Issue Papers

Team II – Foreign Schools –

Session Two

Issue #1: United States Generally Accepted Accounting Principles 

(U.S. GAAP) financial statements................................... 2

Issue #2: Compliance audits...................................... 13

Issue #3: Definition of a foreign school......................... 23

Issue #4: Non-profit status for foreign schools.................. 30

Issue #5: Public foreign schools and financial responsibility.... 32

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

countrywide basis................................................. 36

Issue #7: Deferments for eligible non-citizens................... 38

Issue #8: Non-degree programs.................................... 39

Issue #9: New eligibility criteria for foreign medical schools... 45

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

veterinary schools in other countries............................. 62

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

foreign nursing schools, and foreign veterinary schools in other 

countries......................................................... 64

Issue #12: Eligibility requirements for foreign veterinary schools

.................................................................. 66

Issue #13: Eligibility requirements for foreign nursing schools.. 68

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

certified separately from larger school........................... 76
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?

Updated information since 11/16-20 meeting:

The draft regulatory language would:

 Waive the financial audit submission requirement for a foreign 

institution that received less than $500,000 in U.S. Title IV 

program funds during its most recently completed fiscal year, 
3

unless an institution is in its initial provisional period of 

participation;

 For public foreign institutions, if an institution received at 

least $500,000 in U.S. Title IV program funds, but less than 

$1,000,000 in U.S. Title IV program funds during the 

institution’s fiscal year preceding the audit period, the 

institution would be required to submit audited financial 

statements prepared in accordance with the generally accepted 

accounting principles of the institution's home country, 

unless there is an unpaid liability due to the Secretary by 

any public institution controlled by the same government 

entity. If there is an unpaid liability due to the Secretary 

by any public institution controlled by the same government 

entity, all public institutions controlled by that government 

entity would be required to submit audited financial

statements translated to meet the requirements for domestic 

institutions;

 Require audited financial statements translated to meet the 

requirements for domestic institutions for: (1) public 

institutions that received $1,000,000 or more in U.S. Title IV 

program funds or failed to qualify for the provision described 

in bullet two; (2) private foreign institutions that received

$500,000 or more in U.S. Title IV program funds; and any 

institution in its initial provisional period of 

participation.

 Provide that the Secretary may specify the manner in which an 

institution must submit audited financial statements if there 

are problems with the institution’s financial condition or 

financial reporting.

In addition, the draft regulatory language would: (1) remove the

superseded language in §668.15 addressing submission of financial 

audits for foreign institutions; (2) make technical corrections to 

reflect OMB’s 2003 rescission of Circular A-128 and expansion of 

Circular A-133 to include State and local governments and (3) add 

the phrase ―issued by the Comptroller General of the United States‖ 

to §668.23(d)(1) to make clear that United States auditing standards 

must be used for all submitted financial statements, including those 

from foreign institutions.

Draft Regulatory Language:

1 §668.15 Factors of financial responsibility.

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

3 financial responsibility for a foreign institution on the basis of 

4 financial statements submitted under the following requirements—

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

6 HEA program funds during its most recently completed fiscal year, 

7 the institution must submit its audited financial statement for that 
4

1 year. For purposes of this paragraph, the audited financial 

2 statements may be prepared under the auditing standards and 

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

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

5 HEA program funds during its most recently completed fiscal year, 

6 the institution must submit its audited financial statement in 

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

8 standards of financial responsibility contained in this section, or 

9 qualify under an alternate standard of financial responsibility 

10 contained in this section.

11 * * * * *

12 §668.23 Compliance audits and audited financial statements.

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

14 the term ―independent auditor‖ refers to an independent certified 

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

16 this section, a government auditor must meet the Government Auditing 

17 Standards qualification and independence standards, including 

18 standards related to organizational independence.

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

20 HEA program must at least annually have an independent auditor 

21 conduct a compliance audit of its administration of that program and 

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

23 (3) Third-party servicers. Except as provided under this part or 34 

24 CFR part 682, with regard to complying with the provisions under 

25 this section a third-party servicer must follow the procedures 

26 contained in the audit guides developed by and available from the 

27 Department of Education's Office of Inspector General. A third-party 

28 servicer is defined under §668.2 and 34 CFR 682.200.
5

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

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

3 submit annually to the Secretary its compliance audit and its 

4 audited financial statements no later than six months after the last 

5 day of the institution's fiscal year.

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

7 considers the compliance audit and audited financial statement 

8 submission requirements of this section to be satisfied by an audit 

9 conducted in accordance with the Office of Management and Budget 

10 Circular A–133, ―Audits of States, Local Governments, Institutions 

11 of Higher Education and Other and Non-Pprofit Organizations‖; Office 

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

13 Governments‖, or the audit guides developed by and available from 

14 the Department of Education's Inspector General, whichever is 

15 applicable to the entity, and provided that the Federal student aid 

16 functions performed by that entity are covered in the submission. 

17 (Both OMB circulars are available by calling OMB's Publication 

18 Office at (202) 395–7332, or they can be obtained in electronic form 

19 on the OMB Home Page (http://www.whitehouse.gov).

20 (b) [Compliance audits for institutions.]

21 (c) [Compliance audits for third-party servicers.]

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

23 Secretary to make a determination of financial responsibility, an 

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

25 to the Secretary a set of financial statements for its latest 

26 complete fiscal year, as well as any other documentation the 

27 Secretary deems necessary to make that determination. Financial 

28 statements submitted to the Secretary must be prepared on an accrual 

29 basis in accordance with generally accepted accounting principles, 
6

1 and audited by an independent auditor in accordance with generally 

2 accepted government auditing standards issued by the Comptroller 

3 General of the United States, and other guidance contained in the 

4 Office of Management and Budget Circular A–133, ―Audits of States, 

5 Local Governments, Institutions of Higher Education and Other Non6 Pprofit Organizations‖, ; Office of Management and Budget Circular 

7 A–128, ―Audits of State and Local Governments‖; or in audit guides 

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

9 Office of Inspector General , whichever is applicable. As part of 

10 these financial statements, the institution must include a detailed 

11 description of related entities based on the definition of a related 

12 entity as set forth in the Statement of Financial Accounting 

13 Standards (SFAS) 57. The disclosure requirements under this 

14 provision extend beyond those of SFAS 57 to include all related 

15 parties and a level of detail that would enable to Secretary to 

16 readily identify the related party. Such information may include, 

17 but is not limited to, the name, location and a description of the 

18 related entity including the nature and amount of any transactions 

19 between the related party and the institution, financial or 

20 otherwise, regardless of when they occurred.

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

22 requested by the Secretary in determining whether an institution is 

23 financially responsible, the Secretary may also require the 

24 submission of audited consolidated financial statements, audited 

25 full consolidating financial statements, audited combined financial 

26 statements or the audited financial statements of one or more 

27 related parties that have the ability, either individually or 

28 collectively, to significantly influence or control the institution, 

29 as determined by the Secretary.
7

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

2 institution must submit—

3 (i) Audited financial statements prepared in accordance with the 

4 generally accepted accounting principles of the institution's home 

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

6 title IV, HEA program funds during its most recently completed 

7 fiscal year; or

8 (ii) Audited financial statements translated to meet the 

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

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

11 its most recently completed fiscal year.

12 (43) Disclosure of title IV HEA program revenue. A proprietary 

13 institution must disclose in a footnote to its financial statement 

14 audit the percentage of its revenues derived from the title IV, HEA 

15 program funds that the institution received during the fiscal year 

16 covered by that audit. The revenue percentage must be calculated in 

17 accordance with §600.5(d).

18 (54) Audited financial statements for third-party servicers. A 

19 third-party servicer that enters into a contract with a lender or 

20 guaranty agency to administer any aspect of the lender's or guaranty 

21 agency's programs, as provided under 34 CFR part 682, must submit 

22 annually an audited financial statement. This financial statement 

23 must be prepared on an accrual basis in accordance with generally 

24 accepted accounting principles, and audited by an independent 

25 auditor in accordance with generally accepted government auditing 

26 standards and other guidance contained in audit guides issued by the 

27 Department of Education's Office of Inspector General.
8

1 (e) Access to records. (1) An institution or a third-party 

2 servicer that has a compliance or financial statement audit 

3 conducted under this section must—

4 (i) Give the Secretary and the Inspector General access to records 

5 or other documents necessary to review that audit, including the 

6 right to obtain copies of those records or documents; and

7 (ii) Require an individual or firm conducting the audit to give the 

8 Secretary and the Inspector General access to records, audit work 

9 papers, or other documents necessary to review that audit, including 

10 the right to obtain copies of those records, work papers, or 

11 documents.

12 (2) An institution must give the Secretary and the Inspector 

13 General access to records or other documents necessary to review a 

14 third-party servicer's compliance or financial statement audit, 

15 including the right to obtain copies of those records or documents.

16 (f) Determination of liabilities. (1) Based on the audit finding 

17 and the institution's or third-party servicer's response, the 

18 Secretary determines the amount of liability, if any, owed by the 

19 institution or servicer and instructs the institution or servicer as 

20 to the manner of repayment.

21 (2) If the Secretary determines that a third-party servicer owes a 

22 liability for its administration of an institution's title IV, HEA 

23 programs, the servicer must notify each institution under whose 

24 contract the servicer owes a liability of that determination. The 

25 servicer must also notify every institution that contracts with the 

26 servicer for the same service that the Secretary determined that a 

27 liability was owed.

28 (g) Repayments. (1) An institution or third-party servicer that 

29 must repay funds under the procedures in this section shall repay 
9

1 those funds at the direction of the Secretary within 45 days of the 

2 date of the Secretary's notification, unless—

3 (i) The institution or servicer files an appeal under the 

4 procedures established in subpart H of this part; or

5 (ii) The Secretary permits a longer repayment period.

6 (2) Notwithstanding paragraphs (f) and (g)(1) of this section—

7 (i) If an institution or third-party servicer has posted surety or 

8 has provided a third-party guarantee and the Secretary questions 

9 expenditures or compliance with applicable requirements and 

10 identifies liabilities, then the Secretary may determine that 

11 deferring recourse to the surety or guarantee is not appropriate 

12 because—

13 (A) The need to provide relief to students or borrowers affected by 

14 the act or omission giving rise to the liability outweighs the 

15 importance of deferring collection action until completion of 

16 available appeal proceedings; or

17 (B) The terms of the surety or guarantee do not provide complete 

18 assurance that recourse to that protection will be fully available 

19 through the completion of available appeal proceedings; or

20 (ii) The Secretary may use administrative offset pursuant to 34 CFR 

21 part 30 to collect the funds owed under the procedures of this 

22 section.

