of the United 

States—

(I) the nursing school has an agreement with a hospital, or 

accredited school of nursing (as such terms are defined in section 

801 of the Public Health Service Act (42 U.S.C. 296)), located in 

the United States that requires the students of the nursing school 

to complete the students’ clinical training at such hospital or 

accredited school of nursing;
32 

(II) the nursing school has an agreement with an accredited school 

of nursing located in the United States providing that the students 

graduating from the nursing school located outside of the United 

States also receive a degree from the accredited school of nursing 

located in the

United States;

(III) the nursing school certifies only Federal Stafford Loans under 

section 428, unsubsidized Federal Stafford Loans under section 428H, 

or Federal PLUS loans under section 428B for students attending the 

institution;

(IV) the nursing school reimburses the Secretary for the cost of any 

loan defaults for current and former students included in the 

calculation of the institution’s cohort default rate during the 

previous fiscal year; and

(V) not less than 75 percent of the individuals who were students or 

graduates of the nursing school, and who took the National Council 

Licensure Examination for Registered Nurses in the year preceding 

the year for which the institution is certifying a Federal Stafford 

Loan under section 428, an unsubsidized Federal Stafford Loan under 

section 428H, or a Federal PLUS loan under section 428B, received a 

passing score on such examination.

42 U.S.C. § 296. Definitions. 

As used in this title: 

* * * 

(2) School of nursing. The term "school of nursing" means a 

collegiate, associate degree, or diploma school of nursing in a 

State.

(3) Collegiate school of nursing. The term "collegiate school of 

nursing" means a department, division, or other administrative unit 

in a college or university which provides primarily or exclusively a 

program of education in professional nursing and related subjects 

leading to the degree of bachelor of arts, bachelor of science, 

bachelor of nursing, or to an equivalent degree, or to a graduate 

degree in nursing, or to an equivalent degree, and including 

advanced training related to such program of education provided by 

such school, but only if such program, or such unit, college or 

university is accredited.

(4) Associate degree school of nursing. The term "associate degree 

school of nursing" means a department, division, or other 

administrative unit in a junior college, community college, college, 

or university which provides primarily or exclusively a two-year 

program of education in professional nursing and allied subjects 

leading to an associate degree in nursing or to an equivalent 

degree, but only if such program, or such unit, college, or 

university is accredited.

(5) Diploma school of nursing. The term "diploma school of nursing" 

means a school affiliated with a hospital or university, or an 
33 

independent school, which provides primarily or exclusively a 

program of education in professional nursing and allied subjects 

leading to a diploma or to equivalent indicia that such program has 

been satisfactorily completed, but only if such program, or such 

affiliated school or such hospital or university or such independent 

school is accredited.

(6) Accredited.

 

(A) In general. Except as provided in subparagraph (B), the term 

"accredited" when applied to any program of nurse education means a 

program accredited by a recognized body or bodies, or by a State

agency, approved for such purpose by the Secretary of Education and 

when applied to a hospital, school, college, or university (or a 

unit thereof) means a hospital, school, college, or university (or a 

unit thereof) which is accredited by a recognized body or bodies, or 

by a State agency, approved for such purpose by the Secretary of 

Education. For the purpose of this paragraph, the Secretary of 

Education shall publish a list of recognized accrediting bodies, and 

of State agencies, which the Secretary of Education determines to be 

reliable authority as to the quality of education offered.

 

(B) New programs. A new program of nursing that, by reason of an 

insufficient period of operation, is not, at the time of the 

submission of an application for a grant or contract under this 

title, eligible for accreditation by such a recognized body or 

bodies or State agency, shall be deemed accredited for purposes of 

this title if the Secretary of Education finds, after consultation 

with the appropriate accreditation body or bodies, that there is 

reasonable assurance that the program will meet the accreditation 

standards of such body or bodies prior to the beginning of the 

academic year following the normal graduation date of students of 

the first entering class in such a program.
34 

Issue #14: Foreign medical, veterinary, and nursing schools 

certified separately from larger school 

Origin: ED

Statutory cites: 

Regulatory cites: §600.20

Tentative agreement: 

Summary of issue: Should the regulations require that all foreign 

medical, nursing and veterinary schools be certified separately from 

any larger school, as recommended by NCFMEA (Recommendation 14(a))? 

Should the certification period for foreign medical schools be 

shortened to three years, as recommended by NCFMEA (Recommendation 

14(b))? 

Current Regulatory Language:

§600.20 Application procedures for establishing, reestablishing, 

maintaining, or expanding institutional eligibility and 

certification. 

(a) Initial eligibility application. An institution that wishes to 

establish its eligibility to participate in any HEA program must 

submit an application to the Secretary for a determination that it 

qualifies as an eligible institution under this part. If the 

institution also wishes to be certified to participate in the Title 

IV, HEA programs, it must indicate that intent on the application, 

and submit all the documentation indicated on the application to 

enable the Secretary to determine that it satisfies the relevant 

certification requirements contained in 34 CFR part 668, subparts B 

and L. 

(b) Reapplication. (1) A currently designated eligible institution 

that is not participating in the Title IV, HEA programs must apply 

to the Secretary for a determination that the institution continues 

to meet the requirements in this part if the Secretary requests the 

institution to reapply. If the institution wishes to be certified to 

participate in the Title IV, HEA programs, it must submit an 

application to the Secretary and must submit all the supporting 

documentation indicated on the application to enable the Secretary 

to determine that it satisfies the relevant certification 

requirements contained in subparts B and L of 34 CFR part 668. 

(2) A currently designated eligible institution that participates in 

the Title IV, HEA programs must apply to the Secretary for a 

determination that the institution continues to meet the 

requirements in this part and in 34 CFR part 668 if the institution 

wishes to— 

(i) Continue to participate in the Title IV, HEA programs beyond the 

scheduled expiration of the institution's current eligibility and 

certification designation; 

(ii) Reestablish eligibility and certification as a private 

nonprofit, private for-profit, or public institution following a 

change in ownership that results in a change in control as described 

in §600.31; or 
35 

(iii) Reestablish eligibility and certification after the 

institution changes its status as a proprietary, nonprofit, or 

public institution. 

(c) Application to expand eligibility. A currently designated 

eligible institution that wishes to expand the scope of its 

eligibility and certification and disburse Title IV, HEA Program 

funds to students enrolled in that expanded scope must apply to the 

Secretary and wait for approval to— 

(1) Add a location at which the institution offers or will offer 50 

percent or more of an educational program if one of the following 

conditions applies, otherwise it must report to the Secretary under 

§600.21: 

(i) The institution participates in the Title IV, HEA programs under 

a provisional certification, as provided in 34 CFR 668.13. 

(ii) The institution receives Title IV, HEA program funds under the 

reimbursement or cash monitoring payment method, as provided in 34 

CFR part 668, subpart K. 

(iii) The institution acquires the assets of another institution 

that provided educational programs at that location during the 

preceding year and participated in the Title IV, HEA programs during 

that year. 

(iv) The institution would be subject to a loss of eligibility under 

34 CFR 668.188 if it adds that location. 

(v) The Secretary previously notified the institution that it must 

apply for approval of an additional location. 

(2) Increase its level of program offering (e.g., adding graduate 

degree programs when it previously offered only baccalaureate degree 

programs); 

(3) Add an educational program if the institution is required to 

apply to the Secretary for approval under §600.10(c); 

(4) Add a branch campus at a location that is not currently included 

in the institution's eligibility and certification designation; or 

(5) Convert an eligible location to a branch campus. 

* * * * *