23 (3) If, under the proceedings in subpart H, liabilities asserted in 

24 the Secretary's notification, under paragraph (e)(1) of this 

25 section, to the institution or third-party servicer are upheld, the 

26 institution or third-party servicer must repay those funds at the 

27 direction of the Secretary within 30 days of the final decision 

28 under subpart H of this part unless—

29 (i) The Secretary permits a longer repayment period; or
10

1 (ii) The Secretary determines that earlier collection action is 

2 appropriate pursuant to paragraph (g)(2) of this section.

3 (4) An institution is held responsible for any liability owed by 

4 the institution's third-party servicer for a violation incurred in 

5 servicing any aspect of that institution's participation in the 

6 title IV, HEA programs and remains responsible for that amount until 

7 that amount is repaid in full.

8 (h) Audit submission requirements for foreign institutions.

9 (1) Audited financial statements. (i) The Secretary waives the 

10 submission of audited financial statements if the institution is a 

11 foreign institution that received less than $500,000 in U.S. title 

12 IV program funds during its most recently completed fiscal year, 

13 unless a foreign institution is in its initial provisional period of 

14 participation.

15 (ii) Except as provided in paragraph (h)(iii) of this section, a 

16 foreign institution that received $500,000 or more in U.S. title IV 

17 program funds during its most recently completed fiscal year, and 

18 any institution in its initial provisional period of participation, 

19 must submit in English, audited financial statements translated to 

20 meet the requirements of paragraph (d) of this section.

21 (iii) In lieu of making the submission required by paragraph (ii)

22 of this section a public institution that received $500,000 or more 

23 in U.S. title IV program funds, but less than $1,000,000 in U.S. 

24 title IV program funds during its most recently completed fiscal 

25 year, may submit in English an audited financial statement prepared 

26 in accordance with the generally accepted accounting principles of 

27 the institution's home country, so long as the institution has been 

28 notified by the Secretary that there are no unpaid liabilities due 
11

1 to the Secretary from any public institution that is controlled by 

2 the same government entity.

3 (iv) For purposes of this paragraph, the Secretary considers a 

4 liability to be ―unpaid‖ if it is a final decision of the Department 

5 pursuant to 34 CFR 668.121 and the liability has not been paid or is 

6 being repaid pursuant to a repayment agreement within 180 days, 

7 unless a suit has been filed and is pending to challenge that 

8 liability by the institution in a federal court of the United 

9 States. 

10 (2) Compliance audits. [see Issue Paper 2]

11 (3)(i) Exceptions. Notwithstanding the provisions of paragraphs 

12 (h)(1)(i) and (h)(1)(iii) of this section, the Secretary may issue a 

13 letter to a foreign institution that identifies problems with its 

14 financial condition or financial reporting and requires the 

15 submission of audited financial statements in the manner specified 

16 by the Secretary. 

17 (ii) [Compliance audits—see Issue Paper 2] .

18 * * * * *

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 
12

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;
13

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?

Updated information since 11/16-20 meeting:

The draft regulations would separate foreign institutions into two 

cohorts; Tier One--foreign institutions that received less than 

$500,000 in U.S. Title IV program funds during the institution’s 

most recently completed fiscal year; and Tier Two—foreign 

institutions that received $500,000 or more in U.S. Title IV program

funds during the institution’s most recently completed fiscal year. 

Tier One Alternative: Foreign institutions that disburse less than 

$500,000 per year. The draft regulations would require an annual 

submission for the first two years, then every three years 

thereafter (under certain conditions), in both cases under an 

alternative compliance audit. To qualify for submission every three 

years, a foreign institution in this tier must: (1) be fully 

certified; (2) have timely submitted and had accepted compliance 

audits for two successive fiscal years and have no history of late 

submissions since then.

Under an alternative compliance audit, the draft regulations would 

require a compliance audit performed in accordance with U.S.

government auditing standards and AICPA attestation standards (which 

is consistent with the current audit guides developed by the 

Department’s Office of Inspector General). Under an alternative 

compliance audit, the auditor performs prescribed procedures and 

reports the results of performing such procedures. Based upon the 

auditor's report, the Department evaluates the institution's 

compliance. The auditor does not express an opinion of the 

reliability of the institution's assertions concerning the 

institution's compliance with the requirements. An alternative 

compliance audit is the lowest level compliance audit. 
14

The Office of Postsecondary Education would recommend to the 

Inspector General that current audit guides be revised to require, 

with respect to the alternative compliance audit:

 For each year audited, the use of a student sample of 25%, 

with a minimum of 10 students or all students, whichever is 

less;

 A check for student eligibility--Presence of a valid ISIR EFC, 

documenting the student’s cost of attendance for the program 

enrolled, proof of student need, proof of enrollment of the 

student’s stated eligible program of study, satisfactory 

academic progress, proof of enrollment status at the time of 

loan delivery, and if applicable, documentation that a correct 

R2T4 calculation was performed, loan amounts, and SSCR 

reporting;

 A check for institutional eligibility--recipients of funds 

were enrolled in an eligible program, and, if prior year 

findings were resolved to a program determination letter 

issued by the Department. 

The Department could require more frequent submissions, a larger 

sample size, or a standard compliance audit should problems with the 

institution’s administrative capability or compliance reporting be 

identified. 

Tier Two Alternative: Foreign institutions that disburse $500,000 

or more per year: The draft regulations would require an annual 

submission under a standard compliance audit. That is, a full 

examination-level compliance audit performed on an annual basis of 

the foreign institution’s compliance with regulations per the audit 

guides developed by the Department’s Office of Inspector General. 

Under a standard compliance audit, the auditor expresses an opinion 

about the reliability of assertions made by the institution’s 

management concerning the institution’s compliance with 

requirements. An examination-level compliance audit is the highest 

level of compliance audit. However, it is not a full audit of the 

foreign institution’s compliance with regulations. 

The Office of Postsecondary Education would recommend to the 

Inspector General that current audit guides be revised to require:

 The use of a student sample of 25%, with a minimum of 25 

students and a maximum of 50 students, whichever is less;

 A review of the institution’s internal controls over 

compliance, and that the institution has followed up on any 

prior audits. 

 That the auditor test management assertions regarding:

o Approved locations 

o Legal authority 

o No Title IV funds to programs offered in whole or in part 

through telecommunications, correspondence, or direct 

assessment

o SAP 

o Accreditation 

o Length of programs 

o Clinical training 

o SSCR reporting 
15

o Student eligibility (e.g., SARs, ISIRs, enrollment, loan 

amounts, eligible programs...) 

o Processing loan proceeds 

o Refunds and Return to Title IV 

o Administrative capability

o Other material items identified by the auditor during the 

compliance audit.

Draft Regulatory Language:

1 §668.23 Compliance audits and audited financial statements.

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

3 the term ―independent auditor‖ refers to an independent certified 

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

5 this section, a government auditor must meet the Government Auditing 

6 Standards qualification and independence standards, including 

7 standards related to organizational independence.

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

9 HEA program must at least annually have an independent auditor 

10 conduct a compliance audit of its administration of that program and 

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

12 (3) Third-party servicers. Except as provided under this part or 34 

13 CFR part 682, with regard to complying with the provisions under 

14 this section a third-party servicer must follow the procedures 

15 contained in the audit guides developed by and available from the 

16 Department of Education's Office of Inspector General. A third-party 

17 servicer is defined under §668.2 and 34 CFR 682.200.

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

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

20 submit annually to the Secretary its compliance audit and its 

21 audited financial statements no later than six months after the last 

22 day of the institution's fiscal year.
16

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

2 considers the compliance audit and audited financial statement 

3 submission requirements of this section to be satisfied by an audit 

4 conducted in accordance with the Office of Management and Budget 

5 Circular A–133, ―Audits of States, Local Governments, Institutions 

6 of Higher Education and Other and Non-Pprofit Organizations‖; Office 

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

8 Governments‖, or the audit guides developed by and available from 

9 the Department of Education's Inspector General, whichever is 

10 applicable to the entity, and provided that the Federal student aid 

11 functions performed by that entity are covered in the submission. 

12 (Both OMB circulars are available by calling OMB's Publication 

13 Office at (202) 395–7332, or they can be obtained in electronic form 

14 on the OMB Home Page (http://www.whitehouse.gov).

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

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

17 HEA program transactions, and must cover all of those transactions 

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

19 last compliance audit.

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

21 conducted in accordance with—

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

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

24 Auditing Standards. (This publication is available from the 

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

26 Washington, DC 20402); and

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

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

29 Inspector General.
17

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

2 its compliance audit report to guaranty agencies or eligible lenders 

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

4 Affairs, or nationally recognized accrediting agencies.

5 (c) Compliance audits for third-party servicers. (1) A third-party 

6 servicer that administers title IV, HEA programs for institutions 

7 does not have to have a compliance audit performed if—

8 (i) The servicer contracts with only one institution; and

9 (ii) The audit of that institution's administration of the title 

10 IV, HEA programs involves every aspect of the servicer's 

11 administration of that program for that institution.

12 (2) A third-party servicer that contracts with more than one 

13 participating institution may submit a compliance audit report that 

14 covers the servicer's administration of the title IV, HEA programs 

15 for all institutions with which the servicer contracts.

16 (3) A third-party servicer must submit annually to the Secretary 

17 its compliance audit no later than six months after the last day of 

18 the servicer's fiscal year.

19 (4) The Secretary may require a third-party servicer to provide a 

20 copy of its compliance audit report to guaranty agencies or eligible 

21 lenders under the FFEL programs, State agencies, the Secretary of 

22 Veterans Affairs, or nationally recognized accrediting agencies.

23 (d) [Audited financial statements]

24 (e) Access to records. (1) An institution or a third-party 

25 servicer that has a compliance or financial statement audit 

26 conducted under this section must—

27 (i) Give the Secretary and the Inspector General access to records 

28 or other documents necessary to review that audit, including the 

29 right to obtain copies of those records or documents; and
18

1 (ii) Require an individual or firm conducting the audit to give the 

2 Secretary and the Inspector General access to records, audit work 

3 papers, or other documents necessary to review that audit, including 

4 the right to obtain copies of those records, work papers, or 

5 documents.

6 (2) An institution must give the Secretary and the Inspector 

7 General access to records or other documents necessary to review a 

8 third-party servicer's compliance or financial statement audit, 

9 including the right to obtain copies of those records or documents.

10 (f) Determination of liabilities. (1) Based on the audit finding

11 and the institution's or third-party servicer's response, the 

12 Secretary determines the amount of liability, if any, owed by the 

13 institution or servicer and instructs the institution or servicer as 

14 to the manner of repayment.

15 (2) If the Secretary determines that a third-party servicer owes a 

16 liability for its administration of an institution's title IV, HEA 

17 programs, the servicer must notify each institution under whose 

18 contract the servicer owes a liability of that determination. The 

19 servicer must also notify every institution that contracts with the 

20 servicer for the same service that the Secretary determined that a 

21 liability was owed.

22 (g) Repayments. (1) An institution or third-party servicer that 

23 must repay funds under the procedures in this section shall repay 

24 those funds at the direction of the Secretary within 45 days of the 

25 date of the Secretary's notification, unless—

26 (i) The institution or servicer files an appeal under the 

27 procedures established in subpart H of this part; or

28 (ii) The Secretary permits a longer repayment period.

29 (2) Notwithstanding paragraphs (f) and (g)(1) of this section—
19

1 (i) If an institution or third-party servicer has posted surety or 

2 has provided a third-party guarantee and the Secretary questions 

3 expenditures or compliance with applicable requirements and 

4 identifies liabilities, then the Secretary may determine that 

5 deferring recourse to the surety or guarantee is not appropriate 

6 because—

7 (A) The need to provide relief to students or borrowers affected by 

8 the act or omission giving rise to the liability outweighs the 

9 importance of deferring collection action until completion of 

10 available appeal proceedings; or

11 (B) The terms of the surety or guarantee do not provide complete 

12 assurance that recourse to that protection will be fully available 

13 through the completion of available appeal proceedings; or

14 (ii) The Secretary may use administrative offset pursuant to 34 CFR 

15 part 30 to collect the funds owed under the procedures of this 

16 section.

17 (3) If, under the proceedings in subpart H, liabilities asserted in 

18 the Secretary's notification, under paragraph (e)(1) of this 

19 section, to the institution or third-party servicer are upheld, the 

20 institution or third-party servicer must repay those funds at the 

21 direction of the Secretary within 30 days of the final decision 

22 under subpart H of this part unless—

23 (i) The Secretary permits a longer repayment period; or

24 (ii) The Secretary determines that earlier collection action is 

25 appropriate pursuant to paragraph (g)(2) of this section.

26 (4) An institution is held responsible for any liability owed by 

27 the institution's third-party servicer for a violation incurred in 

28 servicing any aspect of that institution's participation in the 
20

1 title IV, HEA programs and remains responsible for that amount until 

2 that amount is repaid in full.

3 (h) Audit submission requirements for foreign institutions.

4 (1) Audited financial statements. [see Issue Paper 1]

5 (2) Compliance audits. A foreign institution's compliance audit 

6 must cover, on a fiscal year basis, all title IV, HEA program 

7 transactions, and must cover all of those transactions that have 

8 occurred since the period covered by the institution's last 

9 compliance audit. A compliance audit that is due under this 

10 paragraph must be submitted no later than six months after the last 

11 day of the institution’s fiscal year, and must meet the following 

12 requirements:

13 (i) If the foreign institution received $500,000 or more in U.S. 

14 dollars in title IV, HEA program funds during its most recently 

15 completed fiscal year, it must submit a standard compliance audit 

16 for that year that is performed in accordance with audit guides 

17 developed by, and available from, the Department of Education’s 

18 Office of Inspector General, together with an alternative compliance 

19 audit or audits prepared in accordance with paragraph (h)(2)(ii) of 

20 this section for any preceding fiscal year or years in which the 

21 foreign institution received less than $500,000 in U.S. dollars in 

22 title IV, HEA program funds;

23 (ii) If the foreign institution received less than $500,000 U.S. in 

24 title IV, HEA program funds for its most recently completed fiscal 

25 year, it must submit an alternative compliance audit for that prior 

26 fiscal year that is performed in accordance with audit guides 

27 developed by, and available from, the Department of Education’s 

28 Office of Inspector General, except as noted in paragraph 

29 (h)(2)(iii) of this section;
21

1 (iii) If so notified by the Secretary, a foreign institution may 

2 submit an alternative compliance audit that covers a period not to 

3 exceed three of the institution’s consecutive fiscal years if the 

4 following conditions are met:

5 (A) The institution received less than $500,000 in title IV, HEA 

6 program funds for its most recently completed fiscal year;

7 (B) The institution has timely submitted acceptable compliance 

8 audits for two successive fiscal years, and following such 

9 submission has no history of late submission since then;

10 (C) The institution is fully certified;

11 (D) The alternative compliance audit described in this paragraph is 

12 submitted no later than six months after the last day of the last 

13 fiscal year included in such audit; and

14 (E) The alternative compliance audit described in this paragraph is 

15 performed in accordance with audit guides developed by, and 

16 available from, the Department of Education’s Office of Inspector 

17 General.

18 (3)(i) Exceptions. [Audited financial statements—see Issue Paper 

19 1]. 

20 (ii) Notwithstanding the provisions of paragraphs (h)(2)(ii) and 

21 (h)(2)(iii) of this section, the Secretary may issue a letter to a 

22 foreign institution that identifies problems with its administrative 

23 capability or compliance reporting that specifies whether the 

24 compliance audit must be performed at a higher level of engagement, 

25 and whether the compliance audit must be submitted annually.

26 * * * * *

Statutory Language with changes from the HEOA: 

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

* * * * *
22

(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;
23

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.

Updated information since 11/16-20 meeting:

Under the draft regulatory language, a ―foreign institution or 

school‖ would be defined in §600.52 as an institution that: 

 Is not located in a State and does not have U.S. locations 

(other than clinical locations of foreign medical, veterinary, 

or nursing schools) and does not have written arrangements 

with institutions located in the United States.

 Does not permit students to engage in any combination of 

courses, research, work, internship, externship or special 

studies from with the United States; 

 Holds legal authorization by the education ministry, council, 

or equivalent agency of the country in which the institution 

is located;

 Has official recognition of its degrees, certificates and 

other educational credentials from the country in which the 

institution is located;

 For programs designed to prepare students for entry into 

gainful employment in a recognized occupation, to prepare its 

students to meet all educational requirements, including 

educational eligibility to take licensing exams, for entering 

into that occupation in that country. 

If an educational enterprise enrolls students both within a State 

and outside a State, and the number of students who would be 

eligible to receive title IV, HEA program funds attending locations 

outside a State is at least twice the number of students enrolled 

within a State, the locations outside a State must be approved to 

participate as one or more foreign institutions and must meet all 
24

requirements of paragraph (1) of the definition of a foreign 

institution and school, and the other requirements of this part.

Under the draft regulatory language, each additional location of a 

foreign institution would be required to separately meet the 

definition of a foreign institution if it is:

(1) located outside of the country in which the main campus is 

located; or (2) not covered by the legal authorization of the main 

campus. In addition, an eligible foreign institution would not be 

permitted to enter into a written arrangement with an ineligible 

institution or organization to provide any portion of an eligible 

program offered by the foreign institution. Finally, the draft 

regulatory language would make clear that a foreign institution must 

comply with all laws and regulations applicable to domestic 

institutions that participate in the Title IV programs, except where 

(1) those provisions are inconsistent with any requirements of the 

HEA specific to foreign institutions; or (2) the Secretary has 

identified specific provisions as inapplicable to foreign schools 

through a notice published in the Federal Register.

Note that the proposed regulations would also reduce the 

certification period of all foreign institutions to three years (see 

Issue Paper 14).

Draft Regulatory Language:

1 §600.51 Purpose and scope.

2 (a) A foreign institution is eligible to apply to participate in 

3 the Federal Family Education Loan (FFEL) programs if it is 

4 comparable to an eligible institution of higher education located in 

5 the United States and has been approved by the Secretary in 

6 accordance with the provisions of this subpart.

7 (b) This subpart E contains the procedures and criteria under which 

8 a foreign institution may be deemed eligible to apply to participate 

9 in the FFEL programs.

10 (c) A foreign institution must comply with all requirements for 

11 eligible and participating institutions except--

12 (1) To the extent those provisions are inconsistent with this 

13 subpart or other provisions of these regulations or the HEA specific 

14 to foreign institutions; or

15 (2) The Secretary, through a notice in the Federal Register, 

16 identifies specific provisions as inapplicable to foreign schools.
25

1 (c) This subpart E does not include the procedures and criteria by 

2 which a foreign institution that is deemed eligible to apply to 

3 participate in the FFEL programs actually applies for that 

4 participation. Those procedures and criteria are contained in the 

5 regulations for the FFEL programs, 34 CFR part 682, subpart F.

6 * * * * *

7

8 §600.52 Definitions.

9 The following definitions apply to this subpart E:

10 * * * * *

11 Foreign institution or foreign school:

12 (1) An institution that—

13 (i) Iis not located in a State;

14 (ii) Has no U.S. locations, except for clinical sites of foreign 

15 medical schools in accordance with §668.55(e)(1)(ii), foreign 

16 veterinary schools in accordance with §668.56(a)(1)(ii), and foreign 

17 nursing schools in accordance with §600.57(a)(2);

18 (iii) Has no written arrangements with institutions located in the 

19 United States for students enrolling at the foreign institution to 

20 take courses from institutions located in the United States; and

21 (iv) Does not permit students to enroll in any course offered by 

22 the foreign institution in the United States, including research, 

23 work, internship, externship or special studies from within the 

24 United States;

25 (v) Is legally authorized by the education ministry, council, or 

26 equivalent agency of the country in which the institution is located 

27 to provide an educational program beyond the secondary education 

28 level;
26

1 (vi) Awards degrees, certificates or other recognized educational 

2 credentials in accordance with §600.54(c) that are officially 

3 recognized by the country in which the institution is located; and

4 (vii) For each program, including degree programs, designed to 

5 prepare the student for gainful employment in a recognized 

6 occupation, with or without licensure, provides a credential that—

7 (A) Satisfies the educational requirements in the country in which 

8 the institution is located for entry into that occupation, including 

9 educational requirements for licensure; and 

10 (B) Satisfies the educational requirements, including requirements 

11 for licensure, for entry into that occupation in the United States;

12 or

13 (2) If an educational enterprise enrolls students both within 

14 a State and outside a State, and the number of students who 

15 would be eligible to receive title IV, HEA program funds 

16 attending locations outside a State is at least twice the 

17 number of students enrolled within a State, the locations 

18 outside a State must be approved to participate as one or more 

19 foreign institutions and must meet all requirements of 

20 paragraph (1) of this definition, and the other requirements 

21 of this part. 

22

23 * * * * *

24

25 §600.54 Criteria for determining whether a foreign institution is 

26 eligible to apply to participate in the FFEL programs.

27 The Secretary considers a foreign institution to be comparable to an 

28 eligible institution of higher education in the United States and 
27

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

2 institution is a public or private nonprofit educational institution 

3 thatmeets the following requirements:—

4 (a) Except for a foreign graduate medical school, foreign 

5 veterinary school, or foreign nursing school, the foreign 

6 institution is a public or private nonprofit educational 

7 institution;

8 (ab) The foreign institution admits as regular students only 

9 persons who—

10 (1) Have a secondary school completion credential; or

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

12 credential;

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

14 eligible educational program beyond the secondary school level in 

15 the country in which the institution is located; and

16 (c)(1) Notwithstanding §668.5, an eligible foreign institution may 

17 not enter into a written arrangement with an ineligible institution 

18 or organization to provide any portion of an eligible program 

19 offered by the foreign institution. 

20 (2) An additional location of a foreign institution must separately 

21 meet the definition of a foreign institution in §600.52 if it is—

22 (i) Located outside of the country in which the main campus is 

23 located; or

24 (ii) Located within the same country as the main campus, but is not 

25 covered by the legal authorization of the main campus;

26 (cd) The foreign institution pProvides an eligible education 

27 program—
28

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

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

3 or professional degree awarded in the United States; 

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

5 full credit toward the equivalent of a baccalaureate degree awarded 

6 in the United States; or

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

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

9 other recognized educational credential and prepares students for 

10 gainful employment in a recognized occupation.;

11 (e) For a for-profit foreign medical, veterinary or nursing school12 -

13 (1) No portion of an eligible program offered may be at what would 

14 be an undergraduate level in the United States; and

15 (2) The title IV, HEA program eligibility does not extend to any 

16 first professional degree or joint degree program. 

17

18 §668.2 Definitions.

19 * * * * *

20 (a) * * *

21 (2) The following definitions are set forth in the regulations for 

22 Institutional Eligibility under the Higher Education Act of 1965, as 

23 amended, 34 CFR part 600:

24 * * *

25 Foreign institution or school

26 * * * * * 

27

28

29 §682.200 Definitions.
29

1 * * * * *

2 (a) * * *

3 (2) The following definitions are set forth in the regulations for 

4 Institutional Eligibility under the Higher Education Act of 1965, as 

5 amended, 34 CFR part 600:

6 * * *

7 Foreign institution or school

8 * * * * * 

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

10 * * * 

11 Foreign school. A school not located in a State.

12 * * * * *

13 §682.611 Foreign schools.

14 A foreign school is required to comply with the provisions of this 

15 part, except to the extent that the Secretary states in this part or 

16 in other official publications or documents that those schools need 

17 not comply with those provisions.

18 (Authority: 20 U.S.C. 1077, 1078, 1078–1, 1078–2, 1078–3, 1082, 

19 1088, and 1094)

20 [60 FR 61816, Dec. 1, 1995]
30

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. 

Updated information since 11/16-20 meeting:

Under the draft regulatory language, if the recognized tax authority 

of the institution’s home country is recognized by the Secretary for 

purposes of making determinations of an institution’s nonprofit 

status for Title IV purposes, the Secretary would automatically 

accept that tax authority’s determination of nonprofit educational 

status for any institution located in that country. If the 

recognized tax authority of the institution’s home country is not 

recognized by the Secretary for purposes of making determinations of 

an institution’s nonprofit status for Title IV purposes, a foreign 

institution must demonstrate to the satisfaction of the Secretary 

that it is a nonprofit educational institution. The draft 

regulations would also make clear that a nonprofit foreign 

institution may not be owned by a for profit entity. A foreign 

institution that is not determined to be a nonprofit entity would 

not be eligible to participate in the Title IV programs unless it is 

a medical, veterinary, or nursing school.

Draft Regulatory Language:

1 §600.2 Definitions.

2 * * * * *

3 Nonprofit institution: An institution that—

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

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

6 private shareholder or individual;
31

1 (2)(ii) Is legally authorized to operate as a nonprofit 

2 organization by each State in which it is physically located; and

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

4 an organization to which contributions are tax-deductible in 

5 accordance with section 501(c)(3) of the Internal Revenue Code (26 

6 U.S.C. 501(c)(3)).; or

7 (2) For a foreign institution—

8 (i) An institution that is owned and operated only by one or more 

9 nonprofit corporations or associations; and

10 (ii)(A) If the recognized tax authority of the institution’s home 

11 country is recognized by the Secretary for purposes of making 

12 determinations of an institution’s nonprofit status for title IV 

13 purposes, is determined by that tax authority to be a nonprofit 

14 educational institution; or 

15 (B) If the recognized tax authority of the institution’s home 

16 country is not recognized by the Secretary for purposes of making 

17 determinations of an institution’s nonprofit status for title IV 

18 purposes, the foreign institution demonstrates to the satisfaction 

19 of the Secretary that it is a nonprofit educational institution.

20 * * * * *
32

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?

Updated information since 11/16-20 meeting:

The draft regulatory language would permit a foreign public 

institution to meet the financial responsibility regulations in a 

manner similar to domestic public institutions. That is, the 

Secretary would considers a public foreign institution to be 

financially responsible if the institution: (1) notifies the 

Secretary that it is designated as a public institution by the 

country or other government entity that has the legal authority to 

make that designation; and (2) provides documentation from an 

official of that country or other government entity confirming that 

the institution is a public institution and is backed by the full 

faith and credit of the country or other government entity. As with 

domestic public institutions, a foreign public institution could not 

be in violation of any past performance requirement. If a foreign 

public institution did not meet this provision, its financial 

responsibility would be determined under the general requirements of 

financial responsibility, including the application of the equity, 

primary reserve, and net income ratios.

Draft Regulatory Language:

1 §668.171 General.

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

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

4 that it is financially responsible under the standards established 

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

6 Secretary determines whether an institution is financially 

7 responsible based on the institution's ability to—
33

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

2 statements;

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

4 participates; and

5 (3) Meet all of its financial obligations.

6 (b) General standards of financial responsibility. Except as 

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

8 considers an institution to be financially responsible if the 

9 Secretary determines that—

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

11 ratios yield a composite score of at least 1.5, as provided under 

12 §668.172 and appendices A and B to this subpart;

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

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

15 §668.173;

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

17 is not current in its debt payments if—

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

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

20 or audit opinion; or

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

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

23 filed suit to recover funds under those obligations; and

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

25 including but not limited to—

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

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

28 responsible under §668.22; and
34

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

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

3 (c) Public institutions. (1) The Secretary considers a domestic 

4 public institution to be financially responsible if the institution—

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

6 public institution by the State, local or municipal government 

7 entity, tribal authority, or other government entity that has the 

8 legal authority to make that designation; and

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

10 government entity confirming that the institution is a public 

11 institution; and

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

13 under §668.174.

14 (2) The Secretary considers a foreign public institution to be 

15 financially responsible if the institution--

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

17 institution by the country or other government entity that has the 

18 legal authority to make that designation; and

19 (B) Provides documentation from an official of that country or 

20 other government entity confirming that the institution is a public 

21 institution and is backed by the full faith and credit of the 

22 country or other government entity; and

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

24 §668.174.

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

26 institution satisfies all of the general standards of financial 

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

28 does not consider the institution to be financially responsible if—
35

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

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

3 opinion, or the auditor expressed doubt about the continued 

4 existence of the institution as a going concern, unless the 

5 Secretary determines that a qualified or disclaimed opinion does not 

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

7 or

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

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

10 requirement, or the persons or entities affiliated with the 

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

12 program requirement.

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

14 institution is not financially responsible under the standards and 

15 provisions of this section or under an alternative standard in 

16 §668.175, or the institution does not submit its financial and 

17 compliance audits by the date permitted and in the manner required 

18 under §668.23, the Secretary may—

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

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

21 participation in the Title IV, HEA programs; or

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

23 action against the institution under the procedures established in 

24 §668.13(d).

25 * * * * *
36

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?

Updated information since 11/16-20 meeting: The draft regulatory 

language would allow a country to provide to the Secretary a single 

legal authorization for all institutions in the country that provide 

eligible educational programs beyond the secondary school level. 

The draft regulatory language would also provide for a single legal 

authorization for all eligible institutions within a governmental 

jurisdiction of the country, such as a province. Under the draft 

regulatory language, the Secretary would continue to accept 

individual legal authorizations for each separate eligible foreign 

institution in the country, as well.

Draft Regulatory Language:

1 §600.54 Criteria for determining whether a foreign institution is 

2 eligible to apply to participate in the FFEL programs.

3 The Secretary considers a foreign institution to be comparable to an 

4 eligible institution of higher education in the United States and 

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

6 institution is a public or private nonprofit educational institution 

7 that--

8 * * *

9 (b) Is legally authorized by an appropriate government entity 

10 authority to provide an eligible educational program beyond the 

11 secondary school level in the country in which the institution is 

12 located; and

13 (c) Provides an eligible education program—
37

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

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

3 or professional degree awarded in the United States;

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

5 full credit toward the equivalent of a baccalaureate degree awarded 

6 in the United States; or

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

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

9 other recognized educational credential and prepares students for 

10 gainful employment in a recognized occupation.

11 (d) Proof that a foreign institution meets the requirements of 

12 paragraph (b) of this section may be provided to the Secretary by a 

13 legal authorization from an appropriate government entity—

14 (i) For all eligible foreign institutions in the country; 

15 (ii) For all eligible foreign institutions in a jurisdiction within 

16 the country; or

17 (iii) For each separate eligible foreign institution in the 

18 country.
38

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.

Updated information since 11/16-20 meeting: The committee agreed to 

remove this issue 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;
39

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?

Updated information since 11/16-20 meeting:

Two of the issues under negotiation by Team I (Program Integrity 

Issues) may have a significant impact on the eligibility of these 

programs. First, Team I is exploring the definition of what it 

means to ―provide gainful employment in a recognized occupation.‖ 

The draft regulatory language put forward for discussion in the last 

session defined ―recognized occupation‖ as one that is identified by 

a Standard Occupational Classification (SOC) code established by the 

U.S. Department of Labor, or determined by the Secretary in 

consultation with the Secretary of Labor to be a recognized 

occupation. In addition, the Department indicated that the 

relationship of debt levels of recent graduates of an institution or 

program to expected earnings could be a consideration in determining 

a program’s eligibility. Alternatively, a reasonable relationship 

between tuition costs incurred by students and expected earnings 

could be considered. Second, Team I is considering defining a 

credit hour in regulation for Title IV purposes. The draft 

regulatory language provided for discussion defined a credit hour as 

a Carnegie unit or academic work comparable to a Carnegie unit. For 

courses or programs for which the Carnegie unit is not meaningful, 

the institution would be responsible for establishing equivalencies 

in credit hours for the amount of academic work, as represented in 
40

intended learning outcomes and verified by evidence of their 

achievement, and for ensuring the equivalencies are in accordance 

with accrediting agency standards and State agency requirements.

Our preliminary research indicates that the assignment of credits or 

other measures of academic work by foreign institutions vary 

greatly. As a result, the draft regulatory language would require a 

foreign institution to demonstrate that the amount of academic work 

required by a program it seeks to qualify as eligible as at least a 

one-academic-year training program is equivalent to—

 For a program offered in credit hours, a minimum of 30 weeks 

of instructional time and, for an undergraduate program, an 

amount of instructional time whereby a full-time student is 

expected to complete at least 24 semester or trimester credit 

hours or 36 quarter credit hours; or

 For a program offered in clock hours, a minimum of 26 weeks of 

instructional time and, for an undergraduate program, an 

amount of instructional time whereby a full-time student is 

expected to complete at least 900 clock hours for a program 

measured in clock hours.

The Secretary would need to make program-by-program determinations 

of comparability. The definition of an academic year is included at 

the end of this issue paper for your reference.

Draft Regulatory Language:

1 §600.54 Criteria for determining whether a foreign institution is 

2 eligible to apply to participate in the FFEL programs.

3 The Secretary considers a foreign institution to be comparable to an 

4 eligible institution of higher education in the United States and 

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

6 institution is a public or private nonprofit educational institution 

7 that—

8 * * *

9 (c) Provides an eligible education program—

10 * * *

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

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

13 other recognized educational credential and prepares students for 

14 gainful employment in a recognized occupation.;
41

1 (ii) An institution must demonstrate to the satisfaction of the 

2 Secretary that the amount of academic work required by a program in 

3 paragraph (c)(3) is equivalent to at least the definition of an 

4 academic year in §668.3. 

5

6 §668.8 Eligible program.

7 * * * * *

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

9 institution offers an undergraduate educational program in credit 

10 hours, the institution must use the formula contained in paragraph 

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

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

13 and the number of credit hours in that educational program for 

14 purposes of the Title IV, HEA programs, unless—

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

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

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

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

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

20 professional degree, or equivalent degree as determined by the 

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

22 two academic years of study.

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

24 described in paragraph (k) of this section satisfies the 

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

26 and the number of credit hours in that educational program with 

27 regard to the Title IV, HEA programs—

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

29 instruction;
42

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

2 instruction; and

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

4 * * * * *

5

6 §668.9 Relationship between clock hours and semester, trimester, 

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

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

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

10 is eligible to receive, the institution shall apply the formula 

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

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

13 measures academic progress in that program in semester, trimester, 

14 or quarter hours.

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

16 private nonprofit hospital-based school of nursing that awards a 

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

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

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

20 that program for purposes of calculating Title IV, HEA program 

21 assistance.

22
43

1 §668.3 Academic year.

2 (a) General. Except as provided in paragraph (c) of this section, 

3 an academic year for a program of study must include—

4 (1)(i) For a program offered in credit hours, a minimum of 30 weeks 

5 of instructional time; or

6 (ii) For a program offered in clock hours, a minimum of 26 weeks of 

7 instructional time; and

8 (2) For an undergraduate educational program, an amount of 

9 instructional time whereby a full-time student is expected to 

10 complete at least—

11 (i) Twenty-four semester or trimester credit hours or 36 quarter 

12 credit hours for a program measured in credit hours; or

13 (ii) 900 clock hours for a program measured in clock hours. 

14 (b) Definitions. For purposes of paragraph (a) of this section—

15 (1) A week is a consecutive seven-day period; 

16 (2) A week of instructional time is any week in which at least one 

17 day of regularly scheduled instruction or examinations occurs or,

18 after the last scheduled day of classes for a term or payment 

19 period, at least one day of study for final examinations occurs; and 

20 (3) Instructional time does not include any vacation periods, 

21 homework, or periods of orientation or counseling. 

22 (c) Reduction in the length of an academic year. (1) Upon the 

23 written request of an institution, the Secretary may approve, for 

24 good cause, an academic year of 26 through 29 weeks of instructional 

25 time for educational programs offered by the institution if the 

26 institution offers a two-year program leading to an associate degree 

27 or a four-year program leading to a baccalaureate degree. 

28 (2) An institution's written request must—
44

1 (i) Identify each educational program for which the institution 

2 requests a reduction, and the requested number of weeks of 

3 instructional time for that program; 

4 (ii) Demonstrate good cause for the requested reductions; and 

5 (iii) Include any other information that the Secretary may require 

6 to determine whether to grant the request. 

7 (3)(i) The Secretary approves the request of an eligible institution 

8 for a reduction in the length of its academic year if the 

9 institution has demonstrated good cause for granting the request and 

10 the institution's accrediting agency and State licensing agency have 

11 approved the request.

12 (ii) If the Secretary approves the request, the approval terminates 

13 when the institution's program participation agreement expires. The 

14 institution may request an extension of that approval as part of the 

15 recertification process.
45

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).

Updated information since 11/16-20 meeting:

The draft regulatory language would:

 Add the changes made by the HEOA to: (1) increase the ECFMG

exams pass rate threshold from 60 percent to 75 percent; and 

(2) allow 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;

(§600.55(e)(4)(i)(B) and §600.55(e)(4)(ii)(B))

 Remove the definition of a foreign graduate medical school as 

a foreign institution that qualifies to be listed in, and is 

listed as a medical school in, the most current edition of the 
46

World Directory of Medical Schools published by the World 

Health Organization (WHO).

 Reference the advisory panel of medical experts established by 

the Secretary (the National Committee on Foreign Medical 

Education and Accreditation) by name. (§600.52)

 When a foreign graduate medical school applies for initial 

certification or for recertification to participate in the 

Title IV programs, require the school to list on its 

application all educational sites, including sites which offer 

all or a portion of a clinical training program in the country 

in which the main campus is located, the United States, or 

another country [NCFMEA Recommendation 12(a)]

(§600.20(a)(4)(i) and §600.20(b)(3)(i))

 Require a foreign graduate medical school to state on its 

application for initial certification or for recertification 

to participate in the Title IV programs whether the program 

offered is an integrated first professional degree program or 

a post-baccalaureate/equivalent program [NCFMEA Recommendation 

14(a)]; (§600.20(a)(4)(ii) and §600.20(b)(3)(ii))

 Require a foreign graduate medical school to provide copies of 

its affiliation agreements with hospitals and clinics as a 

part of any application for initial certification or 

recertification to participate in the Title IV programs; 

[NCFMEA Recommendation 12(b)] (§600.20(a)(4)(iii) and 

§600.20(b)(3)(iii))

 Require a foreign graduate medical school that adds a location 

which offers all or a portion of a clinical training program 

in a country other than the United States or the country in 

which the main campus is located to apply to the Department 

and wait for approval if it wishes to provide Title IV funds 

to the students at that location. (§600.20(c)(5))

 Require a foreign medical school to have the following 

admission criteria:

o For a school having a post-baccalaureate equivalent 

medical program: (1) Students must have a baccalaureate 

degree, or at least 90 semester credit hours or the 

equivalent, in general education that includes, but is 

not limited to, coursework in the social sciences, 

history, and languages; and (2) Students must have taken 

premedical courses deemed essential preparation for 

completing the medical school curriculum, including, but 

not limited to, basic science and mathematics, which 

cover areas such as biology, general chemistry, organic 

chemistry, and physics; and (3) Students who are U.S. 

citizens, nationals or permanent residents must have 

taken the Medical College Admission Test (MCAT) [NCFMEA 

Recommendation 1(a), bullets 2 and 5]; (§600.56(c)(1))

o For a school having an integrated program for a first 

professional program leading to a Doctor of Medicine 

(M.D.) degree, or its equivalent: (1) Students must have 

a basic general education background, including 

requisite pre-medical studies, as well as a broad 

general education including, but not limited to, 

coursework in the social sciences, history, and 

languages; and (2) Students must have taken premedical 

courses deemed essential preparation for completing the 
47

medical school curriculum, including, but not limited 

to, basic science and mathematics, which cover areas 

such as biology, general chemistry, organic chemistry, 

and physics; and (3) Must require students who are U.S. 

citizens, nationals or permanent residents to take the 

Medical College Admission Test (MCAT) no later than 

three years after admission to the program; [NCFMEA 

Recommendation 1(b), bullets 1 and 2]; (§600.56(c)(2))

o Require a foreign graduate medical school to determine 

the consent requirements for and require the necessary 

consents of all students accepted for admission who are 

U.S. citizens, nationals, or eligible permanent 

residents to enable the school to comply with the 

collection and submission requirements for MCAT scores, 

residency placement, and USMLE examination scores

[NCFMEA Recommendations 9, 3 and 4(a), but limited to 

U.S. citizens, nationals, or eligible permanent 

residents]; (§600.56(c)(4))

 Require a foreign graduate medical school to collect and 

submit data on (1) MCAT scores [NCFMEA Recommendation 9(a)];

(2) placement in an U.S. medical residency [NCFMEA 

Recommendation 3]; and (3) the USMLE examination [NCFMEA 

Recommendation 4(a)]; (§600.56(d))

 Require a 75% pass rate on each step of the USMLE, rather than 

a combined pass rate for all steps, but limited to U.S. 

citizens, nationals, or eligible permanent residents [NCFMEA 

Recommendation 4(b), but limited to U.S. citizens, nationals, 

or eligible permanent residents]; (§600.56(e)(4))

 Require a foreign graduate medical school to (1) include in 

its satisfactory academic progress standards a requirement 

that a student complete his or her educational program within 

150 percent of the published length of the educational 

program; and (2) document the educational remediation it 

provides to assist students in making satisfactory academic 

progress[NCFMEA Recommendation 9(b), but requires schools to 

document, rather than submit to the Department, educational 

remediation provided]; (§600.56(e)(5))

 Require a foreign graduate medical school to publish all the 

languages in which instruction is offered[NCFMEA 

Recommendation 10]; (§600.56(e)(6))

 Require a foreign graduate medical school to have a formal 

affiliation agreement with any hospital or clinic providing 

all or a portion of a clinical training program, and require 

that agreement to state how the site will (1) maintain the 

school’s standards; (2) appoint faculty to the medical school 

staff; (3) design the curriculum; (4) supervise students; (5) 

provide liability insurance; and (6) evaluate student 

performance. [NCFMEA Recommendation 12(b)]; (§600.56(e)(7))

 Require a foreign graduate medical school to notify their 

accrediting body within one year of any changes in (1) the 

educational programs, including clinical sites; (2) the 

overseeing bodies and in the formal affiliation agreements 

with hospitals and clinics [NCFMEA Recommendation 12(b)];

(§600.56(e)(8))
48

NCFMEA Recommendation 14(d) called for the development of 

requirements for foreign medical schools that are comparable to the 

―Transparency in College Tuition for Consumers‖ provisions added at 

section 132 of the HEA by the HEOA. These provisions of the HEA are 

already applicable to foreign institutions, and the Secretary is 

specifically prohibited from regulating on this section of the HEA. 

However, because foreign institutions cannot submit the information 

through the Integrated Postsecondary Education Data System(IPEDS) as 

domestic institutions are required to, the Secretary will instead 

collect the information from foreign institutions as a part of the 

application to participate in the Title IV programs when the 

institution is next required to submit such an application. 

Draft Regulatory Language:

1 §600.20 Application procedures for establishing, reestablishing, 

2 maintaining, or expanding institutional eligibility and 

3 certification.

4 (a) Initial eligibility application. (1) An institution that 

5 wishes to establish its eligibility to participate in any HEA 

6 program must submit an application to the Secretary for a 

7 determination that it qualifies as an eligible institution under 

8 this part.

9 (2) If the institution also wishes to be certified to participate 

10 in the Title IV, HEA programs, it must indicate that intent on the 

11 application, and submit all the documentation indicated on the 

12 application to enable the Secretary to determine that it satisfies 

13 the relevant certification requirements contained in 34 CFR part 

14 668, subparts B and L. 

15 (3) [separate certification—see Issue Paper 14].

16 (4) A foreign graduate medical school must include in its 

17 application to participate--

18 (i) A list of all educational sites, including sites which offer 

19 all or a portion of a clinical training program in the country in 

20 which the main campus is located, the United States, or another 

21 country; 
49

1 (ii) Whether the programs offered are first professional degree 

2 programs, post-baccalaureate/equivalent programs, or both; and

3 (iii) Copies of the formal affiliation agreements with hospitals or 

4 clinics providing all or a portion of a clinical training program 

5 that meet the requirements of §600.55.

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

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

8 to the Secretary for a determination that the institution continues 

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

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

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

12 application to the Secretary and must submit all the supporting 

13 documentation indicated on the application to enable the Secretary 

14 to determine that it satisfies the relevant certification 

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

16 (2) A currently designated eligible institution that participates 

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

18 determination that the institution continues to meet the 

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

20 wishes to—

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

22 the scheduled expiration of the institution's current eligibility 

23 and certification designation; 

24 (ii) Reestablish eligibility and certification as a private 

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

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

27 in §600.31; or 
50

1 (iii) Reestablish eligibility and certification after the 

2 institution changes its status as a proprietary, nonprofit, or 

3 public institution.

4 (3) A foreign graduate medical school must include in its 

5 reapplication to participate--

6 (i) A list of all educational sites, including sites which offer 

7 all or a portion of a clinical training program in the country in 

8 which the main campus is located, the United States, or another 

9 country; 

10 (ii) Whether the program offered is a first professional degree 

11 program or a post-baccalaureate/equivalent program; and

12 (ii) Copies of the formal affiliation agreements with hospitals or 

13 clinics providing all or a portion of a clinical training program 

14 required under §600.55(d)(7).

15 (c) Application to expand eligibility. A currently designated 

16 eligible institution that wishes to expand the scope of its 

17 eligibility and certification and disburse title IV, HEA Program 

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

19 Secretary and wait for approval to—

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

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

22 conditions applies, otherwise it must report to the Secretary under 

23 §600.21: 

24 (i) The institution participates in the title IV, HEA programs 

25 under a provisional certification, as provided in 34 CFR 668.13. 

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

27 reimbursement or cash monitoring payment method, as provided in 34 

28 CFR part 668, subpart K. 
51

1 (iii) The institution acquires the assets of another institution 

2 that provided educational programs at that location during the 

3 preceding year and participated in the title IV, HEA programs during 

4 that year. 

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

6 under 34 CFR 668.188 if it adds that location. 

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

8 apply for approval of an additional location. 

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

10 degree programs when it previously offered only baccalaureate degree 

11 programs); 

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

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

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

15 included in the institution's eligibility and certification 

16 designation; or

17 (5) For a foreign graduate medical school, add a location which 

18 offers all or a portion of a clinical training program in a country 

19 other than the United States of the country in which the main campus 

20 is located; or

21 (56) Convert an eligible location to a branch campus.

22 * * * * *

23

24 §600.52 Definitions.

25 The following definitions apply to this subpart E:

26 * * * * *

27 Foreign graduate medical school: A foreign institution that 

28 qualifies to be listed in, and is listed as a medical school in, the 
52

1 most current edition of the World Directory of Medical Schools 

2 published by the World Health Organization (WHO).

3 * * * * *

4 National Committee on Foreign Medical Education and Accreditation 

5 (NCFMEA): The operational committee of medical experts established 

6 by the Secretary to determine whether the medical school accrediting 

7 standards used in other countries are comparable to those applied to 

8 medical schools in the U.S., for purposes of evaluating the 

9 eligibility of accredited foreign graduate medical schools to 

10 participate in the FFEL programs.

11 * * * * *

12

13 §600.55 Additional criteria for determining whether a foreign 

14 graduate medical school is eligible to apply to participate in the 

15 FFEL programs.

16 (a) General. The Secretary considers a foreign graduate medical 

17 school to be eligible to apply to participate in the FFEL programs 

18 if, in addition to satisfying the criteria in §600.54 of this part

19 (except the criterion in §600.54 that the institution be public or 

20 private nonprofit), the school satisfies all of the following 

21 criteria of this section.:

22 (b) Accreditation. (4)(i) The school has been A foreign graduate 

23 medical school must—

24 (1) Be approved by an accrediting body—

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

26 graduate medical school educational programs and facilities in the 

27 country where the school is located; and

28 (ii)(B) Whose standards of accreditation of graduate medical 

29 schools— (1) Hhave been evaluated by the NCFMEA or its successor 
53

1 committee of medical expertsadvisory panel of medical experts 

2 established by the Secretary; and (2) Hhave been determined to be 

3 comparable to standards of accreditation applied to medical schools 

4 in the United States; or

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

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

7 (c) Admission criteria. (1) A foreign graduate medical school

8 having a post-baccalaureate equivalent medical program must have

9 admission criteria that include the following: 

10 (i) Students accepted for admission must have a baccalaureate 

11 degree, or at least 90 semester credit hours or the equivalent, in 

12 general education that includes, but is not limited to, coursework 

13 in the social sciences, history, and languages

14 (ii) Students accepted for admission must have taken premedical 

15 courses deemed essential preparation for completing the medical 

16 school curriculum, including, but not limited to, basic science and 

17 mathematics, which cover areas such as biology, general chemistry,

18 organic chemistry, and physics; and

19 (3) Students accepted for admission who are U.S. citizens, 

20 nationals or permanent residents must have taken the Medical College 

21 Admission Test (MCAT); and 

22 (2) A foreign graduate medical school having an integrated program 

23 for a first professional program leading to a Doctor of Medicine 

24 (M.D.) degree, or its equivalent, must have entrance criteria that 

25 include the following: 

26 (i) Students accepted for admission must have a basic general 

27 education background, including requisite pre-medical studies, as 

28 well as a broad general education including, but not limited to, 

29 coursework in the social sciences, history, and languages;
54

1 (ii) Students accepted for admission must have taken premedical 

2 courses deemed essential preparation for completing the medical 

3 school curriculum, including, but not limited to, basic science and 

4 mathematics, which cover areas such as biology, general chemistry, 

5 organic chemistry, and physics; and

6 (iii) Must require students accepted for admission who are U.S. 

7 citizens, nationals or permanent residents to take the Medical 

8 College Admission Test (MCAT) no later than three years after

9 admission to the program; and 

10 (3) A foreign graduate medical school must determine the consent 

11 requirements for and require the necessary consents of all students 

12 accepted for admission who are U.S. citizens, nationals, or eligible 

13 permanent residents to enable the school to comply with the 

14 collection and submission requirements of paragraph (d) of this 

15 section.

16 (d) Collection and submission of data. A foreign graduate medical 

17 school must—

18 (1)(i) Take all necessary steps to obtain the scores on the MCAT or 

19 successor examination, of students who are U.S. citizens, nationals, 

20 or eligible permanent residents, and submit the scores annually to 

21 its accrediting authority and, on request, to the Secretary, 

22 together with a statement of the number of times each student took 

23 the examination;

24 (2) Annually collect and submit to its accrediting authority and, 

25 on request, to the Secretary, the percentage of its graduates 

26 (including at least all graduates who are U.S. citizens, nationals 

27 or eligible permanent residents) who obtain placement in an 

28 accredited U.S. medical residency program, and pay such fees as are 

29 necessary to determine this percentage;
55

1 (3)(i) Except upon written notice from the Secretary that the 

2 necessary information has been obtained by the Secretary for the 

3 year directly from the Educational Commission for Foreign Medical 

4 Graduates (ECFMG) or other responsible third parties, the foreign 

5 graduate medical school must obtain annually, at its own expense, 

6 all scores, disaggregated by step and attempt, earned by the student 

7 during the enrollment and following graduation, on all parts of the 

8 USMLE, together with the dates the student has taken each part, 

9 including any failed examinations; and

10 (ii) Provide such scores annually to its accrediting authority and, 

11 on request, to the Secretary. 

12 (e) Other criteria. (1) The A foreign graduate medical school must 

13 provides, and in the normal course requires its students to 

14 complete, a program of clinical and classroom medical instruction of 

15 not less that 32 months in length, that is supervised closely by 

16 members of the school's faculty and that is provided either—

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

18 and staffed to afford students comprehensive clinical and classroom 

19 medical instruction; or

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

21 medical students that has been approved by all medical licensing 

22 boards and evaluating bodies whose views are considered relevant by 

23 the Secretary. 

24 (2)(3)The A foreign graduate medical school may employs for the 

25 program described in paragraph (ae)(1) of this section only those 

26 faculty members whose academic credentials are the equivalent of 

27 credentials required of faculty members teaching the same or similar 

28 courses at medical schools in the United States.
56

1 (3)(2) The A foreign graduate medical school hasmust have graduated 

2 classes during each of the two twelve-month periods immediately 

3 preceding the date the Secretary receives the school's request for 

4 an eligibility determination.; and

5 (4)(5)(i)(A)(1) During the academic year preceding the year for 

6 which any of the school's students seeks an FFEL program loan, at 

7 least 60 percent of those enrolled as full-time regular students in 

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

9 graduating class were persons who did not meet the citizenship and 

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

11 U.S.C. 1091(a)(5); or

12 (2) The school had a clinical training program approved by a State 

13 prior to January 1, 2008, and continues to operate a clinical 

14 training program in at least one State that approves the program; and

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

16 each step of the USMLE administered by the ECFMG, at least 6075

17 percent of the school's U.S. citizen, national, or eligible 

18 permanent resident students and graduates who took any that step of 

19 the examinations administered by the Educational Commission for 

20 Foreign Medical Graduates (ECFMG) (including the ECFMG English test) 

21 in the year preceding the year for which any of the school's 

22 students seeks an FFEL program loan must have received a passing 

23 scores on the exams that step; or

24 (ii)(A) The school's had a clinical training program was approved 

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

26 State.; and

27 (B) The school continues to operate a clinical training program in 

28 at least one State that approves the program.
57

1 (iii)(b) In performing the calculation required in paragraph 

2 (ae)(54)(i)(B) of this section, a foreign graduate medical school 

3 shall—

4 (A) Ccount as a graduate each U.S. citizen, national, or eligible 

5 permanent resident person who graduated from the school during the 

6 three years preceding the year for which the calculation is 

7 performed.;

8 (B) Count each U.S. citizen, national, or eligible permanent 

9 resident who takes more than one step of the USMLE examination in a 

10 year in the denominator for each of those steps; and 

11 (C) Count each U.S. citizen, national, or eligible permanent 

12 resident who repeats a step of the USMLE examination in a year only 

13 once in the denominator for that step;

14 (5)(i) As part of establishing, publishing, and applying reasonable 

15 satisfactory academic progress standards, a foreign graduate medical 

16 school must include as a quantitative component a maximum timeframe 

17 in which a student must complete his or her educational program that 

18 must—

19 (A) Be no longer than 150 percent of the published length of the 

20 educational program measured in academic years, terms, credit hours 

21 attempted, clock hours completed, etc., as appropriate; and

22 (B) Notwithstanding the requirement that the program be an

23 undergraduate program, meet the requirements of §668.16(e)(2)(ii); 

24 (ii) A foreign graduate medical school must document the 

25 educational remediation it provides to assist students in making 

26 satisfactory academic progress;

27 (6) A foreign graduate medical school must publish all the 

28 languages in which instruction is offered;
58

1 (7)(i) A foreign graduate medical school must have a formal 

2 affiliation agreement with any hospital or clinic providing all or a 

3 portion of a clinical training program;

4 (ii) The agreements described in paragraph (e)(7)(i) of this 

5 section must state how the site will—

6 (A) Maintain the school’s standards;

7 (B) Appoint faculty to the medical school staff;

8 (C) Design the curriculum;

9 (D) Supervise students;

10 (E) Provide liability insurance; and 

11 (F) Evaluate student performance; and

12 (8) A foreign graduate medical school must notify its accrediting 

13 body within one year of any changes in—

14 (i) The educational programs, including changes in clinical 

15 training programs; 

16 (ii) The overseeing bodies and in the formal affiliation agreements 

17 with hospitals and clinics described in paragraph (e)(7)(i) of this 

18 section.

19 (f) Location of a program. [see Issue Papers 10 and 11]

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 
59

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) [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.
60

(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.

(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 
61

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.

* * * * *
62

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.

Updated information since 11/16-20 meeting:

The draft regulatory language reflects current Department policy for 

foreign graduate medical schools (described above). For a foreign 

veterinary school, the clinical training program would have to be 

located in the country in which the main campus of the school is 

located, or the United States, except for for-profit veterinary 

schools, which must have their clinical training program located in 

the United States.

Draft Regulatory Language:

1 §600.55 Additional criteria for determining whether a foreign 

2 graduate medical school is eligible to apply to participate in the 

3 FFEL programs.

4 * * * * *

5 (f) Location of a program. (1) All portions of a graduate medical 

6 education program offered to U.S. students must be located in a 

7 country whose medical school accrediting standards are comparable to 

8 standards used in the United States, as determined by the NCFMEA, 
63

1 except for clinical sites located in the United States in accordance 

2 with §668.55(d)(1)(ii);

3 (2) [location of basic science—see Issue Paper 11]

4 (3) The institution’s medical accrediting agency must have 

5 conducted an on-site evaluation and specifically approved the 

6 clinical training sites in order for students attending the site to 

7 be eligible to borrow FFEL program funds; and 

8 (4) If any component of the clinical training program is located in 

9 an approved comparable foreign country other than the country in 

10 which the main campus is located or in the United States clinical 

11 instruction must be offered in conjunction with medical educational 

12 programs offered to students enrolled in accredited medical schools 

13 located in that approved foreign country.

14 * * * * *

15

16 §600.56 Additional criteria for determining whether a foreign 

17 veterinary school is eligible to apply to participate in the FFEL 

18 programs.

19 * * * * *

20 (c) Location of a program. No portion of the foreign veterinary 

21 educational program may be located outside of the country in which 

22 the main campus of the foreign veterinary school is located, except 

23 for clinical sites located in the United States;

24 (2) For a veterinary school that is neither public nor private 

25 nonprofit, the school's students must complete their clinical 

26 training at an approved veterinary school located in the United 

27 States.
64

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. 

Updated information since 11/16-20 meeting:

The draft regulatory language reflects current policy and, for 

foreign graduate medical schools, NCFMEA Recommendation 12. It 

would require that all portions of the basic science portion of a 

foreign graduate medical, foreign veterinary, and foreign nursing 

program must be offered to U.S. students in the country in which the 

main campus of the school is located.

Draft Regulatory Language:

1 §600.55 Additional criteria for determining whether a foreign 

2 graduate medical school is eligible to apply to participate in the 

3 FFEL programs.

4 * * * * *

5 (e) Location of a program. (1) All portions of a graduate medical 

6 education program offered to U.S. students must be located in a 

7 country whose medical school accrediting standards are comparable to 

8 standards used in the United States, as determined by the NCFMEA, 

9 except for clinical sites located in the United States in accordance 

10 with §668.55(d)(1)(ii);
65

1 (2) No portion of the preclinical educational program offered to 

2 U.S. students may be located outside of the country in which the 

3 main campus of the foreign medical school is located;

4 (3) [location of clinical sites—see Issue Paper 10]

5 * * * * *

6 §600.56 Additional criteria for determining whether a foreign 

7 veterinary school is eligible to apply to participate in the FFEL 

8 programs.

9 * * * * *

10 (c) Location of a program. (1) No portion of the foreign 

11 veterinary educational program offered to U.S. students may be 

12 located outside of the country in which the main campus of the 

13 foreign medical school is located, except for clinical sites located 

14 in the United States;

15 (2) [location of clinical sites for for-profit schools—see Issue 

16 Paper 10]

17

18 §600.57 Additional criteria for determining whether a foreign 

19 nursing school is eligible to apply to participate in the FFEL 

20 programs.

21 [for paragraphs (a)-(c) see Issue Paper 13]

22 (d) Location of a program. (1) No portion of the foreign nursing

23 program offered to U.S. students may be located outside of the 

24 country in which the main campus of the foreign nursing school is 

25 located, except for clinical sites located in the United States;
66

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? 

Updated information since 11/16-20 meeting: The draft regulatory 

language would require foreign veterinary schools to be accredited 

by the American Veterinary Medical Association (AVMA) in order to be 

eligible to participate in the Title IV programs.

Draft Regulatory Language:

1 §600.56 Additional criteria for determining whether a foreign 

2 veterinary school is eligible to apply to participate in the FFEL 

3 programs.

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

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

6 addition to satisfying the criteria in §600.54 this part (except the 

7 criterion in §600.54 that the institution be public or private 

8 nonprofit), the school satisfies all of the following criteria:

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

10 students to complete, a program of clinical and classroom veterinary 

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

12 faculty, and that is provided either—
67

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

2 and staffed to afford students comprehensive clinical and classroom 

3 veterinary instruction,; or

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

5 veterinary students that has been approved by all veterinary 

6 licensing boards and evaluating bodies whose views are considered 

7 relevant by the Secretary.

8 (2) The school has graduated classes during each of the two twelve9 month periods immediately preceding the date the Secretary receives 

10 the school's request for an eligibility determination.

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

12 (a)(1) of this section only those faculty members whose academic 

13 credentials are the equivalent of credentials required of faculty 

14 members teaching the same or similar courses at veterinary schools 

15 in the United States. 

16 (4) For a veterinary school that is neither public nor private non17 profit, the school's students complete their clinical training at an 

18 approved veterinary school located in the United States. [moved to 

19 paragraph (c)]

20 (b) [Reserved] The school is accredited by the American Veterinary 

21 Medical Association.

22 (c) Location of a program. [see Issue Papers 10 and 11]
68

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.

Updated information since 11/16-20 meeting: The draft regulatory 

language would implement the HEOA provisions related to nursing 

schools by adding a new section to the regulations, entitled 

―Additional criteria for determining whether a foreign nursing 

school is eligible to apply to participate in the FFEL programs.‖ 

The new section is modeled on similar sections in the regulations 

for medical schools and veterinary schools. 

For purposes of reimbursing the Secretary for the cost of loan 

defaults, the draft regulatory language would specify the different 

types of costs included in determining the cost of a loan default. 

Under the draft regulatory language, after the school reimburses the 

Secretary, the defaulted borrower remains liable for the outstanding 

balance of the loan payable to the holder of the loan.
69

In addition, several new definitions would be added to the 

definitions in 600.52. The new definitions are derived from 

definitions relating to nursing schools in the Public Health Service 

Act.

Draft Regulatory Language:

1 §600.52 Definitions.

2 The following definitions apply to this subpart E:

3 Associate degree school of nursing: A school which provides 

4 primarily or exclusively a two-year program of education in 

5 professional nursing leading to a degree equivalent to an associate 

6 degree in the United States. 

7

8 Collegiate school of nursing: A school which provides primarily or 

9 exclusively a program of education in professional nursing leading 

10 to a degree equivalent to a bachelor of arts, bachelor of science, 

11 or bachelor of nursing in the United States, or to a degree 

12 equivalent to a graduate degree in nursing in the United States, and 

13 including advanced training related to the program of education 

14 provided by the school. 

15

16 Diploma school of nursing: A school affiliated with a hospital or 

17 university, or an independent school, which provides primarily or 

18 exclusively a program of education in professional nursing leading 

19 to the equivalent of a diploma in the United States or to equivalent 

20 indicia that the program has been satisfactorily completed.

21

22 Foreign institution or school: [see Issue Paper 3]

23

24 Passing score: The minimum passing score as defined by the 

25 Educational Commission for Foreign Medical Graduates (ECFMG), or by 
70

1 the National Council Licensure Examination for Registered Nurses, as 

2 applicable.

3

4 Secondary school: A school that provides secondary education as 

5 determined under the laws of the country in which the school is 

6 located.

7 * * * * *

8 §600.57 Additional criteria for determining whether a foreign 

9 nursing school is eligible to apply to participate in the FFEL 

10 programs.

11 (a) The Secretary considers a foreign nursing school to be eligible 

12 to apply to participate in the FFEL programs if, in addition to 

13 satisfying the criteria in this part (except the criterion in 

14 §600.54 that the institution be public or private nonprofit), the 

15 nursing school satisfies all of the following criteria:

16 (1) The nursing school is an associate degree school of nursing, a 

17 collegiate school of nursing, or a diploma school of nursing. 

18 (2) The nursing school has an agreement with a hospital located in 

19 the United States or an accredited school of nursing located in the 

20 United States that requires students of the nursing school to 

21 complete the student’s clinical training at the hospital or 

22 accredited school of nursing.

23 (3) The nursing school has an agreement with an accredited school 

24 of nursing located in the United States providing that students 

25 graduating from the nursing school located outside of the United 

26 States also receive a degree from the accredited school of nursing 

27 located in the United States.
71

1 (4) The nursing school certifies only Federal Stafford Loan program 

2 loans or Federal PLUS program loans, as those terms are defined in 

3 §668.2, for students attending the nursing school.

4 (5) The nursing school reimburses the Secretary for the cost of any 

5 loan defaults for current and former students included in the 

6 calculation of the institution’s cohort default rate during the 

7 previous fiscal year.

8 (6) The nursing school determines the consent requirements for and 

9 requires the necessary consents of all students accepted for 

10 admission who are U.S. citizens, nationals, or eligible permanent 

11 residents to enable the school to comply with the collection and 

12 submission requirements of paragraph (a)(6)(ii) of this section.

13 (ii) The nursing school annually—

14 (A) Obtains, at its own expense, all scores earned by students and 

15 graduates who are U.S. citizens, nationals, or eligible permanent 

16 residents on the National Council Licensure Examination for 

17 Registered Nurses, together with the dates the student has taken the 

18 examination, including any failed examinations; and

19 (B) Provides such scores to its accrediting authority and, on 

20 request, to the Secretary.

21 (7) Not less than 75 percent of the school’s students and graduates 

22 who are either U.S. citizens, nationals, or eligible permanent 

23 residents who took the National Council Licensure Examination for 

24 Registered Nurses in the year preceding the year for which the 

25 institution is certifying a Federal Stafford Loan or a Federal Plus 

26 Loan, received a passing score on such examination.

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

28 students to complete a program of clinical and classroom nursing 

29 instruction that is supervised closely by members of the school’s 
72

1 faculty that is provided in facilities adequately equipped and 

2 staffed to afford students comprehensive clinical and classroom 

3 nursing instruction, through a training program for foreign nursing 

4 students that has been approved by all nurse licensing boards and 

5 evaluating bodies whose views are considered relevant by the 

6 Secretary.

7 (9) The school has graduated classes during each of the two twelve8 month periods immediately preceding the date the Secretary receives 

9 the school’s request for an eligibility determination.

10 (10) The school employs only those faculty members whose academic 

11 credentials are the equivalent of credentials required of faculty 

12 members teaching the same or similar courses at nursing schools in 

13 the United States.

14 (b) For purposes of paragraph (a)(5) of this section, the cost of a 

15 loan default is the sum of the defaulted loan’s—

16 (i) Outstanding principal;

17 (ii) Accrued interest;

18 (iii) Unpaid late fees and collection costs;

19 (iv) Special allowance payments; 

20 (v) Reinsurance payments; and

21 (vi) Any related or similar payments the Secretary is obligated to 

22 make on the loan.

23 (c) After a school reimburses the Secretary for the amount 

24 specified in paragraph (b) of this section, the borrower remains 

25 liable for the outstanding balance of the loan, payable to the

26 holder of the loan under the terms and conditions specified in the 

27 promissory note.

28 (d) [location of the preclinical portion of a nursing program—see 

29 Issue Paper 11] 
73

1

2 §600.57 58 Duration of eligibility determination.

3 * * * * *

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

(II) the institution—

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

State as of January 1,

1992; and
74

(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;

(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 
75

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 

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.
76

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))?

Updated information since 11/16-20 meeting: The draft regulatory 

language would implement NCFMEA recommendations 14(a) and 14(b) by 

requiring foreign graduate medical schools, foreign veterinary 

schools, and foreign nursing schools to be certified separately from 

any larger school. The draft regulatory language would also reduce 

the certification period of all foreign institutions to three years.

Draft Regulatory Language:

1 §600.20 Application procedures for establishing, reestablishing, 

2 maintaining, or expanding institutional eligibility and 

3 certification.

4 (a) Initial eligibility application. (1) An institution that 

5 wishes to establish its eligibility to participate in any HEA 

6 program must submit an application to the Secretary for a 

7 determination that it qualifies as an eligible institution under 

8 this part.

9 (2) If the institution also wishes to be certified to participate 

10 in the Title IV, HEA programs, it must indicate that intent on the 

11 application, and submit all the documentation indicated on the 

12 application to enable the Secretary to determine that it satisfies 

13 the relevant certification requirements contained in 34 CFR part 

14 668, subparts B and L. 

15 (3) If a foreign graduate medical school, a foreign veterinary 

16 school, or a foreign nursing school is part of a larger institution, 

17 that foreign graduate medical school, foreign veterinary school, or 

18 foreign nursing school must submit a separate application to the 
77

1 Secretary for a determination that it qualifies as an eligible 

2 institution and, if it wishes to be certified to participate in the 

3 Title IV programs, must indicate on that separate application that

4 intent as described in paragraph (a)(2) of this section.

5 (4) [foreign graduate medical school application—see Issue Paper 9]

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

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

8 to the Secretary for a determination that the institution continues 

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

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

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

12 application to the Secretary and must submit all the supporting 

13 documentation indicated on the application to enable the Secretary 

14 to determine that it satisfies the relevant certification 

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

16 (2) A currently designated eligible institution that participates 

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

18 determination that the institution continues to meet the 

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

20 wishes to—

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

22 the scheduled expiration of the institution's current eligibility 

23 and certification designation; 

24 (ii) Reestablish eligibility and certification as a private 

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

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

27 in §600.31; or 
78

1 (iii) Reestablish eligibility and certification after the 

2 institution changes its status as a proprietary, nonprofit, or 

3 public institution.

4 (3) [foreign graduate medical school application see Issue Paper 9]

5 * * * * *

6 (c) Application to expand eligibility. A currently designated 

7 eligible institution that wishes to expand the scope of its 

8 eligibility and certification and disburse title IV, HEA Program 

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

10 Secretary and wait for approval to—

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

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

13 conditions applies, otherwise it must report to the Secretary under 

14 §600.21: 

15 (i) The institution participates in the title IV, HEA programs 

16 under a provisional certification, as provided in 34 CFR 668.13. 

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

18 reimbursement or cash monitoring payment method, as provided in 34 

19 CFR part 668, subpart K. 

20 (iii) The institution acquires the assets of another institution 

21 that provided educational programs at that location during the 

22 preceding year and participated in the title IV, HEA programs during 

23 that year. 

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

25 under 34 CFR 668.188 if it adds that location. 

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

27 apply for approval of an additional location. 
79

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

2 degree programs when it previously offered only baccalaureate degree 

3 programs); 

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

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

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

7 included in the institution's eligibility and certification 

8 designation; or

9 (5) [foreign graduate medical school—additional clinical location 

10 outside U.S. or home country—see Issue Paper 9]; or

11 (56) Convert an eligible location to a branch campus.

12

13 §668.13 Certification procedures.

14 (a) Requirements for certification. (1) The Secretary certifies an 

15 institution to participate in the title IV, HEA programs if the 

16 institution qualifies as an eligible institution under 34 CFR part 

17 600, meets the standards of this subpart and 34 CFR part 668, 

18 subpart L, and satisfies the requirements of paragraph (a)(2) (3) 

19 of this section.

20 (2) The Secretary certifies a foreign graduate medical school, a 

21 foreign veterinary school, and a foreign nursing school separately, 

22 regardless of whether the medical school, veterinary school, or 

23 nursing school is freestanding or is part of a larger institution. 

24 (2)(3)Except as provided in paragraph (a)(3) (4) of this section, 

25 if an institution wishes to participate for the first time in the 

26 title IV, HEA programs or has undergone a change in ownership that 

27 results in a change in control as described in 34 CFR 600.31, the 

28 institution must require the following individuals to complete title 

29 IV, HEA program training provided or approved by the Secretary no 
80

1 later than 12 months after the institution executes its program 

2 participation agreement under §668.14:

3 (i) The individual the institution designates under §668.16(b)(1) 

4 as its title IV, HEA program administrator.

5 (ii) The institution's chief administrator or a high level 

6 institutional official the chief administrator designates.

7 (3)(4)(i) An institution may request the Secretary to waive the 

8 training requirement for any individual described in paragraph 

9 (a)(2)(3) of this section.

10 (ii) When the Secretary receives a waiver request under paragraph 

11 (a)(3)(4)(i) of this section, the Secretary may grant or deny the 

12 waiver, require another institutional official to take the training, 

13 or require alternative training.

14 (b) Period of participation. (1) If the Secretary certifies that 

15 an institution meets the standards of this subpart, the Secretary 

16 also specifies the period for which the institution may participate 

17 in a Title IV, HEA program. An institution's period of participation 

18 expires six years after the date that the Secretary certifies that 

19 the institution meets the standards of this subpart, except that—

20 (i) The period of participation for a foreign institution expires 

21 three years after the date of the Secretary’s certification; and 

22 (ii) Tthe Secretary may specify a shorter period.

23 (2)(3)Provided that an institution has submitted an application for 

24 a renewal of certification that is materially complete at least 90 

25 days prior to the expiration of its current period of participation, 

26 the institution's existing certification will be extended on a month 

27 to month basis following the expiration of the institution's period 

28 of participation until the end of the month in which the Secretary 

29 issues a decision on the application for recertification.